UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4708
---------------------------------------------
SunAmerica Income Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: March 31, 2010
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2010
SUNAMERICA
Income Funds
[LOGO]
MARCH 31, 2010 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............................... 63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 79
APPROVAL OF ADVISORY AGREEMENTS............................. 80
RESULTS OF SPECIAL SHAREHOLDER MEETING...................... 83
TRUSTEE AND OFFICER INFORMATION............................. 84
SHAREHOLDER TAX INFORMATION................................. 88
COMPARISONS: PORTFOLIOS VS. INDICES......................... 89
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholder,
Enclosed is the annual report for the SunAmerica Income Funds for the
twelve-month period ended March 31, 2010.
The annual period marks a year in which government-sponsored liquidity fueled
investors' appetite for risk. This policy action, coupled with the Federal
Reserve's policy of consistently low interest rates, fueled strong performance
in certain segments of the fixed income market. Riskier assets, exemplified by
high yield bonds, posted strong returns as demonstrated by the Citigroup High
Yield Market Index*, which returned 53.86% for the annual period. On the other
end of the risk spectrum, the Barclays Capital U.S. Government Index* posted a
return of -0.13% for the same period. The broad-based Barclays Capital U.S.
Aggregate Bond Index* posted a 7.69% return during the annual period.
Investors' fears have calmed somewhat as the financial markets have shown signs
of stabilization. Nevertheless, major economic questions remain unanswered. How
and when will the U.S. government remove its financial backstop? When will the
Federal Reserve increase interest rates? Can the U.S. economy generate
sufficient jobs to reduce unemployment? How will we deal with the growing
budget deficit? Is the U.S. economy heading for a period of inflation? The
future of the fixed income markets will play out as these questions are
resolved.
We urge you to read the detailed discussions of each Fund, found on subsequent
pages of this report, to better understand its performance during the annual
period. Be sure to consult with your financial advisor when determining how
best to position your portfolio. Finally, we encourage you to utilize our
website, www.sunamericafunds.com, for ongoing updates throughout the year.
Thank you for your investment in the SunAmerica Income Funds. We remain focused
on managing your assets and continue to work diligently to preserve and grow
your capital as is consistent with each Fund's individual objectives.
Sincerely,
THE SUNAMERICA INCOME FUNDS INVESTMENT PROFESSIONALS
Michael Cheah Robert Vanden Assem John Yovanovic Christopher Jones
Bryan Petermann Tim Lindvall Geoffrey Cornell
Rajeev Mittal John Dunlevy 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. 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. The BARCLAYS CAPITAL U.S. AGGREGATE BOND INDEX represents
securities that are SEC-registered, taxable and dollar denominated. The
index covers the U.S. investment-grade fixed-rate bond market, with index
components for government and corporate securities, mortgage pass-through
securities and asset-backed securities. Indices are not managed and an
investor cannot invest directly into an index.
2
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2010 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the
SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
contingent deferred sales charges and (2) ongoing costs, including management
fees, distribution and service fees and other Fund expenses. The example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at October 1, 2009 and held until March 31, 2010.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2010" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2010" column does not include small account fees that may be charged if your
account balance is below $500 ($250 for retirement plan accounts). In addition,
the "Expenses Paid During the Six Months Ended March 31, 2010" 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 March
31, 2010" column would have been higher and the "Ending Account Value" would
have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in these Funds and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. The "Expenses Paid During the Six Months
Ended March 31, 2010" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended March
31, 2010" column does not include administrative fees that may apply to
qualified retirement plan accounts. See the Fund'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 March 31, 2010" column would have been higher and
the "Ending Account Value" would have been lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges, small account
fees and administrative fees, if applicable to your account. Please refer to
your prospectus and/or qualified retirement plan document for more information.
Therefore, the "Hypothetical" example is useful in comparing ongoing costs
only, and will not help you determine the relative total costs of owning
different funds. In addition, if these transaction costs and other fees were
included, your costs would have been higher.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ ------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSES PAID VALUE USING EXPENSES PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE EXPENSE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, MARCH 31,
FUND 2009 2010 2010* 2009 2010 2010* 2010*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- ---------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $ 993.41 $ 4.92 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $ 990.22 $ 8.14 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $ 990.20 $ 8.14 $1,000.00 $1,016.75 $ 8.25 1.64%
GNMA
Class A#................. $1,000.00 $1,018.44 $ 4.98 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $1,015.14 $ 8.24 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $1,015.13 $ 8.24 $1,000.00 $1,016.75 $ 8.25 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,058.41 $ 6.67 $1,000.00 $1,018.45 $ 6.54 1.30%
Class B.................. $1,000.00 $1,051.80 $10.03 $1,000.00 $1,015.16 $ 9.85 1.96%
Class C.................. $1,000.00 $1,054.90 $ 9.99 $1,000.00 $1,015.21 $ 9.80 1.95%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,112.01 $ 7.16 $1,000.00 $1,018.15 $ 6.84 1.36%
Class B#................. $1,000.00 $1,108.32 $10.57 $1,000.00 $1,014.91 $10.10 2.01%
Class C#................. $1,000.00 $1,108.16 $10.56 $1,000.00 $1,014.91 $10.10 2.01%
TAX EXEMPT INSURED
Class A#................. $1,000.00 $ 994.00 $ 4.67 $1,000.00 $1,020.24 $ 4.73 0.94%
Class B#................. $1,000.00 $ 987.33 $10.85 $1,000.00 $1,014.01 $11.00 2.19%
Class C#................. $1,000.00 $ 990.47 $ 7.94 $1,000.00 $1,016.95 $ 8.05 1.60%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
prospectus, your retirement plan documents and/or materials from your
financial adviser for more information.
# During the stated period, the investment adviser either waived a portion of
or all fees and assumed a portion of or all expenses for the Funds. As a
result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended March 31,
2010" and the "Expenses Ratios" would have been higher.
4
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2010
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ------------ ------------
ASSETS:
Investments at value (unaffiliated)........................................ $185,333,225 $480,266,291 $590,745,488
Repurchase agreements (cost approximates value)............................ 30,518,000 49,002,000 2,843,000
------------ ------------ ------------
Total investments........................................................ 215,851,225 529,268,291 593,588,488
------------ ------------ ------------
Cash....................................................................... 508 253 1,802,021
Foreign cash*.............................................................. -- -- 210,814
Receivable for:
Shares of beneficial interest sold....................................... 99,531 566,949 2,364,564
Dividends and interest................................................... 666,834 1,541,702 9,519,399
Investments sold......................................................... 23,321,461 123,924,861 4,962,836
Prepaid expenses and other assets.......................................... 6,349 7,221 8,412
Due from investment adviser for expense reimbursements/fee waivers......... 84,968 34,135 --
------------ ------------ ------------
Total assets............................................................... 240,030,876 655,343,412 612,456,534
------------ ------------ ------------
LIABILITIES:
Payable for-
Shares of beneficial interest redeemed................................... 470,626 1,301,406 1,706,858
Investments purchased.................................................... 56,688,625 257,868,785 14,451,802
Investment advisory and management fees.................................. 102,019 157,595 315,822
Distribution and service maintenance fees................................ 68,372 179,359 344,287
Transfer agent fees and expenses......................................... 47,671 98,087 130,022
Trustees' fees and expenses.............................................. 14,564 4,429 890
Other accrued expenses................................................... 105,342 134,924 233,066
Dividends payable........................................................ 34,152 171,548 949,927
------------ ------------ ------------
Total liabilities.......................................................... 57,531,371 259,916,133 18,132,674
------------ ------------ ------------
Net Assets................................................................. $182,499,505 $395,427,279 $594,323,860
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 191,039 $ 337,051 $ 1,783,993
Paid-in capital............................................................ 180,489,524 380,539,332 679,667,333
------------ ------------ ------------
180,680,563 380,876,383 681,451,326
Accumulated undistributed net investment income (loss)..................... 608,325 (110,822) (330,468)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short and foreign exchange transactions........ (18,421) 2,807,223 (96,501,093)
Unrealized appreciation (depreciation) on investments...................... 1,229,038 11,854,495 9,711,790
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- -- (7,695)
------------ ------------ ------------
NET ASSETS................................................................. $182,499,505 $395,427,279 $594,323,860
============ ============ ============
*Cost
Investment securities (unaffiliated)..................................... $184,104,187 $468,411,796 $581,033,698
============ ============ ============
Foreign cash............................................................. $ -- $ -- $ 216,614
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------- -----------
ASSETS:
Investments at value (unaffiliated)........................................ $ 138,774,004 $72,070,156
Repurchase agreements (cost approximates value)............................ 2,505,000 --
------------- -----------
Total investments........................................................ 141,279,004 72,070,156
------------- -----------
Cash....................................................................... 147,485 --
Foreign cash*.............................................................. -- --
Receivable for:
Shares of beneficial interest sold....................................... 546,021 52,488
Dividends and interest................................................... 3,074,533 931,627
Investments sold......................................................... 858,253 --
Prepaid expenses and other assets.......................................... 6,034 5,776
Due from investment adviser for expense reimbursements/fee waivers......... 51,174 21,864
------------- -----------
Total assets............................................................... 145,962,504 73,081,911
------------- -----------
LIABILITIES:
Payable for-
Shares of beneficial interest redeemed................................... 251,507 5,299
Investments purchased.................................................... 2,827,228 --
Investment advisory and management fees.................................. 89,472 31,234
Distribution and service maintenance fees................................ 76,298 32,413
Transfer agent fees and expenses......................................... 39,978 18,221
Trustees' fees and expenses.............................................. 5,848 3,911
Other accrued expenses................................................... 191,855 73,732
Dividends payable........................................................ 393,522 83,838
------------- -----------
Total liabilities.......................................................... 3,875,708 248,648
------------- -----------
Net Assets................................................................. $ 142,086,796 $72,833,263
============= ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 421,782 $ 57,614
Paid-in capital............................................................ 254,214,457 69,101,927
------------- -----------
254,636,239 69,159,541
Accumulated undistributed net investment income (loss)..................... (716,129) 75,872
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short and foreign exchange transactions........ (105,922,704) 188,396
Unrealized appreciation (depreciation) on investments...................... (5,910,610) 3,409,454
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- --
------------- -----------
NET ASSETS................................................................. $ 142,086,796 $72,833,263
============= ===========
*Cost
Investment securities (unaffiliated)..................................... $ 144,684,614 $68,660,702
============= ===========
Foreign cash............................................................. $ -- $ --
============= ===========
See Notes to Financial Statements
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2010 -- (CONTINUED)
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ------------ ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $159,027,885 $290,727,591 $287,960,381
Shares of beneficial interest issued and outstanding................................ 16,646,204 24,803,282 86,582,684
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 9.55 $ 11.72 $ 3.33
Maximum sales charge (4.75% of offering price)...................................... $ 0.48 $ 0.58 $ 0.17
------------ ------------ ------------
Maximum offering price to public.................................................... $ 10.03 $ 12.30 $ 3.50
============ ============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 8,578,113 $ 31,715,063 $ 50,124,709
Shares of beneficial interest issued and outstanding................................ 897,570 2,698,893 15,075,456
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 9.56 $ 11.75 $ 3.32
============ ============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 14,893,507 $ 72,984,625 $256,238,770
Shares of beneficial interest issued and outstanding................................ 1,560,085 6,202,886 76,741,161
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 9.55 $ 11.77 $ 3.34
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $79,244,735 $53,892,881
Shares of beneficial interest issued and outstanding................................ 23,570,950 4,264,555
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 3.36 $ 12.64
Maximum sales charge (4.75% of offering price)...................................... $ 0.17 $ 0.63
----------- -----------
Maximum offering price to public.................................................... $ 3.53 $ 13.27
=========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $18,185,707 $ 2,267,371
Shares of beneficial interest issued and outstanding................................ 5,400,065 179,068
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.37 $ 12.66
=========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $44,656,354 $16,673,011
Shares of beneficial interest issued and outstanding................................ 13,207,145 1,317,814
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.38 $ 12.65
=========== ===========
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED MARCH 31, 2010
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ----------- ------------
INCOME:
Dividends (unaffiliated)........................................................ $ -- $ -- $ 149,480
Interest (unaffiliated)......................................................... 5,977,371 14,301,356 41,322,631
------------ ----------- ------------
Total investment income*...................................................... 5,977,371 14,301,356 41,472,111
------------ ----------- ------------
EXPENSES:
Investment advisory and management fees......................................... 1,227,365 2,007,651 3,530,042
Distribution and service maintenance fees:
Class A....................................................................... 560,065 1,129,051 951,627
Class B....................................................................... 111,897 376,460 447,421
Class C....................................................................... 176,847 775,794 2,425,373
Transfer agent fees:
Class A....................................................................... 389,684 756,297 634,824
Class B....................................................................... 31,615 97,094 110,199
Class C....................................................................... 43,854 182,872 558,866
Registration fees:
Class A....................................................................... 23,044 34,360 15,400
Class B....................................................................... 11,212 8,359 10,389
Class C....................................................................... 12,087 15,954 11,814
Custodian and accounting fees................................................... 81,630 164,848 158,242
Reports to shareholders......................................................... 31,051 78,460 76,869
Audit and tax fees.............................................................. 42,463 41,723 44,135
Legal fees...................................................................... 12,904 26,419 39,063
Trustees' fees and expenses..................................................... 23,917 50,263 58,864
Interest expense................................................................ 452 -- 481
Interest expense on securities sold short....................................... -- -- --
Other expenses.................................................................. 16,434 24,272 27,123
------------ ----------- ------------
Total expenses before fee waivers, expense reimbursements, expense
recoupments, and custody credits............................................. 2,796,521 5,769,877 9,100,732
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)..................................................................... (738,795) (686,555) --
Custody credits earned on cash balances....................................... (1) (21) (255)
------------ ----------- ------------
Net expenses.................................................................. 2,057,725 5,083,301 9,100,477
------------ ----------- ------------
Net investment income (loss)..................................................... 3,919,646 9,218,055 32,371,634
------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)........................... 6,326,315 8,750,524 4,695,253
Net realized foreign exchange gain (loss) on other assets and liabilities........ -- -- 205,570
Net realized gain (loss) on securities sold short................................ -- -- --
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................... 6,326,315 8,750,524 4,900,823
------------ ----------- ------------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)... (13,121,119) (3,494,156) 102,297,067
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities..................................................................... -- -- 28,841
Change in unrealized appreciation (depreciation) on securities sold short........ -- -- --
------------ ----------- ------------
Net unrealized gain (loss) on investments and foreign currencies................. (13,121,119) (3,494,156) 102,325,908
------------ ----------- ------------
Net realized and unrealized gain (loss) on investments, and foreign currencies... (6,794,804) 5,256,368 107,226,731
------------ ----------- ------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ (2,875,158) $14,474,423 $139,598,365
============ =========== ============
- --------
* Net of foreign withholding taxes on interest and dividends of................. $ -- $ -- $ 33,059
============ =========== ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------ ----------
INCOME:
Dividends (unaffiliated)........................................................ $ 57,118 $ --
Interest (unaffiliated)......................................................... 14,790,175 3,344,121
------------ ----------
Total investment income*...................................................... 14,847,293 3,344,121
------------ ----------
EXPENSES:
Investment advisory and management fees......................................... 1,039,164 375,770
Distribution and service maintenance fees:
Class A....................................................................... 266,642 198,036
Class B....................................................................... 191,104 24,150
Class C....................................................................... 432,615 161,572
Transfer agent fees:
Class A....................................................................... 191,924 134,752
Class B....................................................................... 50,071 7,896
Class C....................................................................... 105,395 38,210
Registration fees:
Class A....................................................................... 8,802 20,490
Class B....................................................................... 9,217 11,793
Class C....................................................................... 10,756 12,766
Custodian and accounting fees................................................... 69,398 39,013
Reports to shareholders......................................................... 49,401 9,628
Audit and tax fees.............................................................. 50,061 41,128
Legal fees...................................................................... 35,521 4,384
Trustees' fees and expenses..................................................... 15,039 8,446
Interest expense................................................................ 572 --
Interest expense on securities sold short....................................... 11,837 --
Other expenses.................................................................. 12,563 12,154
------------ ----------
Total expenses before fee waivers, expense reimbursements, expense
recoupments, and custody credits............................................. 2,550,082 1,100,188
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)..................................................................... (260,277) (263,039)
Custody credits earned on cash balances....................................... (39) (2)
------------ ----------
Net expenses.................................................................. 2,289,766 837,147
------------ ----------
Net investment income (loss)..................................................... 12,557,527 2,506,974
------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)........................... (17,457,158) 929,445
Net realized foreign exchange gain (loss) on other assets and liabilities........ -- --
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)........................................................... -- --
Net increase from payment by affiliates (Note 3)................................. -- --
------------ ----------
Net realized gain (loss) on investments and foreign currencies................... (17,620,471) 929,445
------------ ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)... 57,046,856 1,098,839
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities..................................................................... -- --
Change in unrealized appreciation (depreciation) on securities sold short........ 9,750 --
------------ ----------
Net unrealized gain (loss) on investments and foreign currencies................. 57,056,606 1,098,839
------------ ----------
Net realized and unrealized gain (loss) on investments, and foreign currencies... 39,436,135 2,028,284
------------ ----------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $ 51,993,662 $4,535,258
============ ==========
- --------
* Net of foreign withholding taxes on interest and dividends of................. $ -- $ --
============ ==========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2010 2009
------------ ------------
OPERATIONS:
Net investment income (loss)........................................................... $ 3,919,646 $ 5,856,989
Net realized gain (loss) on investments and foreign currencies......................... 6,326,315 2,492,555
Net unrealized gain (loss) on investments and foreign currencies....................... (13,121,119) 7,055,161
------------ ------------
Increase (decrease) in net assets resulting from operations.............................. (2,875,158) 15,404,705
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (3,397,795) (5,369,678)
Net investment income (Class B)........................................................ (171,728) (345,850)
Net investment income (Class C)........................................................ (265,263) (381,222)
Net realized gain on securities (Class A).............................................. (3,256,689) --
Net realized gain on securities (Class B).............................................. (185,175) --
Net realized gain on securities (Class C).............................................. (329,316) --
------------ ------------
Total distributions to shareholders...................................................... (7,605,966) (6,096,750)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (21,878,250) (17,856,605)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (32,359,374) (8,548,650)
NET ASSETS:
Beginning of period...................................................................... 214,858,879 223,407,529
------------ ------------
End of period+........................................................................... $182,499,505 $214,858,879
============ ============
- --------
+Includes accumulated undistributed net investment income (loss)......................... $ 608,325 $ 27,608
============ ============
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
GNMA FUND STRATEGIC BOND FUND
-------------------------- ---------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2010 2009 2010 2009
------------ ------------ ------------ -------------
OPERATIONS:
Net investment income (loss)............................... $ 9,218,055 $ 12,369,438 $ 32,371,634 $ 41,117,669
Net realized gain (loss) on investments and foreign
currencies............................................... 8,750,524 4,332,582 4,900,823 (78,183,148)
Net unrealized gain (loss) on investments and foreign
currencies............................................... (3,494,156) 7,314,226 102,325,908 (76,650,431)
------------ ------------ ------------ -------------
Increase (decrease) in net assets resulting from operations. 14,474,423 24,016,246 139,598,365 (113,715,910)
------------ ------------ ------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)............................ (7,858,163) (10,909,235) (18,121,990) (30,006,872)
Net investment income (Class B)............................ (669,608) (1,314,574) (2,673,918) (3,566,240)
Net investment income (Class C)............................ (1,390,868) (1,383,879) (14,593,645) (18,381,363)
Net realized gain on securities (Class A).................. (4,876,043) (2,340,430) -- --
Net realized gain on securities (Class B).................. (541,803) (411,116) -- --
Net realized gain on securities (Class C).................. (1,223,760) (540,648) -- --
------------ ------------ ------------ -------------
Total distributions to shareholders......................... (16,560,245) (16,899,882) (35,389,553) (51,954,475)
------------ ------------ ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 6)........................ (68,988,018) 47,194,149 24,052,943 (170,519,517)
------------ ------------ ------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (71,073,840) 54,310,513 128,261,755 (336,189,902)
NET ASSETS:
Beginning of period......................................... 466,501,119 412,190,606 466,062,105 802,252,007
------------ ------------ ------------ -------------
End of period+.............................................. $395,427,279 $466,501,119 $594,323,860 $ 466,062,105
============ ============ ============ =============
- --------
+Includes accumulated undistributed net investment income
(loss)..................................................... $ (110,822) $ (378,883) $ (330,468) $ (1,427,417)
============ ============ ============ =============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
HIGH YIELD BOND FUND TAX EXEMPT INSURED FUND
-------------------------- ------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2010 2009 2010 2009
------------ ------------ ------------ ------------
OPERATIONS:
Net investment income (loss).......................... $ 12,557,527 $ 17,867,997 $ 2,506,974 $ 1,968,886
Net realized gain (loss) on investments and foreign
currencies.......................................... (17,620,471) (34,155,084) 929,445 (632,662)
Net unrealized gain (loss) on investments and foreign
currencies.......................................... 57,056,606 (43,371,099) 1,098,839 1,114,958
------------ ------------ ----------- -----------
Increase (decrease) in net assets resulting from
operations............................................ 51,993,662 (59,658,186) 4,535,258 2,451,182
------------ ------------ ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)....................... (8,325,461) (8,583,504) (1,927,828) (1,633,906)
Net investment income (Class B)....................... (1,964,960) (2,374,059) (52,109) (82,242)
Net investment income (Class C)....................... (4,434,133) (4,308,886) (434,279) (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.................... (14,724,554) (15,266,449) (2,414,216) (1,928,998)
------------ ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
CAPITAL SHARE TRANSACTIONS (NOTE 6)................... (4,803,623) (20,708,775) 305,426 15,549,201
------------ ------------ ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS................ 32,465,485 (95,633,410) 2,426,468 16,071,385
NET ASSETS:
Beginning of period.................................... 109,621,311 205,254,721 70,406,795 54,335,410
------------ ------------ ----------- -----------
End of period+......................................... $142,086,796 $109,621,311 $72,833,263 $70,406,795
============ ============ =========== ===========
- --------
+Includes accumulated undistributed net investment
income (loss)......................................... $ (716,129) $ 1,059,921 $ 75,872 $ (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
-------
03/31/06 $ 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
03/31/10 10.02 0.21 (0.28) (0.07) (0.21) (0.19) (0.40) 9.55 (0.75)(4) 159,028
CLASS B
-------
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
03/31/10 10.02 0.16 (0.29) (0.13) (0.14) (0.19) (0.33) 9.56 (1.29)(4) 8,578
CLASS C
-------
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
03/31/10 10.01 0.15 (0.28) (0.13) (0.14) (0.19) (0.33) 9.55 (1.30)(4) 14,894
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
- ------------- ------------- ---------
0.99% 3.80% 357%
0.99 4.05 243
0.99 3.83 343
0.99 2.73 84
0.99 2.17 472
1.64% 3.14% 357%
1.64 3.40 243
1.64 3.20 343
1.64 2.08 84
1.64 1.59 472
1.64% 3.14% 357%
1.64 3.40 243
1.64 3.14 343
1.64 2.05 84
1.64 1.55 472
- --------
(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):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.36% 0.38% 0.39% 0.35% 0.38%
U.S. Government Securities Fund Class B. 0.43 0.43 0.48 0.40 0.50
U.S. Government Securities Fund Class C. 0.57 0.43 0.50 0.40 0.44
(4)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).
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
-------
03/31/06 $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
03/31/10 11.78 0.27 0.14 0.41 (0.29) (0.18) (0.47) 11.72 3.55 290,728 0.99
CLASS B
-------
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
03/31/10 11.81 0.20 0.13 0.33 (0.21) (0.18) (0.39) 11.75 2.88 31,715 1.64
CLASS C
-------
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
03/31/10 11.82 0.19 0.15 0.34 (0.21) (0.18) (0.39) 11.77 2.96 72,985 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- ---------
3.17% 138%
4.19 142
4.15 354
3.32 73
2.28 104
2.50% 138%
3.53 142
3.52 354
2.67 73
1.63 104
2.49% 138%
3.53 142
3.49 354
2.55 73
1.63 104
- --------
(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):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10
-------- -------- -------- -------- --------
GNMA Fund Class A............. 0.13% 0.15% 0.15% 0.13% 0.15%
GNMA Fund Class B............. 0.17 0.18 0.19 0.15 0.19
GNMA Fund Class C............. 0.19 0.17 0.22 0.15 0.16
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
-------
03/31/06 $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(5)
03/31/08 3.63 0.19 (0.11) 0.08 (0.21) -- (0.21) 3.50 2.29 483,820 1.28(5)
03/31/09 3.50 0.21 (0.71) (0.50) (0.27) -- (0.27) 2.73 (14.67) 227,601 1.31
03/31/10 2.73 0.19 0.62 0.81 (0.21) -- (0.21) 3.33 30.31 287,960 1.29
CLASS B
-------
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(5)
03/31/08 3.63 0.16 (0.10) 0.06 (0.19) -- (0.19) 3.50 1.61 52,528 1.96(5)
03/31/09 3.50 0.19 (0.71) (0.52) (0.25) -- (0.25) 2.73 (15.25) 38,281 1.99
03/31/10 2.73 0.17 0.61 0.78 (0.19) -- (0.19) 3.32 29.05 50,125 1.97
CLASS C
-------
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(5)
03/31/08 3.64 0.17 (0.11) 0.06 (0.19) -- (0.19) 3.51 1.64 265,904 1.94(5)
03/31/09 3.51 0.19 (0.71) (0.52) (0.25) -- (0.25) 2.74 (15.16) 200,180 1.96
03/31/10 2.74 0.17 0.62 0.79 (0.19) -- (0.19) 3.34 29.39 256,239 1.94
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
- ---------- ---------
5.19%(4) 118%(6)
4.79(5) 134(6)
5.30(5) 162(6)
6.54 112
6.13 157
4.51%(3)(4) 118%(6)
4.12(5) 134(6)
4.63(5) 162(6)
6.00 112
5.44 157
4.54%(3)(4) 118%(6)
4.12(5) 134(6)
4.65(5) 162(6)
6.03 112
5.48 157
- --------
(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):
03/31/06
--------
Strategic Bond Fund Class A............. -- %
Strategic Bond Fund Class B............. 0.00
Strategic Bond Fund Class C............. 0.00
(4)Net of custody credits of:
03/31/06
--------
Strategic Bond Fund..................... 0.07%
(5)Gross of custody credits of:
03/31/07 03/31/08
-------- --------
Strategic Bond Fund..................... 0.05% 0.02%
(6)Portfolio turnover includes "to be announced" ("TBA") transactions.
Previously, portfolio turnover was calculated excluding TBA transactions and
was as follows:
2006 2007 2008
---- ---- ----
Strategic Bond Fund. 119% 131% 151%
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ----------- -------------
CLASS A
-------
03/31/06 $4.43 $0.31 $ 0.19 $ 0.50 $(0.33) $-- $(0.33) $4.60 11.61% $214,041 1.36%(4)
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
03/31/10 2.52 0.29 0.89 1.18 (0.34) -- (0.34) 3.36 48.44 79,245 1.36
CLASS B
-------
03/31/06 $4.44 $0.31 $ 0.16 $ 0.47 $(0.30) $-- $(0.30) $4.61 10.88% $ 52,346 2.01%(4)
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
03/31/10 2.53 0.27 0.89 1.16 (0.32) -- (0.32) 3.37 47.35 18,186 2.01
CLASS C
-------
03/31/06 $4.46 $0.30 $ 0.17 $ 0.47 $(0.30) $-- $(0.30) $4.63 10.86% $ 70,140 2.01%(4)
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
03/31/10 2.54 0.27 0.89 1.16 (0.32) -- (0.32) 3.38 47.21 44,656 2.01
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
- ------------- ---------
7.20%(4) 91%
6.44 86
7.49 72
10.74 77
9.34 110
6.71%(4) 91%
5.82 86
6.80 72
10.18 77
8.77 110
6.67%(4) 91%
5.80 86
6.75 72
10.16 77
8.70 110
- --------
(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):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10
-------- -------- -------- -------- --------
High Yield Bond Fund Class A............ 0.11% 0.09% 0.17% 0.14% 0.18%
High Yield Bond Fund Class B............ 0.14 0.11 0.20 0.16 0.23
High Yield Bond Fund Class C............ 0.12 0.10 0.18 0.15 0.18
(4)Net of custody credits of 0.01%.
See Notes to Financial Statements
14
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
TAX EXEMPT INSURED FUND
-----------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
- ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- ----------
CLASS A
-------
03/31/06 $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)
03/31/10 12.27 0.44 0.36 0.80 (0.43) -- (0.43) 12.64 6.58 53,893 0.93(3)
CLASS B
-------
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)
03/31/10 12.28 0.30 0.35 0.65 (0.27) -- (0.27) 12.66 5.34 2,267 2.12(3)
CLASS C
-------
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)
03/31/10 12.28 0.35 0.36 0.71 (0.34) -- (0.34) 12.65 5.81 16,673 1.62(3)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
- ---------- ---------
3.14% 81%
3.28 84
3.35 57
3.49(3) 92
3.52(3) 38
2.48% 81%
2.44 84
2.46 57
2.58(3) 92
2.33(3) 38
2.48%(3) 81%
2.60(3) 84
2.71(3) 57
2.92(3) 92
2.84(3) 38
- --------
(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):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10
-------- -------- -------- -------- --------
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......... 0.20 0.09 0.31 0.42 0.35
See Notes to Financial Statements
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 51.5%
U.S. Government Agencies........ 27.4
United States Treasury Bonds.... 21.1
Repurchase Agreements........... 16.7
Federal Farm Credit Bank........ 0.7
United States Treasury Notes.... 0.5
Small Business Administration... 0.4
-----
118.3%
=====
CREDIT QUALITY+#
Government -- Treasury. 29.2%
Government -- Agency... 70.8
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 52.6%
FEDERAL FARM CREDIT BANK -- 0.7%
5.64% due 04/04/11.................... $ 500,000 $ 525,578
6.00% due 03/07/11.................... 200,000 210,074
6.30% due 12/03/13.................... 500,000 571,895
-----------
1,307,547
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/23.................... 29,192 33,703
11.00% due 02/01/15................... 23 27
11.50% due 09/01/19................... 6,334 7,043
-----------
40,773
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 51.5%
4.50% due 05/15/18.................... 555,972 586,730
4.50% due 08/15/18.................... 879,402 928,051
4.50% due 09/15/18.................... 2,402,260 2,535,158
4.50% due 10/15/18.................... 2,439,422 2,574,375
4.50% due 09/15/33.................... 3,430,769 3,506,319
4.50% due May TBA..................... 33,000,000 33,262,977
5.00% due 04/15/18.................... 2,448,814 2,613,276
5.00% due 04/15/33.................... 26,071 27,314
5.00% due 08/15/33.................... 1,239,573 1,298,689
5.00% due 09/15/33.................... 579,749 607,386
5.00% due 10/15/33.................... 380,447 398,583
5.00% due 04/15/34.................... 19,282 20,183
5.00% due 11/15/34.................... 138,368 144,834
5.00% due 02/15/35.................... 17,512 18,297
5.00% due 03/15/35.................... 439,271 458,976
5.00% due 04/15/35.................... 42,745 44,662
5.00% due 05/15/35.................... 1,208,393 1,262,600
5.00% due 09/15/35.................... 731,479 764,293
5.00% due 10/15/35.................... 103,848 108,506
5.00% due 12/15/35.................... 63,566 66,417
5.00% due 03/15/36.................... 617,557 644,103
5.00% due 05/15/36.................... 898,527 937,148
5.00% due 06/15/36.................... 587,236 612,477
5.00% due 09/15/36.................... 1,419,703 1,482,096
5.00% due 10/15/36.................... 341,410 356,086
5.00% due 11/15/36.................... 39,169 40,853
5.00% due 12/15/36.................... 222,704 232,278
5.00% due 01/15/37.................... 2,689,908 2,803,849
5.00% due 02/15/37.................... 1,427,595 1,488,067
5.00% due 03/15/37.................... 928,344 967,667
5.00% due 04/15/37.................... 1,008,048 1,050,748
5.00% due 08/15/38.................... 8,194,389 8,536,373
5.50% due 11/15/32.................... 8,600 9,173
5.50% due 03/15/33.................... 295,502 315,069
5.50% due 04/15/33.................... 356,224 379,811
5.50% due 05/15/33.................... 807,219 860,665
5.50% due 06/15/33.................... 3,542,426 3,776,988
5.50% due 07/15/33.................... 1,050,120 1,119,653
5.50% due 10/15/33.................... 1,038,410 1,107,168
5.50% due 12/15/33.................... 211,676 225,692
5.50% due 01/15/34.................... 2,511,609 2,675,167
5.50% due 02/15/34.................... 1,391,262 1,481,861
6.00% due 01/15/28.................... 1,819 1,973
6.00% due 04/15/28.................... 788,650 850,827
6.00% due 05/15/28.................... 1,277 1,385
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 10/15/28....................... $ 3,352 $ 3,636
6.00% due 04/15/29....................... 29,195 31,670
6.00% due 05/15/29....................... 55,539 60,246
6.00% due 06/15/29....................... 21,048 22,832
6.00% due 04/15/31....................... 14,962 16,230
6.00% due 05/15/31....................... 27,440 29,765
6.00% due 11/15/31....................... 145,165 157,468
6.00% due 12/15/31....................... 170,655 185,119
6.00% due 01/15/32....................... 95,820 103,942
6.00% due 02/15/32....................... 19,968 21,659
6.00% due 03/15/32....................... 4,684 5,081
6.00% due 08/15/32....................... 175,402 190,269
6.00% due 11/15/32....................... 21,258 23,059
6.00% due 12/15/32....................... 5,440 5,901
6.00% due 01/15/33....................... 13,657 14,780
6.00% due 02/15/33....................... 26,866 29,076
6.00% due 03/15/33....................... 55,449 60,010
6.00% due 04/15/33....................... 233,938 253,181
6.00% due 07/15/33....................... 159,642 172,773
6.00% due 08/15/33....................... 1,411,271 1,530,237
6.00% due 09/15/33....................... 220,669 238,820
6.00% due 10/15/33....................... 604,594 654,338
6.00% due 11/15/33....................... 87,742 94,959
6.00% due 12/15/33....................... 459,507 497,305
6.00% due 02/15/34....................... 124,214 133,966
6.00% due 05/15/34....................... 18,133 19,557
6.00% due 06/15/34....................... 24,852 26,803
6.00% due 07/15/34....................... 870,977 939,355
6.00% due 08/15/34....................... 104,855 113,087
6.00% due 09/15/34....................... 654,829 706,239
6.00% due 10/15/34....................... 1,950,569 2,103,705
6.00% due 12/15/34....................... 231,973 250,184
6.00% due 06/15/35....................... 121,891 131,004
6.00% due 08/15/35....................... 110,890 119,180
6.50% due 02/15/29....................... 8,301 9,137
6.50% due 05/15/31....................... 10,312 11,338
6.50% due 06/15/31....................... 37,922 41,695
6.50% due 07/15/31....................... 21,223 23,334
6.50% due 08/15/31....................... 40,305 44,316
6.50% due 09/15/31....................... 114,739 126,155
6.50% due 10/15/31....................... 162,728 178,919
6.50% due 11/15/31....................... 7,763 8,535
6.50% due 12/15/31....................... 4,042 4,444
6.50% due 01/15/32....................... 19,627 21,469
6.50% due 02/15/32....................... 345,881 378,350
7.00% due 07/15/23....................... 14,283 15,957
7.00% due 10/15/23....................... 26,448 29,549
7.00% due 09/15/25....................... 153,769 172,169
7.00% due 03/20/29....................... 11,734 13,263
7.00% due 06/20/29....................... 1,895 2,128
7.00% due 11/20/30....................... 40,661 45,703
7.50% due 04/15/17....................... 7,943 8,740
7.50% due 08/15/23....................... 120,625 136,257
7.50% due 09/15/23....................... 368,805 416,604
9.00% due 12/15/16....................... 30,037 33,546
11.00% due 08/20/15...................... 70 77
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
11.00% due 09/20/15...................... $ 200 $ 222
11.50% due 05/20/15...................... 994 1,104
12.50% due 09/15/14...................... 3,429 3,929
13.00% due 02/15/11...................... 601 606
13.00% due 04/15/11...................... 37 38
13.00% due 10/20/14...................... 736 839
13.00% due 11/15/14...................... 315 344
13.50% due 02/15/13...................... 3,676 4,257
15.00% due 01/15/12...................... 107 122
15.00% due 02/15/12...................... 434 494
15.00% due 06/15/12...................... 2,650 3,020
15.00% due 09/15/12...................... 297 339
15.50% due 09/15/11...................... 12,968 14,110
------------
93,881,348
------------
SMALL BUSINESS ADMINISTRATION -- 0.4%
6.30% due 06/01/18....................... 700,131 760,513
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $92,365,509)....................... 95,990,181
------------
U.S. GOVERNMENT TREASURIES -- 21.6%
UNITED STATES TREASURY BONDS -- 21.1%
4.25% due 05/15/39....................... 6,000,000 5,559,372
4.50% due 08/15/39....................... 34,000,000 32,831,250
------------
38,390,622
------------
UNITED STATES TREASURY NOTES -- 0.5%
3.13% due 05/15/19....................... 1,000,000 952,422
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $41,738,678)....................... 39,343,044
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $134,104,187)...................... 135,333,225
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 27.4%
U.S. GOVERNMENT AGENCIES -- 27.4%
Federal Home Loan Bank Disc. Notes
0.01% due 04/01/10
(cost $50,000,000).................. $50,000,000 $ 50,000,000
------------
REPURCHASE AGREEMENT -- 16.7%
REPURCHASE AGREEMENT -- 16.7%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)
(cost $30,518,000).................. 30,518,000 30,518,000
------------
TOTAL INVESTMENTS
(cost $214,622,187)(2).............. 118.3% 215,851,225
Liabilities in excess of other assets.. (18.3) (33,351,720)
----------- ------------
NET ASSETS 100.0% $182,499,505
=========== ============
- --------
(1) See Note 2 for details of Joint Repurchase Agreements.
