UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4708
---------------------------------------------
SunAmerica Income Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: September 30, 2010
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
SEMI-ANNUAL REPORT 2010
SUNAMERICA
Income Funds
[LOGO]
SEPTEMBER 30, 2010 SEMI-ANNUAL REPORT
SUNAMERICA INCOME FUNDS
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND (SGTAX)
SUNAMERICA GNMA FUND (GNMAX)
SUNAMERICA STRATEGIC BOND FUND (SDIAX)
SUNAMERICA HIGH YIELD BOND FUND (SHNAX)
SUNAMERICA TAX EXEMPT INSURED FUND (STEAX)
TABLE OF CONTENTS
SHAREHOLDER LETTER.......................................... 2
EXPENSE EXAMPLE............................................. 3
STATEMENT OF ASSETS AND LIABILITIES......................... 5
STATEMENT OF OPERATIONS..................................... 7
STATEMENT OF CHANGES IN NET ASSETS.......................... 8
FINANCIAL HIGHLIGHTS........................................ 11
PORTFOLIO OF INVESTMENTS.................................... 16
NOTES TO FINANCIAL STATEMENTS............................... 62
APPROVAL OF ADVISORY AGREEMENTS............................. 77
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholders,
We are pleased to bring you the semi-annual report for the period ended
September 30, 2010. Since our last report, events both here and abroad had a
profound impact on the fixed income market.
Overseas, a sovereign debt crisis in Greece unleashed renewed scrutiny of the
budget situations of Spain, Portugal, Italy and Ireland. Moreover, the
situation in Greece has highlighted the unsustainable budget paths of leading
industrial nations such as the United States (U.S.), United Kingdom and Japan.
Domestically, a decline in home sales following the expiration of the homebuyer
tax credit in March illustrated that the housing market has not fully
stabilized and continues to rely on government support. Declining consumer
confidence and anemic employment trends also reignited fears that the domestic
economy might be headed for a double-dip and forced the Federal Reserve to
maintain an accommodative monetary stance throughout the recent six-month
period.
As the semi-annual period drew to a close, there was growing consensus that the
U.S. economy was not heading toward another recession. The Federal Reserve also
communicated that it would initiate a second round of quantitative easing if
need be. However, with the political climate change in Washington, the subject
of deficit reduction has returned to the forefront. U.S. central bankers face
the question of whether domestic economic growth is sustainable as federal and
state governments embark on policies which focus on spending reduction and
increased taxes. Overseas, concerns about the dollar weakness and trade
tensions with China have reignited global currency volatility.
To provide a clearer understanding of the overall fixed income market
environment during the semi-annual period, we've included the returns of some
general fixed income market indices. In the last six months, the Barclays
Capital U.S. Government Index* gained 17.72%. U.S. Treasuries rose over the
six-month period--the yield on the 10-year Treasury declined over 140 basis
points from a high of 3.99% in April to 2.51% at the semi-annual period's end
and the Citigroup 10-Year Treasury Benchmark* retuned 13.22%. High yield
securities, as represented by the Citigroup High Yield Market Index,* were
essentially flat in the second quarter of 2010, returning 0.08%, but finished
the six-month period gaining 6.42%. Both the Barclays Capital U.S. Aggregate
Bond Index* and Citigroup Mortgage GNMA Index* delivered solid returns of 6.05%
and 4.44%, respectively, for the same period.
As always, we recommend that you consult your financial adviser to make sure
that your portfolio is appropriate given your risk tolerance, time horizon and
financial objectives. Thank you for your investment in the SunAmerica Income
Funds. We continue to work diligently to preserve or grow your capital
consistent with each Fund's individual objectives. We also encourage you to
visit our website, www.sunamericafunds.com, for more information.
Sincerely,
THE SUNAMERICA INCOME FUNDS INVESTMENT PROFESSIONALS
Michael Cheah Robert Vanden Assem Geoffrey Cornell Christopher Jones
Andrew Doulos Rajeev Mittal Peter Stevenson Anthony King
- --------
Past performance is no guarantee of future results.
* 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 CITIGROUP 10-YEAR TREASURY BENCHMARK is an unmanaged index
composed of ten-year Treasury bonds and notes. The CITIGROUP HIGH YIELD
MARKET INDEX is a broad-based, unmanaged index of high-yield securities. The
BARCLAYS CAPITAL U.S. AGGREGATE BOND INDEX represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. The CITIGROUP MORTGAGE GNMA INDEX is a market
capitalization-weighted index of 15- and 30-year fixed-rate securities
backed by mortgage pools of the Government National Mortgage Association
(GNMA). Indices are not managed and an investor cannot invest directly into
an index.
2
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 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 April 1, 2010 and held until September 30, 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 September 30, 2010" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
September 30, 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
September 30, 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 September 30, 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 September 30, 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
September 30, 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 September 30, 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
the Fund's prospectus, your retirement plan document and/or material from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 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 APRIL 1, SEPTEMBER 30, SEPTEMBER 30, AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
FUND 2010 2010 2010* 2010 2010 2010* 2010*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,059.38 $ 5.11 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,055.91 $ 8.45 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $1,055.96 $ 8.45 $1,000.00 $1,016.85 $ 8.29 1.64%
GNMA
Class A#................. $1,000.00 $1,044.68 $ 5.07 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,041.22 $ 8.39 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $1,041.16 $ 8.39 $1,000.00 $1,016.85 $ 8.29 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,069.01 $ 6.79 $1,000.00 $1,018.50 $ 6.63 1.31%
Class B.................. $1,000.00 $1,068.57 $10.37 $1,000.00 $1,015.04 $10.10 2.00%
Class C.................. $1,000.00 $1,068.47 $10.22 $1,000.00 $1,015.19 $ 9.95 1.97%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,056.78 $ 7.01 $1,000.00 $1,018.25 $ 6.88 1.36%
Class B#................. $1,000.00 $1,053.34 $10.35 $1,000.00 $1,014.99 $10.15 2.01%
Class C#................. $1,000.00 $1,053.28 $10.35 $1,000.00 $1,014.99 $10.15 2.01%
TAX EXEMPT INSURED
Class A#................. $1,000.00 $1,047.03 $ 4.62 $1,000.00 $1,020.56 $ 4.56 0.90%
Class B#................. $1,000.00 $1,041.50 $10.29 $1,000.00 $1,014.99 $10.15 2.01%
Class C#................. $1,000.00 $1,043.86 $ 8.51 $1,000.00 $1,016.75 $ 8.39 1.66%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
prospectus, 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 September 30,
2010" and the "Expenses Ratios" would have been higher.