(2) See Note 5 for cost of investments on a tax basis.
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (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......... $ -- $ 1,307,547 $ -- $ 1,307,547
Federal National Mtg. Assoc...... -- 40,773 -- 40,773
Government National Mtg. Assoc... -- 93,881,348 -- 93,881,348
Small Business Administration.... -- 760,513 -- 760,513
U.S. Government Treasuries........ -- 39,343,044 -- 39,343,044
Short Term Investment Securities:
U.S. Government Agencies.......... -- 50,000,000 -- 50,000,000
Repurchase Agreement................ -- 30,518,000 -- 30,518,000
----------- ------------ ----------- ------------
Total............................... $ -- $215,851,225 $ -- $215,851,225
=========== ============ =========== ============
See Notes to Financial Statements
18
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 95.3%
U.S. Government Agencies........ 18.9
Repurchase Agreements........... 12.4
United States Treasury Notes.... 4.9
United States Treasury Bonds.... 2.2
Small Business Administration... 0.1
-----
133.8%
=====
CREDIT QUALITY ALLOCATION+#
Government -- Treasury. 7.0%
Government -- Agency... 93.0
-----
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.
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------
U.S. GOVERNMENT AGENCIES -- 95.3%
GOVERNMENT NATIONAL MTG. ASSOC. -- 95.2%
4.50% due 05/15/18.. $ 1,111,944 $ 1,173,459
4.50% due 08/15/18.. 570,036 601,571
4.50% due 09/15/18.. 1,840,503 1,942,323
4.50% due 10/15/18.. 2,847,822 3,005,369
4.50% due 08/15/33.. 1,949,763 1,992,700
4.50% due 09/15/33.. 2,610,954 2,668,450
4.50% due 05/15/39.. 29,151,243 29,556,335
4.50% due May TBA... 50,000,000 50,398,450
5.00% due 03/15/18.. 353,863 377,629
5.00% due 04/15/18.. 3,952,376 4,217,818
5.00% due 05/15/18.. 5,648,788 6,028,159
5.00% due 01/15/33.. 9,512 9,965
5.00% due 05/15/33.. 8,669 9,083
5.00% due 08/15/33.. 1,777,445 1,862,178
5.00% due 09/15/33.. 1,761,536 1,845,511
5.00% due 10/15/33.. 4,086,786 4,281,609
5.00% due 04/15/34.. 30,236 31,650
5.00% due 05/15/34.. 105,042 109,951
5.00% due 11/15/34.. 473,417 495,541
5.00% due 12/15/34.. 459,733 481,218
5.00% due 09/15/35.. 14,853 15,519
5.00% due 10/15/35.. 91,956 96,081
5.00% due 11/15/35.. 88,526 92,497
5.00% due 12/15/35.. 47,500 49,631
5.00% due 02/15/36.. 114,818 119,754
5.00% due 04/15/36.. 358,496 373,905
5.00% due 06/15/36.. 1,182,248 1,233,065
5.00% due 07/15/36.. 349,925 364,966
5.00% due 08/15/36.. 21,509 22,433
5.00% due 09/15/36.. 613,688 640,953
5.00% due 10/15/36.. 25,351 26,441
5.00% due 11/15/36.. 195,657 204,067
5.00% due 12/15/36.. 737,596 769,301
5.00% due 01/15/37.. 451,851 470,991
5.00% due 02/15/37.. 634,529 661,408
5.00% due 04/15/37.. 5,527,549 5,761,689
5.00% due May TBA... 80,000,000 82,787,520
5.50% due 06/15/29.. 3,505 3,741
5.50% due 01/15/32.. 32,483 34,644
5.50% due 12/15/32.. 430,520 459,162
5.50% due 01/15/33.. 325,298 346,838
5.50% due 02/15/33.. 1,067,027 1,137,680
5.50% due 03/15/33.. 655,171 698,552
5.50% due 04/15/33.. 3,500,787 3,732,591
5.50% due 05/15/33.. 4,326,864 4,613,310
5.50% due 06/15/33.. 4,580,633 4,883,858
5.50% due 07/15/33.. 251,476 268,128
5.50% due 08/15/33.. 1,454,611 1,550,928
5.50% due 09/15/33.. 202,770 216,196
5.50% due 10/15/33.. 4,045,675 4,313,558
5.50% due 12/15/33.. 3,917,296 4,176,679
5.50% due 01/15/34.. 5,642,022 6,009,437
5.50% due 02/15/34.. 846,945 902,100
5.50% due 04/15/35.. 1,149,203 1,222,604
5.50% due 07/15/35.. 1,695,788 1,804,099
5.50% due 09/15/35.. 18,410,230 19,586,109
5.50% due 10/15/35.. 11,069,619 11,776,646
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 11/15/35....................... $16,619,084 $17,680,561
5.50% due 12/15/35....................... 12,068,015 12,838,809
5.50% due 02/15/36....................... 1,480,244 1,572,013
5.50% due 03/15/36....................... 7,306,332 7,759,296
5.50% due 04/15/36....................... 247,922 263,292
5.50% due 05/15/36....................... 2,091,365 2,221,021
6.00% due 11/15/23....................... 3,363 3,628
6.00% due 01/15/24....................... 4,972 5,361
6.00% due 07/15/28....................... 2,087 2,264
6.00% due 11/15/28....................... 218,240 236,738
6.00% due 12/15/28....................... 178,411 193,533
6.00% due 01/15/29....................... 363,851 394,690
6.00% due 02/15/29....................... 429,715 466,137
6.00% due 03/15/29....................... 373,810 405,494
6.00% due 04/15/29....................... 916,152 993,754
6.00% due 05/15/29....................... 34,664 37,602
6.00% due 06/15/29....................... 372,266 403,781
6.00% due 07/15/29....................... 123,320 133,772
6.00% due 08/15/29....................... 13,186 14,303
6.00% due 10/15/29....................... 98,680 107,044
6.00% due 04/15/31....................... 11,433 12,401
6.00% due 07/15/31....................... 14,459 15,685
6.00% due 10/15/31....................... 65,818 71,397
6.00% due 11/15/31....................... 631,581 685,113
6.00% due 12/15/31....................... 358,156 388,515
6.00% due 01/15/32....................... 421,501 457,226
6.00% due 02/15/32....................... 21,342 23,150
6.00% due 03/15/32....................... 285,798 309,916
6.00% due 07/15/32....................... 65,012 70,522
6.00% due 08/15/32....................... 916,414 993,697
6.00% due 09/15/32....................... 593,656 643,974
6.00% due 10/15/32....................... 110,648 120,025
6.00% due 11/15/32....................... 835 905
6.00% due 12/15/32....................... 48,940 53,088
6.00% due 01/15/33....................... 881,280 953,773
6.00% due 02/15/33....................... 831,380 899,768
6.00% due 03/15/33....................... 749,882 811,565
6.00% due 04/15/33....................... 806,363 872,691
6.00% due 05/15/33....................... 873,584 945,443
6.00% due 06/15/33....................... 583,599 631,606
6.00% due 08/15/33....................... 849,978 920,293
6.00% due 10/15/33....................... 314,865 340,765
6.00% due 11/15/33....................... 993,120 1,074,816
6.00% due 12/15/33....................... 1,718,966 1,860,364
6.00% due 01/15/34....................... 939,753 1,013,532
6.00% due 02/15/34....................... 6,287,574 6,781,200
6.00% due 03/15/34....................... 76,558 82,568
6.00% due 04/15/34....................... 1,762,252 1,900,603
6.00% due 05/15/34....................... 150,605 162,428
6.00% due 06/15/34....................... 168,582 181,817
6.00% due 07/15/34....................... 1,977,772 2,133,043
6.00% due 08/15/34....................... 2,755,895 2,971,473
6.00% due 09/15/34....................... 141,120 152,151
6.00% due 10/15/34....................... 394,544 425,519
6.00% due 11/15/34....................... 545,153 587,952
6.00% due 12/15/34....................... 55,998 60,394
6.00% due 01/15/35....................... 59,506 63,954
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 02/15/35.. $ 466,662 $ 501,550
6.00% due 04/15/35.. 35,129 37,755
6.00% due 05/15/35.. 6,574 7,066
6.00% due 06/15/35.. 178,109 191,424
6.00% due 11/15/35.. 8,543 9,181
6.00% due 12/15/35.. 998,256 1,075,339
6.00% due 01/15/36.. 670,092 718,302
6.00% due 02/15/36.. 1,029,580 1,103,654
6.00% due 03/15/36.. 400,393 429,199
6.00% due 04/15/36.. 2,118,680 2,271,110
6.00% due 05/15/36.. 4,056,862 4,348,734
6.00% due 06/15/36.. 1,307,693 1,401,775
6.00% due 07/15/36.. 918,023 984,071
6.00% due 08/15/36.. 11,451 12,266
6.00% due 09/15/36.. 72,223 77,419
6.00% due 10/15/36.. 819,466 878,479
6.00% due 11/15/36.. 1,393,666 1,493,935
6.00% due 09/15/38.. 10,265,872 10,982,000
6.50% due 03/15/28.. 15,585 17,108
6.50% due 08/15/28.. 24,868 27,436
6.50% due 01/15/29.. 2,799 3,081
6.50% due 02/15/29.. 931 1,024
6.50% due 03/15/29.. 80,101 88,171
6.50% due 04/15/29.. 858 945
6.50% due 05/15/29.. 7,742 8,529
6.50% due 06/15/29.. 27,037 29,761
6.50% due 07/15/29.. 1,703 1,875
6.50% due 10/15/29.. 3,149 3,466
6.50% due 08/15/31.. 108,659 119,470
6.50% due 09/15/31.. 10,378 11,411
6.50% due 10/15/31.. 162,728 178,919
6.50% due 11/15/31.. 95,797 105,330
6.50% due 12/15/31.. 109,991 120,935
6.50% due 02/15/32.. 156,124 170,780
6.50% due 05/15/32.. 677,875 741,509
6.50% due 06/15/32.. 84,203 92,108
7.00% due 03/15/23.. 17,964 20,071
7.00% due 01/20/24.. 426 477
7.00% due 03/20/24.. 405 454
7.00% due 07/20/25.. 1,892 2,120
7.00% due 09/15/25.. 66,779 74,769
7.00% due 01/20/29.. 26,326 29,576
7.00% due 02/20/29.. 4,454 5,004
7.00% due 06/20/29.. 9,395 10,554
7.00% due 07/20/29.. 33,642 37,795
7.00% due 09/20/29.. 3,239 3,639
7.00% due 10/20/29.. 6,295 7,072
7.00% due 11/20/29.. 2,168 2,436
7.00% due 03/20/30.. 3,397 3,819
7.00% due 06/20/30.. 3,392 3,813
7.00% due 08/20/30.. 12,969 14,577
7.00% due 09/20/30.. 15,021 16,884
7.00% due 10/20/30.. 17,623 19,809
8.00% due 11/15/26.. 86,081 98,928
8.00% due 12/15/29.. 9,006 10,373
8.00% due 04/15/30.. 28,441 32,774
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
8.00% due 05/15/30....................... $ 1,923 $ 2,216
8.00% due 08/15/30....................... 28,179 32,472
8.50% due 03/15/17....................... 10,922 12,228
8.50% due 05/15/21....................... 26,079 30,025
8.50% due 12/15/22....................... 26,494 30,579
8.50% due 01/15/23....................... 95,961 110,988
8.50% due 09/15/24....................... 17,167 19,889
9.00% due 07/15/16....................... 33,660 37,593
9.00% due 10/15/16....................... 4,232 4,726
-------------
376,843,252
-------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
6.30% due 06/01/18....................... 233,377 253,504
-------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $364,555,236)...................... 377,096,756
-------------
U.S. GOVERNMENT TREASURIES -- 7.1%
UNITED STATES TREASURY BONDS -- 2.2%
United States Treasury Bonds
4.50% due 08/15/39....................... 9,000,000 8,690,625
-------------
UNITED STATES TREASURY NOTES -- 4.9%
United States Treasury Notes
3.38% due 11/15/19....................... 10,000,000 9,649,220
3.63% due 02/15/20....................... 10,000,000 9,829,690
-------------
19,478,910
-------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $28,856,560)....................... 28,169,535
-------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $393,411,796)...................... 405,266,291
-------------
SHORT-TERM INVESTMENT SECURITIES -- 19.0%
U.S. GOVERNMENT AGENCIES -- 19.0%
Federal Home Loan Bank
Discount Notes
0.10% due 04/01/2010
(cost $75,000,000)....................... 75,000,000 75,000,000
-------------
REPURCHASE AGREEMENT -- 12.4%
Agreement with State Street Bank & Trust
Co., Joint Repurchase Agreement(1)
(cost $49,002,000)....................... 49,002,000 49,002,000
-------------
TOTAL INVESTMENTS
(cost $517,413,796)(2)................... 133.8% 529,268,291
Liabilities in excess of other assets....... (33.8) (133,841,012)
----------- -------------
NET ASSETS 100.0% $ 395,427,279
=========== =============
- --------
(1) See Note 2 for details of Joint Repurchase Agreements.
(2) See Note 5 for cost of investments on a tax basis.
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (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... $ -- $376,843,252 $ -- $376,843,252
Small Business Administration.... -- 253,504 -- 253,504
U.S. Government Treasuries........ -- 28,169,535 -- 28,169,535
Short Term Investment Securities:
U.S. Government Agencies.......... -- 75,000,000 -- 75,000,000
Repurchase Agreements............... -- 49,002,000 -- 49,002,000
----------- ------------ ----------- ------------
Total............................... $ -- $529,268,291 $ -- $529,268,291
=========== ============ =========== ============
See Notes to Financial Statements
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Foreign Government Agencies............ 29.0%
Federal Home Loan Mtg. Corp............ 6.8
Federal National Mtg. Assoc............ 4.9
Diversified Financial Services......... 3.4
Oil Companies-Exploration & Production. 2.8
Diversified Banking Institutions....... 2.5
Time Deposits.......................... 2.4
Telephone-Integrated................... 1.8
Banks-Super Regional................... 1.7
Cable/Satellite TV..................... 1.6
Pipelines.............................. 1.5
Banks-Commercial....................... 1.5
Medical-Hospitals...................... 1.5
Special Purpose Entities............... 1.4
Electric-Integrated.................... 1.4
Casino Hotels.......................... 1.1
Steel-Producers........................ 1.0
Electric-Generation.................... 1.0
Paper & Related Products............... 0.9
Cellular Telecom....................... 0.8
Telecom Services....................... 0.7
Coal................................... 0.7
Satellite Telecom...................... 0.7
Airlines............................... 0.6
Medical-Drugs.......................... 0.6
United States Treasury Bonds........... 0.6
Insurance-Mutual....................... 0.6
Insurance-Life/Health.................. 0.5
Non-Hazardous Waste Disposal........... 0.5
Oil Companies-Integrated............... 0.5
Building-Residential/Commercial........ 0.5
Diversified Minerals................... 0.5
Gas-Transportation..................... 0.5
Repurchase Agreements.................. 0.5
Retail-Regional Department Stores...... 0.5
Insurance-Multi-line................... 0.5
Electronic Components-Semiconductors... 0.4
Computer Services...................... 0.4
Diversified Manufacturing Operations... 0.4
Chemicals-Plastics..................... 0.4
Food-Meat Products..................... 0.4
Rental Auto/Equipment.................. 0.4
Transport-Air Freight.................. 0.4
Printing-Commercial.................... 0.4
Building & Construction Products-Misc.. 0.4
Physicians Practice Management......... 0.4
Finance-Auto Loans..................... 0.4
Funeral Services & Related Items....... 0.4
Firearms & Ammunition.................. 0.4
Independent Power Producers............ 0.4
Seismic Data Collection................ 0.4
Television............................. 0.3
Building Products-Cement............... 0.3
Finance-Investment Banker/Broker....... 0.3
Containers-Paper/Plastic............... 0.3
Broadcast Services/Program............. 0.3
Containers-Metal/Glass................. 0.3
Oil-Field Services..................... 0.3
Real Estate Investment Trusts.......... 0.3
Chemicals-Diversified.................. 0.3
Auto/Truck Parts & Equipment-Original.. 0.3
Retail-Toy Stores............................ 0.3%
Medical-Biomedical/Gene...................... 0.3
Food-Retail.................................. 0.3
Transport-Marine............................. 0.3
Import/Export................................ 0.2
Music........................................ 0.2
Electronic Components-Misc................... 0.2
Aerospace/Defense............................ 0.2
Multimedia................................... 0.2
Hotels/Motels................................ 0.2
Retail-Drug Store............................ 0.2
Real Estate Operations & Development......... 0.2
Retail-Petroleum Products.................... 0.2
Decision Support Software.................... 0.2
Distribution/Wholesale....................... 0.2
Auto/Truck Parts & Equipment-Replacement..... 0.2
Gambling (Non-Hotel)......................... 0.2
Chemicals-Specialty.......................... 0.2
Food-Misc.................................... 0.2
Retail-Apparel/Shoe.......................... 0.2
Auto-Heavy Duty Trucks....................... 0.2
Consulting Services.......................... 0.2
Hazardous Waste Disposal..................... 0.2
Forestry..................................... 0.2
Rubber-Tires................................. 0.2
Photo Equipment & Supplies................... 0.2
Commercial Services.......................... 0.2
Real Estate Management/Services.............. 0.2
Cosmetics & Toiletries....................... 0.2
Transport-Services........................... 0.2
Private Corrections.......................... 0.2
Medical-Outpatient/Home Medical.............. 0.2
Direct Marketing............................. 0.2
Data Processing/Management................... 0.2
Transport-Equipment & Leasing................ 0.2
Enterprise Software/Service.................. 0.2
Beverages-Wine/Spirits....................... 0.2
Diversified Operations....................... 0.2
Consumer Products-Misc....................... 0.2
Wireless Equipment........................... 0.2
Medical Instruments.......................... 0.2
Marine Services.............................. 0.2
Home Furnishings............................. 0.1
Gas-Distribution............................. 0.1
Warehousing & Harbor Transportation Services. 0.1
Transport-Rail............................... 0.1
Metal-Copper................................. 0.1
Electric-Distribution........................ 0.1
United States Treasury Notes................. 0.1
Research & Development....................... 0.1
Web Hosting/Design........................... 0.1
Applications Software........................ 0.1
Publishing-Newspapers........................ 0.1
Theaters..................................... 0.1
Mining Services.............................. 0.1
Finance-Mortgage Loan/Banker................. 0.1
Municipal Bonds & Notes...................... 0.1
Banks-Fiduciary.............................. 0.1
Storage/Warehousing.......................... 0.1
Finance-Commercial........................... 0.1
Building-Heavy Construction.................. 0.1
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Insurance-Reinsurance........ 0.1%
Retail-Arts & Crafts......... 0.1
Retail-Restaurants........... 0.1
Banks-Money Center........... 0.1
Wire & Cable Products........ 0.1
Metal-Diversified............ 0.1
Casino Services.............. 0.1
Circuit Boards............... 0.1
Computers-Memory Devices..... 0.1
Advertising Services......... 0.1
Metal-Aluminum............... 0.1
Finance-Consumer Loans....... 0.1
Diamonds/Precious Stones..... 0.1
Publishing-Books............. 0.1
Radio........................ 0.1
Oil Refining & Marketing..... 0.1
Medical Information Systems.. 0.1
Medical-HMO.................. 0.1
Building Products-Wood....... 0.1
Computers-Integrated Systems. 0.1
Pharmacy Services............ 0.1
Publishing-Periodicals....... 0.1
----
99.9%
====
CREDIT QUALITY+#
Government -- Treasury. 0.7%
Government -- Agency... 11.9
AAA.................... 8.0
AA..................... 3.1
A...................... 6.7
BBB.................... 19.0
BB..................... 21.6
B...................... 19.8
CCC.................... 5.2
CC..................... 0.5
C...................... 0.3
Below C................ 0.1
Not Rated@............. 3.1
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poors
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating or the rating is unavailable
from the data source.
COUNTRY ALLOCATION*
United States........ 62.6%
Brazil............... 4.7
Mexico............... 4.0
Canada............... 3.6
Russia............... 3.0
Turkey............... 2.3
Norway............... 2.0
Sweden............... 1.8
Japan................ 1.5
Indonesia............ 1.3
Venezuela............ 1.4
Philippines.......... 1.3
Australia............ 1.3
Italy................ 1.1
Cayman Islands....... 1.1
Bermuda.............. 1.0
Colombia............. 0.7
Peru................. 0.8
Netherlands.......... 0.7
United Kingdom....... 0.5
Luxembourg........... 0.6
France............... 0.5
Uruguay.............. 0.3
Argentina............ 0.2
Georgia.............. 0.2
South Africa......... 0.2
Germany.............. 0.2
United Arab Emirates. 0.1
Qatar................ 0.2
Trinidad and Tobago.. 0.1
New Zealand.......... 0.2
Bahrain.............. 0.1
Kazakhstan........... 0.1
Austria.............. 0.1
Marshall Islands..... 0.1
----
99.9%
====
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
ASSET BACKED SECURITIES -- 2.2%
DIVERSIFIED FINANCIAL SERVICES -- 2.2%
Bear Stearns Commercial Mtg.
Securities, Inc.
Series 2007-PW15, Class A2
5.21% due 02/11/44(3).................... $ 825,000 $ 844,546
Bear Stearns Commercial Mtg.
Securities, Inc.
Series 2007-PW17, Class AM
5.92% due 06/11/50(2)(3)................. 2,000,000 1,691,787
Carrington Mtg. Loan Trust
Series 2006-NC3, Class A2
0.35% due 08/25/36(4).................... 2,611,738 2,083,396
Commercial Mtg.
Pass Through Certs.
Series 2006-CN2A, Class A2FL
0.45% due 02/05/19*(3)(4)................ 1,575,000 1,451,124
Commercial Mtg.
Pass Through Certs.,
Series 2004-LB4A, Class A3,
4.41% due 10/15/37(3).................... 1,500,000 1,530,615
Deutsche ALT-A Securities, Inc.,
Series 2006-AB2, Class A5A,
6.09% due 06/25/36(1).................... 575,314 289,245
Indymac Residential Asset Backed Trust
Series 2006-C, Class 3A2
0.34% due 08/25/36(4).................... 2,193,966 2,105,203
JP Morgan Chase Commercial Mtg.
Securities Corp.
Series 2006-LDP9, Class AM
5.37% due 05/15/47(3).................... 413,000 312,114
LB-UBS Commercial Mtg. Trust
Series 2007-C2, Class A3
5.43% due 02/15/40(3).................... 800,000 769,867
Morgan Stanley Capital I
Series 2007-IQ14, Class A4
5.69% due 04/15/49(2)(3)................. 1,500,000 1,375,650
Wells Fargo Mtg. Backed Securities Trust
Series 2006-AR12, Class 2A1
6.07% due 09/25/36(1)(2)................. 468,925 395,766
-----------
TOTAL ASSET BACKED SECURITIES
(cost $13,248,056)....................... 12,849,313
-----------
CONVERTIBLE BONDS & NOTES -- 0.0%
TELECOM SERVICES -- 0.0%
ICO North America, Inc.
Notes
7.50% due 08/15/09+(5)(6)(7)(8)(9)(10)
(cost $312,925).......................... 297,000 207,900
-----------
U.S. CORPORATE BONDS & NOTES -- 43.8%
ADVERTISING SERVICES -- 0.1%
Visant Holding Corp.
Senior Notes
10.25% due 12/01/13(11).................. 458,000 471,740
-----------
AEROSPACE/DEFENSE -- 0.2%
Meccanica Holdings USA
Company Guar. Notes
6.25% due 01/15/40*...................... 205,000 200,987
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
AEROSPACE/DEFENSE (CONTINUED)
Spirit Aerosystems, Inc.
Company Guar. Notes
7.50% due 10/01/17*........................ $1,125,000 $1,153,125
----------
1,354,112
----------
AGRICULTURAL CHEMICALS -- 0.0%
Incitec Pivot Finance LLC
Company Guar. Notes
6.00% due 12/10/19*........................ 51,000 51,543
Terra Capital, Inc.
Company Guar. Notes
7.75% due 11/01/19......................... 76,000 91,770
----------
143,313
----------
AIRLINES -- 0.6%
Continental Airlines, Inc.
Pass Through Certs.
Series 2001-1, Class A-2
6.50% due 06/15/11......................... 400,000 409,000
Continental Airlines, Inc.
Pass Through Certs.
Series 1991, Class A
6.55% due 02/02/19......................... 403,579 411,651
Delta Air Lines, Inc.
Pass Through Certs.
6.82% due 02/10/24......................... 1,264,046 1,264,046
Delta Air Lines, Inc.
Senior Sec. Notes
9.50% due 09/15/14*........................ 700,000 735,875
United AirLines, Inc.
Pass Through Certs.
Series 2009-2, Class A
9.75% due 01/15/17......................... 825,000 895,125
----------
3,715,697
----------
APPLICATIONS SOFTWARE -- 0.1%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13........................ 730,000 774,713
----------
AUTO-HEAVY DUTY TRUCKS -- 0.2%
Navistar International Corp.
Senior Notes
8.25% due 11/01/21......................... 1,100,000 1,122,000
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.3%
ArvinMeritor, Inc.
Senior Notes
8.13% due 09/15/15......................... 750,000 723,750
Lear Corp. Company
Company Guar. Notes
7.88% due 03/15/18......................... 500,000 505,625
Lear Corp. Company
Company Guar. Notes
8.13% due 03/15/20......................... 475,000 482,719
----------
1,712,094
----------
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.2%
Allison Transmission
Senior Notes
11.00% due 11/01/15*.......................... $1,150,000 $1,224,750
Exide Corp.
Notes
10.00% due 03/15/25+(5)(6).................... 225,000 0
----------
1,224,750
----------
BANKS-COMMERCIAL -- 0.1%
BB&T Corp.
Sub. Notes
0.55% due 05/23/17(4)......................... 280,000 255,091
KeyBank NA
Sub. Notes
7.41% due 10/15/27............................ 128,000 130,961
Wachovia Bank NA
Sub. Notes
6.00% due 11/15/17............................ 412,000 446,564
----------
832,616
----------
BANKS-FIDUCIARY -- 0.1%
State Street Capital Trust IV
Company Guar. Notes
1.26% due 06/15/37(4)......................... 919,000 689,379
----------
BANKS-SUPER REGIONAL -- 1.6%
BAC Capital Trust XIII
Bank Guar. Notes
0.66% due 03/15/12(4)(12)..................... 1,070,000 734,398
BAC Capital Trust XV
Bank Guar. Notes
1.05% due 06/01/56(4)......................... 250,000 169,283
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27............................ 135,000 157,531
Fifth Third Capital Trust IV
Bank Guar. Notes
6.50% due 04/15/17(4)......................... 1,595,000 1,343,787
JPMorgan Chase Bank NA
Sub. Notes
5.88% due 06/13/16............................ 1,064,000 1,144,670
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 10/01/17............................ 195,000 207,902
National City Corp.
Senior Notes
4.90% due 01/15/15............................ 165,000 172,353
PNC Preferred Funding Trust II
Jr. Sub. Bonds
6.11% due 03/15/12*(4)(12).................... 390,000 307,083
SunTrust Banks, Inc.
Senior Notes
6.00% due 09/11/17............................ 205,000 207,646
USB Capital IX
Company Guar. Notes
6.19% due 04/15/11(4)(12)..................... 685,000 585,675
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
BANKS-SUPER REGIONAL (CONTINUED)
Wachovia Capital Trust III
Bank Guar. Notes
5.80% due 03/15/11(4)(12)................... $4,475,000 $3,792,562
Wachovia Corp.
Sub. Notes
5.63% due 10/15/16.......................... 200,000 210,769
Wells Fargo & Co.
Jr. Sub. Notes
7.98% due 03/15/12(4)....................... 235,000 245,575
Wells Fargo Bank NA
Sub. Notes
5.75% due 05/16/16.......................... 421,000 454,337
----------
9,733,571
----------
BEVERAGES-WINE/SPIRITS -- 0.2%
Constellation Brands, Inc.
Company Guar. Notes
7.25% due 05/15/17.......................... 950,000 973,750
----------
BROADCAST SERVICES/PROGRAM -- 0.3%
Clear Channel Communications, Inc.
Company Guar. Notes
10.75% due 08/01/16......................... 725,000 567,313
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14.......................... 865,000 849,862
Nexstar Broadcasting, Inc.
Company Guar. Notes
0.50% due 01/15/14*(13)..................... 401,986 317,569
Nexstar Broadcasting, Inc.
Company Guar. Notes
7.00% due 01/15/14.......................... 133,000 107,730
----------
1,842,474
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.2%
Interline Brands, Inc.
Senior Sub. Notes
8.13% due 06/15/14.......................... 752,000 774,560
Owens Corning
Company Guar. Notes
6.50% due 12/01/16.......................... 214,000 226,357
----------
1,000,917
----------
BUILDING PRODUCTS-CEMENT -- 0.2%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16*......................... 1,425,000 1,474,875
----------
BUILDING PRODUCTS-WOOD -- 0.1%
Masco Corp.
Senior Bonds
4.80% due 06/15/15.......................... 326,000 314,508
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.5%
Beazer Homes USA, Inc.
Company Guar. Notes
8.13% due 06/15/16.......................... 1,175,000 1,042,812
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-RESIDENTIAL/COMMERCIAL (CONTINUED)
KB Home
Company Guar. Notes
6.25% due 06/15/15............................... $1,175,000 $1,128,000
Standard Pacific Corp.
Company Guar. Notes
7.00% due 08/15/15............................... 900,000 832,500
----------
3,003,312
----------
CABLE/SATELLITE TV -- 1.6%
CCH II LLC/CCH II Capital Corp.
Senior Notes
13.50% due 11/30/16.............................. 963,718 1,158,871
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13............................... 1,526,000 1,564,150
Charter Communications Operating LLC
Senior Notes
10.88% due 09/15/14*............................. 19,000 21,256
Charter Communications Operating LLC/Charter
Communications Operating Capital, Inc.
Senior Notes
8.38% due 04/30/14*.............................. 381,000 391,478
Comcast Corp.
Company Guar. Notes
5.70% due 05/15/18............................... 164,000 173,888
Comcast Corp.
Company Guar. Notes
5.90% due 03/15/16............................... 1,030,000 1,125,160
COX Communications, Inc.
Notes
7.13% due 10/01/12............................... 211,000 235,826
CSC Holdings, Inc.
Senior Notes
8.63% due 02/15/19*.............................. 1,025,000 1,122,375
DirecTV Holdings LLC
Company Guar. Notes
6.38% due 06/15/15............................... 390,000 405,112
DirecTV Holdings LLC/DirecTV Financing Co., Inc.
Company Guar. Notes
7.63% due 05/15/16............................... 195,000 218,400
DISH DBS Corp.
Company Guar. Notes
7.75% due 05/31/15............................... 1,287,000 1,344,915
Echostar DBS Corp.
Company Guar. Notes
7.13% due 02/01/16............................... 575,000 585,781
Time Warner Cable, Inc.
Company Guar. Notes
5.85% due 05/01/17............................... 618,000 661,724
Time Warner Cos., Inc.
Company Guar. Notes
6.95% due 01/15/28............................... 409,000 444,627
----------
9,453,563
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
CASINO HOTELS -- 1.1%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(6)(13).................... $ 946,489 $ 799,783
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(5)(6)...................... 425,000 369,750
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17........................... 1,300,000 1,400,750
MGM Mirage, Inc.
Company Guar. Notes
6.75% due 09/01/12............................ 1,175,000 1,110,375
MGM Mirage, Inc.