4
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2010 --
(UNAUDITED)
STRATEGIC
U.S. GOVERNMENT GNMA BOND
SECURITIES FUND FUND FUND
--------------- ------------ ------------
ASSETS:
Investments at value (unaffiliated)*....................................... $178,269,135 $357,201,786 $581,856,405
Repurchase agreements (cost approximates value)............................ 35,984,000 37,973,000 4,259,000
------------ ------------ ------------
Total investments........................................................ 214,253,135 395,174,786 586,115,405
------------ ------------ ------------
Cash....................................................................... 504 328 23,335
Foreign cash*.............................................................. -- -- 101,681
Receivable for:
Shares of beneficial interest sold....................................... 74,294 1,848,976 2,598,450
Dividends and interest................................................... 554,590 1,416,666 8,493,543
Investments sold......................................................... 7,982,775 7,982,775 8,545,777
Prepaid expenses and other assets.......................................... 2,496 2,496 2,838
Due from investment adviser for expense reimbursements/fee waivers......... 58,296 50,327 --
------------ ------------ ------------
Total assets............................................................... 222,926,090 406,476,354 605,881,029
------------ ------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................................... 103,478 753,671 1,740,626
Investments purchased.................................................... 32,244,275 23,753,400 17,793,093
Investment advisory and management fees.................................. 102,097 144,565 299,366
Distribution and service maintenance fees................................ 67,703 165,025 334,305
Transfer agent fees and expenses......................................... 46,507 91,008 120,706
Trustees' fees and expenses.............................................. 15,167 8,462 9,819
Other accrued expenses................................................... 98,065 143,518 220,526
Dividends payable........................................................ 23,937 163,102 996,172
------------ ------------ ------------
Total liabilities.......................................................... 32,701,229 25,222,751 21,514,613
------------ ------------ ------------
Net Assets................................................................. $190,224,861 $381,253,603 $584,366,416
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 189,406 $ 314,707 $ 1,683,569
Paid-in capital............................................................ 178,608,008 354,459,892 646,431,644
------------ ------------ ------------
178,797,414 354,774,599 648,115,213
Accumulated undistributed net investment income (loss)..................... 635,916 (99,584) (465,500)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short, and foreign exchange transactions....... 2,627,267 9,686,533 (84,244,387)
Unrealized appreciation (depreciation) on investments...................... 8,164,264 16,892,055 20,936,762
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- -- 24,328
------------ ------------ ------------
NET ASSETS................................................................. $190,224,861 $381,253,603 $584,366,416
============ ============ ============
*Cost
Investments (unaffiliated)............................................... $170,104,871 $340,309,731 $560,919,643
============ ============ ============
Foreign cash............................................................. $ -- $ -- $ 95,084
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------- -----------
ASSETS:
Investments at value (unaffiliated)*....................................... $ 134,224,607 $75,893,434
Repurchase agreements (cost approximates value)............................ 5,130,000 --
------------- -----------
Total investments........................................................ 139,354,607 75,893,434
------------- -----------
Cash....................................................................... 84,969 5
Foreign cash*.............................................................. -- --
Receivable for:
Shares of beneficial interest sold....................................... 637,515 70,127
Dividends and interest................................................... 2,868,905 897,859
Investments sold......................................................... 384,967 --
Prepaid expenses and other assets.......................................... 2,496 2,496
Due from investment adviser for expense reimbursements/fee waivers......... 29,876 21,778
------------- -----------
Total assets............................................................... 143,363,335 76,885,699
------------- -----------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................................... 361,182 182,431
Investments purchased.................................................... 2,608,506 --
Investment advisory and management fees.................................. 83,573 31,112
Distribution and service maintenance fees................................ 70,292 32,552
Transfer agent fees and expenses......................................... 36,988 17,110
Trustees' fees and expenses.............................................. 6,748 4,254
Other accrued expenses................................................... 176,911 62,229
Dividends payable........................................................ 337,220 76,669
------------- -----------
Total liabilities.......................................................... 3,681,420 406,357
------------- -----------
Net Assets................................................................. $ 139,681,915 $76,479,342
============= ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 408,872 $ 58,759
Paid-in capital............................................................ 250,249,313 70,598,669
------------- -----------
250,658,185 70,657,428
Accumulated undistributed net investment income (loss)..................... (707,674) 129,950
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short, and foreign exchange transactions....... (106,382,729) 177,672
Unrealized appreciation (depreciation) on investments...................... (3,885,867) 5,514,292
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- --
------------- -----------
NET ASSETS................................................................. $ 139,681,915 $76,479,342
============= ===========
*Cost
Investments (unaffiliated)............................................... $ 138,110,474 $70,379,142
============= ===========
Foreign cash............................................................. $ -- $ --
============= ===========
See Notes to Financial Statements
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2010 --
(UNAUDITED) (CONTINUED)
STRATEGIC
U.S. GOVERNMENT GNMA BOND
SECURITIES FUND FUND FUND
--------------- ------------ ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $166,397,824 $279,985,293 $266,281,239
Shares of beneficial interest issued and outstanding................................ 16,567,467 23,132,664 76,854,553
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 10.04 $ 12.10 $ 3.46
Maximum sales charge (4.75% of offering price)...................................... 0.50 0.60 0.17
------------ ------------ ------------
Maximum offering price to public.................................................... $ 10.54 $ 12.70 $ 3.63
============ ============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 8,057,205 $ 26,632,049 $ 53,054,176
Shares of beneficial interest issued and outstanding................................ 801,901 2,194,870 15,315,473
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 10.05 $ 12.13 $ 3.46
============ ============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 15,769,832 $ 74,636,261 $265,031,001
Shares of beneficial interest issued and outstanding................................ 1,571,244 6,143,128 76,186,845
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 10.04 $ 12.15 $ 3.48
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $80,547,706 $56,315,718
Shares of beneficial interest issued and outstanding................................ 23,624,751 4,328,152
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 3.41 $ 13.01
Maximum sales charge (4.75% of offering price)...................................... 0.17 0.65
----------- -----------
Maximum offering price to public.................................................... $ 3.58 $ 13.66
=========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $17,665,716 $ 2,052,919
Shares of beneficial interest issued and outstanding................................ 5,171,897 157,507
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.42 $ 13.03
=========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $41,468,493 $18,110,705
Shares of beneficial interest issued and outstanding................................ 12,090,594 1,390,265
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.43 $ 13.03
=========== ===========
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE PERIOD ENDED SEPTEMBER 30, 2010 --
(UNAUDITED)
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ----------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................... $ -- $ -- $ 128,499
Interest (unaffiliated)............................................................ 2,455,801 6,392,474 19,792,848
----------- ----------- -----------
Total investment income*.......................................................... 2,455,801 6,392,474 19,921,347
----------- ----------- -----------
EXPENSES:
Investment advisory and management fees............................................ 624,689 875,125 1,801,852
Distribution and service maintenance fees:
Class A........................................................................... 295,403 486,405 462,045
Class B........................................................................... 41,689 148,848 256,054
Class C........................................................................... 75,362 364,366 1,280,672
Transfer agent fees and expenses:
Class A........................................................................... 196,355 318,606 301,316
Class B........................................................................... 10,760 36,847 59,632
Class C........................................................................... 18,491 83,883 288,317
Registration fees:
Class A........................................................................... 19,303 13,780 14,223
Class B........................................................................... 7,778 11,376 11,446
Class C........................................................................... 9,187 17,086 26,142
Custodian and accounting fees...................................................... 38,865 75,086 105,712
Reports to shareholders............................................................ 9,500 30,496 73,347
Audit and tax fees................................................................. 14,769 15,438 13,587
Legal fees......................................................................... 4,653 6,334 10,962
Trustees' fees and expenses........................................................ 12,131 24,379 39,231
Interest expense................................................................... -- -- 1,021
Other expenses..................................................................... 10,451 15,651 20,492
----------- ----------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
and custody credits.............................................................. 1,389,386 2,523,706 4,766,051
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)......................................................................... (361,851) (306,202) --
Custody credits earned on cash balances........................................... (4) (2) (490)
----------- ----------- -----------
Net expenses...................................................................... 1,027,531 2,217,502 4,765,561
----------- ----------- -----------
Net investment income (loss)......................................................... 1,428,270 4,174,972 15,155,786
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................... 2,645,688 6,879,310 10,296,659
Net realized foreign exchange gain (loss) on other assets and liabilities............ -- -- 1,960,047
----------- ----------- -----------
Net realized gain (loss) on investments and foreign currencies....................... 2,645,688 6,879,310 12,256,706
----------- ----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)....... 6,935,226 5,037,560 11,224,972
Change in unrealized foreign exchange gain (loss) on other assets and liabilities.... -- -- 32,023
----------- ----------- -----------
Net unrealized gain (loss) on investments and foreign currencies..................... 6,935,226 5,037,560 11,256,995
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies........ 9,580,914 11,916,870 23,513,701
----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $11,009,184 $16,091,842 $38,669,487
=========== =========== ===========
*Net of foreign withholding taxes on interest and dividends of....................... $ -- $ -- $ 7,071
=========== =========== ===========
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
---------- ----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................... $ 11,320 $ --
Interest (unaffiliated)............................................................ 6,411,021 1,647,817
---------- ----------
Total investment income*.......................................................... 6,422,341 1,647,817
---------- ----------
EXPENSES:
Investment advisory and management fees............................................ 507,345 184,289
Distribution and service maintenance fees:
Class A........................................................................... 133,924 95,030
Class B........................................................................... 87,977 11,174
Class C........................................................................... 205,842 85,890
Transfer agent fees and expenses:
Class A........................................................................... 91,461 62,624
Class B........................................................................... 20,656 3,211
Class C........................................................................... 48,391 19,650
Registration fees:
Class A........................................................................... 20,657 9,459
Class B........................................................................... 10,168 4,922
Class C........................................................................... 10,201 12,612
Custodian and accounting fees...................................................... 30,242 14,780
Reports to shareholders............................................................ 29,512 2,022
Audit and tax fees................................................................. 15,445 14,754
Legal fees......................................................................... 1,344 4,503
Trustees' fees and expenses........................................................ 8,879 4,571
Interest expense................................................................... 824 22
Other expenses..................................................................... 9,008 7,704
---------- ----------
Total expenses before fee waivers, expense reimbursements, expense recoupments,
and custody credits.............................................................. 1,231,876 537,217
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)......................................................................... (120,885) (129,003)
Custody credits earned on cash balances........................................... (27) (3)
---------- ----------
Net expenses...................................................................... 1,110,964 408,211
---------- ----------
Net investment income (loss)......................................................... 5,311,377 1,239,606
---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................... (460,025) (10,724)
Net realized foreign exchange gain (loss) on other assets and liabilities............ -- --
---------- ----------
Net realized gain (loss) on investments and foreign currencies....................... (460,025) (10,724)
---------- ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)....... 2,024,743 2,104,838
Change in unrealized foreign exchange gain (loss) on other assets and liabilities.... -- --
---------- ----------
Net unrealized gain (loss) on investments and foreign currencies..................... 2,024,743 2,104,838
---------- ----------
Net realized and unrealized gain (loss) on investments and foreign currencies........ 1,564,718 2,094,114
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................... $6,876,095 $3,333,720
========== ==========