Company Guar. Notes
6.75% due 04/01/13............................ 875,000 791,875
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17*.......................... 1,375,000 1,543,438
Turning Stone Resort Casino Enterprise
Senior Notes
9.13% due 09/15/14*........................... 618,000 618,000
----------
6,633,971
----------
CASINO SERVICES -- 0.1%
FireKeepers Development Authority
Senior Notes
13.88% due 05/15/15*.......................... 475,000 549,813
----------
CELLULAR TELECOM -- 0.6%
Cricket Communications, Inc.
Company Guar. Notes
10.00% due 07/15/15........................... 1,225,000 1,274,000
MetroPCS Wireless, Inc.
Company Guar. Notes
9.25% due 11/01/14............................ 925,000 945,812
Nextel Communications, Inc.
Senior Notes
7.38% due 08/01/15............................ 1,125,000 1,068,750
----------
3,288,562
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Olin Corp.
Senior Notes
8.88% due 08/15/19............................ 875,000 949,375
Solutia, Inc.
Company Guar. Notes
7.88% due 03/15/20............................ 550,000 556,875
Union Carbide Corp.
Senior Notes
7.75% due 10/01/96............................ 250,000 213,981
----------
1,720,231
----------
CHEMICALS-PLASTICS -- 0.2%
Hexion Finance Escrow LLC/Hexion Escrow Corp.
Senior Sec. Notes
8.88% due 02/01/18*........................... 1,225,000 1,206,625
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-SPECIALTY -- 0.2%
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14.................... $1,208,000 $1,208,000
----------
CIRCUIT BOARDS -- 0.1%
Viasystems, Inc.
Senior Sec. Notes
12.00% due 01/15/15*.................. 500,000 541,250
----------
COAL -- 0.5%
Arch Coal, Inc.
Senior Notes
8.75% due 08/01/16*................... 1,225,000 1,295,437
Consol Energy, Inc.
Company Guar. Notes
8.00% due 04/01/17*................... 300,000 308,250
Consol Energy, Inc.
Company Guar. Notes
8.25% due 04/01/20*................... 300,000 308,250
Drummond Co., Inc.
Senior Notes
9.00% due 10/15/14*................... 1,250,000 1,287,500
----------
3,199,437
----------
COMMERCIAL SERVICES -- 0.2%
Ceridian Corp.
Senior Notes
11.25% due 11/15/15................... 1,150,000 1,101,125
----------
COMPUTER SERVICES -- 0.4%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/15.................... 234,000 241,020
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*.................. 1,095,000 1,160,700
SunGard Data Systems, Inc.
Company Guar. Notes
9.13% due 08/15/13.................... 1,020,000 1,045,500
----------
2,447,220
----------
COMPUTERS-INTEGRATED SYSTEMS -- 0.1%
Brocade Communications Systems, Inc.
Senior Sec. Notes
6.63% due 01/15/18*................... 200,000 203,500
Brocade Communications Systems, Inc.
Senior Sec. Notes
6.88% due 01/15/20*................... 100,000 102,000
----------
305,500
----------
CONSULTING SERVICES -- 0.2%
FTI Consulting, Inc.
Company Guar. Notes
7.75% due 10/01/16.................... 1,100,000 1,122,000
----------
CONSUMER PRODUCTS-MISC. -- 0.2%
American Achievement Corp.
Company Guar. Notes
8.25% due 04/01/12*................... 971,000 961,290
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CONTAINERS-METAL/GLASS -- 0.3%
Ball Corp.
Company Guar. Notes
6.88% due 12/15/12.................... $ 217,000 $ 219,170
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................... 1,100,000 1,159,125
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
8.25% due 05/15/13.................... 418,000 423,225
----------
1,801,520
----------
CONTAINERS-PAPER/PLASTIC -- 0.3%
Berry Plastics Corp.
Senior Sec. Notes
8.25% due 11/15/15.................... 475,000 480,937
Berry Plastics Corp.
Senior Sec. Notes
8.88% due 09/15/14.................... 575,000 563,500
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/17.................... 750,000 800,625
----------
1,845,062
----------
COSMETICS & TOILETRIES -- 0.2%
Revlon Consumer Products Corp.
Company Guar. Notes
9.75% due 11/15/15*................... 1,050,000 1,084,125
----------
DATA PROCESSING/MANAGEMENT -- 0.2%
First Data Corp.
Company Guar. Notes
9.88% due 09/24/15.................... 1,220,000 1,040,050
----------
DECISION SUPPORT SOFTWARE -- 0.2%
Vangent, Inc.
Company Guar. Notes
9.63% due 02/15/15.................... 1,350,000 1,255,500
----------
DIRECT MARKETING -- 0.2%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12.................... 1,494,000 1,045,800
----------
DISTRIBUTION/WHOLESALE -- 0.2%
McJunkin Red Man Corp.
Senior Sec. Notes
9.50% due 12/15/16*................... 1,200,000 1,225,500
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.3%
Bank of America Corp.
Sub. Notes
5.42% due 03/15/17.................... 13,000 12,847
Bank of America Corp.
Sub. Notes
7.25% due 10/15/25.................... 117,000 120,749
Bank of America Corp.
Jr. Sub. Notes
8.00% due 01/30/18(4)(12)............. 3,345,000 3,413,004
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Bank of America Corp.
Jr. Sub. Notes
8.13% due 05/15/18(4)(12)................. $1,305,000 $ 1,331,531
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14........................ 253,000 252,644
Citigroup, Inc.
Senior Notes
5.50% due 04/11/13........................ 414,000 435,023
Citigroup, Inc.
Sub. Notes
5.50% due 02/15/17........................ 210,000 207,485
Citigroup, Inc.
Senior Notes
5.85% due 07/02/13........................ 622,000 653,648
Citigroup, Inc.
Senior Notes
6.38% due 08/12/14........................ 370,000 395,272
GMAC, Inc.
Sub. Notes
8.00% due 12/31/18........................ 1,108,000 1,091,380
GMAC, Inc.
Company Guar. Notes
8.00% due 11/01/31........................ 2,657,000 2,537,435
GMAC, Inc.
Company Guar. Notes
8.30% due 02/12/15*....................... 600,000 630,000
JP Morgan Chase & Co.
Sub. Notes
4.89% due 09/01/15(4)..................... 451,000 453,835
JP Morgan Chase & Co.
Notes
4.95% due 03/25/20........................ 278,000 275,627
Morgan Stanley
Senior Notes
6.00% due 04/28/15........................ 599,000 641,658
Morgan Stanley
Senior Notes
7.30% due 05/13/19........................ 485,000 535,832
The Goldman Sachs Group, Inc.
Senior Notes
5.38% due 03/15/20........................ 185,000 183,289
The Goldman Sachs Group, Inc.
Senior Notes
5.45% due 11/01/12........................ 195,000 210,795
The Goldman Sachs Group, Inc.
Sub. Notes
5.63% due 01/15/17........................ 200,000 204,941
-----------
13,586,995
-----------
DIVERSIFIED FINANCIAL SERVICES -- 1.1%
CIT Group Funding Co. of Delaware LLC
Senior Sec. Notes
10.25% due 05/01/13....................... 208,928 217,285
CIT Group Funding Co. of Delaware LLC
Senior Sec. Notes
10.25% due 05/01/14....................... 313,393 325,145
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
CIT Group Funding Co. of Delaware LLC
Senior Sec. Notes
10.25% due 05/01/15....................... $ 313,393 $ 324,362
CIT Group Funding Co. of Delaware LLC
Senior Sec. Notes
10.25% due 05/01/16....................... 522,324 540,605
CIT Group Funding Co. of Delaware LLC
Senior Sec. Notes
10.25% due 05/01/17....................... 731,256 756,850
Citigroup Capital XXI
Company Guar. Bonds
8.30% due 12/21/57(4)..................... 2,450,000 2,480,625
General Electric Capital Corp.
Senior Notes
2.80% due 01/08/13........................ 410,000 414,952
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38........................ 504,000 479,178
General Electric Capital Corp.
Senior Notes
6.15% due 08/07/37........................ 881,000 861,535
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32........................ 279,000 295,176
----------
6,695,713
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
General Electric Co.
Senior Notes
5.25% due 12/06/17........................ 190,000 199,281
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15........................ 1,586,000 1,486,875
SPX Corp.
Senior Notes
7.63% due 12/15/14........................ 725,000 758,531
----------
2,444,687
----------
ELECTRIC-DISTRIBUTION -- 0.0%
The Narragansett Electric Co.
Senior Notes
5.64% due 03/15/40*....................... 200,000 193,841
----------
ELECTRIC-GENERATION -- 1.0%
Allegheny Energy Supply Co., LLC
Senior Notes
6.75% due 10/15/39*....................... 567,000 556,532
Edison Mission Energy
Senior Notes
7.00% due 05/15/17........................ 650,000 453,375
Edison Mission Energy
Senior Notes
7.63% due 05/15/27........................ 950,000 608,000
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19........................ 453,330 444,263
Midwest Generation LLC
Pass Thru Certs.,
Series B
8.56% due 01/02/16........................ 437,919 448,341
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-GENERATION (CONTINUED)
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series B
9.24% due 07/02/17............................. $ 513,325 $ 549,258
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series C
9.68% due 07/02/26............................. 575,000 611,656
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 615,402 635,612
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 1,120,000 1,136,800
The AES Corp.
Senior Notes
8.00% due 06/01/20............................. 550,000 547,938
----------
5,991,775
----------
ELECTRIC-INTEGRATED -- 1.2%
Ameren Energy Generating Co.
Senior Notes
6.30% due 04/01/20............................. 308,000 309,513
CenterPoint Energy Houston Electric LLC
General Refunding Mtg.
7.00% due 03/01/14............................. 415,000 471,431
CMS Energy Corp.
Senior Notes
6.25% due 02/01/20............................. 450,000 443,250
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/33............................. 525,000 555,104
Dominion Resources, Inc.
Senior Notes
7.00% due 06/15/38............................. 202,000 230,280
Entergy Texas, Inc.
1st Mtg. Notes
7.13% due 02/01/19............................. 55,000 61,679
Exelon Generation Co. LLC
Senior Notes
6.25% due 10/01/39............................. 202,000 204,262
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 1,380,000 1,297,200
Mirant Mid-Atlantic LLC
Pass Through Certs.,
Series B
9.13% due 06/30/17............................. 463,365 492,326
Pepco Holdings, Inc.
Senior Notes
6.45% due 08/15/12............................. 940,000 1,007,179
Southern California Edison Co.
1st Mtg. Bonds
Series 04-G
5.75% due 04/01/35............................. 80,000 81,419
Southern Energy, Inc.
Notes
7.90% due 07/15/09+(5)(6)...................... 1,550,000 0
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
ELECTRIC-INTEGRATED (CONTINUED)
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes,
Series A
10.25% due 11/01/15.......................... $2,215,000 $1,539,425
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(7)....................... 787,134 539,187
Trans-Allegheny Interstate Line Co.
Senior Notes
4.00% due 01/15/15*.......................... 200,000 200,241
----------
7,432,496
----------
ELECTRONIC COMPONENTS-MISC. -- 0.2%
Jabil Circuit, Inc.
Senior Notes
7.75% due 07/15/16........................... 1,050,000 1,105,125
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Amkor Technology, Inc.
Senior Notes
9.25% due 06/01/16........................... 1,150,000 1,213,250
Freescale Semiconductor, Inc.
Senior Sec. Notes
10.13% due 03/15/18*......................... 600,000 642,000
National Semiconductor Corp.
Senior Notes
3.95% due 04/15/15........................... 243,000 240,691
National Semiconductor Corp.
Senior Notes
6.15% due 06/15/12........................... 184,000 198,975
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/17........................... 298,000 323,548
----------
2,618,464
----------
ELECTRONIC MEASUREMENT INSTRUMENTS -- 0.0%
Agilent Technologies, Inc.
Senior Notes
5.50% due 09/14/15........................... 247,000 264,774
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.2%
JDA Software Group, Inc.
Senior Notes
8.00% due 12/15/14*.......................... 950,000 988,000
----------
FINANCE-AUTO LOANS -- 0.4%
Ford Motor Credit Co. LLC
Senior Notes
7.50% due 08/01/12........................... 2,125,000 2,200,397
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13........................... 640,000 657,588
----------
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-CONSUMER LOANS -- 0.1%
SLM Corp.
Senior Notes
5.13% due 08/27/12......................... $ 236,000 $ 234,502
SLM Corp.
Senior Notes
8.00% due 03/25/20......................... 210,000 204,489
----------
438,991
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.2%
JPMorgan Chase Capital XXIII, Ltd.
Company Guar. Bonds
1.25% due 05/15/77(4)...................... 105,000 78,800
Lehman Brothers Holdings Capital Trust VII
Company Guar. Notes
5.86% due 05/31/12+(8)(12)(14)............. 222,000 555
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17+(8)(14)................. 280,000 700
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38+(8)(14)................. 361,000 902
Merrill Lynch & Co., Inc.
Sub. Notes
6.05% due 05/16/16......................... 690,000 703,560
TD Ameritrade Holding Corp.
Company Guar. Notes
2.95% due 12/01/12......................... 685,000 691,175
----------
1,475,692
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.1%
Countrywide Financial Corp.
Sub. Notes
6.25% due 05/15/16......................... 420,000 431,211
----------
FINANCE-OTHER SERVICES -- 0.0%
Nationstar Mtg./Nationstar Capital Corp.
Senior Notes
10.88% due 04/01/15*....................... 225,000 217,125
----------
FIREARMS & AMMUNITION -- 0.4%
FGI Holding Co., Inc.
Senior Notes
11.25% due 10/01/15*(7).................... 1,050,000 1,029,000
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*....................... 1,075,000 1,136,812
----------
2,165,812
----------
FOOD-MEAT PRODUCTS -- 0.2%
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14*....................... 1,075,000 1,198,625
----------
FOOD-MISC. -- 0.2%
Kraft Foods, Inc.
Senior Notes
6.50% due 02/09/40......................... 531,000 550,265
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
FOOD-MISC. (CONTINUED)
Kraft Foods, Inc.
Senior Notes
6.75% due 02/19/14.................... $ 416,000 $ 467,783
----------
1,018,048
----------
FOOD-RETAIL -- 0.3%
Ahold Finance USA LLC
Company Guar. Notes
6.88% due 05/01/29.................... 450,000 490,035
Ingles Markets, Inc.
Senior Notes
8.88% due 05/15/17.................... 700,000 731,500
SUPERVALU, Inc.
Senior Notes
8.00% due 05/01/16.................... 350,000 353,500
----------
1,575,035
----------
FORESTRY -- 0.2%
Weyerhaeuser Co.
Senior Notes
7.38% due 03/15/32.................... 1,150,000 1,108,327
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.4%
Carriage Services, Inc.
Senior Notes
7.88% due 01/15/15.................... 1,200,000 1,155,000
Service Corp. International
Senior Notes
8.00% due 11/15/21.................... 1,000,000 1,012,500
----------
2,167,500
----------
GAMBLING (NON-HOTEL) -- 0.2%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*.................. 650,000 591,500
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*................... 1,076,000 586,420
----------
1,177,920
----------
GAS-DISTRIBUTION -- 0.1%
MXEnergy Holdings, Inc.
Senior Sec. Notes
13.25% due 08/01/14*(5)(6)............ 277,000 210,520
Sempra Energy
Senior Notes
6.50% due 06/01/16.................... 318,000 355,265
----------
565,785
----------
GAS-TRANSPORTATION -- 0.5%
Sabine Pass LNG LP
Senior Notes
7.25% due 11/30/13.................... 605,000 568,700
Sabine Pass LNG LP
Senior Sec. Notes
7.50% due 11/30/16.................... 2,690,000 2,373,925
----------
2,942,625
----------
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
HAZARDOUS WASTE DISPOSAL -- 0.2%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16........................ $1,100,000 $1,116,500
----------
HOME FURNISHINGS -- 0.1%
Norcraft Cos., LP/Norcraft Finance Corp.
Senior Sec. Notes
10.50% due 12/15/15*...................... 850,000 896,750
----------
HOTEL/MOTELS -- 0.2%
Starwood Hotels & Resorts Worldwide, Inc.
Senior Notes
6.75% due 05/15/18........................ 1,100,000 1,102,750
----------
HUMAN RESOURCES -- 0.0%
Team Health, Inc.
Company Guar. Notes
11.25% due 12/01/13....................... 223,000 233,035
----------
INDEPENDENT POWER PRODUCERS -- 0.4%
Calpine Corp.
Notes
8.75% due 07/15/13+(5)(6)................. 4,203,000 0
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16........................ 1,535,000 1,523,487
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17........................ 645,000 578,888
----------
2,102,375
----------
INSURANCE-LIFE/HEALTH -- 0.5%
Jefferson-Pilot Corp.
Senior Notes
4.75% due 01/30/14........................ 227,000 232,286
Lincoln National Corp.
Bonds
7.00% due 05/17/16(4)..................... 2,600,000 2,366,000
Nationwide Financial Services, Inc.
Senior Notes
5.90% due 07/01/12........................ 284,000 297,602
Principal Life Income Funding Trusts
Senior Sec. Notes
0.43% due 11/08/13(4)..................... 323,000 308,689
----------
3,204,577
----------
INSURANCE-MULTI-LINE -- 0.3%
Genworth Financial, Inc.
Senior Notes
4.95% due 10/01/15........................ 234,000 227,207
Genworth Financial, Inc.
Senior Notes
8.63% due 12/15/16........................ 215,000 234,621
Hartford Financial Services Group, Inc.
Senior Notes
4.00% due 03/30/15........................ 185,000 183,272
MetLife, Inc.
Senior Notes
6.75% due 06/01/16........................ 230,000 257,750
Metropolitan Life Global Funding I
Notes
2.88% due 09/17/12*....................... 460,000 465,870
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
INSURANCE-MULTI-LINE (CONTINUED)
Nationwide Mutual Insurance Co.
Notes
9.38% due 08/15/39*.............. $ 346,000 $ 394,244
----------
1,762,964
----------
INSURANCE-MUTUAL -- 0.6%
Liberty Mutual Group, Inc.
Notes
5.75% due 03/15/14*.............. 195,000 204,108
Liberty Mutual Group, Inc.
Notes
6.50% due 03/15/35*.............. 274,000 238,581
Liberty Mutual Group, Inc.
Company Guar. Notes
7.80% due 03/15/37*.............. 727,000 643,395
Liberty Mutual Group, Inc.
Company Guar. Bonds
10.75% due 06/15/58*(4).......... 2,015,000 2,256,800
----------
3,342,884
----------
INSURANCE-REINSURANCE -- 0.0%
Axis Specialty Finance LLC
Company Guar. Notes
5.88% due 06/01/20............... 259,000 255,579
----------
MEDICAL INFORMATION SYSTEMS -- 0.1%
Spheris, Inc.
Senior Sub. Notes
11.00% due 12/15/12+(14)......... 2,400,000 348,000
----------
MEDICAL INSTRUMENTS -- 0.2%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/17*.............. 425,000 431,375
Boston Scientific Corp.
Senior Notes
5.50% due 11/15/15............... 251,000 255,148
Boston Scientific Corp.
Senior Notes
6.00% due 01/15/20............... 247,000 233,339
----------
919,862
----------
MEDICAL PRODUCTS -- 0.0%
CareFusion Corp.
Senior Notes
4.13% due 08/01/12............... 240,000 250,319
----------
MEDICAL-BIOMEDICAL/GENE -- 0.3%
Amgen, Inc.
Senior Notes
5.75% due 03/15/40............... 280,000 277,222
Amgen, Inc.
Senior Notes
5.85% due 06/01/17............... 450,000 499,045
Bio-Rad Laboratories, Inc.
Senior Sub. Notes
8.00% due 09/15/16............... 350,000 372,750
Life Technologies Corp.
Senior Notes
3.38% due 03/01/13............... 440,000 442,431
----------
1,591,448
----------
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-DRUGS -- 0.4%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15.................... $ 500,000 $ 540,000
Valeant Pharmaceuticals International
Senior Notes
8.38% due 06/15/16*................... 1,575,000 1,645,875
----------
2,185,875
----------
MEDICAL-GENERIC DRUGS -- 0.0%
Watson Pharmaceuticals, Inc.
Senior Notes
6.13% due 08/15/19.................... 264,000 277,499
----------
MEDICAL-HMO -- 0.1%
UnitedHealth Group, Inc.
Senior Notes
5.25% due 03/15/11.................... 325,000 337,482
----------
MEDICAL-HOSPITALS -- 1.3%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15.................... 2,225,000 2,302,875
HCA, Inc.
Senior Notes
7.50% due 11/15/95.................... 2,700,000 2,119,500
HCA, Inc.
Senior Notes
8.50% due 04/15/19*................... 3,025,000 3,253,766
----------
7,676,141
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.2%
Select Medical Corp.
Senior Sub. Notes
7.63% due 02/01/15.................... 1,120,000 1,066,800
----------
METAL-ALUMINUM -- 0.1%
Alcoa, Inc.
Bonds
5.90% due 02/01/27.................... 255,000 225,886
Alcoa, Inc.
Senior Notes
5.95% due 02/01/37.................... 282,000 231,220
----------
457,106
----------
METAL-COPPER -- 0.1%
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.25% due 04/01/15.................... 550,000 598,812
Freeport-McMoRan Copper & Gold, Inc.
Senior Notes
8.38% due 04/01/17.................... 213,000 236,963
----------
835,775
----------
MINING SERVICES -- 0.1%
Noranda Aluminum Acquisition Corp.
Company Guar. Notes
4.52% due 11/15/14(4)(7).............. 912,213 725,209
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
MULTIMEDIA -- 0.1%
Haights Cross Operating Co.
Company Guar. Bond
11.75% due 03/15/14(4)(5)(6)................ $ 461,095 $ 449,568
Time Warner Entertainment Co. LP
Senior Notes
8.38% due 07/15/33.......................... 250,000 301,101
----------
750,669
----------
MUSIC -- 0.2%
WMG Acquisition Corp.
Senior Notes
9.50% due 06/15/16*......................... 1,300,000 1,389,375
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(5)(6)(10)(15).......... 500,000 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.5%
Allied Waste North America, Inc.
Company Guar. Notes
7.13% due 05/15/16.......................... 673,000 731,046
Casella Waste Systems, Inc.
Senior Sec. Notes
11.00% due 07/15/14*........................ 700,000 750,750
Waste Management, Inc.
Company Guar. Notes
6.13% due 11/30/39.......................... 229,000 227,270
Waste Management, Inc.
Company Guar. Notes
6.38% due 11/15/12.......................... 270,000 299,163
Waste Services, Inc.
Senior Sub. Notes
9.50% due 04/15/14*......................... 1,125,000 1,158,750
----------
3,166,979
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.9%
Atlas Energy Operating Co. LLC/
Atlas Energy Finance Corp.
Company Guar. Notes
10.75% due 02/01/18......................... 1,150,000 1,265,000
Belden & Blake Corp.
Company Guar. Notes
8.75% due 07/15/12.......................... 150,000 140,250
Brigham Exploration Co.
Company Guar. Notes
9.63% due 05/01/14.......................... 1,020,000 1,040,400
Chaparral Energy, Inc.
Company Guar. Notes
8.50% due 12/01/15.......................... 1,370,000 1,250,125
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.......................... 1,450,000 1,421,000
Chesapeake Energy Corp.
Senior Notes
7.25% due 12/15/18.......................... 425,000 425,000
Denbury Resources, Inc.
Company Guar. Notes
9.75% due 03/01/16.......................... 225,000 247,500
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Encore Acquisition Co.
Senior Notes
9.50% due 05/01/16........................ $720,000 $ 778,500
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*....................... 430,000 424,625
Kerr-McGee Corp.
Company Guar. Notes
6.95% due 07/01/24........................ 564,000 627,369
Linn Energy LLC/Linn Energy Finance Corp.
Senior Notes
8.63% due 04/15/20*....................... 750,000 750,937
Plains Exploration & Production Co.
Company Guar. Notes
7.63% due 04/01/20........................ 200,000 198,000
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16....................... 600,000 663,000
Quicksilver Resources, Inc.
Senior Notes
8.25% due 08/01/15........................ 550,000 561,000
Quicksilver Resources, Inc.
Senior Notes
9.13% due 08/15/19........................ 200,000 210,000
SandRidge Energy, Inc.
Company Guar. Notes
8.75% due 01/15/20*....................... 575,000 560,625
XTO Energy, Inc.
Senior Notes
6.38% due 06/15/38........................ 252,000 282,207
XTO Energy, Inc.
Senior Notes
6.50% due 12/15/18........................ 195,000 225,059
-----------
11,070,597
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
ConocoPhillips Holding Co.
Senior Notes
6.95% due 04/15/29........................ 258,000 296,134
Hess Corp.
Senior Notes
7.88% due 10/01/29........................ 691,000 827,929
-----------
1,124,063
-----------
OIL REFINING & MARKETING -- 0.1%
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/17*...................... 425,000 382,500
-----------
OIL-FIELD SERVICES -- 0.3%
Basic Energy Services, Inc.
Senior Sec. Notes
11.63% due 08/01/14....................... 875,000 962,500
Helix Energy Solutions Group, Inc.
Senior Notes
9.50% due 01/15/16*....................... 740,000 762,200
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
OIL-FIELD SERVICES (CONTINUED)
Oslo Seismic Services, Inc.
1st Mtg. Bonds
8.28% due 06/01/11......................... $ 71,626 $ 71,908
----------
1,796,608
----------
PAPER & RELATED PRODUCTS -- 0.7%
Boise Paper Holdings LLC
Company Guar. Notes
8.00% due 04/01/20*........................ 675,000 675,000
Boise Paper Holdings LLC
Senior Notes
9.00% due 11/01/17*........................ 100,000 105,000
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(5)(6)(7)............... 200,821 194,796
Cellu Tissue Holdings, Inc.
Senior Sec. Notes
11.50% due 06/01/14........................ 625,000 696,875
Georgia-Pacific LLC
Company Guar. Notes
7.00% due 01/15/15*........................ 770,000 796,950
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*........................ 365,000 379,600
Georgia-Pacific LLC
Senior Notes
7.75% due 11/15/29......................... 277,000 277,000
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14........................ 525,000 522,375
Verso Paper Holdings LLC/Verso Paper, Inc.
Senior Sec. Notes
9.13% due 08/01/14......................... 200,000 194,000
Verso Paper Holdings LLC/Verso Paper, Inc.
Senior Sec. Notes
11.50% due 07/01/14*....................... 500,000 540,000
----------
4,381,596
----------
PHARMACY SERVICES -- 0.1%
BioScrip, Inc.
Senior Notes
10.25% due 10/01/15*....................... 300,000 305,250
----------
PHOTO EQUIPMENT & SUPPLIES -- 0.2%
Eastman Kodak Co.
Senior Sec. Notes
9.75% due 03/01/18*........................ 1,125,000 1,102,500
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.4%
US Oncology, Inc.
Senior Sec. Notes
9.13% due 08/15/17......................... 2,125,000 2,220,625
----------
PIPELINES -- 1.5%
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16......................... 885,000 897,169
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Crosstex Energy/Crosstex Energy
Finance Corp.
Senior Notes
8.88% due 02/15/18*.......................... $ 650,000 $ 670,312
Dynegy-Roseton Danskammer
Pass Through Certs., Series B
7.67% due 11/08/16........................... 1,720,000 1,671,634
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14........................... 625,000 637,751
El Paso Corp.
Senior Notes
12.00% due 12/12/13.......................... 150,000 175,125
El Paso Natural Gas Co.
Senior Notes
5.95% due 04/15/17........................... 575,000 598,967
El Paso Pipeline Partners Operating Co., LLC
Company Guar. Notes
6.50% due 04/01/20........................... 490,000 495,983
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
8.50% due 07/15/16........................... 550,000 558,937
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Senior Notes
8.75% due 04/15/18........................... 525,000 538,781
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27........................... 1,090,000 566,800
Plains All American Pipeline LP
Senior Notes
4.25% due 09/01/12........................... 156,000 162,074
Plains All American Pipeline LP/PAA
Finance Corp.
Company Guar. Notes
5.63% due 12/15/13........................... 370,000 398,653
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
8.38% due 12/15/13........................... 415,000 430,563
Rockies Express Pipeline LLC
Senior Notes
5.63% due 04/15/20*.......................... 273,000 268,773
Rockies Express Pipeline LLC
Senior Notes
6.88% due 04/15/40*.......................... 233,000 228,194
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16........................... 225,000 227,531
Williams Partners LP
Senior Notes
7.50% due 06/15/11........................... 544,000 576,214
----------
9,103,461
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
PRINTING-COMMERCIAL -- 0.4%
Cenveo Corp.
Senior Sec. Notes
8.88% due 02/01/18*................... $1,225,000 $1,238,781
Valassis Communications, Inc.
Senior Notes
8.25% due 03/01/15.................... 1,115,000 1,145,663
----------
2,384,444
----------
PRIVATE CORRECTIONS -- 0.2%
Corrections Corp. of America
Company Guar. Notes
7.75% due 06/01/17.................... 1,025,000 1,071,125
----------
PUBLISHING-BOOKS -- 0.1%
TL Acquisitions, Inc.
Senior Notes
10.50% due 01/15/15*.................. 450,000 432,000
----------
PUBLISHING-NEWSPAPERS -- 0.1%
Gannett Co., Inc.
Company Guar. Notes
8.75% due 11/15/14*................... 425,000 453,157
Gannett Co., Inc.
Company Guar. Notes
9.38% due 11/15/17*................... 275,000 293,906
----------
747,063
----------
PUBLISHING-PERIODICALS -- 0.0%
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17+(5)(6)(8)(14)...... 2,115,000 6,980
----------
RADIO -- 0.1%
Salem Communications Corp.
Senior Sec. Notes
9.63% due 12/15/16.................... 375,000 391,875
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.3%
Brandywine Operating Partnership LP
Senior Notes
5.70% due 05/01/17.................... 191,000 181,276
Developers Diversified Realty Corp.
Senior Notes
7.50% due 04/01/17.................... 200,000 202,334
DuPont Fabros Technology LP
Company Guar. Notes
8.50% due 12/15/17*................... 1,000,000 1,030,000
Federal Realty Investors Trust
Bonds
5.90% due 04/01/20.................... 95,000 95,198
Health Care REIT, Inc.
Senior Notes
6.13% due 04/15/20.................... 234,000 234,727
----------
1,743,535
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.2%
AMB Property LP
Company Guar. Notes
6.63% due 12/01/19.................... 220,000 223,913
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
REAL ESTATE MANAGEMENT/SERVICES (CONTINUED)
CB Richard Ellis Services, Inc.
Company Guar. Notes
11.63% due 06/15/17....................... $ 775,000 $ 868,000
----------
1,091,913
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.1%
Country Garden Holdings Co.
Senior Notes
11.75% due 09/10/14*...................... 440,000 467,500
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14+(7)(8)(14)............. 3,285,000 28,744
----------
RENTAL AUTO/EQUIPMENT -- 0.4%
Avis Budget Car Rental LLC/Avis Budget
Finance, Inc.
Company Guar. Notes
9.63% due 03/15/18*....................... 975,000 1,018,875
United Rentals North America, Inc.
Company Guar. Notes
7.75% due 11/15/13........................ 1,450,000 1,392,000
----------
2,410,875
----------
RESEARCH & DEVELOPMENT -- 0.1%
Alion Science and Technology Corp.
Company Guar. Notes
10.25% due 02/01/15....................... 590,000 448,400
Alion Science and Technology Corp.
Senior Sec. Notes
12.00% due 11/01/14*(13)(21).............. 325,000 329,063
----------
777,463
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Senior Notes
6.95% due 03/01/33........................ 847,000 753,830
Limited Brands, Inc.
Company Guar. Notes
8.50% due 06/15/19........................ 365,000 406,975
----------
1,160,805
----------
RETAIL-ARTS & CRAFTS -- 0.1%
Michaels Stores, Inc.
Company Guar. Notes
11.38% due 11/01/16....................... 575,000 621,000
----------
RETAIL-DRUG STORE -- 0.2%
CVS Pass-Through Trust
Pass Through Certs.
7.51% due 01/10/32*....................... 187,607 208,623
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19....................... 600,000 640,500
Rite Aid Corp.
Senior Sec. Notes
10.38% due 07/15/16....................... 425,000 449,437
----------
1,298,560
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
RETAIL-PETROLEUM PRODUCTS -- 0.2%
Ferrellgas LP
Senior Notes
6.75% due 05/01/14..................... $ 539,000 $ 533,610
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16..................... 725,000 746,750
----------
1,280,360
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.5%
JC Penney Corp., Inc.
Senior Notes
6.38% due 10/15/36..................... 1,035,000 963,844
Macy's Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16..................... 679,000 677,302
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.38% due 03/15/37..................... 421,000 387,320
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24..................... 450,000 425,250
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29..................... 400,000 380,000
----------
2,833,716
----------
RETAIL-RESTAURANTS -- 0.1%
Landry's Restaurants, Inc.
Senior Sec. Notes
11.63% due 12/01/15*................... 575,000 618,125
----------
RETAIL-TOY STORES -- 0.3%
Toys R Us Property Co. LLC
Senior Sec. Notes
8.50% due 12/01/17*.................... 1,625,000 1,685,937
----------
RUBBER-TIRES -- 0.2%
The Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16.................... 1,025,000 1,107,000
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(5)(6)(8)(10)...... 100,000 0
----------
SATELLITE TELECOM -- 0.0%
Intelsat Corp.
Senior Notes
9.25% due 06/15/16..................... 150,000 157,125
----------
SAVINGS & LOANS/THRIFTS -- 0.0%
Amsouth Bank NA
Sub. Notes
4.85% due 04/01/13..................... 210,000 205,039
----------
SEISMIC DATA COLLECTION -- 0.4%
Geokinetics Holdings, Inc.
Senior Sec. Notes
9.75% due 12/15/14*.................... 1,115,000 1,045,312
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
SEISMIC DATA COLLECTION (CONTINUED)
Seitel, Inc.
Senior Notes
9.75% due 02/15/14........................ $1,310,000 $1,041,450
----------
2,086,762
----------
SPECIAL PURPOSE ENTITIES -- 1.0%
Buffalo Thunder Development Authority
Senior Notes
9.38% due 12/15/14*+(14).................. 3,200,000 424,000
Capital One Capital V
Company Guar. Notes
10.25% due 08/15/39....................... 1,150,000 1,362,388
Capital One Capital VI
Company Guar. Notes
8.88% due 05/15/40........................ 512,000 557,969
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*....................... 1,045,000 856,900
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*...................... 625,000 594,531
LBI Escrow Corp.
Senior Sec. Notes
8.00% due 11/01/17*....................... 300,000 311,250
Local TV Finance LLC
Senior Notes
10.00% due 06/15/15*(7)................... 617,761 404,633
New Communications Holdings, Inc.
Senior Notes
7.88% due 04/15/15*....................... 75,000 77,063
New Communications Holdings, Inc.
Senior Notes
8.25% due 04/15/17*....................... 350,000 356,125
New Communications Holdings, Inc.
Senior Notes
8.50% due 04/15/20*....................... 350,000 352,625
New Communications Holdings, Inc.
Senior Notes
8.75% due 04/15/22*....................... 75,000 75,000
Teco Finance, Inc.
Company Guar. Notes
6.57% due 11/01/17........................ 160,000 175,862
Teco Finance, Inc.
Company Guar. Notes
7.00% due 05/01/12........................ 98,000 105,644
The Goldman Sachs Capital III
Company Guar. Notes
1.02% due 09/01/12(4)(12)................. 176,000 122,320
----------
5,776,310
----------
STEEL-PRODUCERS -- 0.6%
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15....................... 1,222,000 1,283,100
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15........................ 1,090,000 1,098,175
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
STEEL-PRODUCERS (CONTINUED)
Steel Dynamics, Inc.
Senior Notes
7.75% due 04/15/16....................... $ 900,000 $ 927,000
United States Steel Corp.
Senior Notes
7.38% due 04/01/20....................... 450,000 451,125
----------
3,759,400
----------
STORAGE/WAREHOUSING -- 0.1%
Mobile Mini, Inc.
Company Guar. Notes
9.75% due 08/01/14....................... 655,000 677,925
----------
TELECOM SERVICES -- 0.7%
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23....................... 50,000 41,500
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23....................... 225,000 186,750
Cincinnati Bell Telephone Co., LLC
Company Guar. Notes
7.27% due 12/11/23....................... 375,000 311,250
Clearwire Communications LLC/Clearwire
Finance, Inc.
Senior Sec. Notes
12.00% due 12/01/15*..................... 1,200,000 1,224,000
PAETEC Holding Corp
Company Guar. Notes
8.88% due 06/30/17....................... 600,000 616,500
Qwest Corp.
Senior Notes
8.88% due 03/15/12....................... 749,000 820,155
SBA Telecommunications, Inc.
Company Guar. Notes
8.25% due 08/15/19*...................... 875,000 931,875
----------
4,132,030
----------
TELEPHONE-INTEGRATED -- 1.5%
CenturyTel, Inc.
Senior Notes
7.60% due 09/15/39....................... 1,065,000 1,026,612
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/18....................... 1,050,000 1,050,000
Level 3 Financing, Inc.
Company Guar. Notes
10.00% due 02/01/18*..................... 1,025,000 978,875
Qwest Communications International, Inc.
Company Guar. Notes, Series B
7.50% due 02/15/14....................... 535,000 544,363
Qwest Communications International, Inc.
Company Guar. Notes
7.50% due 02/15/14....................... 351,000 357,143
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15*...................... 275,000 292,875
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Sprint Capital Corp.
Company Guar. Notes
6.88% due 11/15/28.................... $1,650,000 $1,328,250
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32.................... 3,175,000 2,944,812
Verizon Virginia, Inc.
Senior Notes
4.63% due 03/15/13.................... 250,000 262,223
Windstream Corp.
Bonds
7.88% due 11/01/17.................... 350,000 344,750
----------
9,129,903
----------
TELEVISION -- 0.3%
Allbritton Communications Co.
Senior Sub. Notes
7.75% due 12/15/12.................... 739,000 740,848
Bonten Media Acquisition Co.
Company Guar. Notes
9.75% due 06/01/15*(7)................ 195,777 94,462
CBS Corp.
Company Guar. Notes
5.75% due 04/15/20.................... 185,000 185,795
CBS Corp.
Company Guar. Notes
7.88% due 07/30/30.................... 237,000 261,184
Paxson Communications Corp.
Senior Sec. Notes
7.38% due 01/15/13*+(5)(6)(7)(8)(14).. 1,849,114 0
Umbrella Acquisition, Inc.
Company Guar. Notes
9.75% due 03/15/15*................... 894,625 771,614
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(8)(14)............ 380,000 2,660
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(8)(14)........... 1,075,000 7,525
----------
2,064,088
----------
THEATERS -- 0.1%
AMC Entertainment, Inc.
Senior Notes
8.75% due 06/01/19.................... 700,000 735,000
----------
TRANSPORT-AIR FREIGHT -- 0.4%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 01/02/11.................... 136,158 130,031
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/19.................... 1,332,937 1,266,290
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
TRANSPORT-AIR FREIGHT (CONTINUED)
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15.................. $ 41,548 $ 35,524
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20.................. 384,859 373,313
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17.................. 614,197 601,913
----------
2,407,071
----------
TRANSPORT-EQUIPMENT & LEASING -- 0.2%
GATX Corp.
Notes
4.75% due 10/01/12.................. 332,000 346,543
GATX Corp.
Senior Notes
4.75% due 05/15/15.................. 195,000 193,544
Maxim Crane Works LP
Senior Sec. Notes
12.25% due 04/15/15*................ 500,000 486,450
----------
1,026,537
----------
TRANSPORT-MARINE -- 0.1%
Martin Midstream Partners & Finance
Senior Notes
8.88% due 04/01/18*................. 100,000 101,000
Overseas Shipholding Group, Inc.
Senior Notes
8.13% due 03/30/18.................. 475,000 471,438
----------
572,438
----------
TRANSPORT-RAIL -- 0.0%
Burlington Northern Santa Fe LLC
Notes
5.65% due 05/01/17.................. 195,000 209,009
----------
TRANSPORT-SERVICES -- 0.2%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17.................. 699,000 705,990
PHI, Inc.
Company Guar. Notes
7.13% due 04/15/13.................. 385,000 373,931
----------
1,079,921
----------
WEB HOSTING/DESIGN -- 0.1%
Equinix, Inc.
Senior Notes
8.13% due 03/01/18.................. 750,000 776,250
----------
WIRE & CABLE PRODUCTS -- 0.1%
Coleman Cable, Inc.
Senior Notes
9.00% due 02/15/18*................. 600,000 606,000
----------
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
WIRELESS EQUIPMENT -- 0.2%
Motorola, Inc.
Senior Notes
5.38% due 11/15/12.................... $ 435,000 $ 455,989
Motorola, Inc.
Senior Notes
6.00% due 11/15/17.................... 220,000 227,673
Motorola, Inc.
Debentures
6.50% due 09/01/25.................... 246,000 238,886
------------
922,548
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $260,826,822)................... 260,048,045
------------
FOREIGN CORPORATE BONDS & NOTES -- 8.6%
BANKS-COMMERCIAL -- 1.2%
ANZ National International, Ltd.
Company Guar. Notes
2.38% due 12/21/12*................... 503,000 503,992
ANZ National International, Ltd.
Company Guar. Notes
6.20% due 07/19/13*................... 220,000 242,450
ATF Bank JSC
Bank Guar. Notes
9.25% due 02/21/14.................... 580,000 614,800
Banco ABC Brasil SA
Bonds
7.88% due 04/08/20*................... 710,000 698,008
Banco de Credito del Peru
Jr. Sub. Notes
9.75% due 11/06/19*(4)(12)............ 202,000 232,523
Barclays Bank PLC
Jr. Sub. Bonds
5.93% due 12/15/16*(4)(12)............ 630,000 554,400
Barclays Bank PLC
Jr. Sub. Notes
6.86% due 06/15/32*(4)(12)............ 180,000 158,400
BNP Paribas
Sub. Notes
4.80% due 06/24/15*................... 195,000 199,495
BOM Capital PLC
Senior Notes
6.70% due 03/11/15*................... 1,400,000 1,405,250
Credit Suisse New York
Senior Notes
3.50% due 03/23/15.................... 185,000 184,283
Groupe BPCE
Notes
4.16% due 06/30/10(4)(12)............. 141,000 94,759
Lloyds Banking Group PLC
Jr. Sub. Bonds
5.92% due 10/01/15*(4)(12)............ 1,975,000 1,170,188
Nordea Bank AB
Bonds
8.38% due 03/25/15(4)(12)............. 184,000 198,146
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
BANKS-COMMERCIAL (CONTINUED)
Svenska Handelsbanken AB
Senior Notes
5.13% due 03/30/20*......................... $ 192,000 $ 192,028
The Royal Bank of Scotland PLC
Bank Guar. Notes
4.88% due 03/16/15.......................... 190,000 189,953
Westpac Banking Corp.
Sub. Notes
0.59% due 09/30/10(4)(12)................... 1,050,000 661,500
----------
7,300,175
----------
BANKS-MONEY CENTER -- 0.1%
Bank of Scotland PLC
Senior Sub. Notes
0.69% due 05/28/10(4)(12)(24)............... 850,000 408,000
Lloyds TSB Bank PLC
Bank Guar. Notes
5.80% due 01/13/20*......................... 205,000 200,016
----------
608,016
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.2%
Desarrolladora Homex SAB de CV
Company Guar. Notes
9.50% due 12/11/19*......................... 720,000 761,400
Urbi Desarrollos Urbanos SAB de CV
Company Guar. Notes
9.50% due 01/21/20*......................... 550,000 595,375
----------
1,356,775
----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Rearden G Holdings EINS GmbH
Company Guar. Notes
7.88% due 03/30/20*......................... 540,000 546,750
----------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
Odebrecht Finance, Ltd.
Company Guar. Notes
7.00% due 04/21/20*......................... 620,000 645,575
----------
CELLULAR TELECOM -- 0.2%
America Movil SAB de CV
Company Guar. Notes
5.00% due 03/30/20*......................... 456,000 449,555
America Movil SAB de CV
Company Guar. Notes
6.13% due 03/30/40*......................... 390,000 381,104
Vodafone Group PLC
Senior Notes
4.15% due 06/10/14.......................... 190,000 197,301
----------
1,027,960
----------
CHEMICALS-PLASTICS -- 0.2%
Montell Finance Co. BV
Company Guar. Notes
8.10% due 03/15/27*......................... 1,325,000 1,232,250
----------
COAL -- 0.2%
Indo Integrated Energy II BV
Company Guar. Notes
9.75% due 11/05/16*......................... 780,000 832,650
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
COAL (CONTINUED)
Adaro Indonesia PT
Company Guar. Notes
7.63% due 10/22/19*................... $ 219,000 $ 227,497
----------
1,060,147
----------
COMPUTERS-MEMORY DEVICES -- 0.1%
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16.................... 525,000 526,312
----------
DIAMONDS/PRECIOUS STONES -- 0.1%
Alrosa Finance SA
Company Guar. Notes
8.88% due 11/17/14.................... 400,000 436,000
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.2%
Credit Agricole SA
Jr. Sub. Bonds
6.64% due 05/31/17*(4)(12)............ 494,000 431,015
Natixis
Sub. Notes
0.50% due 01/15/19(4)................. 150,000 131,762
Royal Bank of Scotland Group PLC
Bonds
7.64% due 09/29/17(4)(12)(24)......... 1,075,000 677,250
----------
1,240,027
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.1%
TNK-BP Finance SA
Company Guar. Notes
7.88% due 03/13/18.................... 560,000 614,600
----------
DIVERSIFIED MINERALS -- 0.5%
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
6.42% due 03/01/26.................... 420,000 459,878
Rio Tinto Finance USA, Ltd.
Company Guar. Notes
5.88% due 07/15/13.................... 276,000 303,378
Rio Tinto Finance USA, Ltd.
Company Guar. Notes
7.13% due 07/15/28.................... 293,000 335,383
Teck Resources, Ltd.
Senior Sec. Notes
10.25% due 05/15/16................... 950,000 1,130,500
Teck Resources, Ltd.
Senior Sec. Notes
10.75% due 05/15/19................... 625,000 765,625
----------
2,994,764
----------
DIVERSIFIED OPERATIONS -- 0.2%
Voto-Votorantim, Ltd.
Company Guar. Notes
6.75% due 04/05/21*................... 975,000 962,812
----------
ELECTRIC-DISTRIBUTION -- 0.1%
Majapahit Holding BV
Company Guar. Notes
7.75% due 01/20/20*................... 580,000 629,300
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
ELECTRIC-INTEGRATED -- 0.3%
EDF SA
Senior Notes
5.60% due 01/27/40*.............. $515,000 $ 485,415
Electricite de France
Notes
5.50% due 01/26/14*.............. 331,000 363,411
Enel Finance International SA
Company Guar. Notes
3.88% due 10/07/14*.............. 448,000 453,823
Iberdrola Finance Ireland, Ltd.
Company Guar. Notes
5.00% due 09/11/19*.............. 243,000 238,818
----------
1,541,467
----------
ELECTRONIC COMPONENTS-MISC. -- 0.0%
Flextronics International, Ltd.
Senior Sub. Notes
6.25% due 11/15/14............... 250,000 253,125
----------
FOOD-MEAT PRODUCTS -- 0.2%
BFF International, Ltd.
Company Guar. Notes
7.25% due 01/28/20*.............. 605,000 609,431
JBS SA
Company Guar. Notes
9.38% due 02/07/11............... 591,000 611,685
----------
1,221,116
----------
GAS-DISTRIBUTION -- 0.0%
Grupo Petrotemex SA de CV
Senior Notes
9.50% due 08/19/14*.............. 215,000 232,737
----------
HOTEL/MOTELS -- 0.0%
Grupo Posadas SAB de CV
Company Guar. Notes
9.25% due 01/15/15*.............. 200,000 208,500
----------
IMPORT/EXPORT -- 0.2%
Marfrig Overseas, Ltd.
Company Guar. Bonds
9.63% due 11/16/16............... 520,000 548,600
Minerva Overseas II, Ltd.
Company Guar. Notes
10.88% due 11/15/19*............. 830,000 895,829
----------
1,444,429
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(6)(14)(16).. 725,000 725
----------
INSURANCE-MULTI-LINE -- 0.2%
Aegon NV
Sub. Notes
3.92% due 07/14/14(4)(12)........ 111,000 73,138
XL Capital, Ltd.
Senior Notes
5.25% due 09/15/14............... 488,000 504,465
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-MULTI-LINE (CONTINUED)
XL Capital, Ltd.
Senior Notes
6.38% due 11/15/24.......................... $ 318,000 $ 302,757
----------
880,360
----------
INSURANCE-REINSURANCE -- 0.1%
Endurance Specialty Holdings, Ltd.
Senior Notes
7.00% due 07/15/34.......................... 390,000 369,416
----------
MARINE SERVICES -- 0.2%
Trico Shipping AS
Senior Sec. Notes
11.88% due 11/01/14*........................ 950,000 907,250
----------
METAL-DIVERSIFIED -- 0.1%
Falconbridge, Ltd.
Senior Notes
7.35% due 06/05/12.......................... 308,000 338,753
Inco, Ltd.
Senior Notes
7.75% due 05/15/12.......................... 215,000 235,508
----------
574,261
----------
MULTIMEDIA -- 0.1%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... 375,000 379,688
Thomson Reuters Corp.
Senior Notes
5.85% due 04/15/40.......................... 195,000 189,705
----------
569,393
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.9%
Alliance Oil Co., Ltd.
Senior Notes
9.88% due 03/11/15*......................... 700,000 721,000
Compton Petroleum Finance Corp.
Company Guar. Notes
7.63% due 12/01/13.......................... 965,000 816,631
Gaz Capital SA
Bonds
8.15% due 04/11/18.......................... 650,000 731,315
KazMunaiGaz Finance Sub BV
Company Guar. Notes
11.75% due 01/23/15*........................ 300,000 385,500
Nexen, Inc.
Senior Notes
5.88% due 03/10/35.......................... 256,000 243,412
OPTI Canada, Inc.
Senior Sec. Notes
7.88% due 12/15/14.......................... 2,580,000 2,412,300
----------
5,310,158
----------
OIL COMPANIES-INTEGRATED -- 0.3%
Lukoil International Finance BV
Company Guar. Notes
7.25% due 11/05/19*......................... 345,000 361,262
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
OIL COMPANIES-INTEGRATED (CONTINUED)
Petroleum Co. of Trinidad & Tobago, Ltd.
Senior Notes
9.75% due 08/14/19*....................... $ 710,000 $ 807,625
Shell International Finance BV
Company Guar. Notes
5.50% due 03/25/40........................ 185,000 181,349
Statoil ASA
Company Guar. Notes
7.15% due 11/15/25........................ 552,000 641,038
----------
1,991,274
----------
PAPER & RELATED PRODUCTS -- 0.2%
Cascades, Inc.
Senior Notes
7.75% due 12/15/17*....................... 500,000 503,750
PE Paper Escrow GmbH
Senior Sec. Notes
12.00% due 08/01/14*...................... 475,000 528,329
----------
1,032,079
----------
PRINTING-COMMERCIAL -- 0.0%
Quebecor World Capital Corp.
Notes
6.50% due 08/01/27+(5)(6)(14)(16)......... 1,640,000 0
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.1%
Agile Property Holdings, Ltd.
Senior Notes
10.00% due 11/14/16*...................... 760,000 813,200
----------
SATELLITE TELECOM -- 0.7%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Bonds
9.50% due 02/01/15(11).................... 2,430,000 2,515,050
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.88% due 01/15/15........................ 1,335,000 1,378,387
----------
3,893,437
----------
SPECIAL PURPOSE ENTITIES -- 0.3%
CCL Finance, Ltd.
Company Guar. Notes
9.50% due 08/15/14*....................... 405,000 465,750
Hellas Telecommunications Luxembourg II
Sub. Notes
6.03% due 01/15/15*(4)(14)................ 1,330,000 53,200
Kuwait Projects Co.
Senior Notes
8.88% due 10/17/16........................ 780,000 803,010
SMFG Preferred Capital, Ltd.
Sub. Notes
6.08% due 01/25/17*(4)(12)................ 373,000 345,827
----------
1,667,787
----------
STEEL-PRODUCERS -- 0.4%
Essar Steel Algoma, Inc.
Senior Sec. Notes
9.38% due 03/15/15*....................... 1,100,000 1,111,000
Evraz Group SA
Notes
8.88% due 04/24/13........................ 470,000 493,030
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
STEEL-PRODUCERS (CONTINUED)
Gerdau Holdings, Inc.
Company Guar. Notes
7.00% due 01/20/20*..................... $ 610,000 $ 643,550
-----------
2,247,580
-----------
SUPRANATIONAL BANKS -- 0.0%
Asian Development Bank
Bonds
5.82% due 06/16/28...................... 181,000 190,431
-----------
TELEPHONE-INTEGRATED -- 0.3%
Telecom Italia Capital SA
Company Guar. Bonds
5.25% due 10/01/15...................... 621,000 635,837
Telefonica Emisiones SAU
Company Guar. Notes
5.98% due 06/20/11...................... 185,000 194,471
Telefonos de Mexico SAB de CV
Senior Notes
5.50% due 01/27/15...................... 197,000 210,597
Virgin Media Finance PLC
Company Guar. Notes
8.38% due 10/15/19...................... 1,000,000 1,027,500
-----------
2,068,405
-----------
TRANSPORT-MARINE -- 0.2%
BW Group, Ltd.
Notes
6.63% due 06/28/17...................... 730,000 689,850
Teekay Corp.
Senior Notes
8.50% due 01/15/20...................... 275,000 287,375
-----------
977,225
-----------
TRANSPORT-RAIL -- 0.1%
Canadian Pacific Railway Co.
Notes
6.50% due 05/15/18...................... 350,000 380,177
Kansas City Southern de Mexico SA de CV
Senior Notes
8.00% due 02/01/18*..................... 400,000 410,040
-----------
790,217
-----------
WAREHOUSING & HARBOR TRANSPORTATION SERVICES -- 0.1%
DP World, Ltd.
Notes
6.85% due 07/02/37...................... 1,040,000 876,200
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $50,373,595)...................... 51,242,235
-----------
FOREIGN GOVERNMENT AGENCIES -- 28.9%
SOVEREIGN -- 28.9%
Federal Republic of Brazil
Bonds
5.63% due 01/07/41...................... 510,000 480,165
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...................... 1,030,000 1,119,095
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
SOVEREIGN (CONTINUED)
Federal Republic of Brazil
Bonds
7.13% due 01/20/37.......... $ 2,450,000 $2,789,325
Federal Republic of Brazil
Notes
8.00% due 01/15/18.......... 2,133,333 2,486,400
Federal Republic of Brazil
Bonds
8.25% due 01/20/34.......... 1,695,000 2,161,125
Federal Republic of Brazil
Notes
8.75% due 02/04/25.......... 2,720,000 3,590,400
Federal Republic of Brazil
Bonds
8.88% due 10/14/19.......... 1,840,000 2,369,000
Federal Republic of Brazil
Notes
11.00% due 08/17/40......... 5,060,000 6,772,810
Federal Republic of Brazil
Bonds
12.50% due 01/05/22......... BRL 1,010,000 663,073
Federal Republic of Germany
Bonds
4.25% due 07/04/39.......... EUR 675,000 980,357
Government of Australia
Bonds
6.25% due 06/15/14.......... AUD 2,650,000 2,505,212
Government of Canada
Notes
3.00% due 06/01/14.......... CAD 6,430,000 6,403,663
Government of Canada
Bonds
3.75% due 06/01/12.......... CAD 2,765,000 2,829,303
Government of Canada
Notes
4.25% due 06/01/18.......... CAD 3,750,000 3,892,778
Government of Canada
Bonds
5.75% due 06/01/29.......... CAD 1,030,000 1,235,686
Government of France
Bonds
3.75% due 10/25/19.......... EUR 1,085,000 1,515,478
Government of Japan
Bonds
1.40% due 12/20/15.......... JPY 144,900,000 1,612,237
Government of Japan
Bonds
1.70% due 09/20/17.......... JPY 309,000,000 3,473,938
Government of Japan
Bonds
2.10% due 03/20/27.......... JPY 321,400,000 3,478,082
Kingdom of Bahrain
Senior Notes
5.50% due 03/31/20*......... 640,000 635,004
Kingdom of Norway
Bonds
5.00% due 05/15/15.......... NOK 31,345,000 5,726,786
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Kingdom of Norway
Bonds
6.50% due 05/15/13............. NOK 22,060,000 $4,125,397
Kingdom of Sweden
Bonds
4.25% due 03/12/19............. SEK 10,500,000 1,586,968
Kingdom of Sweden
Bonds
4.50% due 08/12/15............. SEK 35,360,000 5,384,949
Kingdom of Sweden
Bonds
5.50% due 10/08/12............. SEK 24,500,000 3,720,297
New South Wales Treasury Corp.
Government Guar. Bonds
6.00% due 05/01/12............. AUD 3,148,000 2,927,284
Republic of Argentina
Notes
2.50% due 12/31/38(11)......... 2,269,761 814,844
Republic of Argentina
Bonds
8.28% due 12/31/33............. 1,003,701 752,776
Republic of Colombia
Notes
7.38% due 01/27/17............. 440,000 506,000
Republic of Colombia
Notes
7.38% due 03/18/19............. 1,263,000 1,452,450
Republic of Colombia
Bonds
7.38% due 09/18/37............. 1,870,000 2,094,400
Republic of Colombia
Bonds
8.13% due 05/21/24............. 360,000 432,000
Republic of Georgia
Bonds
7.50% due 04/15/13............. 1,300,000 1,352,650
Republic of Indonesia
Bonds
5.88% due 03/13/20*............ 1,120,000 1,162,000
Republic of Indonesia
Bonds
6.63% due 02/17/37............. 2,226,000 2,271,408
Republic of Indonesia
Senior Bonds
8.50% due 10/12/35............. 1,620,000 2,016,900
Republic of Indonesia
Bonds
11.63% due 03/04/19............ 1,800,000 2,583,000
Republic of Italy
Bonds
4.25% due 03/01/20............. EUR 3,420,000 4,775,816
Republic of Italy
Bonds
4.75% due 02/01/13............. EUR 1,310,000 1,912,758
Republic of Peru
Bonds
6.55% due 03/14/37............. 820,000 877,400
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Peru
Notes
7.35% due 07/21/25....... $1,826,000 $2,118,160
Republic of Peru
Bonds
8.75% due 11/21/33....... 720,000 954,000
Republic of Philippines
Bonds
6.50% due 01/20/20....... 2,160,000 2,327,400
Republic of Philippines
Bonds
7.75% due 01/14/31....... 1,000,000 1,145,000
Republic of Philippines
Senior Notes
9.50% due 02/02/30....... 1,570,000 2,095,950
Republic of Philippines
Notes
10.63% due 03/16/25...... 1,515,000 2,170,238
Republic of South Africa
Bonds
5.50% due 03/09/20....... 690,000 698,625
Republic of South Africa
Bonds
6.88% due 05/27/19....... 432,000 482,220
Republic of Turkey
Bonds
6.75% due 05/30/40....... 1,710,000 1,680,075
Republic of Turkey
Notes
6.88% due 03/17/36....... 2,230,000 2,252,300
Republic of Turkey
Notes
7.00% due 06/05/20....... 1,470,000 1,617,000
Republic of Turkey
Notes
7.38% due 02/05/25....... 2,160,000 2,405,808
Republic of Turkey
Bonds
7.50% due 11/07/19....... 2,090,000 2,369,538
Republic of Turkey
Notes
8.00% due 02/14/34....... 611,000 701,886
Republic of Turkey
Senior Bonds
11.88% due 01/15/30...... 1,695,000 2,701,491
Republic of Uruguay
Bonds
6.88% due 09/28/25....... 370,000 401,450
Republic of Uruguay
Notes
7.63% due 03/21/36....... 1,260,000 1,426,950
Republic of Venezuela
Bonds
5.75% due 02/26/16....... 1,515,000 1,098,375
Republic of Venezuela
Bonds
7.65% due 04/21/25....... 490,000 319,725
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Venezuela
Notes
8.50% due 10/08/14............. $ 1,200,000 $ 1,044,000
Republic of Venezuela
Bonds
9.00% due 05/07/23............. 1,100,000 816,750
Republic of Venezuela
Bonds
9.25% due 09/15/27............. 4,805,000 3,759,913
Republic of Venezuela
Bonds
9.25% due 05/07/28............. 1,540,000 1,134,210
Russian Federation
Senior Bonds
7.50% due 03/31/30(11)......... 13,341,840 15,377,805
Russian Federation
Notes
12.75% due 06/24/28............ 340,000 603,534
State of Qatar
Senior Notes
6.40% due 01/20/40*............ 500,000 522,500
State of Qatar
Bonds
6.40% due 01/20/40............. 330,000 344,850
United Mexican States
Notes
5.13% due 01/15/20............. 3,334,000 3,367,340
United Mexican States
Notes
5.63% due 01/15/17............. 2,430,000 2,600,100
United Mexican States
Notes
5.95% due 03/19/19............. 984,000 1,062,720
United Mexican States
Notes
6.05% due 01/11/40............. 1,220,000 1,216,950
United Mexican States
Notes
6.75% due 09/27/34............. 3,255,000 3,580,500
United Mexican States
Bonds
7.50% due 04/08/33............. 840,000 1,001,700
United Mexican States
Bonds
7.75% due 12/14/17............. MXN 60,800,000 5,008,577
United Mexican States
Notes
8.13% due 12/30/19............. 950,000 1,182,750
United Mexican States
Bonds
8.30% due 08/15/31............. 1,430,000 1,837,550
------------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $164,013,550)............ 171,843,154
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
FOREIGN GOVERNMENT TREASURIES -- 0.1%
SOVEREIGN -- 0.1%
Queensland Treasury Corp.
Government Guar. Notes
5.50% due 05/14/10
(cost $335,090)................... $ 350,000 $ 321,905
----------
LOANS(17)(18) -- 0.4%
MEDICAL-DRUGS -- 0.2%
Triax Pharmaceuticals LLC
BTL
14.00% due 08/30/11(5)(6)(9)(19).. 1,596,512 1,452,826
----------
MEDICAL-HOSPITALS -- 0.2%
Capella Healthcare, Inc.
2nd Lien
13.00% due 02/29/16(6)(9)......... 1,000,000 1,020,000
----------
TOTAL LOANS
(cost $2,411,366)................. 2,472,826
----------
U.S. GOVERNMENT AGENCIES -- 11.7%
FEDERAL HOME LOAN MTG. CORP. -- 6.8%
4.13% due 07/12/10................ 300,000 303,257
4.50% due 02/01/20................ 121,729 127,608
4.50% due 08/01/20................ 234,674 246,007
4.50% due 01/01/39................ 617,060 619,224
5.00% due 09/01/18................ 286,500 306,010
5.00% due 07/01/20................ 456,208 485,849
5.00% due 01/01/24................ 782,474 827,034
5.00% due 02/01/34................ 306,238 318,320
5.00% due 03/01/34................ 2,101,361 2,182,302
5.00% due 05/01/34................ 214,556 222,820
5.00% due 02/01/35................ 429,188 445,720
5.00% due 07/01/35................ 694,424 719,001
5.00% due 08/01/35................ 672,295 696,090
5.00% due 10/01/35................ 939,465 972,715
5.00% due 04/01/36................ 360,838 373,609
5.00% due 05/01/36................ 237,908 245,994
5.00% due 08/01/36................ 306,871 317,301
5.00% due 11/01/37................ 1,304,845 1,349,119
5.00% due 03/01/39................ 1,867,082 1,930,246
5.33% due 12/01/35(4)............. 232,792 245,537
5.48% due 03/01/36(4)............. 138,757 146,802
5.50% due 05/01/37................ 1,169,883 1,236,738
5.50% due 06/01/37................ 286,810 303,200
5.50% due 09/01/37................ 916,753 969,142
5.50% due 10/01/37................ 3,513,858 3,714,662
5.50% due 11/01/37................ 1,162,980 1,229,440
5.50% due 12/01/37................ 876,410 926,494
5.50% due 01/01/38................ 2,170,995 2,296,878
5.50% due 02/01/38................ 666,470 704,556
5.50% due 07/01/38................ 551,775 583,306
5.79% due 01/01/37(4)............. 98,298 104,700
5.94% due 10/01/36(4)............. 638,895 676,323
6.00% due 10/01/37................ 949,392 1,020,314
6.00% due 12/01/37................ 2,340,380 2,515,212
6.13% due 09/01/36(4)............. 128,563 136,667
6.50% due 05/01/29................ 4,479 4,944
6.50% due 02/01/35................ 120,941 132,810
6.50% due 11/01/37................ 4,338,467 4,723,572
6.88% due 09/15/10................ 156,000 160,808
7.00% due 06/01/29................ 12,835 14,436
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
Federal Home Loan Mtg. Corp. REMIC
Series 3317, Class PD.............
5.00% due 09/15/31(1)............. $ 935,000 $ 993,914
Series 3116, Class PD.............
5.00% due 10/15/34(1)............. 3,000,000 3,170,567
Series 3349, Class HB.............
5.50% due 06/15/31(1)............. 1,724,000 1,835,146
Series 41, Class F................
10.00% due 05/15/20(1)............ 9,034 9,939
Series 1103, Class N..............
11.57% due 06/15/21(1)(23)........ 4,570 1,049
-----------
40,545,382
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 4.9%
2.13% due 01/25/13................ 369,000 372,150
2.51% due 01/01/35(4)............. 579,968 586,093
4.44% due 02/01/34(4)............. 252,569 262,003
4.50% due 06/01/19................ 339,115 356,498
4.50% due 11/01/22................ 613,726 643,459
4.50% due 06/01/23................ 722,209 750,540
4.50% due 01/01/39................ 3,419,834 3,431,828
4.75% due 10/01/35(4)............. 112,848 117,945
5.00% due 06/01/19................ 159,779 170,210
5.00% due 01/01/23................ 127,446 134,584
5.00% due 03/01/34................ 208,349 215,854
5.00% due 05/01/35................ 103,304 106,863
5.00% due 10/01/35................ 42,637 44,106
5.00% due 02/01/37................ 194,387 200,821
5.00% due 04/01/37................ 1,500,466 1,549,971
5.00% due 05/01/37................ 271,663 280,627
5.00% due 06/01/37................ 13,549 13,996
5.00% due 07/01/37................ 226,006 233,463
5.00% due 05/01/38................ 2,211,582 2,284,549
5.00% due 05/01/39................ 4,444,839 4,591,044
5.17% due 01/01/37(4)............. 2,391,323 2,504,694
5.50% due 11/01/19................ 973,949 1,051,381
5.50% due 08/01/20................ 228,537 246,421
5.50% due 11/01/22................ 450,894 482,866
5.50% due 08/01/23................ 354,736 379,870
5.50% due 01/01/29................ 5,736 6,108
5.50% due 02/01/35................ 377,396 398,984
5.50% due 12/01/35................ 513,620 543,000
5.50% due 12/01/36................ 443,386 468,056
5.50% due 04/01/37................ 236,576 249,615
5.50% due 03/01/38................ 33,476 35,321
6.00% due 02/01/32................ 79,977 87,039
6.00% due 05/01/34................ 13,540 14,609
6.00% due 10/01/34................ 358,801 387,118
6.00% due 06/01/35................ 97,335 104,165
6.00% due 07/01/37................ 3,542,250 3,768,675
6.00% due 08/01/37................ 185,018 196,844
6.00% due 10/01/37................ 426,702 453,977
6.50% due 02/01/35................ 42,376 46,171
7.50% due 01/01/30................ 9,750 11,033
7.50% due 09/01/30................ 3,286 3,721
8.00% due 11/01/28................ 15,543 18,013
13.00% due 11/01/15............... 1,271 1,418
PRINCIPAL
AMOUNT**/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------------
Federal National Mtg. Assoc. REMIC
Series 2005-12, Class BE..................
5.00% due 11/25/30(1)..................... $ 900,000 $ 959,544
Series 1989-2, Class D....................
8.80% due 01/25/19(1)..................... 26,924 29,926
Series 1989-17, Class E...................