*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
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2010 MARCH 31,
(UNAUDITED) 2010
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 1,428,270 $ 3,919,646
Net realized gain (loss) on investments and foreign currencies......................... 2,645,688 6,326,315
Net unrealized gain (loss) on investments and foreign currencies....................... 6,935,226 (13,121,119)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 11,009,184 (2,875,158)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,296,980) (3,397,795)
Net investment income (Class B)........................................................ (37,023) (171,728)
Net investment income (Class C)........................................................ (66,676) (265,263)
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...................................................... (1,400,679) (7,605,966)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (1,883,149) (21,878,250)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 7,725,356 (32,359,374)
NET ASSETS:
Beginning of period...................................................................... 182,499,505 214,858,879
------------ ------------
End of period+........................................................................... $190,224,861 $182,499,505
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ 635,916 $ 608,325
============ ============
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
GNMA FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2010 MARCH 31,
(UNAUDITED) 2010
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 4,174,972 $ 9,218,055
Net realized gain (loss) on investments and foreign currencies......................... 6,879,310 8,750,524
Net unrealized gain (loss) on investments and foreign currencies....................... 5,037,560 (3,494,156)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 16,091,842 14,474,423
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (3,284,223) (7,858,163)
Net investment income (Class B)........................................................ (255,604) (669,608)
Net investment income (Class C)........................................................ (623,907) (1,390,868)
Net realized gain on securities (Class A).............................................. -- (4,876,043)
Net realized gain on securities (Class B).............................................. -- (541,803)
Net realized gain on securities (Class C).............................................. -- (1,223,760)
------------ ------------
Total distributions to shareholders...................................................... (4,163,734) (16,560,245)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (26,101,784) (68,988,018)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (14,173,676) (71,073,840)
NET ASSETS:
Beginning of period...................................................................... 395,427,279 466,501,119
------------ ------------
End of period+........................................................................... $381,253,603 $395,427,279
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ (99,584) $ (110,822)
============ ============
STRATEGIC BOND FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2010 MARCH 31,
(UNAUDITED) 2010
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 15,155,786 $ 32,371,634
Net realized gain (loss) on investments and foreign currencies......................... 12,256,706 4,900,823
Net unrealized gain (loss) on investments and foreign currencies....................... 11,256,995 102,325,908
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 38,669,487 139,598,365
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (7,531,155) (18,121,990)
Net investment income (Class B)........................................................ (1,286,129) (2,673,918)
Net investment income (Class C)........................................................ (6,473,534) (14,593,645)
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...................................................... (15,290,818) (35,389,553)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (33,336,113) 24,052,943
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (9,957,444) 128,261,755
NET ASSETS:
Beginning of period...................................................................... 594,323,860 466,062,105
------------ ------------
End of period+........................................................................... $584,366,416 $594,323,860
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ (465,500) $ (330,468)
============ ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2010 MARCH 31,
(UNAUDITED) 2010
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 5,311,377 $ 12,557,527
Net realized gain (loss) on investments and foreign currencies......................... (460,025) (17,620,471)
Net unrealized gain (loss) on investments and foreign currencies....................... 2,024,743 57,056,606
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 6,876,095 51,993,662
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (3,107,860) (8,325,461)
Net investment income (Class B)........................................................ (657,195) (1,964,960)
Net investment income (Class C)........................................................ (1,537,867) (4,434,133)
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...................................................... (5,302,922) (14,724,554)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (3,978,054) (4,803,623)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (2,404,881) 32,465,485
NET ASSETS:
Beginning of period...................................................................... 142,086,796 109,621,311
------------ ------------
End of period+........................................................................... $139,681,915 $142,086,796
============ ============
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ (707,674) $ (716,129)
============ ============
TAX EXEMPT INSURED FUND
-------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2010 MARCH 31,
(UNAUDITED) 2010
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 1,239,606 $ 2,506,974
Net realized gain (loss) on investments and foreign currencies......................... (10,724) 929,445
Net unrealized gain (loss) on investments and foreign currencies....................... 2,104,838 1,098,839
----------- -----------
Net increase (decrease) in net assets resulting from operations.......................... 3,333,720 4,535,258
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (930,441) (1,927,828)
Net investment income (Class B)........................................................ (26,532) (52,109)
Net investment income (Class C)........................................................ (228,555) (434,279)
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...................................................... (1,185,528) (2,414,216)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 1,497,887 305,426
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 3,646,079 2,426,468
NET ASSETS:
Beginning of period...................................................................... 72,833,263 70,406,795
----------- -----------
End of period+........................................................................... $76,479,342 $72,833,263
=========== ===========
- --------
+ Includes accumulated undistributed net investment income (loss)........................ $ 129,950 $ 75,872
=========== ===========
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
09/30/10+ 9.55 0.08 0.49 0.57 (0.08) -- (0.08) 10.04 5.94 166,398
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
09/30/10+ 9.56 0.05 0.48 0.53 (0.04) -- (0.04) 10.05 5.59 8,057
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
09/30/10+ 9.55 0.05 0.48 0.53 (0.04) -- (0.04) 10.04 5.60 15,770
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
0.99(5) 1.57(5) 109
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(5) 0.92(5) 109
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
1.64(5) 0.92(5) 109
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10 09/30/10(+)(5)
-------- -------- -------- -------- -------- --------------
U.S. Government Securities Fund Class A. 0.36% 0.38% 0.39% 0.35% 0.38% 0.36%
U.S. Government Securities Fund Class B. 0.43 0.43 0.48 0.40 0.50 0.55
U.S. Government Securities Fund Class C. 0.57 0.43 0.50 0.40 0.44 0.47
(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.
(5)Annualized
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
GNMA FUND
---------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- --------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
CLASS A
-------
03/31/06 $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
09/30/10+ 11.72 0.14 0.38 0.52 (0.14) -- (0.14) 12.10 4.47 279,985 0.99(4)
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
09/30/10+ 11.75 0.11 0.37 0.48 (0.10) -- (0.10) 12.13 4.12 26,632 1.64(4)
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
09/30/10+ 11.77 0.10 0.38 0.48 (0.10) -- (0.10) 12.15 4.12 74,636 1.64(4)
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
2.37(4) 78
2.50% 138%
3.53 142
3.52 354
2.67 73
1.63 104
1.72(4) 78
2.49% 138%
3.53 142
3.49 354
2.55 73
1.63 104
1.72(4) 78
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10 09/30/10+(4)
-------- -------- -------- -------- -------- ------------
GNMA Fund Class A............. 0.13% 0.15% 0.15% 0.13% 0.15% 0.15%
GNMA Fund Class B............. 0.17 0.18 0.19 0.15 0.19 0.23
GNMA Fund Class C............. 0.19 0.17 0.22 0.15 0.16 0.18
(4)Annualized
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
STRATEGIC BOND FUND
-------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD+ RETURN(2) (000'S) NET ASSETS
- --------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ----------
CLASS A
-------
03/31/06 $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
09/30/10+ 3.33 0.10 0.13 0.23 (0.10) -- (0.10) 3.46 6.90 266,281 1.31(7)
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
09/30/10+ 3.32 0.08 0.14 0.22 (0.08) -- (0.08) 3.46 6.86 53,054 2.00(7)
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
09/30/10+ 3.34 0.08 0.15 0.23 (0.09) -- (0.09) 3.48 6.85 265,031 1.97(7)
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
5.66(7) 69
4.51%(3)(4) 118%(6)
4.12(5) 134(6)
4.63(5) 162(6)
6.00 112
5.44 157
4.97(7) 69
4.54%(3)(4) 118%(6)
4.12(5) 134(6)
4.65(5) 162(6)
6.03 112
5.48 157
5.00(7) 69
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/06
--------
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%
(7)Annualized
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
- --------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ----------- -------------
CLASS A
-------
03/31/06 $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
09/30/10+ 3.36 0.14 0.05 0.19 (0.14) -- (0.14) 3.41 5.68 80,548 1.36(5)
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
09/30/10+ 3.37 0.13 0.04 0.17 (0.12) -- (0.12) 3.42 5.33 17,666 2.01(5)
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
09/30/10+ 3.38 0.13 0.05 0.18 (0.13) -- (0.13) 3.43 5.33 41,468 2.01(5)
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
8.13(5) 22
6.71%(4) 91%
5.82 86
6.80 72
10.18 77
8.77 110
7.49(5) 22
6.67%(4) 91%
5.80 86
6.75 72
10.16 77
8.70 110
7.49(5) 22
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10 09/30/10+(5)
-------- -------- -------- -------- -------- ------------
High Yield Bond Fund Class A............ 0.11% 0.09% 0.17% 0.14% 0.18% 0.17%
High Yield Bond Fund Class B............ 0.14 0.11 0.20 0.16 0.23 0.23
High Yield Bond Fund Class C............ 0.12 0.10 0.18 0.15 0.18 0.17
(4)Net of custody credits of 0.01%.
(5)Annualized
See Notes to Financial Statements
14
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
TAX EXEMPT INSURED FUND
-----------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
- ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- ----------
CLASS A
-------
03/31/06 $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)
09/30/10+ 12.64 0.23 0.36 0.59 (0.22) -- (0.22) 13.01 4.70 56,316 0.90(3)(4)
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)
09/30/10+ 12.66 0.16 0.36 0.52 (0.15) -- (0.15) 13.03 4.15 2,053 2.01(3)(4)
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)
09/30/10+ 12.65 0.18 0.37 0.55 (0.17) -- (0.17) 13.03 4.39 18,111 1.66(3)(4)
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
3.57(3)(4) 0
2.48% 81%
2.44 84
2.46 57
2.58(3) 92
2.33(3) 38
2.46(3)(4) 0
2.48%(3) 81%
2.60(3) 84
2.71(3) 57
2.92(3) 92
2.84(3) 38
2.81(3)(4) 0
- --------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/06 03/31/07 03/31/08 03/31/09 03/31/10 09/30/10+(4)
-------- -------- -------- -------- -------- ------------
Tax Exempt Insured Fund Class A......... -- % -- % -- % 0.24% 0.35% 0.35%
Tax Exempt Insured Fund Class B......... -- -- -- 0.23 0.35 0.35
Tax Exempt Insured Fund Class C......... 0.20 0.09 0.31 0.42 0.35 0.35
(4)Annualized
See Notes to Financial Statements
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 41.6%
U.S. Government Agencies........ 26.3
United States Treasury Bonds.... 23.7
Repurchase Agreement............ 18.9
United States Treasury Notes.... 1.1
Federal Farm Credit Bank........ 0.7
Small Business Administration... 0.3
-----
112.6%
=====
CREDIT QUALITY+#
Government -- Treasury. 36.9%
Government -- Agency... 63.1
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 42.6%
FEDERAL FARM CREDIT BANK -- 0.7%
5.64% due 04/04/11.................... $ 500,000 $ 513,772
6.00% due 03/07/11.................... 200,000 205,006
6.30% due 12/03/13.................... 500,000 583,784
-----------
1,302,562
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/23.................... 28,259 31,215
11.00% due 02/01/15................... 22 22
11.50% due 09/01/19................... 1,427 1,561
-----------
32,798
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 41.6%
4.50% due 05/15/18.................... 485,654 518,598
4.50% due 08/15/18.................... 800,764 855,083
4.50% due 09/15/18.................... 2,146,515 2,292,125
4.50% due 10/15/18.................... 2,078,335 2,219,317
4.50% due 09/15/33.................... 3,251,872 3,453,993
4.50% due October TBA................. 23,000,000 24,193,125
5.00% due 04/15/18.................... 2,149,033 2,301,024
5.00% due 04/15/33.................... 22,509 24,144
5.00% due 08/15/33.................... 1,163,625 1,248,192
5.00% due 09/15/33.................... 520,479 558,390
5.00% due 10/15/33.................... 359,820 385,952
5.00% due 04/15/34.................... 17,479 18,728
5.00% due 11/15/34.................... 123,807 132,648
5.00% due 02/15/35.................... 14,848 15,890
5.00% due 03/15/35.................... 402,334 430,563
5.00% due 04/15/35.................... 37,140 39,746
5.00% due 05/15/35.................... 1,020,931 1,092,562
5.00% due 09/15/35.................... 539,535 578,654
5.00% due 10/15/35.................... 91,618 98,047
5.00% due 12/15/35.................... 52,574 56,263
5.00% due 03/15/36.................... 573,982 615,718