10.40% due 04/25/19(1).................... 2,299 2,656
-----------
28,797,829
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.0%
7.50% due 07/15/27........................ 9,267 10,466
7.50% due 10/15/27........................ 58,601 66,185
-----------
76,651
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $66,235,622)........................ 69,419,862
-----------
U.S. GOVERNMENT TREASURIES -- 0.7%
UNITED STATES TREASURY BONDS -- 0.6%
4.38% due 11/15/39........................ 1,569,000 1,483,686
4.50% due 08/15/39........................ 1,756,000 1,695,637
6.25% due 08/15/23........................ 166,000 199,485
-----------
3,378,808
-----------
UNITED STATES TREASURY NOTES -- 0.1%
2.38% due 02/28/15........................ 152,000 150,956
2.75% due 11/30/16........................ 15,000 14,586
3.38% due 11/15/19........................ 551,000 531,672
3.63% due 02/15/20........................ 116,000 114,024
3.88% due 09/15/10........................ 7,000 7,115
4.38% due 12/15/10........................ 1,000 1,029
-----------
819,382
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $4,282,695)......................... 4,198,190
-----------
MUNICIPAL BONDS & NOTES -- 0.1%
MUNICIPAL BONDS & NOTES -- 0.1%
Chicago Transit Authority
Revenue Bonds, Series B
6.20% due 12/01/40........................ 302,000 299,022
Municipal Electric Authority of Georgia
Revenue Bonds
6.66% due 04/01/57........................ 400,000 397,680
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $702,000)........................... 696,702
-----------
COMMON STOCK -- 0.1%
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.+(5)(6)................ 135,000 0
-----------
FOOD-MISC. -- 0.0%
Wornick Co.+(5)(6)(9)...................... 4,592 179,088
-----------
GAMBLING (NON-HOTEL) -- 0.0%
Shreveport Gaming Holdings, Inc.+(5)(6)(9). 2,441 33,515
-----------
GAS-DISTRIBUTION -- 0.0%
MXEnergy Holdings, Inc.+(5)(6)............. 138,937 118,027
-----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(5)(6)(9)(21).... 128,418 1,284
-----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(5)(6)(9)............................ 4,107 513
-----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
--------------------------------------------------------------
COMMON STOCK (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Energy Partners, Ltd.+.................. 4,057 $ 49,414
------------
PAPER & RELATED PRODUCTS -- 0.0%
Caraustar Industries, Inc.+(5)(6)....... 89 196,334
------------
PUBLISHING-PERIODICALS -- 0.1%
Haights Cross Communication, Inc.(5)(6). 47,723 256,273
------------
TOTAL COMMON STOCK
(cost $1,336,327)...................... 834,448
------------
PREFERRED STOCK -- 0.4%
BANKS-COMMERCIAL -- 0.1%
CoBank ACB 11.00%*...................... 12,063 629,538
------------
BANKS-SUPER REGIONAL -- 0.1%
Wachovia Capital Trust IX
6.38%.................................. 12,800 292,608
------------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
General Electric Capital Corp.
4.50%(11).............................. 8,582 214,979
------------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
JPMorgan Chase Capital XXIX
6.70%.................................. 19,440 478,807
------------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Countrywide Capital V
7.00%.................................. 12,048 270,477
Freddie Mac
8.38%(4)............................... 11,300 14,351
------------
284,828
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C
14.70%(5)(6)(9)........................ 39,177 392
------------
SPECIAL PURPOSE ENTITY -- 0.1%
Structured Repackaged Asset-Backed
Trust Securities
3.00%(4)............................... 29,200 625,756
------------
TOTAL PREFERRED STOCK
(cost $2,832,390)...................... 2,526,908
------------
WARRANTS + -- 0.0%
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(5)(6)............. 13,811 0
------------
TELECOM SERVICES -- 0.0%
Leap Wireless International, Inc.
Expires 04/15/10
(strike price $96.80)*(5)(6)........... 500 0
------------
TOTAL WARRANTS
(cost $39,260)......................... 0
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $566,949,698).................... 576,661,488
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 2.4%
TIME DEPOSITS -- 2.4%
Euro Time Deposit with State Street
Bank & Trust Co.
0.01% due 04/01/10
(cost $14,084,000)................... $14,084,000 14,084,000
------------
REPURCHASE AGREEMENT -- 0.5%
State Street Bank & Trust Co., Joint
Repurchase Agreement(22)
(cost $2,843,000).................... 2,843,000 $ 2,843,000
------------
TOTAL INVESTMENTS
(cost $583,876,698) (20)............. 99.9% 593,588,488
Other assets less liabilities........... 0.1 735,372
----------- ------------
NET ASSETS 100.0% $594,323,860
=========== ============
- --------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At March 31, 2010, the
aggregate value of these securities was $96,217,318 representing 16.2% of
net assets. Unless otherwise indicated these securities are not considered
to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1) Collateralized Mortgage Obligation
(2) Variable Rate Security -- the rate reflected is as of March 31, 2010,
maturity date reflects the stated maturity date.
(3) Commercial Mortgage Backed Security
(4) Floating rate security where the rate fluctuates. The rate moves up or
down at each reset date. The rate reflected is as of March 31, 2010.
(5) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(6) Illiquid security. At March 31, 2010, the aggregate value of these
securities was $5,498,274 representing 0.9% of net assets.
(7) Income may be received in cash or additional bonds at the discretion of
the issuer.
(8) Company has filed for Chapter 11 bankruptcy protection.
(9) 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 the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition,
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
certain restricted securities may exhibit greater price volatility than
securities for which secondary markets exist. As of March 31, 2010, the
SunAmerica Strategic Bond Fund held the following restricted securities:
PRINCIPAL ACQUI VALUE % OF
ACQUISITION AMOUNT/ SITION 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 $1,020,000 $102.00 0.17%
Critical Care
Systems
International,
Inc.
Common
Stock........... 7/20/2006 4,107 37,181 513 0.12 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
---------- ----------
297,000 312,925 207,900 70.00 0.03
Shreveport
Gaming
Holdings, Inc.
Common
Stock........... 7/29/2005 2,047 47,128
7/21/2005 394 9,062
---------- ----------
2,441 56,190 33,515 13.73 0.01
Triax
Pharmaceuticals
LLC
14.00% 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
10/1/2009 11,885 21,664
---------- ----------
1,596,512 1,520,396 1,452,826 91.00 0.24
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 4,592 596,039 179,088 39.00 0.03
---------- ----
$2,895,518 0.48%
========== ====
(10) Bond is in default and did not pay principal at maturity.
(11) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(12) Perpetual maturity -- maturity date reflects the next call date.
(13) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(14) Bond in default
(15) Company has filed for Chapter 7 bankruptcy.
(16) Company has filed bankruptcy in country of issuance.
(17) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major United States banks, or the certificate
of deposit rate. Senior loans are generally considered to be restrictive
in that the Fund is ordinarily contractually obligated to receive approval
from the Agent Bank and/or borrower prior to the disposition of a senior
loan.
(18) Senior loans in the Fund's Portfolio are generally subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
borrower to prepay, prepayments may occur. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown.
(19) A portion of the interest was paid in additional bonds/loans.
(20) See Note 5 for cost of investments on a tax basis.
(21) Consists of more than one type of securities traded together as a unit.
(22) See note 2 for details of Joint Repurchase Agreement.
(23) Interest Only
(24) Subsequent to March 31, 2010, interest payments have been suspended for
twenty-four months according to the agreement with the European Commission.
REMIC --Real Estate Mortgage Investment Conduit
AUD --Australian Dollar
BRL --Brazilian Real
CAD --Canadian Dollar
EUR --Euro Dollar
JPY --Japanese Yen
MXN --Mexican Peso
NOK --Norwegian Krone
SEK --Swedish Krona
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (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......... $ -- $ 12,849,313 $ -- $ 12,849,313
Convertible Bonds & Notes....... -- -- 207,900 207,900
U.S. Corporate Bonds & Notes.... -- 254,324,663 5,723,382 260,048,045
Foreign Corporate Bonds & Notes. -- 51,242,235 0 51,242,235
Foreign Government Agencies..... -- 171,843,154 -- 171,843,154
Foreign Government Treasuries... -- 321,905 -- 321,905
Loans........................... -- -- 2,472,826 2,472,826
U.S. Government Agencies........ -- 69,419,862 -- 69,419,862
U.S. Government Treasuries...... -- 4,198,190 -- 4,198,190
Municipal Bond & Notes.......... -- 696,702 -- 696,702
Common Stock.................... 49,414 -- 785,034 834,448
Preferred Stock................. 1,896,978 629,538 392 2,526,908
Warrants........................ -- -- 0 0
Short Term Investment Securities:
Time Deposit.................... -- 14,084,000 -- 14,084,000
Repurchase Agreement.............. -- 2,843,000 -- 2,843,000
---------- ------------ ---------- ------------
Total............................. $1,946,392 $582,452,562 $9,189,534 $593,588,488
========== ============ ========== ============
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......... -- -- 29,432 -- 106,559 --
Realized gain (loss)............... 22 -- (2,761,390) -- 471,718 --
Change in unrealized appreciation
(depreciation).................... 331,978 148,500 3,018,176 -- 477,383 (158,380)
Net purchases (sales).............. (830,000) -- (810,339) 0 (3,954,201) 612,701
Transfers in and/or out of Level 3. -- -- (145,944) -- -- --
--------- -------- ----------- ---------- ----------- ---------
Balance as of 03/31/2010........... $ -- $207,900 $ 5,723,382 $ 0 $ 2,472,826 $ 785,034
========= ======== =========== ========== =========== =========
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).............. -- --
Transfers in and/or out of Level 3. -- --
--------- -----
Balance as of 03/31/2010........... $ 392 $ 0
========= =====
See Notes to Financial Statements
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Auto/Truck Parts & Equipment-Original...... 5.2%
Medical-Hospitals.......................... 4.6
Casino Hotels.............................. 3.9
Diversified Banking Institutions........... 3.1
Computer Services.......................... 3.0
Telecom Services........................... 2.5
Banks-Commercial........................... 2.5
Special Purpose Entities................... 2.5
Finance-Auto Loans......................... 2.5
Telephone-Integrated....................... 2.4
Cable/Satellite TV......................... 2.4
Medical-Drugs.............................. 2.3
Casino Services............................ 2.2
Banks-Super Regional....................... 2.2
Data Processing/Management................. 2.2
Oil Companies-Exploration & Production..... 2.1
Electric-Integrated........................ 2.1
Auto-Cars/Light Trucks..................... 2.1
Diversified Financial Services............. 2.0
Repurchase Agreement....................... 1.8
Theaters................................... 1.8
Pipelines.................................. 1.7
Paper & Related Products................... 1.7
Electric-Generation........................ 1.6
Diversified Manufacturing Operations....... 1.6
Cellular Telecom........................... 1.6
Independent Power Producers................ 1.6
Satellite Telecom.......................... 1.5
Oil-Field Services......................... 1.4
Telecommunication Equipment................ 1.3
Medical Products........................... 1.2
Food-Meat Products......................... 1.2
Broadcast Services/Program................. 1.2
Retail-Regional Department Stores.......... 1.1
Tobacco.................................... 1.1
Auto/Truck Parts & Equipment-Replacement... 1.1
Funeral Services & Related Items........... 1.0
Publishing-Periodicals..................... 0.9
Chemicals-Specialty........................ 0.9
Machinery-General Industrial............... 0.8
Web Hosting/Design......................... 0.8
Rental Auto/Equipment...................... 0.8
Banks-Money Center......................... 0.8
Airlines................................... 0.8
Direct Marketing........................... 0.8
Diversified Minerals....................... 0.7
Banks-Mortgage............................. 0.7
Rubber-Tires............................... 0.7
Insurance-Multi-line....................... 0.7
Machinery-Farming.......................... 0.7
Chemicals-Plastics......................... 0.6
Electronic Components-Semiconductors....... 0.6
Containers-Paper/Plastic................... 0.6
Metal-Aluminum............................. 0.6
Transport-Marine........................... 0.6
Commercial Services........................ 0.5
Athletic Equipment......................... 0.5
Diagnostic Kits............................ 0.5
Diversified Operations/Commercial Services. 0.5
Building Products-Cement................... 0.5
Television................................. 0.4
Transactional Software................. 0.4%
Retail-Drug Store...................... 0.4
Office Supplies & Forms................ 0.4
Building Products-Air & Heating........ 0.4
Multimedia............................. 0.4
Beverages-Non-alcoholic................ 0.3
Oil & Gas Drilling..................... 0.3
Gas-Distribution....................... 0.3
Transport-Services..................... 0.3
Printing-Commercial.................... 0.3
Energy-Alternate Sources............... 0.3
Computers-Memory Devices............... 0.3
Retail-Automobile...................... 0.2
Food-Misc.............................. 0.2
Retail-Arts & Crafts................... 0.2
Firearms & Ammunition.................. 0.2
Building & Construction-Misc........... 0.2
Gambling (Non-Hotel)................... 0.2
Hazardous Waste Disposal............... 0.2
Diversified Operations................. 0.2
Pharmacy Services...................... 0.1
E-Commerce/Services.................... 0.1
Containers-Metal/Glass................. 0.1
Building & Construction Products-Misc.. 0.1
----
99.4%
====
CREDIT QUALITY ALLOCATION+#
A.......... 3.7%
BBB........ 0.7
BB......... 25.9
B.......... 45.9
CCC........ 15.0
Below C.... 0.6
Not Rated@. 8.2
-----
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.
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 0.5%
AUTO-CARS/LIGHT TRUCKS -- 0.5%
Ford Motor Co.
Senior Notes
4.25% due 11/15/16
(cost $514,000)............................ $ 514,000 $ 769,072
----------
U.S. CORPORATE BONDS & NOTES -- 80.6%
AIRLINES -- 0.8%
American Airlines, Inc.
Pass Through Certs.
Series 2001-2, Class A-2
7.86% due 10/01/11......................... 675,000 683,437
Continental Airlines, Inc.
Senior Notes
4.50% due 01/15/15......................... 325,000 423,719
----------
1,107,156
----------
ATHLETIC EQUIPMENT -- 0.5%
Easton-Bell Sports, Inc.
Senior Sec. Notes
9.75% due 12/01/16*........................ 700,000 736,750
----------
AUTO-CARS/LIGHT TRUCKS -- 1.5%
Ford Motor Co.
Notes
7.45% due 07/16/31......................... 2,300,000 2,173,500
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 3.4%
Accuride Corp. Company Guar.
Notes
7.50% due 06/26/20(17)..................... 419,960 947,123
ArvinMeritor, Inc.
Senior Notes
8.13% due 09/15/15......................... 875,000 844,375
ArvinMeritor, Inc.
Company Guar. Notes
10.63% due 03/15/18........................ 515,000 533,025
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.38% due 12/15/14+(8)(9).................. 985,000 704,275
Tenneco, Inc.
Company Guar. Notes
8.13% due 11/15/15......................... 90,000 92,025
Tenneco, Inc.
Company Guar. Notes
8.63% due 11/15/14......................... 405,000 411,075
TRW Automotive, Inc.
Company Guar. Notes
7.00% due 03/15/14*........................ 550,000 541,750
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/17*........................ 725,000 699,625
----------
4,773,273
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 1.1%
Affinia Group, Inc.
Company Guar. Notes
9.00% due 11/30/14......................... 755,000 751,225
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT (CONTINUED)
Affinia Group, Inc.
Senior Sec. Notes
10.75% due 08/15/16*............................ $ 730,000 $ 795,700
Exide Corp.
Notes
10.00% due 03/15/25+(1)(2)...................... 1,650,000 0
----------
1,546,925
----------
BANKS-COMMERCIAL -- 1.9%
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/13.............................. 293,945 285,862
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/14.............................. 440,918 416,667
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/15.............................. 440,918 411,156
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/16.............................. 734,863 677,911
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/17.............................. 1,028,809 949,076
----------
2,740,672
----------
BANKS-MONEY CENTER -- 0.8%
NB Capital Trust IV
Bank Guar. Notes
8.25% due 04/15/27.............................. 1,100,000 1,111,000
----------
BANKS-MORTGAGE -- 0.7%
Provident Funding Associates
Senior Sec. Notes
10.25% due 04/15/17*............................ 1,005,000 1,012,538
----------
BANKS-SUPER REGIONAL -- 2.2%
BAC Capital Trust XI
Bank Guar. Notes
6.63% due 05/23/36.............................. 423,000 386,417
Wells Fargo & Co.
Junior Sub. Notes
7.98% due 03/15/18(6)(18)....................... 2,575,000 2,690,875
----------
3,077,292
----------
BROADCAST SERVICES/PROGRAM -- 1.2%
Clear Channel Worldwide Holdings, Inc., Class A
Company Guar. Notes
9.25% due 12/15/17*............................. 55,000 57,131
Clear Channel Worldwide Holdings, Inc., Class B
Company Guar. Notes
9.25% due 12/15/17*............................. 230,000 240,350
Liberty Media LLC
Debentures
8.25% due 02/01/30.............................. 855,000 796,219
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BROADCAST SERVICES/PROGRAM (CONTINUED)
Liberty Media LLC
Senior Notes
8.50% due 07/15/29.......................... $ 620,000 $ 577,375
----------
1,671,075
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Associated Materials LLC/Associated
Materials Finance, Inc.
Senior Sec. Notes
9.88% due 11/15/16.......................... 105,000 113,400
----------
BUILDING & CONSTRUCTION-MISC. -- 0.2%
Esco Corp.
Senior Notes
8.63% due 12/15/13*......................... 255,000 256,275
----------
BUILDING PRODUCTS-AIR & HEATING -- 0.4%
Goodman Global Group, Inc.
Senior Disc. Notes
zero coupon due 12/15/14*................... 885,000 517,725
----------
BUILDING PRODUCTS-CEMENT -- 0.4%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16*......................... 615,000 636,525
----------
CABLE/SATELLITE TV -- 2.4%
CCH II LLC/CCH II Capital Corp.
Senior Notes
13.50% due 11/30/16......................... 735,867 884,880
CCO Holdings LLC/CCO Holdings Capital Corp.
Senior Notes
8.75% due 11/15/13.......................... 1,078,000 1,104,950
Mediacom LLC / Mediacom Capital Corp.
Senior Notes
9.13% due 08/15/19*......................... 1,385,000 1,428,281
----------
3,418,111
----------
CASINO HOTELS -- 3.9%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(2)(5)................... 1,721,177 1,454,395
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(1)(2).................... 2,675,000 2,327,250
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17......................... 715,000 770,412
MGM Mirage
Senior Sec. Notes
9.00% due 03/15/20*......................... 155,000 159,650
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17*........................ 675,000 757,688
----------
5,469,395
----------
CASINO SERVICES -- 1.2%
Peninsula Gaming LLC
Senior Sec. Notes
8.38% due 08/15/15*......................... 600,000 598,500
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CASINO SERVICES (CONTINUED)
Peninsula Gaming LLC
Senior Notes
10.75% due 08/15/17*.................. $ 360,000 $ 343,800
Scientific Games International, Inc.
Senior Sub. Notes
9.25% due 06/15/19*................... 700,000 742,875
----------
1,685,175
----------
CELLULAR TELECOM -- 1.6%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16.................... 575,000 596,562
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/14.................... 938,000 816,060
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.................... 328,000 311,600
----------
2,286,597
----------
CHEMICALS-PLASTICS -- 0.6%
Hexion US Finance Corp.
Senior Sec. Notes
9.75% due 11/15/14.................... 900,000 918,000
----------
CHEMICALS-SPECIALTY -- 0.9%
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14.................... 915,000 915,000
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14*.................. 297,000 334,125
----------
1,249,125
----------
COMPUTER SERVICES -- 3.0%
Stream Global Services, Inc.
Senior Sec. Notes
11.25% due 10/01/14*.................. 1,125,000 1,170,000
SunGard Data Systems, Inc.
Company Guar. Notes
10.63% due 05/15/15................... 550,000 599,500
Unisys Corp.
Senior Sec. Notes
12.75% due 10/15/14*.................. 1,470,000 1,714,387
Unisys Corp.
Senior Sec. Notes
14.25% due 09/15/15*.................. 620,000 739,350
----------
4,223,237
----------
CONTAINERS-METAL/GLASS -- 0.1%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................... 145,000 152,794
----------
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DATA PROCESSING/MANAGEMENT -- 2.2%
First Data Corp.
Company Guar. Notes
9.88% due 09/24/15........................ $1,750,000 $1,509,375
First Data Corp.
Company Guar. Notes
10.55% due 09/24/15(17)................... 1,837,048 1,563,787
----------
3,073,162
----------
DIAGNOSTIC KITS -- 0.5%
Inverness Medical Innovations, Inc.
Senior Notes
7.88% due 02/01/16........................ 745,000 729,169
----------
DIRECT MARKETING -- 0.7%
Sitel LLC/Sitel Finance Corp.
Senior Notes
11.50% due 04/01/18*...................... 1,055,000 1,062,913
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.6%
Citigroup, Inc.
Senior Sub. Notes
5.88% due 02/22/33........................ 660,000 569,478
GMAC, Inc.
Company Guar. Notes
6.88% due 09/15/11........................ 700,000 711,375
GMAC, Inc.
Sub. Notes
8.00% due 12/31/18........................ 1,100,000 1,083,500
GMAC, Inc.
Company Guar. Notes
8.00% due 11/01/31........................ 1,350,000 1,289,250
----------
3,653,603
----------
DIVERSIFIED FINANCIAL SERVICES -- 1.7%
Citigroup Capital XXI
Company Guar. Bonds
8.30% due 12/21/57(6)..................... 1,865,000 1,888,312
CNG Holdings, Inc.
Senior Sec. Notes
12.25% due 02/15/15*...................... 610,000 590,938
----------
2,479,250
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 1.1%
Harland Clarke Holdings Corp.
Notes
6.00% due 05/15/15(6)..................... 500,000 412,500
Harland Clarke Holdings Corp.
Notes
9.50% due 05/15/15........................ 1,225,000 1,148,438
----------
1,560,938
----------
DIVERSIFIED OPERATIONS -- 0.2%
Reynolds Group, Inc.
Senior Sec. Notes
7.75% due 10/15/16*....................... 210,000 215,775
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES -- 0.5%
ARAMARK Corp.
Company Guar. Notes
8.50% due 02/01/15............................. $ 700,000 $ 715,750
----------
E-COMMERCE/SERVICES -- 0.1%
NetFlix, Inc.
Company Guar. Notes
8.50% due 11/15/17............................. 165,000 173,250
----------
ELECTRIC-GENERATION -- 1.6%
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 465,000 297,600
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 317,550 311,199
Midwest Generation LLC
Pass Thru Certs., Series B
8.56% due 01/02/16............................. 266,559 272,903
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/17............................. 469,945 502,842
The AES Corp.
Senior Notes
8.00% due 10/15/17............................. 805,000 817,075
----------
2,201,619
----------
ELECTRIC-INTEGRATED -- 2.1%
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 715,000 672,100
Mirant Mid-Atlantic LLC
Pass Through Certs., Series B
9.13% due 06/30/17............................. 289,827 307,941
Southern Energy, Inc.
Notes
7.90% due 07/15/09+(1)(2)...................... 3,525,000 0
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes, Series A
10.25% due 11/01/15(19)........................ 1,120,000 778,400
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes, Series B
10.25% due 11/01/15(19)........................ 115,000 79,925
Texas Competitive Electric Holdings Co., LLC
Company Guar. Notes
10.50% due 11/01/16(17)........................ 1,723,700 1,180,735
----------
3,019,101
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.6%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.88% due 12/15/14............................. 925,000 883,375
----------
ENERGY-ALTERNATE SOURCES -- 0.3%
Headwaters, Inc.
Senior Notes
11.38% due 11/01/14*........................... 375,000 391,406
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-AUTO LOANS -- 2.5%
Credit Acceptance Corp.
Company Guar. Notes
9.13% due 02/01/17*................... $ 685,000 $ 703,838
Ford Motor Credit Co., LLC
Senior Notes
8.13% due 01/15/20.................... 750,000 786,728
Ford Motor Credit Co., LLC
Senior Notes
8.70% due 10/01/14.................... 1,885,000 2,043,924
----------
3,534,490
----------
FIREARMS & AMMUNITION -- 0.2%
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*.................. 250,000 264,375
----------
FOOD-MEAT PRODUCTS -- 1.2%
Smithfield Foods, Inc.
Senior Notes
7.75% due 07/01/17.................... 1,225,000 1,203,562
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14*.................. 475,000 529,625
----------
1,733,187
----------
FUNERAL SERVICES & RELATED ITEMS -- 1.0%
Carriage Services, Inc.
Senior Notes
7.88% due 01/15/15.................... 850,000 818,125
StoneMor Partners L.P.
Company Guar. Notes
10.25% due 12/01/17*.................. 575,000 593,688
----------
1,411,813
----------
GAMBLING (NON-HOTEL) -- 0.0%
Greektown Holdings LLC
Senior Notes
10.75% due 12/01/13+*(8)(9)........... 489,000 44,010
----------
GAS-DISTRIBUTION -- 0.2%
MXEnergy Holdings, Inc.
Senior Sec. Notes
13.25% due 08/01/14*(1)(2)............ 384,000 291,840
----------
HAZARDOUS WASTE DISPOSAL -- 0.2%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16.................... 220,000 223,300
----------
INDEPENDENT POWER PRODUCERS -- 1.5%
Calpine Corp.
Notes
8.75% due 07/15/13+(1)(2)............. 3,485,000 0
Mirant North America LLC
Senior Notes
7.38% due 12/31/13.................... 325,000 324,187
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.................... 740,000 734,450
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
INDEPENDENT POWER PRODUCERS (CONTINUED)
NRG Energy, Inc.
Company Guar. Notes
7.38% due 01/15/17...................... $ 750,000 $ 742,500
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17...................... 440,000 394,900
----------
2,196,037
----------
INSURANCE-MULTI-LINE -- 0.7%
Hartford Financial Services Group, Inc.
Junior Sub. Notes
8.13% due 06/15/38(6)................... 965,000 1,003,600
----------
MACHINERY-FARMING -- 0.7%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13*..................... 925,000 959,688
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.8%
CPM Holdings, Inc.
Senior Sec. Notes
10.63% due 09/01/14*.................... 1,105,000 1,176,825
----------
MEDICAL PRODUCTS -- 1.2%
DJO Finance LLC/DJO Finance Corp.
Senior Notes
10.88% due 11/15/14*.................... 260,000 282,750
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17..................... 838,000 923,895
LVB Acquisition Holding LLC
Company Guar. Notes
10.38% due 10/15/17(17)................. 481,000 529,100
----------
1,735,745
----------
MEDICAL-DRUGS -- 0.5%
Axcan Intermediate Holdings, Inc.
Senior Notes
9.25% due 03/01/15...................... 600,000 648,000
----------
MEDICAL-HOSPITALS -- 3.9%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15...................... 1,435,000 1,485,225
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/20*..................... 1,030,000 1,078,281
HCA, Inc.
Senior Notes
8.50% due 04/15/19*..................... 550,000 591,594
HCA, Inc.
Senior Sec. Notes
9.25% due 11/15/16...................... 875,000 930,234
Tenet Healthcare Corp.
Senior Sec. Notes
9.00% due 05/01/15*..................... 1,370,000 1,476,175
----------
5,561,509
----------
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA -- 0.1%
Haights Cross Operating Co.
Bonds
13.5% due 03/15/14(1)(2).................... $ 187,319 $ 182,636
----------
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 -- 0.4%
ACCO Brands Corp.
Senior Sec. Notes
10.63% due 03/15/15*........................ 475,000 518,938
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.1%
Antero Resources Finance Corp.
Senior Notes
9.38% due 12/01/17*......................... 535,000 551,050
Chesapeake Energy Corp.
Senior Notes
6.63% due 01/15/16.......................... 1,250,000 1,225,000
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 375,000 407,812
Petroleum Development Corp.
Senior Notes
12.00% due 02/15/18......................... 90,000 95,400
Plains Exploration & Production Co.
Company Guar. Notes
7.75% due 06/15/15.......................... 350,000 354,813
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16......................... 375,000 414,375
----------
3,048,450
----------
OIL FIELD MACHINERY & EQUIPMENT -- 0.0%
Complete Production Services, Inc.
Company Guar. Notes
8.00% due 12/15/16.......................... 25,000 24,750
----------
OIL-FIELD SERVICES -- 1.4%
Aquilex Holdings LLC/Aquilex Finance Corp.
Senior Notes
11.13% due 12/15/16*........................ 570,000 612,750
Basic Energy Services, Inc.
Senior Sec. Notes
11.63% due 08/01/14......................... 700,000 770,000
Hornbeck Offshore Services, Inc.
Company Guar. Notes
8.00% due 09/01/17.......................... 655,000 655,000
----------
2,037,750
----------
PAPER & RELATED PRODUCTS -- 1.6%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(1)(2)(17)............... 165,290 160,331
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*......................... 290,000 301,600
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/16*....................... $ 425,000 $ 463,250
Neenah Paper, Inc.
Senior Notes
7.38% due 11/15/14........................ 975,000 957,938
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14....................... 385,000 383,075
----------
2,266,194
----------
PHARMACY SERVICES -- 0.1%
BioScrip, Inc.
Senior Notes
10.25% due 10/01/15*...................... 175,000 178,063
----------
PIPELINES -- 1.7%
Dynegy-Roseton Danskammer
Pass Through Certs.,
Series B
7.67% due 11/08/16........................ 1,550,000 1,506,414
El Paso Corp.
Senior Sub. Notes
6.88% due 06/15/14........................ 700,000 714,281
NGC Corp. Capital Trust
Company Guar. Bonds
8.32% due 06/01/27........................ 500,000 260,000
----------
2,480,695
----------
PRINTING-COMMERCIAL -- 0.3%
Cenveo Corp.
Company Guar. Notes
7.88% due 12/01/13........................ 445,000 426,088
----------
PUBLISHING-PERIODICALS -- 0.9%
Nielsen Finance LLC / Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16....................... 375,000 423,750
Nielsen Finance LLC/Nielsen Finance Co.
Company Guar. Bonds
12.50% due 08/01/16(4).................... 840,000 798,000
The Reader's Digest Association, Inc.
Company Guar. Notes
9.00% due 02/15/17+(1)(2)(8)(9)(17)....... 1,020,000 3,366
----------
1,225,116
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14+(8)(9)(17)............. 2,145,000 18,769
----------
RENTAL AUTO/EQUIPMENT -- 0.8%
Avis Budget Car Rental LLC/Avis Budget
Finance, Inc.
Company Guar. Notes
7.63% due 05/15/14........................ 1,130,000 1,118,700
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-ARTS & CRAFTS -- 0.2%
Michaels Stores, Inc.
Company Guar. Notes
11.38% due 11/01/16.................... $250,000 $ 270,000
----------
RETAIL-AUTOMOBILE -- 0.2%
Sonic Automotive, Inc.
Senior Sub. Notes
9.00% due 03/15/18*.................... 325,000 333,125
----------
RETAIL-DRUG STORE -- 0.4%
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16..................... 125,000 134,375
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19.................... 375,000 400,313
----------
534,688
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 1.1%
Macy's Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16..................... 396,000 395,010
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24..................... 172,000 162,540
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29..................... 233,000 221,350
Neiman-Marcus Group, Inc.
Company Guar. Notes
9.00% due 10/15/15(17)................. 810,000 826,200
----------
1,605,100
----------
RUBBER-TIRES -- 0.7%
The Goodyear Tire & Rubber Co.
Senior Notes
9.00% due 07/01/15..................... 350,000 361,375
The Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16.................... 600,000 648,000
----------
1,009,375
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(1)(2)(11)(12)..... 550,000 0
----------
SPECIAL PURPOSE ENTITIES -- 0.6%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*................... 625,000 594,531
UCI Holdco, Inc.
Senior Notes
8.26% due 12/15/13(17)................. 255,781 240,434
----------
834,965
----------
TELECOM SERVICES -- 1.7%
GCI, Inc.
Senior Notes
7.25% due 02/15/14..................... 450,000 450,562
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
TELECOM SERVICES (CONTINUED)
Qwest Corp.
Senior Notes
8.38% due 05/01/16....................... $ 225,000 $ 253,125
West Corp.
Company Guar. Notes
9.50% due 10/15/14....................... 1,500,000 1,541,250
West Corp.
Company Guar. Notes
11.00% due 10/15/16...................... 160,000 169,600
----------
2,414,537
----------
TELECOMMUNICATION EQUIPMENT -- 1.3%
Sorenson Communications, Inc.
Senior Sec. Notes
10.50% due 02/01/15*..................... 1,875,000 1,809,375
----------
TELEPHONE-INTEGRATED -- 2.4%
Cincinnati Bell, Inc.
Company Guar. Notes
8.75% due 03/15/18....................... 880,000 887,700
Frontier Communications Corp.
Senior Notes
7.13% due 03/15/19....................... 350,000 332,500
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15*...................... 570,000 607,050
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... 1,761,000 1,633,327
----------
3,460,577
----------
TELEVISION -- 0.4%
Paxson Communications Corp.
Senior Sec. Notes
7.38% due 01/15/13+*(1)(2)(8)(9)(17)..... 1,862,605 0
Sinclair Television Group, Inc.
Senior Sec. Notes
9.25% due 11/01/17*...................... 540,000 568,350
Young Broadcasting, Inc.
Senior Sub. Notes
8.75% due 01/15/14+(8)(9)................ 685,000 4,795
Young Broadcasting, Inc.
Company Guar. Notes
10.00% due 03/01/11+(8)(9)............... 635,000 4,445
----------
577,590
----------
THEATERS -- 1.3%
AMC Entertainment, Inc.
Senior Sub. Notes
8.00% due 03/01/14....................... 749,000 753,681
AMC Entertainment, Inc.
Senior Notes
8.75% due 06/01/19....................... 425,000 446,250
Marquee Holdings, Inc.
Senior Disc. Notes
9.51% due 08/15/14(4).................... 840,000 703,500
----------
1,903,431
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TOBACCO -- 1.1%
Alliance One International, Inc.
Senior Notes
10.00% due 07/15/16*................... $1,485,000 $ 1,551,825
------------
TRANSACTIONAL SOFTWARE -- 0.4%
Open Solutions, Inc.
Company Guar. Notes
9.75% due 02/01/15*.................... 650,000 559,813
------------
TRANSPORT-MARINE -- 0.6%
Marquette Transportation Co./Marquette
Transportation Finance Corp.
Senior Sec. Notes
10.88% due 01/15/17*................... 785,000 800,700
------------
TRANSPORT-SERVICES -- 0.3%
Bristow Group, Inc.
Senior Notes
7.50% due 09/15/17..................... 425,000 429,250
------------
WEB HOSTING/DESIGN -- 0.8%
Terremark Worldwide, Inc.
Senior Sec. Notes
12.00% due 06/15/17*................... 1,000,000 1,150,000
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $113,106,836).................... 114,590,770
------------
FOREIGN CORPORATE BONDS & NOTES -- 8.9%
BANKS-COMMERCIAL -- 0.6%
Barclays Bank PLC
Sub. Notes
8.55% due 06/15/11*(6)(18)............. 800,000 804,000
------------
COMPUTERS-MEMORY DEVICES -- 0.3%
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16..................... 360,000 360,900
------------
DIVERSIFIED BANKING INSTITUTIONS -- 0.5%
Credit Agricole SA
Sub. Notes
9.75% due 12/26/14..................... EUR 690,000 759,000
------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.5%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*.................... 710,000 743,725
------------
DIVERSIFIED MINERALS -- 0.8%
Teck Resources, Ltd.
Senior Sec. Notes
10.25% due 05/15/16.................... 525,000 624,750
Teck Resources, Ltd.
Senior Sec. Notes
10.75% due 05/15/19.................... 350,000 428,750
------------
1,053,500
------------
ELECTRIC-GENERATION -- 0.1%
Intergen NV
Sec. Notes
9.00% due 06/30/17*.................... 125,000 128,750
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
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*..................... 530,000 524,700
Elan Corp. PLC
Company Guar. Notes
8.88% due 12/01/13...................... 575,000 592,250
----------
1,116,950
----------
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 -- 0.6%
Novelis, Inc.
Company Guar. Notes
11.50% due 02/15/15..................... 760,000 817,950
----------
MULTIMEDIA -- 0.2%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16...................... 325,000 329,063
----------
OIL & GAS DRILLING -- 0.3%
P2021 Rig Co.
Senior Sec. Notes
13.50% due 12/15/13*.................... 455,000 461,825
----------
SATELLITE TELECOM -- 1.5%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Bonds
9.50% due 02/01/15(4)................... 700,000 724,500
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.50% due 01/15/13...................... 475,000 482,125
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.88% due 01/15/15*..................... 915,000 940,162
----------
2,146,787
----------
SPECIAL PURPOSE ENTITIES -- 1.9%
Fibria Overseas Finance, Ltd.
Company Guar. Notes
9.25% due 10/30/19*..................... 345,000 393,157
Hellas Telecommunications Luxembourg II
Sub. Notes
6.00% due 01/15/15*(6)(11).............. 1,025,000 41,000
LBG Capital No.1 PLC
Bank Guar. Notes
7.88% due 11/01/20...................... 2,520,000 2,268,000
----------
2,702,157
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELECOM SERVICES -- 0.8%
Wind Acquisition Finance SA
Company Guar. Bonds
12.00% due 12/01/15*....................... $ 261,000 $ 281,880
Wind Acquisition Finance SA
Senior Notes
11.75% due 07/15/17*....................... 810,000 895,050
-----------
1,176,930
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $16,993,331)......................... 12,605,997
-----------
LOANS(13)(14) -- 5.6%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.8%
Federal Mogul Corp.
Tranche B
2.17% due 12/29/14(2)...................... 675,633 626,016
Federal Mogul Corp.
Term Loan B D6
2.17% due 12/27/15(2)...................... 17,149 15,890
Federal Mogul Corp.
Term Loan B A2
2.17% due 12/27/15(2)...................... 42,873 39,724
Federal Mogul Corp.
Tranche C FL
2.17% due 12/27/15(2)...................... 54,663 50,649
Federal Mogul Corp.
Tranche B BO
2.18% due 12/27/15(2)...................... 85,746 79,449
Federal Mogul Corp.
Term Loan C
2.18% due 12/27/15(2)...................... 364,419 337,657
-----------
1,149,385
-----------
BEVERAGES-NON-ALCOHOLIC -- 0.4%
Le-Natures, Inc.
9.39% due 03/01/11+(2)(8)(9)............... 1,200,000 488,000
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
12.25% due 08/15/13(2)(5).................. 1,377,760 24,111
-----------
CASINO SERVICES -- 1.1%
Herbst Gaming, Inc.
Tranche 1
12.50% due 12/02/11+(2)(8)(9).............. 265,517 145,592
Herbst Gaming, Inc.
Delayed Draw
12.50% due 12/02/11+(2)(8)(9).............. 726,922 398,595
Holding Gaming Borrower LP
9.25% due 02/19/13(2)...................... 995,000 955,200
-----------
1,499,387
-----------
COMMERCIAL SERVICES -- 0.5%
Vertrue, Inc.
7.26% due 08/14/15(2)...................... 1,010,000 760,025
-----------
CONTAINERS-PAPER/PLASTIC -- 0.6%
Consolidated Container Compamy
Second Lien Term Loan
5.75% due 09/28/14(2)...................... 1,000,000 873,333
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
MEDICAL-DRUGS -- 1.0%
Triax Pharmaceuticals LLC
14.00% due 08/30/11(1)(2)(15).............. $1,596,512 $1,452,826
----------
MEDICAL-HOSPITALS -- 0.7%
Capella Healthcare, Inc.
2nd Lien
13.00% due 02/29/16(2)..................... 1,000,000 1,020,000
----------
THEATERS -- 0.5%
AMC Entertainment Holdings, Inc.
5.25% due 06/15/12(2)...................... 741,110 705,907
----------
TOTAL LOANS
(cost $10,051,492)......................... 7,972,974
----------
COMMON STOCK -- 1.7%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.7%
Accuride Corp............................... 294,000 386,610
Lear Corp.+................................. 8,342 661,938
----------
1,048,548
----------
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings+................ 692 29,791
----------
CASINO SERVICES -- 0.0%
Capital Gaming International, Inc.+ (1)(2).. 77 0
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.3%
CIT Group, Inc.+............................ 9,201 358,471
----------
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.+ (1)(2)................ 20,000 0
----------
FOOD-MISC. -- 0.2%
Wornick Co.+ (1)(2)......................... 7,270 283,530
----------
GAMBLING (NON-HOTEL) -- 0.1%
Shreveport Gaming Holdings, Inc.+ (1)(2).... 14,150 194,279
----------
GAS-DISTRIBUTION -- 0.1%
MXEnergy Holdings, Inc.+(1)(2).............. 192,375 163,423
----------
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 8,712
----------
PAPER & RELATED PRODUCTS -- 0.1%
Caraustar Industries, Inc.+ (1)(2).......... 73 161,038
----------
PUBLISHING-PERIODICALS -- 0.1%
Haights Cross Communication, Inc.(1)(2)..... 19,388 104,114
----------
TOTAL COMMON STOCK
(cost $3,629,828).......................... 2,353,190
----------
PREFERRED STOCK -- 0.3%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.3%
Lear Corp. Series A......................... 4,680 367,848
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C
14.70%(1)(2)............................... 39,177 392
----------
TOTAL PREFERRED STOCK
(cost $226,944)............................ 368,240
----------
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
WARRANTS+ -- 0.0%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.0%
Lear Corp.
Expires 11/14/09
(strike price $.01)........................ 1,164 $ 92,475
------------
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings
Expires 06/09/14
(strike price $55.31)...................... 3,355 12,162
Masonite Worldwide Holdings
Expires 06/09/16
(strike price $55.31)...................... 2,517 9,124
------------
21,286
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(1)(2)................. 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 $162,183)............................ 113,761
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $144,684,614)........................ 138,774,004
------------
REPURCHASE AGREEMENTS -- 1.8%
Bank of America Joint
Repurchase Agreement(3).................... $2,125,000 2,125,000
UBS Securities LLC Joint Repurchase
Agreement(3)............................... 380,000 380,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $2,505,000).......................... 2,505,000
------------
TOTAL INVESTMENTS
(cost $147,189,614)(7)..................... 99.4% 141,279,004
Other assets less liabilities................. 0.6 807,792
---------- ------------
NET ASSETS 100.0% $142,086,796
========== ============
- --------
+ Non-income producing security
** Denominated in United States Dollars unless otherwise indicated.
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At March 31, 2010, the aggregate value of
these securities was $39,551,415 representing 27.8% of net assets. Unless
otherwise indicated these securities are not considered to be illiquid.
+ 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 March 31, 2010, the aggregate value of these
securities was $13,314,024 representing 9.4% 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 March 31, 2010.
(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 senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major United States banks, or the certificate
of deposit rate. Senior loans are generally considered to be restrictive in
that the Fund is ordinarily contractually obligated to receive approval
from the Agent Bank and/or borrower prior to the disposition of a senior
loan.
(14)Senior loans in the Fund's Portfolio are generally subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
borrower to prepay, prepayments may occur. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown.
(15)A portion of the interest is paid in the form of additional bonds.
(16)Consist of more than one class of securities traded together as a unit.
(17)Income may be received in cash or additional bonds at the discretion of the
issuer.
(18)Perpetual maturity-maturity date reflects the next call date.
(19)"Step-up" security where the rate increases ("steps up") at a predetermined
rate. Rate shown reflects the increased rate.
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (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....... $ -- $ 769,072 $ -- $ 769,072
U.S. Corporate Bonds & Notes.... -- 110,941,910 3,648,860 114,590,770
Foreign Corporate Bonds & Notes. -- 12,605,997 0 12,605,997
Loans........................... -- 2,022,718 5,950,256 7,972,974
Common Stock.................... 1,436,810 -- 916,380 2,353,190
Preferred Stock................. 367,848 -- 392 368,240
Warrants........................ 113,761 -- 0 113,761
Repurchase Agreements............. -- 2,505,000 -- 2,505,000
---------- ------------ ----------- ------------
Total............................. $1,918,419 $128,844,697 $10,515,888 $141,279,004
========== ============ =========== ============
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
BONDS & NOTES BONDS & NOTES BONDS & NOTES LOANS STOCK
- - ------------- -------------- ----------------- ----------- ---------
Balance as of 3/31/2009.......................... $ 16,800 $ 8,088,682 $ 0 $ 9,162,825 $ 691,369
Accrued discounts/premiums....................... -- 731 -- 146,546 --
Realized gain (loss)............................. -- (1,695,516) -- (875,774) --
Change in unrealized appreciation (depreciation). 67,200 890,381 -- 4,172,672 (140,317)
Net purchases (sales)............................ (84,000) (3,730,733) -- (6,656,013) 365,328
Transfers in and/or out of level 3............... -- 95,315 -- -- --
-------- ----------- ---------- ----------- ---------
Balance as of 03/31/2010......................... $ -- $ 3,648,860 $ 0 $ 5,950,256 $ 916,380
======== =========== ========== =========== =========
PREFERRED
STOCK WARRANTS
- - --------- --------
Balance as of 3/31/2009.......................... $ 137,017 $ 449
Accrued discounts/premiums....................... -- --
Realized gain (loss)............................. (656,190) --
Change in unrealized appreciation (depreciation). 519,565 (449)
Net purchases (sales)............................ -- --
Transfers in and/or out of level 3............... -- --
--------- -----
Balance as of 03/31/2010......................... $ 392 $ 0
========= =====
See Notes to Financial Statements
59
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO PROFILE -- MARCH 31, 2010 -- (UNAUDITED)
ALLOCATION BY STATES*
Massachusetts................. 18.4%
New York...................... 17.4
New Jersey.................... 9.9
Ohio.......................... 8.9
Colorado...................... 7.8
California.................... 6.9
Texas......................... 6.6
Connecticut................... 3.9
New Mexico.................... 3.8
Georgia....................... 3.1
South Dakota.................. 2.9
Missouri...................... 2.9
Hawaii........................ 2.8
Arizona....................... 1.9
Pennsylvania.................. 1.5
Nevada........................ 0.2
Registered Investment Company. 0.1
----
99.0%
====
CREDIT QUALITY ALLOCATION+#
AAA........ 44.2%
AA......... 40.4
A.......... 9.9
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.
60
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 98.3%
ARIZONA -- 1.9%
Arizona Health Facilities Authority Revenue,
Revenue Bonds
5.50% due 01/01/31................................... $1,325,000 $1,355,025
----------
CALIFORNIA -- 6.9%
East Bay California Municipal Utility District Water
System Revenue,
Series A
5.00% due 06/01/32(1)................................ 2,500,000 2,627,050
University of California Revenues,
Series J
4.50% due 05/15/35(1)................................ 2,500,000 2,394,650
----------
5,021,700
----------
COLORADO -- 7.8%
Aurora Colorado Water Improvement Revenue,
Series A
5.00% due 08/01/36(1)................................ 3,000,000 3,083,040
Regional Transportation District Colorado Sales
Tax Revenue,
Series A
5.00% due 11/01/28(1)................................ 2,500,000 2,634,250
----------
5,717,290
----------
CONNECTICUT -- 3.9%
State of Connecticut, Refunded,
Series B
5.00% due 06/01/14(1)................................ 2,500,000 2,831,525
----------
GEORGIA -- 3.1%
Georgia Municipal Electric Authority,
Power Revenue,
Series Y
6.40% due 01/01/13(1)................................ 85,000 91,770
Henry County Georgia School District,
General Obligation
4.38% due 08/01/24(1)................................ 2,075,000 2,142,209
----------
2,233,979
----------
HAWAII -- 2.8%
Honolulu Hawaii City & County Board
Water Supply,
Water System Revenue,
Series A
4.75% due 07/01/31(1)................................ 2,000,000 2,042,060
----------
MASSACHUSETTS -- 18.4%
Massachusetts State School Building Authority,
Series A
5.00% due 08/15/24(1)................................ 3,000,000 3,214,980
Massachusetts State Water Resources Authority,
Revenue Bonds,
Series A
5.00% due 08/01/24(1)................................ 3,910,000 4,133,378
Massachusetts State,
Series C
5.25% due 08/01/24(1)................................ 2,300,000 2,571,975
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MASSACHUSETTS -- (CONTINUED)
University of Massachusetts Building Authority
Project Revenue,
Series 04-1
14.00% due 11/01/27(1)......................... $3,000,000 $ 3,469,140
-----------
13,389,473
-----------
MISSOURI -- 2.9%
Missouri State Health & Educational Facilities
Authority,
Series 2003-B
5.50% due 11/15/32(1).......................... 2,000,000 2,087,640
-----------
NEW JERSEY -- 9.9%
Garden State Preservation Trust New Jersey
Open Space & Farmland,
Series A
5.80% due 11/01/17(1).......................... 2,500,000 2,929,225
New Jersey Economic Development
Authority Revenue Bond,
School Facility Construction
5.00% due 09/01/10(1)(2)....................... 2,000,000 2,193,180
New Jersey State Transportation Transit Fund
Authority,
Series C
zero coupon due 12/15/25(1).................... 5,000,000 2,079,550
-----------
7,201,955
-----------
NEW MEXICO -- 3.8%
New Mexico Finance Authority Transportation,
Series A
5.25% due 06/15/21(1).......................... 2,500,000 2,761,400
-----------
NEW YORK -- 17.0%
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/13(1).......................... 410,000 465,682
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/13(1).......................... 35,000 41,360
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/14(1).......................... 510,000 594,522
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/14(1).......................... 45,000 55,255
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 2,901,522
New York State Thruway Authority,
Series G
5.25% due 01/01/27(1).......................... 1,500,000 1,576,845
Port Authority New York & New Jersey,
Revenue Bonds
4.50% due 09/15/39............................. 2,500,000 2,471,775
61
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2010 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES (CONTINUED)
NEW YORK (CONTINUED)
Sales Tax Asset Receivables Corp.,
Series A
5.25% due 10/15/27(1).......................... $2,000,000 $ 2,175,820
Triborough Bridge & Tunnel Authority,
Series A-2
5.25% due 11/15/34............................. 2,000,000 2,141,340
-----------
12,424,121
-----------
OHIO -- 8.9%
Ohio State Higher Educational Facility
Commission,
Revenue Bonds
5.25% due 01/01/29............................. 1,845,000 1,897,988
Olentangy Local School District Ohio,
Series A
5.25% due 12/01/27(1).......................... 3,250,000 3,720,470
Woodridge, Ohio, Woodmore Local
School District,
6.80% due 12/01/14(1).......................... 755,000 848,469
-----------
6,466,927
-----------
PENNSYLVANIA -- 1.5%
Pennsylvania State Higher Educational Facility
Authority,
Series B
6.00% due 08/15/22............................. 1,000,000 1,134,770
-----------
SOUTH DAKOTA -- 2.9%
South Dakota State Health & Educational
Facilities Revenue,
Refunding
6.25% due 07/01/10(1).......................... 2,120,000 2,147,009
-----------
TEXAS -- 6.6%
Austin Texas Water & Wastewater System,
Series A
5.00% due 11/15/34(1).......................... 2,140,000 2,198,015
Dallas Texas Area Rapid
Transportation, Sales Tax Revenue
5.00% due 12/01/36(1).......................... 2,500,000 2,594,325
-----------
4,792,340
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $68,197,760)............................. 71,607,214
-----------
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
---------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 0.7%
MUNICIPAL BONDS & NOTES -- 0.6%
NEVADA -- 0.2%
Clark County Nevada School District,
Series A
0.34% due 04/01/10(1)(2).............. $120,000 $ 120,000
-----------
NEW YORK -- 0.4%
New York NY,
Series H
0.34% due 04/01/10(1)(2).............. 300,000 300,000
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $420,000)....................... 420,000
-----------
REGISTERED INVESTMENT COMPANY -- 0.1%
SSGA Tax Free Money Market Fund
(cost $42,942)........................ 42,942 42,942
-----------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $462,942)....................... 462,942
-----------
TOTAL INVESTMENTS --
(cost $68,660,702)(3)................. 99.0% 72,070,156
Other assets less liabilities............ 1.0 763,107
-------- -----------
NET ASSETS -- 100.0% $72,833,263
======== ===========
- --------
(1)All or part of this security is insured by the Assured Guaranty Municipal
Corporation ("AGM"), Financial Guaranteed Insurance Corp. ("FGIC"),
Municipal Bond Insurance Association ("MBIA"), or American Municipal Bond
Assurance Corp. ("AMBAC"). The aggregate value is $60,124,794 or 82.6% of
Net Assets.
(2)Variable Rate Security -- the rate reflected is as of March 31, 2010,
maturity date reflects next reset date.
(3)See Note 5 for cost of investments on a tax basis.
62
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2010 (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......... $ -- $71,607,214 $ -- $71,607,214
Short Term Investment Securities:
Municipal Bonds & Notes......... -- 420,000 -- 420,000
Registered Investment Company... -- 42,942 -- 42,942
----------- ----------- ----------- -----------
Total............................. $ -- $72,070,156 $ -- $72,070,156
=========== =========== =========== ===========
See Notes to Financial Statements
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010
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. The Fund may also invest in
other types of U.S. Government 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.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (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 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 and
those differences could be significant. 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 for which the securities
are principally traded. 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
Fund uses the exchange that is the primary market for the security. However,
depending on the foreign market, closing prices may be up to 15 hours old
when they are used to price a Fund's shares, and the Fund may determine that
certain closing prices do not reflect the fair value of the security. This
determination will be based on 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. The pricing services may use valuation
models or matrix pricing which considers information with respect to
comparable bond and note transactions, quotations from bond dealers, or by
reference to other securities that are considered comparable in such
characteristics as rating, interest rate, and maturity date, option adjusted
spreads models, prepayments projections, interest rate spreads, and yield
curves to determine current value. If a vendor quote is unavailable the
securities may be priced at the mean of 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
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
active secondary market exists to a reliable degree, will be valued at the
mean of the last available bid and ask prices in the market for such Loans,
as provided by a third party pricing service. Investments in open-end and
closed-end registered investment companies that do not trade on an exchange
are valued at the end of day net asset value per share. Investments in
open-end and closed-end registered investment companies that trade on an
exchange are valued at the last sales price or official closing price as of
the close of the customary trading session on the exchange where the
security is principally traded.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to a Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day.
Securities for which market quotations are not readily available or if a
development/significant event occurs that may significantly impact the value
of the security, then these securities are fair valued, as determined
pursuant to procedures adopted in good faith by the Board. 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 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,
referenced indices, quoted prices in inactive markets, adjusted quoted
prices in active 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 March
31, 2010 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
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is
closed out. Until the Fund replaces a borrowed security, the Fund will
maintain daily a segregated account, containing cash or liquid securities,
at such a level that (i) the amount deposited in the account plus the amount
deposited with the broker as collateral will equal the current value of the
security sold short and (ii) the amount deposited in the segregated account
plus the amount deposited with the broker as collateral will not be less
than the market value of the security at the time it was sold short.
Liabilities for securities sold short are reported at market value in the
financial statements. Such liabilities are subject to off balance sheet risk
to the extent of any future increases in market value of the securities sold
short. The ultimate liability for securities sold short could exceed the
liabilities recorded in the Statement of Assets and Liabilities. The Fund
bears the risk of potential inability of the broker to meet their obligation
to perform.
MORTGAGE-BACKED DOLLAR ROLLS: Certain Funds may enter into dollar roll
transactions using "to be announced" ("TBA") mortgage-backed securities
("TBA Rolls"). The Funds' policy is to record the components of TBA Rolls as
purchase/sale transactions. Any difference between the purchase and sale
price is recorded as a realized gain or loss on the date the transaction is
entered into. During the year ended March 31, 2010, the U.S. Government
Securities Fund and the GNMA Fund entered into dollar roll transactions.
Dollar roll transactions involve the risk that the market value of the
securities held by the Fund may decline below the price of the securities
that the Fund has sold but is obligated to repurchase under the agreement.
In the event that the buyer of securities in a dollar roll transaction files
bankruptcy or becomes insolvent, the Fund's use of the proceeds from the
sale of the securities may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities. The return earned by the Fund with
the proceeds of the dollar roll transaction may not exceed transaction
costs. For the year ended March 31, 2010, the U.S. Government Securities
Fund and the GNMA Fund had realized gains (losses) from mortgage-backed
dollar rolls of $1,629,551 and $6,782,812, respectively.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to and in accordance with applicable
Securities and Exchange Commission ("SEC") guidance, 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.
As of March 31, 2010, 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. 12.37% $30,518,000
GNMA....................... 19.86 49,002,000
Strategic Bond............. 1.15 2,843,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated March 31, 2010, bearing interest at a
rate of 0.00% per annum, with a principal amount of $246,749,000, a
repurchase price of $246,749,000, and a maturity date of April 1, 2010. The
repurchase agreement is collateralized by the following:
MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT VALUE
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Bills. 0.16% 05/06/10 $248,535,000 $248,510,147
U.S. Treasury Bills. 0.15 06/03/10 3,175,000 3,174,048
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
As of March 31, 2010, the following portfolios held an undivided interest in
the joint repurchase agreement with Bank of America:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
- ---- ---------- ----------
High Yield Bond. 1.06% $2,125,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America, dated March 31, 2010, bearing interest at a rate of
0.01% per annum, with a principal amount of $199,850,000, a repurchase price
of $199,850,056, and a maturity date of April 1, 2010. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
- ------------------ -------- --------- ------------ ------------
U.S. Treasury Notes. 4.00% 8/15/2018 $197,509,600 $204,422,436
As of March 31, 2010, the following portfolios held an undivided interest in
the joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
- ---- ---------- ---------
High Yield Bond. 1.11% $380,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated March 31, 2010, bearing interest at a rate of
0.01% per annum, with a principal amount of $34,330,000, a repurchase price
of $34,330,010, and a maturity date of April 1, 2010. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
- ------------------ -------- --------- ----------- -----------
U.S. Treasury Notes. 0.88% 2/28/2011 $34,971,300 $35,146,157
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily from
settlement date except when collection is not expected. Dividend income is
recorded on the ex-dividend date 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 is 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
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
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 2006.
NOTE 3. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT, DISTRIBUTION AGREEMENT
AND SERVICE AGREEMENT
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SunAmerica. Under the Agreement, SunAmerica
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SunAmerica furnishes the Funds with office facilities, maintains
certain of the Funds' books and records, and pays the salaries and expenses
of all personnel, including officers of the Funds, who are employees of
SunAmerica and its affiliates.
The Funds pay SunAmerica a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
MANAGEMENT
ASSETS FEES
---------------------------- ----------
U.S. Government Securities Fund. $0 - $200 million 0.650%
(greater than) $200 million 0.620
(greater than) $400 million 0.550
GNMA Fund....................... $0 - $25 million 0.550
(greater than) $25 million 0.500
(greater than) $50 million 0.450
Strategic Bond Fund............. $0 - $350 million 0.650
(greater than) $350 million 0.600
High Yield Bond Fund............ $0 - $200 million 0.750
(greater than) $200 million 0.720
(greater than) $400 million 0.550
Tax Exempt Insured Fund*........ $0 - $350 million 0.500
(greater than) $350 million 0.450
- --------
* Pursuant to a Fee Waiver Agreement, 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 in
effect indefinitely, unless terminated by the Trustees, including a majority
of the Disinterested Trustees.
For the period ended March 31, 2010, the amount of the investment advisory
fee waived was $263,039 for the Tax Exempt Insured Fund. The amount is
reflected in the Statement of Operations.
The Strategic Bond Fund is subadvised by PineBridge Investments, LLC
("PineBridge"). The Tax Exempt Fund is subadvised by AIG Asset Management
(U.S.), LLC ("AMG"). Effective December 31, 2009, AIG Global Investment
Corp. ("AIGGIC"), the prior subadviser to the Tax Exempt Insured Fund,
designated AMG as its successor under the Subadvisory Agreement between
AIGGIC and SunAmerica and assigned its rights under the Subadvisory
Agreement to AMG. 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, PineBridge, AMG, and Wellington Management manage the investment
and reinvestment of the assets of the Strategic Bond Fund, Tax Exempt
Insured Fund, and the High Yield Bond Fund, respectively. AMG is an indirect
wholly-owned subsidiary of AIG, and an affiliate of SunAmerica.
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
SunAmerica pays PineBridge, AMG and Wellington Management fees out of the
investment advisory fees it receives from the respective Funds. The portion
of the investment advisory fees received by SunAmerica that are paid to
PineBridge, AMG and Wellington with respect to the Strategic Bond Fund, Tax
Exempt Insured Fund, and High Yield Bond Fund, respectively, 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, was 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, AMG 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 AMG 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.
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 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.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
For the period ended March 31, 2010, 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. $234,324
CLASS SPECIFIC
FUND EXPENSES
- ---- --------------
U.S. Government Securities Class A. $408,022
U.S. Government Securities Class B. 41,233
U.S. Government Securities Class C. 55,216
GNMA Class A....................... 489,638
GNMA Class B....................... 70,003
GNMA Class C....................... 126,914
High Yield Bond Class A............ 137,145
High Yield Bond Class B............ 43,257
High Yield Bond Class C............ 79,875
At March 31, 2010, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment are as follows:
OTHER EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities. $432,805
CLASS SPECIFIC
EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities Class A. $903,665
U.S. Government Securities Class B. 89,807
U.S. Government Securities Class C. 111,022
GNMA Class A....................... 885,166
GNMA Class B....................... 134,693
GNMA Class C....................... 195,890
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an
affiliate of the Adviser. Each Fund has adopted a Distribution Plan on
behalf of each Class in accordance with the provisions of Rule 12b-1 under
the 1940 Act (each a "Plan" and collectively the "Plans"), hereinafter
referred to as the "Class A Plan," the "Class B Plan" and the "Class C
Plan." In adopting the Class A Plan, the Class B Plan and the Class C Plan,
the Trustees determined that there was a reasonable likelihood that each
such Plan would benefit the Trust and the shareholders of the respective
class. The sales charge and distribution fees of a particular class will not
be used to subsidize the sale of shares of any other class.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated for include
fees paid to broker-dealers that have sold Fund shares, commissions, and
other expenses such as those incurred for sales literature, prospectus
printing and distribution and compensation to wholesalers. It is possible
that in any given year the amount paid to the Distributor under the Class A
Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution
costs as described above. The Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the year ended March 31,
2010, SACS received fees (see the Statement of Operations) based upon the
aforementioned rates.
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that for the year
ended March 31, 2010, 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. $ 71,371 $11,148 $ 48,604 $(1,296) $21,180 $ 6,573
GNMA....................... 476,193 56,742 339,702 4,315 44,738 50,973
Strategic Bond............. 395,013 45,130 284,906 6,547 75,580 30,702
High Yield Bond............ 152,764 19,367 107,656 510 44,157 5,842
Tax Exempt Insured......... 125,929 26,005 78,445 20,000 3,269 5,111
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the year ended March 31, 2010, the Funds incurred the following expenses
which are included in transfer agent fees and expenses in the Statement of
Operations to compensate SAFS pursuant to the terms of the Service Agreement:
PAYABLE AT
FUND EXPENSES MARCH 31, 2010
- ---- -------- --------------
U.S. Government Securities Class A. $352,041 $29,980
U.S. Government Securities Class B. 24,618 1,640
U.S. Government Securities Class C. 38,907 2,910
GNMA Class A....................... 709,689 55,431
GNMA Class B....................... 82,821 6,039
GNMA Class C....................... 170,675 14,019
Strategic Bond Class A............. 598,166 53,243
Strategic Bond Class B............. 98,433 9,357
Strategic Bond Class C............. 533,582 47,752
High Yield Bond Class A............ 167,603 14,554
High Yield Bond Class B............ 42,043 3,398
High Yield Bond Class C............ 95,175 8,294
Tax Exempt Insured Class A......... 124,480 10,173
Tax Exempt Insured Class B......... 5,313 432
Tax Exempt Insured Class C......... 35,546 3,138
At March 31, 2010, the following affiliates owned a percentage of the
outstanding shares of the following funds: Focused Balanced Portfolio,
Focused Fixed Income and Equity Strategy Portfolio and Focused Multi-Asset
Strategy Portfolio owned 6.6%, 7.3% and 7.1% of the U.S. Government
Securities Fund, respectively; Focused Balanced Strategy Portfolio and
Focused Multi-Asset Strategy Portfolio owned 15.5% and 10.9% of the GNMA
Fund, respectively; and Focused Multi-Asset Strategy Portfolio owned 15.6%
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.
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
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 79.8% of the aggregate voting power of AIG's common
stock and is entitled to approximately 79.8% of all dividends paid on AIG's
common stock, in each case treating the Stock as if converted. The Stock
will remain outstanding even if the Credit Facility is repaid in full or
otherwise terminates.
NOTE 4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the year ended March 31, 2010 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)............................. $ -- $ -- $847,461,553 $145,021,316 $32,939,386
Sales (excluding U.S. government
securities)............................. -- -- 771,436,856 146,587,003 26,631,267
Purchases of U.S. government securities.. 732,108,315 439,497,683 40,980,217 -- --
Sales of U.S. government securities...... 806,210,749 1,363,086,396 69,435,358 -- --
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, 2010 FOR THE YEAR ENDED MARCH 31, 2010
---------------------------------------- ------------------------------------
LONG-TERM
GAINS/CAPITAL UNREALIZED
ORDINARY LOSS APPRECIATION ORDINARY LONG-TERM
INCOME CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS TAX EXEMPT
- - ---------- ------------- -------------- ----------- ------------- ----------
U.S. Government Securities. $1,535,467 $ -- $ 346,762 $ 5,574,854 $2,031,112 $ --
GNMA....................... 4,328,064 -- 10,718,691 16,553,705 6,540 --
Strategic Bond............. 2,801,310 (93,954,102) 6,101,206 35,389,553 -- --
High Yield Bond............ 1,094,337 (101,752,662) (8,428,400) 14,724,554 -- --
Tax Exempt Insured......... 292,225* 56,016 3,413,638 4,042 -- 2,410,174
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2009
------------------------------------
ORDINARY LONG-TERM
INCOME CAPITAL GAINS TAX EXEMPT
- - ----------- ------------- ----------
U.S. Government Securities. $ 6,096,750 $-- $ --
GNMA....................... 16,899,882 -- --
Strategic Bond............. 51,954,475 -- --
High Yield Bond............ 15,266,449 -- --
Tax Exempt Insured......... -- -- 1,928,998
- --------
* Included in this amount are tax exempt distributable earnings of $159,195.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
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.......................................... $215,504,463 $518,549,600 $587,479,587 $149,707,404 $68,656,518
============ ============ ============ ============ ===========
Appreciation.................................. 3,529,789 12,518,230 27,374,881 12,841,066 3,633,863
Depreciation.................................. (3,183,027) (1,799,539) (21,265,980) (21,269,466) (220,225)
------------ ------------ ------------ ------------ -----------
Unrealized appreciation (depreciation) -- net. $ 346,762 $ 10,718,691 $ 6,108,901 $ (8,428,400) $ 3,413,638
============ ============ ============ ============ ===========
As of March 31, 2010, 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 2011 2012 2013 2014 2015 2016 2017 2018
- ---- ----------- ------- ------- ------- ------- ---------- ----------- -----------
U.S. Government
Securities........ $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
GNMA............... -- -- -- -- -- -- -- --
Strategic Bond..... 10,040,945 -- -- -- -- 1,093,732 27,694,295 55,125,130
High Yield Bond.... 48,994,980 -- -- -- -- 4,051,423 9,384,737 39,321,522
Tax Exempt Insured. -- -- -- -- -- -- -- --
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the year ended March 31, 2010:
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND UTILIZED EXPIRED
- ---- ------------ ------------
U.S. Government Securities. $1,844,407 $ --
GNMA....................... -- --
Strategic Bond............. -- 6,464,175
High Yield Bond............ -- 32,249,552
Tax Exempt Insured......... 443,460 --
Under the current law, losses 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, 2010, the Funds elected
to defer losses as follows:
DEFERRED DEFERRED
POST-OCTOBER POST-OCTOBER
FUND CAPITAL LOSS CURRENCY LOSS
- ---- ------------ -------------
U.S. Government Securities. $ 13,274 $--
GNMA....................... 318,622 --
Strategic Bond............. -- --
High Yield Bond............ 1,896,570 --
Tax Exempt Insured......... -- --
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
For the period ended March 31, 2010, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net paydown adjustments, amortization of discount/premium, fair fund
payments, expiration of capital loss carry forward amounts and treatment of
foreign currency to the components of net assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
INCOME (LOSS) GAIN (LOSS) PAID-IN
-------------- ------------- ------------
U.S. Government Securities. $ 495,857 $ (495,857) $ --
GNMA....................... 968,645 (967,495) (1,150)
Strategic Bond............. 4,114,868 2,349,307 (6,464,175)
High Yield Bond............ 390,977 31,858,575 (32,249,552)
Tax Exempt Insured......... 351 (351) --
NOTE 6. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each class of each series were as follows:
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010 MARCH 31, 2009
------------------------ -------------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares
sold(1)(2)(3)(4)... 4,951,835 $ 48,670,045 9,690,670 $ 93,729,200 190,591 $ 1,855,557 732,418 $ 7,103,474
Reinvested shares... 578,905 5,603,767 421,489 4,055,900 25,168 243,951 25,816 248,047
Shares
redeemed(1)(2)..... (6,748,893) (65,210,789) (11,990,274) (117,892,171) (895,135) (8,716,473) (767,191) (7,490,841)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase
(decrease)......... (1,218,153) $(10,936,977) (1,878,115) $ (20,107,071) (679,376) $(6,616,965) (8,957) $ (139,320)
========== ============ =========== ============= ======== =========== ======== ===========
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold......... 352,862 $ 3,451,796 1,499,699 $ 14,536,998
Reinvested shares... 37,758 365,353 24,122 231,902
Shares
redeemed(3)(4)..... (837,746) (8,141,457) (1,274,412) (12,379,114)
---------- ------------ ----------- -------------
Net increase
(decrease)......... (447,126) $ (4,324,308) 249,409 $ 2,389,786
========== ============ =========== =============
- --------
(1)For the year ended March 31, 2010, includes automatic conversion of 266,173
shares of Class B shares in the amount of $2,595,191 to 266,263 shares of
Class A shares in the amount of $2,595,191.
(2)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.
(3)For the year ended March 31, 2010, 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.