5.00% due 05/15/36.................... 806,711 860,791
5.00% due 06/15/36.................... 501,518 535,139
5.00% due 09/15/36.................... 1,239,522 1,325,255
5.00% due 10/15/36.................... 317,649 338,943
5.00% due 11/15/36.................... 30,110 32,129
5.00% due 12/15/36.................... 202,987 216,595
5.00% due 01/15/37.................... 2,142,627 2,285,257
5.00% due 02/15/37.................... 1,170,379 1,249,746
5.00% due 03/15/37.................... 841,718 897,749
5.00% due 04/15/37.................... 898,965 958,807
5.00% due 08/15/38.................... 7,082,440 7,552,797
5.50% due 11/15/32.................... 6,842 7,400
5.50% due 03/15/33.................... 250,260 270,660
5.50% due 04/15/33.................... 336,313 363,725
5.50% due 05/15/33.................... 738,415 798,716
5.50% due 06/15/33.................... 3,271,700 3,538,371
5.50% due 07/15/33.................... 952,064 1,029,665
5.50% due 10/15/33.................... 945,351 1,022,405
5.50% due 12/15/33.................... 198,445 214,620
5.50% due 01/15/34.................... 2,280,733 2,465,207
5.50% due 02/15/34.................... 1,263,676 1,371,547
6.00% due 01/15/28.................... 1,791 1,966
6.00% due 04/15/28.................... 704,507 769,885
6.00% due 10/15/28.................... 3,304 3,626
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 04/15/29....................... $ 26,080 $ 28,619
6.00% due 05/15/29....................... 52,984 58,143
6.00% due 06/15/29....................... 18,432 20,226
6.00% due 04/15/31....................... 11,414 12,526
6.00% due 05/15/31....................... 26,153 28,699
6.00% due 11/15/31....................... 141,485 155,259
6.00% due 12/15/31....................... 164,089 180,062
6.00% due 01/15/32....................... 82,572 90,610
6.00% due 02/15/32....................... 17,855 19,596
6.00% due 03/15/32....................... 3,672 4,029
6.00% due 08/15/32....................... 164,982 181,042
6.00% due 11/15/32....................... 16,726 18,354
6.00% due 12/15/32....................... 5,368 5,891
6.00% due 01/15/33....................... 13,064 14,328
6.00% due 02/15/33....................... 22,603 24,790
6.00% due 03/15/33....................... 51,374 56,343
6.00% due 04/15/33....................... 218,452 239,582
6.00% due 07/15/33....................... 142,056 155,796
6.00% due 08/15/33....................... 1,273,545 1,397,510
6.00% due 09/15/33....................... 212,651 233,220
6.00% due 10/15/33....................... 555,794 609,556
6.00% due 11/15/33....................... 86,796 95,191
6.00% due 12/15/33....................... 415,763 455,977
6.00% due 02/15/34....................... 122,670 134,229
6.00% due 05/15/34....................... 17,965 19,657
6.00% due 06/15/34....................... 23,791 26,032
6.00% due 07/15/34....................... 861,906 943,118
6.00% due 08/15/34....................... 98,757 108,063
6.00% due 09/15/34....................... 521,103 570,204
6.00% due 10/15/34....................... 1,720,355 1,882,453
6.00% due 12/15/34....................... 229,581 251,213
6.00% due 06/15/35....................... 67,972 74,207
6.00% due 08/15/35....................... 110,002 120,566
6.50% due 02/15/29....................... 6,940 7,797
6.50% due 05/15/31....................... 10,176 11,419
6.50% due 06/15/31....................... 25,888 29,049
6.50% due 07/15/31....................... 20,999 23,564
6.50% due 08/15/31....................... 37,735 42,343
6.50% due 09/15/31....................... 111,548 125,172
6.50% due 10/15/31....................... 149,582 167,851
6.50% due 11/15/31....................... 6,740 7,563
6.50% due 01/15/32....................... 11,868 13,250
6.50% due 02/15/32....................... 322,966 360,594
7.00% due 07/15/23....................... 13,878 15,740
7.00% due 10/15/23....................... 25,842 29,309
7.00% due 09/15/25....................... 143,245 163,107
7.00% due 03/20/29....................... 11,303 12,912
7.00% due 06/20/29....................... 1,762 2,001
7.00% due 11/20/30....................... 36,620 41,624
7.50% due 04/15/17....................... 7,431 8,186
7.50% due 08/15/23....................... 82,964 94,551
7.50% due 09/15/23....................... 341,707 389,432
9.00% due 12/15/16....................... 28,378 31,407
11.00% due 08/20/15...................... 57 64
11.00% due 09/20/15...................... 177 199
11.50% due 05/20/15...................... 917 924
12.50% due 09/15/14...................... 3,039 3,066
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
13.00% due 02/15/11...................... $ 153 $ 154
13.00% due 10/20/14...................... 659 664
13.00% due 11/15/14...................... 233 235
13.50% due 02/15/13...................... 3,092 3,595
15.00% due 01/15/12...................... 43 43
15.00% due 02/15/12...................... 309 312
15.00% due 06/15/12...................... 2,037 2,057
15.00% due 09/15/12...................... 231 233
15.50% due 09/15/11...................... 8,908 8,997
------------
79,052,268
------------
SMALL BUSINESS ADMINISTRATION -- 0.3%
6.30% due 06/01/18....................... 605,573 662,369
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $76,866,584)....................... 81,049,997
------------
U.S. GOVERNMENT TREASURIES -- 24.8%
UNITED STATES TREASURY BONDS -- 23.7%
3.88% due 08/15/40....................... 6,000,000 6,202,500
4.50% due 08/15/39....................... 34,000,000 38,930,000
------------
45,132,500
------------
UNITED STATES TREASURY NOTES -- 1.1%
1.75% due 07/31/15....................... 1,000,000 1,024,060
3.13% due 05/15/19....................... 1,000,000 1,062,578
------------
2,086,638
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $43,238,287)....................... 47,219,138
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $120,104,871)...................... 128,269,135
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 26.3%
U.S. GOVERNMENT AGENCIES -- 26.3%
Federal Home Loan Bank Disc. Notes
0.01% due 10/01/10
(cost $50,000,000).................. $50,000,000 $ 50,000,000
------------
REPURCHASE AGREEMENT -- 18.9%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)
(cost $35,984,000).................. 35,984,000 35,984,000
------------
TOTAL INVESTMENTS
(cost $206,088,871)(2).............. 112.6% 214,253,135
Liabilities in excess of other assets.. (12.6) (24,028,274)
----------- ------------
NET ASSETS 100.0% $190,224,861
=========== ============
- --------
(1) See Note 2 for details of Joint Repurchase Agreement.