(4)For the year ended March 31, 2009, includes automatic conversion of 8,074
shares of Class C shares in the amount of $76,701 to 8,070 shares of Class A
shares in the amount of $76,701.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
GNMA FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010 MARCH 31, 2009
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(1)(2)(3)(4) 8,843,827 $ 103,866,817 16,454,058 $ 190,740,558 455,746 $ 5,370,482 893,277 $ 10,341,831
Reinvested
shares.......... 850,332 9,992,440 930,075 10,662,369 79,649 938,224 115,705 1,333,338
Shares
redeemed(1)(2).. (14,279,708) (167,696,258) (16,639,819) (190,295,408) (1,602,886) (18,883,109) (1,256,553) (14,461,371)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net
increase
(decrease)...... (4,585,549) $ (53,837,001) 744,314 $ 11,107,519 (1,067,491) $(12,574,403) (247,571) $(2,786,202)
=========== ============= =========== ============= ========== ============ ========== ============
GNMA FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold...... 2,818,246 $ 33,248,319 4,782,459 $ 55,469,801
Reinvested
shares.......... 140,442 1,656,772 110,892 1,283,588
Shares
redeemed(3)(4).. (3,180,279) (37,481,705) (1,545,670) (17,880,557)
----------- ------------- ----------- -------------
Net
increase
(decrease)...... (221,591) $ (2,576,614) 3,347,681 $ 38,872,832
=========== ============= =========== =============
STRATEGIC BOND FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010 MARCH 31, 2009
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(5)(6)(7)(8) 28,833,017 $ 89,973,498 28,181,402 $ 88,303,532 3,900,120 $ 12,442,954 2,768,121 $ 8,604,917
Reinvested
shares.......... 3,807,770 12,072,891 6,911,590 20,910,397 508,364 1,608,679 757,346 2,245,433
Shares
redeemed(5)(6).. (29,356,872) (92,555,446) (90,064,427) (269,765,594) (3,349,123) (10,498,692) (4,525,516) (13,765,056)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)...... 3,283,915 $ 9,490,943 (54,971,435) $(160,551,665) 1,059,361 $ 3,552,941 (1,000,049) $(2,914,706)
=========== ============= =========== ============= ========== ============ ========== ============
STRATEGIC BOND FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold...... 19,933,246 $ 62,309,817 20,978,989 $ 65,587,436
Reinvested
shares.......... 2,424,904 7,721,208 3,188,058 9,483,900
Shares
redeemed(7)(8).. (18,604,628) (59,021,966) (26,879,603) (82,124,482)
----------- ------------- ----------- -------------
Net
increase
(decrease)...... 3,753,522 $ 11,009,059 (2,712,556) $ (7,053,146)
=========== ============= =========== =============
- --------
(1)For the year ended March 31, 2010, includes automatic conversion of 814,886
shares of Class B shares in the amount of $9,605,095 to 817,013 shares of
Class A shares in the amount of $9,605,095.
(2)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.
(3)For the year ended March 31, 2010, 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.
(4)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.
(5)For the year ended March 31, 2010, includes automatic conversion of
1,118,312 shares of Class B shares in the amount of $3,512,291 to 1,117,804
shares of Class A shares in the amount of $3,512,291.
(6)For the year ended March 31, 2009, includes automatic conversion of 486,542
shares of Class B shares in the amount of $1,447,732 to 486,396 shares of
Class A shares in the amount of $1,447,732.
(7)For the year ended March 31, 2010, 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.
(8)For the year ended March 31, 2009, includes automatic conversion of 1,926
shares of Class C shares in the amount of $5,981 to 1,934 shares of Class A
shares in the amount of $5,981.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
HIGH YIELD BOND FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010 MARCH 31, 2009
------------------------ -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(1)(2)(3)(4)... 7,732,814 $ 23,414,767 22,337,994 $ 75,859,217 845,744 $ 2,570,744 906,056 $ 3,224,831
Reinvested shares... 1,547,670 4,861,972 1,546,637 4,985,176 348,771 1,096,203 399,013 1,255,376
Shares
redeemed(1)(2)..... (9,167,809) (28,603,749) (26,686,670) (90,949,453) (2,524,892) (7,828,528) (2,955,881) (9,863,942)
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease)......... 112,675 $ (327,010) (2,802,039) $(10,105,060) (1,330,377) $(4,161,581) (1,650,812) $(5,383,735)
========== ============ =========== ============= ========== =========== ========== ============
HIGH YIELD BOND FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold......... 4,117,325 $ 12,443,591 6,335,877 $ 22,432,864
Reinvested shares... 752,875 2,379,032 708,423 2,246,671
Shares
redeemed(3)(4)..... (4,817,123) (15,137,655) (8,506,235) (29,899,515)
---------- ------------ ----------- -------------
Net increase
(decrease)......... 53,077 $ (315,032) (1,461,935) $ (5,219,980)
========== ============ =========== =============
TAX EXEMPT INSURED FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009 MARCH 31, 2010 MARCH 31, 2009
------------------------ -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(5)(6)(7)(8)... 932,988 $ 11,729,716 898,941 $ 10,737,867 64,400 $ 810,262 60,526 $ 732,314
Reinvested shares... 82,253 1,035,297 80,083 971,850 2,633 33,157 4,261 51,727
Shares
redeemed(5)(6)..... (1,116,262) (14,059,383) (438,991) (5,309,371) (126,131) (1,582,742) (99,866) (1,189,974)
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease)......... (101,021) $ (1,294,370) 540,033 $ 6,400,346 (59,098) $ (739,323) (35,079) $ (405,933)
========== ============ =========== ============= ========== =========== ========== ============
TAX EXEMPT INSURED FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2010 MARCH 31, 2009
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold......... 544,809 $ 6,847,602 931,608 $ 11,190,502
Reinvested shares... 19,393 244,223 9,925 120,592
Shares
redeemed(7)(8)..... (379,122) (4,752,706) (146,791) (1,756,306)
---------- ------------ ----------- -------------
Net increase
(decrease)......... 185,080 $ 2,339,119 794,742 $ 9,554,788
========== ============ =========== =============
- --------
(1)For the year ended March 31, 2010, includes automatic conversion of
1,179,778 shares of Class B shares in the amount of $3,641,872 to 1,182,338
shares of Class A shares in the amount of $3,641,872.
(2)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.
(3)For the year ended March 31, 2010, 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.
(4)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.
(5)For the year ended March 31, 2010, includes automatic conversion of 54,699
shares of Class B shares in the amount of $687,518 to 54,748 shares of Class
A shares in the amount of $687,518.
(6)For the year ended March 31, 2009, includes automatic conversion of 39,126
shares of Class B shares in the amount of $479,229 to 39,169 shares of Class
A shares in the amount of $479,229.
(7)For the year ended March 31, 2010, 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.
(8)For the year ended March 31, 2009, includes automatic conversion of 104
shares of Class C shares in the amount of $1,284 to 104 shares of Class A
shares in the amount of $1,284.
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
NOTE 7. LINES OF CREDIT
The SunAmerica family of mutual Funds has established $75 million committed
and $50 million uncommitted lines of credit with State Street Bank and Trust
Company, the Funds' custodian. Interest is currently payable at the higher
of the Federal Funds Rate or London Interbank Offered Rate plus 125 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 the other expenses line 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. During the year ending
March 31, 2010, 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.............. 26 481 791,494 0.94
High Yield Bond............. 23 572 769,692 1.18
At March 31, 2010, there were no borrowings outstanding.
NOTE 8. INTERFUND LENDING AGREEMENT
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating funds to borrow money
from and loan money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended March 31, 2010 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.
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2010 -- (CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF MARCH 31, 2010
- ---- -----------------------------------------------
U.S. Government
Securities.............. $15,861 $ 894 $4,571
GNMA..................... 6,841 1,029 1,668
Strategic Bond........... 6,566 1,073 1,468
High Yield Bond.......... 6,613 270 1,931
Tax Exempt Insured....... 4,343 201 1,277
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 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 Funds had
52.6% and 95.3%, respectively, of their total net assets invested in such
securities.
78
SUNAMERICA INCOME FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Income Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the five
portfolios constituting SunAmerica Income Funds, hereafter referred to as the
"Funds," at March 31, 2010, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the
five years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Funds' management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at March 31, 2010 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where securities purchased had not been received, provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Houston, Texas
May 27, 2010
79
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
APPROVAL OF A NEW SUBADVISORY AGREEMENT
At an in-person meeting held on November 9, 2009, the Board of Trustees (the
"Board" the members of which are referred to as "Trustees") of the Trust,
including the Disinterested Trustees, approved a new subadvisory agreement
between SunAmerica and PineBridge with respect to the Strategic Bond Fund,
subject to shareholder approval (the "New Subadvisory Agreement"). The Board
approved the New Subadvisory Agreement in response to the anticipated
termination of the prior subadvisory agreement between SunAmerica and AIG
Global Investment Corp. ("AIGGIC") with respect to the Strategic Bond Fund (the
"Prior Subadvisory Agreement") as a result of the announcement that, on
September 5, 2009, AIG entered into an agreement to sell a portion of AIG
Investments, including its interest in AIGGIC, to Bridge Partners, L.P.
("Bridge"), a partnership formed by the Pacific Century Group ("PCG"), an
Asia-based private investment group (the "Transaction"). In preparation for the
closing of the Transaction, AIG merged AIGGIC with and into PineBridge on
December 31, 2009.
Shareholders of the Strategic Bond Fund approved the New Subadvisory Agreement
at a special meeting of shareholders held on March 24, 2010 and the Transaction
closed on March 29, 2010. Upon the closing of the Transaction, PineBridge
became an indirect, wholly-owned subsidiary of Bridge. The closing of the
Transaction also resulted in an "assignment" of the Prior Subadvisory Agreement
which, under the terms of the Prior Subadvisory Agreement and as required by
law, resulted in the automatic termination of the Prior Subadvisory Agreement.
The New Subadvisory Agreement, which became effective upon the closing of the
Transaction, will remain in effect until August 31, 2011, and is subject to
continuance thereafter for successive one-year periods in the manner required
by the 1940 Act and the rules thereunder.
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and AIGGIC provided, materials relating to the Board's consideration
of whether to approve the New Subadvisory Agreement. These materials included
(a) information concerning the Transaction, including the corporate
restructuring of AIGGIC into PineBridge in anticipation of the closing of the
Transaction; (b) a summary of the services to be provided by PineBridge;
(c) information independently compiled by Lipper on fees and expenses of the
Strategic Bond Fund as compared to a representative group of similar funds as
determined by Lipper; (d) information provided by AIGGIC on fees and expenses
of funds with similar investment styles as the Strategic Bond Fund;
(e) performance information of the Strategic Bond Fund as well as performance
information of funds and accounts managed by AIGGIC with investment policies
and/or strategies similar to the Strategic Bond Fund; (f) a discussion of
indirect benefits to PineBridge; (g) a report by SunAmerica of PineBridge's
compliance policies and procedures; (h) a summary of brokerage and soft dollar
practices; and (i) a discussion of the key personnel of PineBridge. In
determining whether to approve the New Subadvisory Agreement, the Board,
including the Disinterested Trustees, considered the following information:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY PINEBRIDGE
The Board, including the Disinterested Trustees, considered the nature, extent
and quality of services to be provided to the Strategic Bond Fund by
PineBridge. The Board observed that they had a long-standing relationship with
AIGGIC. The Board also considered information relating to the Transaction and
representations from AIGGIC and PCG, which would be the ultimate parent company
of PineBridge, that PCG was committed to PineBridge and would devote sufficient
resources to PineBridge. The Board concluded that the services to be provided
by PineBridge would be identical to the services that AIGGIC has provided to
the Strategic Bond Fund, which would include investment management services
such as investment research, advice and supervision, and determining which
securities will be purchased or sold by the Strategic Bond Fund, subject to the
oversight and review of SunAmerica. In addition, the Board reviewed AIGGIC's
history, structure, size, visibility and resources, which are needed to attract
and retain highly qualified investment professionals, and considered the
resources PineBridge was expected to have under its new ownership structure.
The Board also reviewed the personnel that would be responsible for providing
subadvisory services to the Strategic Bond Fund and considered that the key
investment personnel at AIGGIC that were responsible for managing the Strategic
Bond Fund would continue to manage the Strategic Bond Fund as portfolio
managers at PineBridge. The Board also considered that certain other key
personnel of AIGGIC would continue with PineBridge and that PCG anticipated
allowing PineBridge to manage its day-to-day operations. In light of these
considerations, the Board concluded that PineBridge would be able to continue
to provide a high level of service to the Funds.
The Board concluded, based on the materials provided and its prior experience
with AIGGIC, that: (i) PineBridge would be able to retain high quality
portfolio managers and other investment personnel; (ii) PineBridge would
continue to exhibit a high level of diligence and attention to detail in
carrying out its responsibilities as a subadviser; and (iii) PineBridge would
be responsive to requests of the Board and of SunAmerica. The Board concluded
that AIGGIC had developed internal policies and procedures for
80
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
monitoring compliance with the investment objectives, policies and restrictions
of the Strategic Bond Fund as set forth in its prospectus, and that such
policies and procedures were expected to continue. The Board also concluded
that it was satisfied with AIGGIC's code of ethics and compliance and
regulatory history. The Board concluded that the nature and extent of services
to be provided by PineBridge to the Strategic Bond Fund under the New
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, considered the investment
performance of AIGGIC. In connection with its review, the Board received
information prepared by AIGGIC regarding the performance information of the
Strategic Bond Fund as compared to a variable annuity fund subadvised by AIGGIC
whose investment policies and/or strategies were similar to those of the
Strategic Bond Fund. The Board noted that the performance of this comparable
fund was similar to the performance of the Strategic Bond Fund.
The Board also reviewed a Lipper report with respect to the Strategic Bond Fund
that was provided at the August 25-26, 2009 Board meeting in connection with
the annual renewal of the Strategic Bond Fund's Prior Subadvisory Agreement.
The Lipper report provided performance information through May 31, 2009 with
respect to the Strategic Bond Fund and a representative group of similar funds
as determined by Lipper. The Board also considered the performance information
of the Strategic Bond Fund through September 30, 2009.
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
Strategic Bond 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 concluded that, despite the lagging short-term performance, the
Strategic Bond Fund's overall performance was adequate.
CONSIDERATION OF THE SUBADVISORY FEES AND THE COST OF THE SERVICES AND PROFITS
TO BE REALIZED BY PINEBRIDGE AND ITS AFFILIATES FROM THE RELATIONSHIP WITH THE
STRATEGIC BOND FUND.
The Board, including the Disinterested Trustees, received and reviewed
information regarding the fees to be paid by SunAmerica to PineBridge pursuant
to the New 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 PineBridge or its affiliates in connection with providing such services to
the Strategic Bond Fund.
To assist in analyzing the reasonableness of the subadvisory fees under the New
Subadvisory Agreement, which are identical to the subadvisory fees of the Prior
Subadvisory Agreement, the Board reviewed the Lipper report referenced above
that was provided at the August 25-26, 2009 Board meeting in connection with
the annual renewal of the Strategic Bond Fund's Prior Subadvisory Agreement.
The Lipper report addressed the expense information of the Strategic Bond Fund
and a representative group of similar funds as determined by Lipper. In
considering the reasonableness of the subadvisory fee to be paid by SunAmerica
to PineBridge on behalf of the Strategic Bond Fund, the Board reviewed expense
comparisons by Lipper including contractual and actual subadvisory fees as a
portion of actual net management fees. The Board compared the Strategic 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 PineBridge. The Board noted that the Peer Group information as a whole
was useful in assessing whether the subadviser was providing services at a cost
that was competitive with other similar funds. The Board also considered
information provided by AIGGIC on fees relating to the variable annuity fund
subadvised by AIGGIC whose investment policies and/or strategies are
substantially similar to those of the Strategic Bond Fund, and noted that the
fees payable to AIGGIC with respect to the comparable fund were identical to
those payable to AIGGIC for the Strategic Bond Fund. The Board also considered
that the subadvisory fees are paid by SunAmerica out of its management fee and
not by the Strategic 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 noted that the subadvisory fees paid under the Prior Subadvisory
Agreement and the proposed subadvisory fees that would be paid to PineBridge
under the New Subadvisory Agreements are identical. 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 further considered whether there
were any collateral or "fall-out" benefits that PineBridge and its affiliates
may derive as a result of their relationship with the Strategic Bond Fund. The
Board concluded that any such benefits would be de minimis and would not impact
the reasonableness of the management fees.
81
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
The Board also reviewed financial information and other reports from PineBridge
and considered whether PineBridge would have the financial resources necessary
to attract and retain high quality investment management personnel and to
provide a high quality of services. In connection with its review, the Board
received the consolidated financial statements of AIG and its subsidiaries,
including AIGGIC, for the year ended December 31, 2008. The Board also received
pro forma financial information for Bridge. The Board concluded that PineBridge
had the financial resources necessary to perform its obligations under the New
Subadvisory Agreement and would provide the Strategic Bond Fund with high
quality services. The Board also concluded that the subadvisory fees were
reasonable in light of the factors discussed above.
ECONOMIES OF SCALE
The Board did not review specific information regarding whether there would be
economies of scale with respect to PineBridge's management of the Strategic
Bond Fund because it regards that information as less relevant at the
subadviser level. Rather, the Board noted that it considered information
regarding economies of scale in the context of the renewal of the Investment
Advisory and Management Agreement with SunAmerica.
OTHER FACTORS
In consideration of the New Subadvisory Agreement, the Board also received
information regarding PineBridge's brokerage and soft dollar practices. The
Board considered that SunAmerica and PineBridge are responsible for decisions
to buy and sell securities, selection of broker-dealers and negotiation of
commission rates.
CONCLUSION
After a full and complete discussion, the Board approved the New Subadvisory
Agreement. Based upon their evaluation, the Board, including the Disinterested
Trustees, was satisfied that the terms of the New Subadvisory Agreement are
fair and reasonable and in the best interests of the Strategic Bond Fund and
its shareholders. In arriving at a decision to approve the New Subadvisory
Agreement, the Board did not identify a 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 these determinations.
82
SUNAMERICA INCOME FUNDS
RESULTS OF SPECIAL SHAREHOLDER MEETING -- MARCH 31, 2010 -- (UNAUDITED)
A special meeting of shareholders of the Strategic Bond Fund was held on
March 24, 2010 (the "Meeting"). At the Meeting, shareholders approved (i) a new
subadvisory agreement between SunAmerica and PineBridge and (ii) the operation
of Strategic 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 PineBridge:
FOR AGAINST ABSTAIN
--- ------- -------
80,093,499 4,119,518 6,591,922
To approve the Manager of Managers Proposal:
FOR AGAINST ABSTAIN
--- ------- -------
73,049,074 10,888,757 6,867,109
83
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2010 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers who oversee operations of the Funds and other investment companies
within the Fund Complex.
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ----------- -------------- ------------------------------- ------------ ------------------------------
DISINTERESTED
TRUSTEES
Jeffrey S. Burum Trustee 2004- Founder and Chairman of 29 Director, Diversified Pacific
DOB: February 27, present the Board, National Opportunity Fund I, LLC
1963 Community Renaissance (2008 to present); Director,
(non-profit affordable Vandalia Heritage
housing services) (1993- Foundation (1998 to
present); Founder, Owner present).
and Partner of Colonies
Crossroads, Inc. (real estate)
(2000-present); Owner and
Managing Member of
Diversified Pacific
Development Group, LLC
(real estate) (1998-present).
Dr. Judith L. Craven Trustee 2001- Retired. 78 Director, Belo Corporation
DOB: October 6, 1945 present (1992-present); Director,
Sysco Corporation (1996-
present); Director, Luby's
Inc. (1998-present).
William F. Devin Trustee 2001- Retired. 78 Director, Boston Options
DOB: December 30, present Exchange (2001-present).
1938
Samuel M. Eisenstat Chairman 1986- Attorney, solo practitioner. 39 Director, North European
DOB: March 7, 1940 of the present Oil Royal Trust (1996-
Board present).
Stephen J. Gutman Trustee 1985- Vice President and 39 None
DOB: May 10, 1943 present Associate Broker, Corcoran
Group (real estate) (2003-
present); President and
Managing Member, Beau-
Brummell Soho LLC
(licensing of menswear
specialty retailing and other
activities) (1988-2006).
William J. Shea Trustee 2004- Executive Chairman, Lucid, 39 Chairman of the Board of
DOB: February 9, present Inc., (medical technology Centennial Technologies,
1948 and information) (2007- Inc. (1998-2001); Chairman
present); Managing Partner, of the Board, Royal and
DLB Capital, LLC (private SunAlliance Co. U.S.A.,
equity) (2006-2007). Inc. (2004-2006); Director,
Boston Private Financial
Holdings (2004-present);
Chairman, Demoullas
Supermarkets (1999-
present).
84
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- ------------------- ----------- -------------- ---------------------------- ------------ --------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1995- President, CEO and 87 None
DOB: January 23, present Director, SunAmerica,
1954 (1995-present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993-present); Chairman,
Advisor Group, Inc. (2004-
present).
OFFICERS
John T. Genoy President 2007- Chief Financial Officer, N/A N/A
DOB: November 8, present SunAmerica (2002-present);
1968 Senior Vice President,
SunAmerica (2003-present);
Chief Operating Officer,
SunAmerica (2006-present).
Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A
DOB: June 25, 1966 present SunAmerica (2004-present).
Gregory N. Bressler Chief 2005- Senior Vice President and N/A N/A
DOB: November 17, Legal present General Counsel,
1966 Officer SunAmerica (2005-present);
and Vice President and Director
Secretary of U.S. Asset Management
Compliance, Goldman
Sachs Asset Management
L.P. (2004-2005).
85
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ------------- -------------- ----------------------------- ------------ --------------------
Timothy Pettee Vice 2004- Chief Investment Officer, N/A N/A
DOB: April 7, 1958 President present SunAmerica (2003-
present).
Michael Cheah Vice 2000- Senior Vice President, N/A N/A
DOB: January 4, 1960 President present SunAmerica (1999-present).
James Nichols Vice 2006- Director, President and N/A N/A
DOB: April 7, 1966 President present CEO, SACS (2006-
present); Senior Vice
President, SACS (2002-
2006); Senior Vice
President, SunAmerica
(2002-present).
Cynthia Vice 2002- Vice President, SunAmerica N/A N/A
Gibbons-Skrehot President present (2007-present); Chief
DOB: December 6, and Chief Compliance Officer,
1967 Compliance SunAmerica (2002-2006).
Officer
("CCO")
Gregory R. Kingston Vice 2002- Vice President, SunAmerica N/A N/A
DOB: January 18, President present (2001-present).
1966 and
Assistant
Treasurer
Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel,
and SunAmerica (2005-
Assistant present); Vice President and
Secretary Associate General Counsel,
SunAmerica (2002-2005).
86
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2010 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
- -------------------- ------------- -------------- ---------------------------- ------------ --------------------
Matthew J. Hackethal Anti- 2006- Chief Compliance Officer, N/A N/A
DOB: December 31, Money present SunAmerica (2006-present);
1971 Laundering Vice President, Credit
Compliance Suisse Asset Management,
Officer LLC (2001-2006); CCO,
Credit Suisse Alternative
Funds (2005-2006); CCO,
Credit Suisse Asset
Management Securities, Inc.
(2004-2005).
- --------
* The business address for each Trustee and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the investment adviser. The "Fund
Complex" includes the Trust (5 funds), SunAmerica Equity Funds (3 funds),
SunAmerica Focused Series, Inc. (14 portfolios), SunAmerica Focused Alpha
Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc.
(1 fund), SunAmerica Money Market Funds, Inc. (2 funds); Anchor Series
Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (35 portfolios), VALIC Company I (33 portfolios),
VALIC Company II (15 portfolios), Seasons Series Trust (24 portfolios) and
SunAmerica Specialty Series (3 portfolios).
(2) Trusteeships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (I.E. "public companies") or other
investment companies regulated under the 1940 Act.
(3) Mr. Harbeck is an "interested person" of the Funds, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustees' retirement plan as discussed in Note 9 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
87
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- MARCH 31, 2010 -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon each Fund's income and distributions for the taxable
year ended March 31, 2010. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calender year ending December 31, 2010. The information necessary to
complete your income tax returns will be included with your Form 1099-DIV which
will be sent to shareholders in early 2011.
For the year ended March 31, 2010, the Funds paid the following long-term
capital gains dividends along with percentage of ordinary income dividends that
qualified for the 70% dividends received deduction for corporations:
NET QUALIFYING % FOR THE
LONG-TERM 70% DIVIDENDS
CAPITAL GAINS RECEIVED DEDUCTION
------------- --------------------
U.S. Government Securities Fund Class A. $0.10 -- %
U.S. Government Securities Fund Class B. 0.10 --
U.S. Government Securities Fund Class C. 0.10 --
GNMA Fund Class A....................... 0.00 --
GNMA Fund Class B....................... 0.00 --
GNMA Fund Class C....................... 0.00 --
Strategic Bond Fund Class A............. -- 0.37
Strategic Bond Fund Class B............. -- 0.37
Strategic Bond Fund Class C............. -- 0.37
High Yield Bond Fund Class A............ -- 0.70
High Yield Bond Fund Class B............ -- 0.70
High Yield Bond Fund Class C............ -- 0.70
Tax-Exempt Insured Fund Class A......... -- --
Tax-Exempt Insured Fund Class B......... -- --
Tax-Exempt Insured Fund Class C......... -- --
For the year ended March 31, 2010, certain dividends paid by the Strategic Bond
Fund and High Yield Bond Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the
distributions paid during the fiscal year, the following represents the maximum
amount that may be considered qualified dividend income:
PORTFOLIO AMOUNT
--------- --------
Strategic Bond Fund.. $149,480
High Yield Bond Fund. 57,118
88
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED)
As required by the Securities and Exchange Commission, the graphs on the
following pages compare the performance of a $10,000 investment in the
SunAmerica Income Funds' portfolios to a similar investment in an index. Please
note that "inception", as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Income Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
89
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
The SunAmerica U.S. Government Securities Fund Class A returned -0.75% (before
maximum sales charge) for the annual period ended March 31, 2010. The Fund
underperformed its benchmark, the Barclays Capital U.S. Government Index,*
which returned -0.13% for the same period.
What a difference a year makes. Signs that government-sponsored initiatives
were stabilizing the markets fueled investors' appetite for risk in almost all
asset classes. However, the sizeable returns of higher-risk asset classes --
such as high-yield bonds and emerging market equities -- came in the face of an
uncertain economy.
While fears that the Great Recession would become the second Great Depression
have dissipated, several critical issues remain such as high unemployment, the
uncertain impact of consumer deleveraging on the economy, a growing federal
budget deficit, and future inflationary threats. While the residential housing
market has begun showing signs of improvement, concerns remain regarding the
stability of the commercial real estate market.
Nevertheless, during the annual period, investors in general seemed to have
anticipated that the worst of the financial crisis was over and allocated money
into riskier securities compared to Treasuries. In a market which rewarded
riskier asset classes, having minimal credit exposure hindered Fund performance.
Over the past year, the Federal Open Market Committee (FOMC) maintained the
Federal Funds target rate to a range of 0.00-0.25%. As of March 31, 2010, the
10-year Treasury note closed at 3.83%, 116 basis points higher than the level a
year ago. Because of this increase, performance was hindered by the portfolio's
duration, which was longer than the benchmark.
The Fund pursued a strategy of holding minimal Freddie Mac, Fannie Mae, and
other credit securities during the annual period. This negatively impacted Fund
performance as the market became increasingly encouraged to assume more credit
risk.
- --------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares.
Interest rates and bond prices typically move inversely to each other,
therefore, as with any bond fund, the value of your investment in these Funds
may go up or down in response to changes in interest rates.
* 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.
Securities listed may or may not be a part of current portfolio construction.
90
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in U.S. Government Securities Fund
Class A shares would have increased to $16,308. The same amount invested in
securities mirroring the performance of the Barclays Capital U.S. Government
Index would be valued at $17,798.
[CHART]
U.S. Government
Securities Barclays Capital
Fund Class A# U.S. Government Index**
------------------ ----------------
3/31/00 9,530 10,000.00
4/30/00 9,537 9,972.33
5/31/00 9,543 9,978.75
6/30/00 9,688 10,156.70
7/31/00 9,753 10,255.09
8/31/00 9,877 10,406.69
9/30/00 9,954 10,436.34
10/31/00 10,072 10,536.18
11/30/00 10,250 10,743.38
12/31/00 10,521 10,957.17
1/31/01 10,587 11,067.84
2/28/01 10,682 11,194.01
3/31/01 10,776 11,233.19
4/30/01 10,671 11,118.61
5/31/01 10,689 11,155.30
6/30/01 10,766 11,206.62
7/31/01 11,030 11,475.58
8/31/01 11,147 11,617.87
9/30/01 11,336 11,820.02
10/31/01 11,551 12,124.98
11/30/01 11,276 11,853.38
12/31/01 11,132 11,750.29
1/31/02 11,239 11,826.36
2/28/02 11,384 11,935.54
3/31/02 11,147 11,675.95
4/30/02 11,427 11,954.16
5/31/02 11,522 12,025.81
6/30/02 11,692 12,194.10
7/31/02 11,916 12,461.82
8/31/02 12,151 12,708.75
9/30/02 12,440 13,006.74
10/31/02 12,420 12,902.19
11/30/02 12,345 12,791.09
12/31/02 12,615 13,101.00
1/31/03 12,592 13,068.16
2/28/03 12,758 13,279.00
3/31/03 12,722 13,241.13
4/30/03 12,770 13,302.49
5/31/03 13,085 13,647.77
6/30/03 13,001 13,576.31
7/31/03 12,284 13,015.12
8/31/03 12,404 13,087.92
9/30/03 12,845 13,468.38
10/31/03 12,657 13,276.64
11/30/03 12,670 13,291.94
12/31/03 12,786 13,409.70
1/31/04 12,899 13,520.76
2/29/04 13,040 13,682.70
3/31/04 13,140 13,803.16
4/30/04 12,713 13,387.81
5/31/04 12,661 13,338.30
6/30/04 12,741 13,392.40
7/31/04 12,863 13,517.15
8/31/04 13,107 13,780.40
9/30/04 13,129 13,808.42
10/31/04 13,234 13,918.36
11/30/04 13,129 13,752.95
12/31/04 13,235 13,875.97
1/31/05 13,341 13,963.00
2/28/05 13,277 13,864.37
3/31/05 13,221 13,818.17
4/30/05 13,463 14,039.93
5/31/05 13,578 14,202.54
6/30/05 13,617 14,282.55
7/31/05 13,471 14,110.21
8/31/05 13,669 14,318.30
9/30/05 13,495 14,148.89
10/31/05 13,349 14,049.39
11/30/05 13,411 14,112.93
12/31/05 13,591 14,243.84
1/31/06 13,582 14,219.48
2/28/06 13,612 14,242.08
3/31/06 13,442 14,113.83
4/30/06 13,342 14,074.49
5/31/06 13,316 14,077.32
6/30/06 13,349 14,116.60
7/31/06 13,531 14,285.12
8/31/06 13,745 14,486.87
9/30/06 13,868 14,615.83
10/31/06 13,948 14,692.20
11/30/06 14,101 14,841.31
12/31/06 13,986 14,738.85
1/31/07 13,945 14,720.74
2/28/07 14,188 14,947.29
3/31/07 14,148 14,951.19
4/30/07 14,213 15,025.67
5/31/07 14,064 14,907.50
6/30/07 13,989 14,901.49
7/31/07 14,180 15,113.83
8/31/07 14,356 15,342.05
9/30/07 14,433 15,439.26
10/31/07 14,551 15,552.25
11/30/07 14,930 15,979.61
12/31/07 14,931 16,015.13
1/31/08 15,231 16,398.59
2/29/08 15,320 16,553.76
3/31/08 15,394 16,663.48
4/30/08 15,196 16,429.52
5/31/08 14,981 16,249.82
6/30/08 15,087 16,344.57
7/31/08 15,098 16,416.03
8/31/08 15,317 16,583.57
9/30/08 15,438 16,658.49
10/31/08 15,332 16,612.60
11/30/08 16,115 17,400.25
12/31/08 16,651 17,999.41
1/31/09 16,191 17,551.62
2/28/09 16,104 17,503.97
3/31/09 16,432 17,821.98
4/30/09 16,169 17,584.91
5/31/09 16,007 17,451.59
6/30/09 16,026 17,428.25
7/31/09 16,140 17,511.59
8/31/09 16,270 17,649.52
9/30/09 16,416 17,781.48
10/31/09 16,432 17,784.24
11/30/09 16,558 18,011.68
12/31/09 16,174 17,603.37
1/31/10 16,367 17,859.19
2/28/10 16,404 17,932.62
3/31/10 16,308 17,798
U.S. GOVERNMENT SECURITIES FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -5.47% -0.75% -5.11% -1.29% -2.25% -1.30%
- --------------------------------------------------------------------------
5 Year Return 3.27% 23.35% 3.29% 19.54% 3.64% 19.55%
- --------------------------------------------------------------------------
10 Year Return 5.01% 71.13% 4.97% 62.50% 4.81% 59.92%
- --------------------------------------------------------------------------
Since Inception* 4.97% 133.49% 5.78% 286.46% 4.55% 62.00%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/1/93; Class B: 03/3/86; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2010, the SunAmerica U.S. Government
Securities Fund Class A returned -5.47%, compared to -0.13% for the Barclays
Capital U.S. Government Index. (The performance table and graph do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or
the redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
** The Barclays Capital U.S. Government Index is a broad market value-weighted
index of U.S. Treasury securities with maturities of one year or more,
securities issued by U.S. Government agencies and quasi-federal
corporations, and corporate or foreign debt guaranteed by the U.S.
Government. Indicies are not managed and an investor cannot invest directly
into an index.
91
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA GNMA FUND
The SunAmerica GNMA Fund Class A returned 3.55% (before maximum sales charge)
for the annual period ended March 31, 2010. The Fund underperformed its
benchmark, the Citigroup Mortgage GNMA Index,* which returned 5.08% in the same
period.
For the duration of the annual period ended March 31, 2010, the Federal Open
Market Committee (FOMC) maintained the Federal Funds target rate to a range of
0.00-0.25%. As of March 31, 2010, the 10-year Treasury note closed at 3.83%,
which is 116 basis points higher than the level a year ago.
The annual period was marked by renewed optimism that the economy, while still
in a fragile state, was exhibiting some signs of recovery. However, as the
twelve-month period drew to close, economic data remains mixed. For instance,
while existing home sales in February declined slightly, delinquency levels
remained high. Although there were some signs of stabilization in the labor
markets, the unemployment rate remained high at 9.7%. And even though personal
income growth remained weak, consumer credit continued to trend lower.
The Fund pursued a strategy of holding minimal Freddie Mac, Fannie Mae, and
other credit securities during the annual period. This negatively impacted Fund
performance as the market became increasingly encouraged to assume more credit
risk. Performance was also hindered by the portfolio's duration, which was
longer than the benchmark. Conversely, nearly record-low mortgage rates, made
possible by this FOMC mortgage-buying program which ended in late March,
positively affected mortgage funds' performance, and therefore contributed to
the Fund's performance.
- --------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares.
Interest rates and bond prices typically move inversely to each other,
therefore, as with any bond fund, the value of your investment in these Funds
may go up or down in response to changes in interest rates.
* The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
92
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in GNMA Fund Class A shares would
have increased to $17,127. The same amount invested in securities mirroring the
performance of the Citigroup Mortgage GNMA Index would be valued at $18,473.