(2) See Note 5 for cost of investments on a tax basis.
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no 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 September 30, 2010 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:
U.S. Government Agencies:
Federal Farm Credit Bank......... $ -- $ 1,302,562 $ -- $ 1,302,562
Federal National Mtg. Assoc...... -- 32,798 -- 32,798
Government National Mtg. Assoc... -- 79,052,268 -- 79,052,268
Small Business Administration.... -- 662,369 662,369
U.S. Government Treasuries........ -- 47,219,138 -- 47,219,138
Short Term Investment Securities:
U.S. Government Agencies.......... -- 50,000,000 -- 50,000,000
Repurchase Agreement................ -- 35,984,000 -- 35,984,000
----------- ------------ ----------- ------------
TOTAL............................... $ -- $214,253,135 $ -- $214,253,135
=========== ============ =========== ============
See Notes to Financial Statements
18
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 83.9%
Repurchase Agreements........... 10.0
United States Treasury Notes.... 7.0
United States Treasury Bonds.... 2.7
Small Business Administration... 0.1
-----
103.7%
=====
CREDIT QUALITY ALLOCATION+#
Government -- Treasury. 10.5%
Government -- Agency... 89.5
-----
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.
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 83.9%
GOVERNMENT NATIONAL MTG. ASSOC. -- 83.8%
4.50% due 05/15/18............. $ 971,307 $ 1,037,196
4.50% due 08/15/18............. 523,273 558,769
4.50% due 09/15/18............. 1,692,733 1,807,560
4.50% due 10/15/18............. 2,342,694 2,501,610
4.50% due 08/15/33............. 1,778,451 1,888,991
4.50% due 09/15/33............. 2,430,619 2,581,695
4.50% due 05/15/39............. 27,986,986 29,499,128
4.50% due October TBA.......... 15,000,000 15,778,125
5.00% due 03/15/18............. 335,495 359,223
5.00% due 04/15/18............. 3,339,973 3,576,190
5.00% due 05/15/18............. 5,091,663 5,451,772
5.00% due 01/15/33............. 5,592 5,998
5.00% due 05/15/33............. 7,765 8,331
5.00% due 08/15/33............. 1,652,088 1,772,132
5.00% due 09/15/33............. 1,514,631 1,626,315
5.00% due 10/15/33............. 3,801,218 4,077,421
5.00% due 04/15/34............. 29,768 31,894
5.00% due 05/15/34............. 98,255 105,272
5.00% due 11/15/34............. 423,597 453,847
5.00% due 12/15/34............. 407,724 436,840
5.00% due 09/15/35............. 12,934 13,842
5.00% due 10/15/35............. 78,628 84,145
5.00% due 11/15/35............. 80,466 86,111
5.00% due 12/15/35............. 43,826 46,901
5.00% due 02/15/36............. 96,745 103,492
5.00% due 04/15/36............. 326,994 348,913
5.00% due 06/15/36............. 1,098,892 1,172,557
5.00% due 07/15/36............. 280,760 299,582
5.00% due 08/15/36............. 21,311 22,740
5.00% due 09/15/36............. 547,121 585,507
5.00% due 10/15/36............. 25,137 26,896
5.00% due 11/15/36............. 155,480 165,903
5.00% due 12/15/36............. 713,542 761,375
5.00% due 01/15/37............. 330,244 352,227
5.00% due 02/15/37............. 621,142 662,489
5.00% due 04/15/37............. 4,516,985 4,819,227
5.00% due 12/15/37............. 15,298 16,317
5.00% due 04/15/38............. 7,067,150 7,536,492
5.00% due 05/15/38............. 4,805,421 5,124,817
5.00% due 06/15/38............. 235,837 251,500
5.00% due 08/15/38............. 569,758 607,596
5.00% due 10/15/38............. 680,651 725,953
5.00% due 01/15/39............. 898,293 957,950
5.00% due 02/15/39............. 2,096,184 2,235,395
5.00% due 03/15/39............. 4,000,000 4,265,647
5.00% due 04/15/39............. 2,004,311 2,137,421
5.00% due 08/15/39............. 2,030,472 2,165,318
5.00% due 09/15/39............. 92,544 98,690
5.00% due 10/15/39............. 9,384,420 10,007,653
5.00% due 11/15/39............. 5,000,001 5,332,059
5.00% due 12/15/39............. 4,318,646 4,616,221
5.00% due 04/15/40............. 3,995,247 4,260,577
5.00% due 05/15/40............. 31,688,296 33,792,767
5.00% due 06/15/40............. 414,533 442,063
5.50% due 06/15/29............. 3,249 3,523
5.50% due 01/15/32............. 29,493 31,901
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 12/15/32....... $ 378,097 $ 408,975
5.50% due 01/15/33....... 307,982 333,085
5.50% due 02/15/33....... 875,025 946,348
5.50% due 03/15/33....... 599,237 648,081
5.50% due 04/15/33....... 3,171,941 3,430,481
5.50% due 05/15/33....... 3,973,199 4,298,803
5.50% due 06/15/33....... 4,088,407 4,421,714
5.50% due 07/15/33....... 211,874 229,143
5.50% due 08/15/33....... 1,277,544 1,381,675
5.50% due 09/15/33....... 200,321 216,649
5.50% due 10/15/33....... 3,683,115 3,983,320
5.50% due 12/15/33....... 3,589,756 3,882,351
5.50% due 01/15/34....... 5,079,617 5,490,880
5.50% due 02/15/34....... 776,389 842,503
5.50% due 04/15/35....... 1,036,672 1,119,226
5.50% due 07/15/35....... 1,486,186 1,604,537