[CHART]
Citigroup Mortgage
GNMA Fund Class A# GNMA Index**
------------------- ------------------
3/31/00 9,525 10,000.00
4/30/00 9,520 9,989.50
5/31/00 9,570 10,034.24
6/30/00 9,724 10,219.06
7/31/00 9,769 10,269.53
8/31/00 9,907 10,421.89
9/30/00 10,000 10,526.65
10/31/00 10,071 10,603.17
11/30/00 10,219 10,750.21
12/31/00 10,429 10,900.11
1/31/01 10,586 11,077.57
2/28/01 10,696 11,129.81
3/31/01 10,774 11,193.38
4/30/01 10,728 11,217.11
5/31/01 10,761 11,307.54
6/30/01 10,794 11,330.73
7/31/01 11,104 11,535.34
8/31/01 11,197 11,620.59
9/30/01 11,406 11,777.72
10/31/01 11,629 11,930.90
11/30/01 11,333 11,830.92
12/31/01 11,209 11,799.00
1/31/02 11,331 11,927.08
2/28/02 11,512 12,040.70
3/31/02 11,274 11,928.99
4/30/02 11,560 12,133.73
5/31/02 11,637 12,217.89
6/30/02 11,775 12,310.64
7/31/02 11,957 12,448.54
8/31/02 12,116 12,550.03
9/30/02 12,305 12,655.60
10/31/02 12,343 12,695.29
11/30/02 12,324 12,700.89
12/31/02 12,501 12,828.42
1/31/03 12,531 12,867.84
2/28/03 12,655 12,937.54
3/31/03 12,659 12,933.86
4/30/03 12,726 12,964.41
5/31/03 12,905 12,971.92
6/30/03 12,876 13,008.20
7/31/03 12,189 12,802.50
8/31/03 12,339 12,878.75
9/30/03 12,754 13,076.94
10/31/03 12,628 13,047.60
11/30/03 12,615 13,099.41
12/31/03 12,766 13,214.36
1/31/04 12,867 13,280.09
2/23/04 13,350.64
2/29/04 12,971 13,367.91
3/31/04 13,046 13,423.64
4/30/04 12,705 13,212.91
5/31/04 12,658 13,176.30
6/30/04 12,766 13,296.96
7/6/04 13,382.16
7/31/04 12,904 13,410.83
8/31/04 13,106 13,614.33
9/30/04 13,119 13,641.52
10/31/04 13,226 13,755.60
11/30/04 13,182 13,718.54
12/31/04 13,269 13,818.79
1/31/05 13,348 13,903.06
2/28/05 13,273 13,857.24
3/31/05 13,230 13,821.10
4/30/05 13,376 13,965.71
5/31/05 13,460 14,069.57
6/30/05 13,496 14,115.40
7/31/05 13,437 14,069.26
8/31/05 13,558 14,186.52
9/30/05 13,466 14,124.75
10/31/05 13,386 14,058.01
11/30/05 13,415 14,092.19
12/31/05 13,571 14,280.33
1/31/06 13,604 14,320.34
2/28/06 13,620 14,350.67
3/31/06 13,518 14,250.77
4/30/06 13,453 14,199.01
5/31/06 13,402 14,163.86
6/30/06 13,412 14,169.62
7/31/06 13,599 14,371.95
8/31/06 13,787 14,608.51
9/30/06 13,888 14,695.10
10/31/06 13,978 14,801.22
11/30/06 14,092 14,946.29
12/31/06 14,056 14,925.89
1/31/07 14,033 14,925.55
2/28/07 14,235 15,112.60
3/31/07 14,225 15,140.37
4/30/07 14,291 15,215.17
5/31/07 14,177 15,132.34
6/30/07 14,087 15,038.53
7/31/07 14,233 15,162.05
8/31/07 14,405 15,350.14
9/30/07 14,506 15,478.39
10/31/07 14,671 15,636.94
11/30/07 15,014 15,949.30
12/31/07 15,029 15,969.72
1/31/08 15,270 16,243.93
2/29/08 15,398 16,324.24
3/31/08 15,462 16,365.62
4/30/08 15,362 16,347.51
5/31/08 15,169 16,258.52
6/30/08 15,243 16,267.12
7/31/08 15,238 16,261.74
8/31/08 15,424 16,438.24
9/30/08 15,553 16,551.13
10/31/08 15,367 16,313.12
11/30/08 16,030 16,915.96
12/31/08 16,334 17,215.50
1/31/09 16,221 17,207.60
2/28/09 16,296 17,310.63
3/31/09 16,541 17,578.94
4/30/09 16,502 17,618.91
5/31/09 16,491 17,642.00
6/30/09 16,452 17,631.54
7/31/09 16,597 17,823.76
8/31/09 16,715 17,934.86
9/30/09 16,817 18,074.98
10/31/09 16,921 18,179.37
11/30/09 17,154 18,419.39
12/31/09 16,822 18,138.08
1/31/10 17,061 18,363.52
2/28/10 17,136 18,458.46
3/31/10 17,127 18,472.78
GNMA FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -1.39% 3.55% -1.10% 2.88% 1.96% 2.96%
- --------------------------------------------------------------------------
5 Year Return 4.28% 29.46% 4.28% 25.31% 4.63% 25.41%
- --------------------------------------------------------------------------
10 Year Return 5.53% 79.82% 5.36% 68.56% 5.36% 68.50%
- --------------------------------------------------------------------------
Since Inception* 5.77% 164.44% 7.24% 556.68% 5.20% 73.09%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/11/93; Class B: 04/25/83; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2010, the SunAmerica GNMA Fund Class A
returned -1.39%, compared to 5.08% for the Citigroup Mortgage GNMA Index. (The
performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
**The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
93
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA STRATEGIC BOND FUND
The SunAmerica Strategic Bond Fund Class A returned 30.31% (before maximum
sales charge) for the annual period ended March 31, 2010. The Fund outperformed
its benchmark, the Barclays Capital U.S. Aggregate Bond Index,* which returned
7.69% for the same period.
The fixed income market has enjoyed robust performance over the past year as
significant liquidity measures employed by central banks and governments in
addition to a nascent global economic recovery have served to ignite a spread
rally across most asset classes. The reduction in short-term rates coupled with
various programs targeted at restoring health to the financial system has
provided a liquidity boost that has effectively reinvigorated markets. Private
sector cost cutting has bolstered balance sheets and left companies in a
relatively strong position. A relatively anemic economic recovery has tempered
market performance somewhat, yet the return to a normal market environment from
the despair of 2008 has produced impressive returns.
Market conditions had a positive effect on the Fund's performance as the rally
in fixed income markets fueled strong returns. Most notable were the impressive
rebound in the lower-rated fixed income sectors, including U.S. High Yield and
Emerging Markets. Exposure to these areas and to the Investment Grade sector
contributed to Fund performance. Security selection also played an important
role because investments in many specific securities that benefited from the
strong liquidity and improving market conditions enhanced returns.
During the year, the yield curve steepened as measured from 2-year to 30-year
U.S. Treasury notes by almost 100 basis points. Therefore, the term structure
of the Fund detracted from performance given the Fund's investments in
longer-term securities.
Sector selection played a positive role in portfolio returns. Exposure to
sectors that benefited most from the rebound in liquidity boosted performance.
Industrials, Banks and Financials provided the strongest sector contributions
to returns over the annual period. Agencies, Fannie Mae mortgage backed
securities and Ginnie Mae mortgage backed securities were sectors that
detracted from performance.
Given the Fund's global nature, country selection played a role in performance.
Overall, currency exposure provided a boost to returns. Specifically, exposure
to Australia and Canada generated the strongest returns given the
commodity-based exposure of these economies. Exposure to the Euro and the Yen
detracted from performance.
As mentioned above, security selection played an important role in portfolio
performance. Certain high yield securities, as well as Russian Federation
bonds, were strong contributors. Japanese and Greek government debts were the
largest negative contributors.
- --------
Past performance is no guarantee of future results.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates. High-yield bonds tend
to have lower interest rate risk than higher-quality bonds of similar maturity
but carry greater credit and default risk. Investing internationally involves
special risks, such as currency fluctuations, and economic and political
instability.
* The Barclays Capital U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
Securities listed may or may not be a part of current Fund construction.
94
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares
would have increased to $19,281. The same amount invested in securities
mirroring the performance of the Barclays Capital U.S. Aggregate Bond Index
would be valued at $18,396.
[CHART]
Strategic Bond Fund Barclays Capital U.S.
Class A# Aggregate Bond Index**
------------------- ---------------------
3/31/00 9,727 10,188.00
4/30/00 9,589 10,158.00
5/31/00 9,521 10,153.00
6/30/00 9,747 10,364.00
7/31/00 9,885 10,459.00
8/31/00 10,061 10,610.00
9/30/00 10,013 10,677.00
10/31/00 9,793 10,748.00
11/30/00 9,644 10,924.00
12/31/00 9,906 11,127.00
1/31/01 10,300 11,308.00
2/28/01 10,367 11,407.00
3/31/01 10,230 11,464.00
4/30/01 10,101 11,416.00
5/31/01 10,206 11,484.00
6/30/01 10,195 11,528.00
7/31/01 10,262 11,786.00
8/31/01 10,438 11,921.00
9/30/01 10,185 12,060.00
10/31/01 10,427 12,312.00
11/30/01 10,586 12,142.00
12/31/01 10,546 12,065.00
1/31/02 10,625 12,162.00
2/28/02 10,687 12,280.00
3/31/02 10,683 12,076.00
4/30/02 10,886 12,310.00
5/31/02 10,838 12,415.00
6/30/02 10,571 12,522.00
7/31/02 10,370 12,673.00
8/31/02 10,639 12,887.00
9/30/02 10,614 13,096.00
10/31/02 10,701 13,036.00
11/30/02 10,935 13,033.00
12/31/02 11,182 13,302.00
1/31/03 11,356 13,313.00
2/28/03 11,553 13,498.00
3/31/03 11,652 13,487.00
4/30/03 12,096 13,599.00
5/31/03 12,471 13,852.00
6/30/03 12,576 13,825.00
7/31/03 12,259 13,360.00
8/31/03 12,443 13,448.00
9/30/03 12,861 13,804.00
10/31/03 12,932 13,676.00
11/30/03 13,119 13,708.00
12/31/03 13,464 13,848.00
1/31/04 13,693 13,959.00
2/29/04 13,679 14,110.00
3/31/04 13,754 14,216.00
4/30/04 13,460 13,846.00
5/31/04 13,285 13,791.00
6/30/04 13,521 13,869.00
7/31/04 13,680 14,006.00
8/31/04 13,965 14,312.00
10/31/04 14,426 14,432.00
11/30/04 14,719 14,317.00
12/31/04 15,126 14,449.00
1/31/05 15,159 14,539.00
2/28/05 15,287 14,454.00
3/31/05 14,999 14,379.00
4/30/05 15,066 14,574.00
5/31/05 15,221 14,732.00
6/30/05 15,415 14,812.00
7/31/05 15,480 14,677.00
8/31/05 15,718 14,865.00
9/30/05 15,696 14,712.00
10/31/05 15,496 14,596.00
11/30/05 15,607 14,660.00
12/31/05 15,817 14,800.00
1/31/06 16,032 14,801.00
2/28/06 16,137 14,850.00
3/31/06 16,025 14,704.00
4/30/06 16,139 14,677.00
5/31/06 15,936 14,662.00
6/30/06 15,911 14,693.00
7/31/06 16,258 14,891.00
8/31/06 16,515 15,119.00
9/30/06 16,584 15,252.00
10/31/06 16,791 15,353.00
11/30/06 17,045 15,531.00
12/31/06 17,070 15,441.00
1/31/07 17,044 15,435.00
2/28/07 17,249 15,673.00
3/31/07 17,318 15,673.00
4/30/07 17,482 15,758.00
5/31/07 17,458 15,638.00
6/30/07 17,288 15,592.00
7/31/07 17,070 15,722.00
8/31/07 17,144 15,915.00
9/30/07 17,551 16,035.00
10/31/07 17,835 16,180.00
11/30/07 17,664 16,470.00
12/31/07 17,737 16,517.00
1/31/08 17,716 16,794.00
2/29/08 17,688 16,818.00
3/31/08 17,716 16,875.00
4/30/08 17,948 16,840.00
5/31/08 17,929 16,716.00
6/30/08 17,705 16,703.00
7/31/08 17,588 16,689.00
8/31/08 17,577 16,847.00
9/30/08 16,626 16,621.00
10/31/08 14,677 16,229.00
11/30/08 14,394 16,757.00
12/31/08 14,965 17,382.00
1/31/09 15,111 17,229.00
2/28/09 14,917 17,164.00
3/31/09 19,281 18,396.00
3/31/10 19,281 18,396.00
STRATEGIC BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 23.95% 30.31% 25.05% 29.05% 28.39% 29.39%
- --------------------------------------------------------------------------
5 Year Return 4.60% 31.33% 4.52% 26.64% 4.86% 26.78%
- --------------------------------------------------------------------------
10 Year Return 6.79% 102.51% 6.73% 91.75% 6.64% 90.14%
- --------------------------------------------------------------------------
Since Inception* 6.56% 198.00% 7.01% 195.76% 6.70% 182.04%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2010, the SunAmerica Strategic Bond
Fund Class A returned 23.95%, compared to 7.69% for the Barclays Capital U.S.
Aggregate Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
** The Barclays Capital U.S. Aggregate Bond Index represents securities that
are SEC-registered, taxable and dollar denominated. The index covers the
U.S. investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index.
95
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
The SunAmerica High Yield Bond Fund Class A returned 48.44% (before maximum
sales charge) for the one-year period ended March 31, 2010. The Fund
underperformed its benchmark, the Citigroup High Yield Market Index,* which
returned 53.86% in the same period.
Improving economic news and better-than-expected corporate earnings supported a
positive tone in risk markets during the annual period. In the closing months
of 2009, the global economy demonstrated clear signs of responsiveness to the
massive stimulus injected following a severe contraction in late 2008. Markets
settled into a cyclical 'sweet spot' as stimulus remained in place and signs of
economic recovery broadened. Investors became increasingly comfortable with
risk as indicators of financial stress faded.
U.S. economic releases exhibited further positive momentum with improvements in
the housing market and retail sales, strong manufacturing data, and a
moderation in the pace of layoffs. While concerns over sustainability remain
due to the state of the banking system and commercial property market, the
unprecedented policy response is gaining traction. The Federal Reserve
maintained its accommodative monetary policy during the annual period holding
the Federal Funds rate in the 0.00-0.25% range.
The lower-quality segment of the high yield market significantly outperformed
the higher-quality segment during the annual period. The BB-rated loans in the
Citigroup High Yield Market Index returned 31.1% over the past twelve months
versus 46.0% for B-rated and 122.5% for CCC-rated securities. In this
environment, the Fund's higher-quality bias detracted from relative results.
During the first four months of the annual period, when the Fund was managed by
a prior subadviser, security selection was the primary source of
underperformance versus the benchmark. Wellington Management assumed management
of the portfolio on July 24, 2009. Since that period, sector allocation
contributed positively to relative performance. Underweight positioning to
defensive sectors such as Supermarkets and Utilities helped relative results
because those sectors lagged in the strong market environment. Overweight
positioning in the Financial Services and Auto sectors was also additive to
relative performance. An underweight to Retailers and an overweight to Media
Cable and Technology detracted from relative returns, offsetting some of the
positive contribution mentioned above.
This strong sector allocation was more than offset by weak security selection
during the period. Positive security selection in Autos, Energy and Chemicals,
specifically overweight positioning in Ford Motor Company and MXenergy, was
offset by negative security selection in Financial Services and Media
Non-Cable, particularly not holding positions in Clear Channel Communications,
Residential Capital or iStar Financial. Among the largest contributors to the
Fund's relative returns during the period were Accuride, Open Solutions and
Ford Motor Company. Holdings in El Dorado Resorts and First Data detracted from
relative results. Lower-rated securities continued their outperformance over
higher-quality names; security selection in higher-quality names detracted from
relative returns during the annual period.
- --------
Past performance is no guarantee of future results.
High-yield bonds tend to have lower interest-rate risk than higher-quality
bonds of similar maturity but carry greater credit and default risk.
Interest rates and bond prices typically move inversely to each other:
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
Securities listed may or may not be a part of current Fund construction.
96
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in High Yield Bond Fund Class A
shares would have increased to $15,428. The same amount invested in securities
mirroring the performance of the Citigroup High Yield Market Index would be
valued at $20,241.
[CHART]
High Yield Bond Fund Citigroup High
Class A# Yield Market Index**
-------------------- --------------------
3/31/00 9,526 10,000.00
4/30/00 9,600 10,039.99
5/31/00 9,541 9,900.21
6/30/00 9,713 10,122.44
7/31/00 9,757 10,232.49
8/31/00 9,947 10,308.57
9/30/00 9,854 10,198.17
10/31/00 9,560 9,896.32
11/30/00 9,050 9,491.49
12/31/00 9,178 9,685.41
1/31/01 9,831 10,337.95
2/28/01 9,962 10,461.45
3/31/01 9,690 10,271.42
4/30/01 9,496 10,120.32
5/31/01 9,631 10,282.74
6/30/01 9,410 10,000.00
7/31/01 9,449 10,188.26
8/31/01 9,571 10,327.33
9/30/01 9,168 9,583.85
10/31/01 9,352 9,902.15
11/30/01 9,567 10,278.50
12/31/01 9,506 10,212.68
1/31/02 9,495 10,256.20
2/28/02 9,317 10,144.73
3/31/02 9,508 10,414.74
4/30/02 9,599 10,585.30
5/31/02 9,438 10,454.01
6/30/02 8,735 9,533.25
7/31/02 8,359 9,102.23
8/31/02 8,405 9,448.67
9/30/02 8,304 9,262.89
10/31/02 8,225 9,231.04
11/30/02 8,682 9,935.60
12/31/02 8,784 10,056.62
1/31/03 9,033 10,431.01
2/28/03 9,099 10,570.79
3/31/03 9,275 10,926.78
4/30/03 9,826 11,605.51
5/31/03 10,002 11,682.65
6/30/03 10,333 12,045.72
7/31/03 10,280 11,867.72
8/31/03 10,409 11,989.45
9/30/03 10,775 12,344.74
10/31/03 10,962 12,631.73
11/30/03 11,148 12,807.25
12/31/03 11,520 13,135.99
1/31/04 11,912 13,363.18
2/29/04 11,760 13,289.93
3/31/04 11,691 13,373.44
4/30/04 11,713 13,327.79
5/31/04 11,515 13,097.07
6/30/04 11,829 13,292.17
7/31/04 11,915 13,462.97
8/31/04 12,053 13,709.11
9/30/04 12,220 13,895.40
10/31/04 12,505 14,183.45
11/30/04 12,951 14,346.76
12/31/04 13,338 14,552.89
1/31/05 13,415 14,533.07
2/28/05 13,650 14,751.41
3/31/05 13,242 14,337.03
4/30/05 13,024 14,139.57
5/31/05 13,282 14,430.45
6/30/05 13,608 14,672.14
7/31/05 13,966 14,884.46
8/31/05 14,260 14,946.39
9/30/05 14,157 14,797.06
10/31/05 13,971 14,686.65
11/30/05 14,128 14,724.51
12/31/05 14,320 14,855.09
1/31/06 14,632 15,088.29
2/28/06 14,668 15,163.66
3/31/06 14,779 15,273.01
4/30/06 14,987 15,356.52
5/31/06 14,973 15,346.26
6/30/06 14,924 15,279.73
7/31/06 15,107 15,444.99
8/31/06 15,424 15,702.96
9/30/06 15,606 15,920.24
10/31/06 15,826 16,148.48
11/30/06 15,945 16,417.07
12/31/06 16,133 16,614.90
1/31/07 16,215 16,770.94
2/28/07 16,392 17,004.28
3/31/07 16,406 17,029.21
4/30/07 16,625 17,259.66
5/31/07 16,676 17,389.67
6/30/07 16,446 17,057.44
7/31/07 15,865 16,499.29
8/31/07 16,020 16,699.29
9/30/07 16,414 17,140.20
10/31/07 16,548 17,250.07
11/30/07 16,240 16,868.93
12/31/07 16,279 16,920.16
1/31/08 15,671 16,706.87
2/29/08 15,385 16,490.43
3/31/08 15,434 16,419.80
4/30/08 16,041 17,143.88
5/31/08 16,169 17,235.12
6/30/08 15,996 16,666.35
7/31/08 15,600 16,416.75
8/31/08 15,583 16,460.10
9/30/08 14,336 15,141.77
10/31/08 11,732 12,818.80
11/30/08 10,303 11,569.19
12/31/08 10,337 12,536.67
1/31/09 10,669 13,214.54
2/28/09 10,426 12,714.94
3/31/09 10,394 13,155.81
4/30/09 11,354 14,753.02
5/31/09 12,125 15,641.91
6/30/09 12,439 16,122.66
7/31/09 13,183 17,110.44
8/31/09 13,250 17,334.78
9/30/09 13,874 18,333.90
10/31/09 14,156 18,621.19
11/30/09 14,304 18,821.45
12/31/09 14,754 19,455.61
1/31/10 14,905 19,671.89
2/28/10 14,955 19,661.58
3/31/10 15,428 20,241.35
HIGH YIELD BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 41.15% 48.44% 43.35% 47.35% 46.21% 47.21%
- --------------------------------------------------------------------------
5 Year Return 2.11% 16.51% 2.11% 12.54% 2.42% 12.70%
- --------------------------------------------------------------------------
10 Year Return 4.43% 61.96% 4.39% 53.70% N/A N/A
- --------------------------------------------------------------------------
Since Inception* 4.05% 65.12% 4.00% 56.36% 4.10% 47.07%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2010, the SunAmerica High Yield Bond
Fund Class A returned 41.15%, compared to 53.86% for the Citigroup High Yield
Market Index. (The performance table and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
** The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
97
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA TAX EXEMPT INSURED FUND
The SunAmerica Tax Exempt Insured Fund Class A returned 6.58% (before maximum
sales charge) for the annual period ended March 31, 2010. The Fund
underperformed its benchmark, the Barclays Capital Municipal Bond Index,* which
returned 9.69% in the same period.
Over the course of the year the Federal Open Market Committee (FOMC) met and
left the Federal Funds target rate unchanged at a range of 0.00-0.25%, citing
risks to growth and commenting that inflation would remain subdued due to the
dampening effects of resource slack upon cost pressures. Ripple effects of the
downturn in the housing market continue to resonate through the economy,
manifested through a decline of household wealth as well as rising
delinquencies and foreclosures that have impacted mortgage-backed security
valuations. The economy recorded a fourth straight quarter of contraction in
the Gross Domestic Product (GDP) before rebounding to a positive 2.2% growth
mark in the third quarter and 5.6% in the fourth quarter of 2009. Unemployment
quickly rose above 9.0% by May and peaked at 10.1% before easing to 9.7%
throughout the first quarter of 2010.
During the annual period there has been a decline in the issuance of insured
bonds which has had a negative impact on the Fund's performance versus its
benchmark. Last year, in the first quarter of 2009, the percentage of new issue
tax-exempt paper backed by insurance had declined to 13% and during the first
quarter of 2010 insurance penetration had fallen to 9.4%; those numbers compare
to a historical penetration rate of 40-50% prior to the challenges facing the
municipal bond insurance guarantors. The limited supply of new issue bonds is
amplified by the cannibalization of tax-exempt supply via the Build America
Bonds subsidy program which provides an economic incentive for issuers to
structure longer maturity borrowing in taxable form.
Lower-rated paper benefited from a narrowing of quality spreads as investor
risk appetites increased and higher-rated credits underperformed. Therefore the
lesser-rated, higher spread sectors such as Industrial Revenue, Housing and
Healthcare were the top performing revenue subsets of the index. Of these three
higher-spread sectors, the Fund only had exposure to Healthcare. Despite an
overweight to the Healthcare sector, the shorter tenor of our holdings
contributed to an underperformance as longer-duration bonds outperformed
shorter-duration holdings during the year. Sector exposure in the Fund was
tilted toward higher-quality sectors like General Obligation and Essential
Service revenue credits.
The Arizona Health Facilities and the Pennsylvania Higher Education Facilities
(University of Pennsylvania Health System) bonds that continued to be held in
the portfolio were the best performing bonds in the Fund. The Fund also
benefited from long duration revenue bond holdings such as Triborough Bridge
and Tunnel Authority, New York City Municipal Water and a purchase of East Bay
California Municipal Utility District bonds.
Conversely, the purchases of the State of North Carolina, New Jersey
Transportation and Henry County, Georgia School District bonds detracted from
the Fund's performance.
- --------
Past performance is no guarantee of future results.
The Fund is not insured by any independent parties or government entities.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
98
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Tax Exempt Insured Fund Class A
shares would have increased to $14,873. The same amount invested in securities
mirroring the performance of the Barclays Capital Municipal Bond Index would be
valued at $17,209.
[CHART]
Tax Exempt Insured Barclays Capital
Class A# Municipal Bond Index**
------------------ ----------------------
3/31/00 9,523 10,000.00
4/30/00 9,460 9,941.00
5/31/00 9,379 9,889.31
6/30/00 9,625 10,151.37
7/31/00 9,763 10,292.48
8/31/00 9,893 10,450.98
9/30/00 9,834 10,396.64
10/31/00 9,935 10,509.96
11/30/00 10,003 10,589.84
12/31/00 10,293 10,851.40
1/31/01 10,374 10,958.83
2/28/01 10,412 10,993.90
3/31/01 10,484 11,092.85
4/30/01 10,294 10,973.04
5/31/01 10,420 11,091.55
6/30/01 10,515 11,165.87
7/31/01 10,675 11,331.12
8/31/01 10,844 11,518.08
9/30/01 10,798 11,478.92
10/31/01 10,925 11,615.52
11/30/01 10,776 11,517.95
12/31/01 10,640 11,408.93
1/31/02 10,794 11,606.79
2/28/02 10,951 11,746.74
3/31/02 10,680 11,516.46
4/30/02 10,897 11,741.56
5/31/02 10,960 11,812.95
6/30/02 11,064 11,937.81
7/31/02 11,239 12,091.27
8/31/02 11,389 12,236.61
9/30/02 11,684 12,504.74
10/31/02 11,365 12,297.36
11/30/02 11,275 12,246.28
12/31/02 11,533 12,504.60
1/31/03 11,461 12,472.98
2/28/03 11,654 12,647.36
3/31/03 11,650 12,654.92
4/30/03 11,746 12,738.64
5/31/03 12,009 13,036.91
6/30/03 11,931 12,981.43
7/31/03 11,491 12,527.11
8/31/03 11,624 12,620.65
9/30/03 11,960 12,991.58
10/31/03 11,872 12,926.23
11/30/03 11,979 13,061.05
12/31/03 12,081 13,169.14
1/31/04 12,128 13,244.55
2/29/04 12,323 13,443.96
3/31/04 12,225 13,397.01
4/30/04 11,938 13,079.72
5/31/04 11,875 13,032.42
6/30/04 11,905 13,079.90
7/31/04 12,042 13,251.86
8/31/04 12,272 13,517.44
9/30/04 12,324 13,589.30
10/31/04 12,424 13,706.14
11/30/04 12,305 13,593.24
12/31/04 12,465 13,759.07
1/31/05 12,596 13,887.81
2/28/05 12,551 13,841.49
3/31/05 12,439 13,754.32
4/30/05 12,626 13,971.17
5/31/05 12,727 14,069.86
6/30/05 12,788 14,157.31
7/31/05 12,693 14,093.19
8/31/05 12,823 14,235.45
9/30/05 12,716 14,139.54
10/31/05 12,619 14,053.71
11/30/05 12,651 14,121.16
12/31/05 12,757 14,242.64
1/31/06 12,764 14,281.08
2/28/06 12,855 14,377.05
3/31/06 12,741 14,277.78
4/30/06 12,725 14,272.94
5/31/06 12,761 14,336.58
6/30/06 12,704 14,282.48
7/31/06 12,842 14,452.48
8/31/06 13,032 14,666.90
9/30/06 13,118 14,768.86
10/31/06 13,207 14,861.37
11/30/06 13,326 14,985.41
12/31/06 13,261 14,932.31
1/31/07 13,216 14,894.17
2/28/07 13,376 15,090.47
3/31/07 13,330 15,053.24
4/30/07 13,346 15,097.79
5/31/07 13,268 15,030.92
6/30/07 13,199 14,953.13
7/31/07 13,290 15,069.01
8/31/07 13,265 15,003.89
9/30/07 13,406 15,225.91
10/31/07 13,438 15,293.77
11/30/07 13,539 15,391.36
12/31/07 13,582 15,434.04
1/31/08 13,642 15,628.69
2/29/08 13,097 14,913.15
3/31/08 13,452 15,339.53
4/30/08 13,620 15,518.89
5/31/08 13,713 15,612.89
6/30/08 13,571 15,436.54
7/31/08 13,608 15,495.28
8/31/08 13,771 15,676.64
9/30/08 13,153 14,941.42
10/31/08 13,161 14,788.87
11/30/08 13,260 14,835.92
12/31/08 13,507 15,052.14
1/31/09 13,941 15,603.22
2/28/09 13,940 15,685.13
3/31/09 13,955 15,688.07
4/30/09 14,186 16,001.48
5/31/09 14,249 16,170.76
6/30/09 14,161 16,019.26
7/31/09 14,339 16,287.23
8/31/09 14,495 16,565.69
9/30/09 14,963 17,160.11
10/31/09 14,566 16,800.03
11/30/09 14,665 16,938.76
12/31/09 14,756 16,995.98
1/31/10 14,776 17,084.58
2/28/10 14,911 17,250.20
3/31/10 14,873 17,208.88
TAX EXEMPT INSURED FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
- ----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 1.53% 6.58% 1.34% 5.34% 4.81% 5.81%
- --------------------------------------------------------------------------
5 Year Return 2.63% 19.57% 2.35% 14.31% 2.99% 15.84%
- --------------------------------------------------------------------------
10 Year Return 4.05% 56.19% 3.93% 47.01% 3.86% 46.10%
- --------------------------------------------------------------------------
Since Inception* 5.28% 267.45% 4.04% 92.21% 3.49% 44.95%
- --------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, return would be lower.
* Inception Date - Class A: 11/22/85; Class B: 10/4/93; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2010, SunAmerica Tax Exempt Insured
Fund Class A returned 1.53%, compared to 9.69% for the Barclays Capital
Municipal Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
- --------
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE RESULTS. MAXIMUM SALES CHARGE: CLASS A: 4.75%, CLASS B: 4.00% CONTINGENT
DEFERRED SALES CHARGE (CDSC), CLASS C: 1.00% CDSC. CLASS B SHARES OF THE FUND
CONVERT AUTOMATICALLY TO CLASS A SHARES APPROXIMATELY EIGHT YEARS AFTER
PURCHASE. THE FUND'S DAILY NET ASSET VALUES ARE NOT GUARANTEED AND SHARES ARE
NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THE
INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE HIGHER OR LOWER THAN THE ORIGINAL
COST. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THAT SHOWN. PERFORMANCE
AS OF THE MOST RECENT MONTH END IS AVAILABLE AT WWW.SUNAMERICAFUNDS.COM.
** The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index.
99
[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 A. Commission's website at Refer-ence Room in
GIBBONS-SKREHOT, VICE http://www.sec.gov. Washington DC
PRESIDENT AND CHIEF (information on the
COMPLIANCE OFFICER DELIVERY OF SHAREHOLDER operation of the Public
GREGORY N. BRESSLER, DOCUMENTS Reference Room may be
CHIEF LEGAL OFFICER The Funds have adopted a ob-tained by calling
AND SECRETARY policy that allows them 1-800-SEC-0330).
NORI L. GABERT, VICE to send only one copy of
PRESIDENT AND a Fund's prospectus, PROXY VOTING RECORD ON
ASSISTANT SECRETARY proxy material, annual SUNAMERICA INCOME FUNDS
KATHLEEN FUENTES, report and semi-annual Information regarding how
ASSISTANT SECRETARY report (the "shareholder the Funds voted proxies
JOHN E. MCLEAN, documents") to relating to securities
ASSISTANT SECRETARY shareholders with held in the Funds during
GREGORY R. KINGSTON, multiple accounts the most recent twelve
VICE PRESIDENT AND residing at the same month period ended June
ASSISTANT TREASURER "household." This 30 is available, once
CHRISTOPHER A. OKEKE, practice is called filed with the U.S.
ASSISTANT TREASURER householding and reduces Securities and Exchange
MATTHEW J. HACKETHAL, Fund expenses, which Commission, without
ANTI-MONEY LAUNDERING benefits you and other charge, upon request, by
COMPLIANCE OFFICER shareholders. Unless the calling (800) 858-8850 or
Funds receive on the U.S. Securities
INVESTMENT ADVISER instructions to the and Exchange Commission's
SUNAMERICA ASSET con-trary, you will only website at
MANAGEMENT CORP. receive one copy of the http://www.sec.gov.
HARBORSIDE FINANCIAL shareholder documents.
CENTER The Funds will continue This report is submitted
3200 PLAZA 5 to household the solely for the general
JERSEY CITY, NJ share-holder documents information of
07311-4992 indefinitely, until we shareholders of the
are instructed otherwise. Funds. Distribution of
DISTRIBUTOR If you do not wish to this report to persons
SUNAMERICA CAPITAL participate in other than shareholders
SERVICES, INC. householding please of the Funds is
HARBORSIDE FINANCIAL contact Shareholder authorized only in
CENTER Services at (800) con-nection with a
3200 PLAZA 5 858-8850 ext. 6010 or currently effective
JERSEY CITY, NJ send a written request pro-spectus, setting
07311-4992 with your name, the name forth details of the
of your fund(s) and your Funds, which must precede
SHAREHOLDER SERVICING account number(s) to or accom-pany this report.
AGENT SunAmerica Mutual Funds
SUNAMERICA FUND c/o BFDS, P.O. Box
SERVICES, INC. 219186, Kansas City MO,
HARBORSIDE FINANCIAL 64121-9186. We will
CENTER resume individual
3200 PLAZA 5 mailings for your account
JERSEY CITY, NJ within thirty (30) days
07311-4992 of receipt of your
request.
CUSTODIAN AND TRANSFER
AGENT
STATE STREET BANK AND
TRUST COMPANY
P.O. BOX 419572
KANSAS CITY, MO
64141-6572
100
[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
INANN - 3/10
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
The SunAmerica Income Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2010, there were no reportable amendments,
waivers, or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(b) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for services rendered by the registrant's principal
accountant were as follows:
2010 2009
(a) Audit Fees ....................$ 161,077 $ 162,427
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 60,655 $ 59,428
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2010 2009
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2010 and 2009 were $538,789 and $943,449, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and
any Adviser Affiliate that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X were considered by the registrant's audit
committee as to whether they were compatible with maintaining the
principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as (defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 9, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 9, 2010
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: June 9, 2010