5.50% due 09/15/35....... 15,099,202 16,301,606
5.50% due 10/15/35....... 9,636,489 10,403,878
5.50% due 11/15/35....... 14,687,842 15,857,489
5.50% due 12/15/35....... 10,535,397 11,374,382
5.50% due 02/15/36....... 1,236,780 1,336,881
5.50% due 03/15/36....... 6,286,367 6,789,591
5.50% due 04/15/36....... 217,039 234,052
5.50% due 05/15/36....... 1,886,388 2,038,022
6.00% due 11/15/23....... 3,246 3,538
6.00% due 01/15/24....... 4,855 5,296
6.00% due 07/15/28....... 2,001 2,196
6.00% due 11/15/28....... 206,386 226,477
6.00% due 12/15/28....... 160,821 176,477
6.00% due 01/15/29....... 344,384 377,908
6.00% due 02/15/29....... 389,155 427,039
6.00% due 03/15/29....... 338,054 370,963
6.00% due 04/15/29....... 835,377 916,701
6.00% due 05/15/29....... 34,026 37,338
6.00% due 06/15/29....... 362,941 398,265
6.00% due 07/15/29....... 106,056 116,379
6.00% due 08/15/29....... 12,896 14,151
6.00% due 10/15/29....... 97,310 106,783
6.00% due 04/15/31....... 11,265 12,362
6.00% due 07/15/31....... 14,300 15,692
6.00% due 10/15/31....... 53,889 59,135
6.00% due 11/15/31....... 524,456 575,508
6.00% due 12/15/31....... 235,415 258,334
6.00% due 01/15/32....... 379,533 416,480
6.00% due 02/15/32....... 15,271 16,758
6.00% due 03/15/32....... 261,043 286,583
6.00% due 07/15/32....... 59,399 65,182
6.00% due 08/15/32....... 820,674 900,566
6.00% due 09/15/32....... 533,369 585,292
6.00% due 10/15/32....... 105,259 115,506
6.00% due 11/15/32....... 826 907
6.00% due 12/15/32....... 29,875 32,784
6.00% due 01/15/33....... 768,579 842,920
6.00% due 02/15/33....... 731,530 802,287
6.00% due 03/15/33....... 728,454 798,913
6.00% due 04/15/33....... 749,671 822,181
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 05/15/33................ $ 782,581 $ 858,275
6.00% due 06/15/33................ 523,107 573,705
6.00% due 08/15/33................ 750,595 823,305
6.00% due 10/15/33................ 273,640 300,108
6.00% due 11/15/33................ 895,058 981,639
6.00% due 12/15/33................ 1,636,278 1,794,546
6.00% due 01/15/34................ 895,866 980,279
6.00% due 02/15/34................ 5,726,746 6,282,299
6.00% due 03/15/34................ 75,756 82,895
6.00% due 04/15/34................ 1,701,484 1,865,089
6.00% due 05/15/34................ 128,784 140,918
6.00% due 06/15/34................ 144,325 158,042
6.00% due 07/15/34................ 1,716,068 1,881,626
6.00% due 08/15/34................ 2,468,683 2,698,977
6.00% due 09/15/34................ 136,074 148,780
6.00% due 10/15/34................ 358,600 392,389
6.00% due 11/15/34................ 486,637 532,490
6.00% due 12/15/34................ 55,382 60,600
6.00% due 01/15/35................ 51,636 56,372
6.00% due 02/15/35................ 389,624 426,340
6.00% due 04/15/35................ 34,799 37,991
6.00% due 05/15/35................ 6,510 7,176
6.00% due 06/15/35................ 171,364 187,082
6.00% due 11/15/35................ 6,973 7,649
6.00% due 12/15/35................ 746,248 815,740
6.00% due 01/15/36................ 574,851 626,181
6.00% due 02/15/36................ 849,838 929,948
6.00% due 03/15/36................ 343,354 374,207
6.00% due 04/15/36................ 1,825,725 1,994,725
6.00% due 05/15/36................ 2,961,906 3,231,634
6.00% due 06/15/36................ 1,123,434 1,223,671
6.00% due 07/15/36................ 778,614 848,085
6.00% due 08/15/36................ 9,873 10,753
6.00% due 09/15/36................ 70,718 77,223
6.00% due 10/15/36................ 706,547 769,944
6.00% due 11/15/36................ 1,156,984 1,260,215
6.00% due 09/15/38................ 8,327,920 9,050,163
6.50% due 03/15/28................ 13,999 15,687
6.50% due 08/15/28................ 24,491 27,574
6.50% due 01/15/29................ 2,339 2,628
6.50% due 02/15/29................ 898 1,009
6.50% due 03/15/29................ 74,429 83,613
6.50% due 04/15/29................ 821 923
6.50% due 05/15/29................ 7,082 7,969
6.50% due 06/15/29................ 26,355 29,607
6.50% due 07/15/29................ 1,569 1,763
6.50% due 10/15/29................ 3,083 3,463
6.50% due 08/15/31................ 106,350 119,339
6.50% due 09/15/31................ 10,272 11,527
6.50% due 10/15/31................ 149,583 167,852
6.50% due 11/15/31................ 87,428 98,105
6.50% due 12/15/31................ 100,603 112,890
6.50% due 02/15/32................ 152,617 170,398
6.50% due 05/15/32................ 588,582 657,157
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 06/15/32................. $ 62,033 $ 69,261
7.00% due 03/15/23................. 16,397 18,596
7.00% due 01/20/24................. 413 467
7.00% due 03/20/24................. 381 431
7.00% due 07/20/25................. 1,633 1,847
7.00% due 09/15/25................. 62,208 70,834
7.00% due 01/20/29................. 23,903 27,151
7.00% due 02/20/29................. 4,114 4,673
7.00% due 06/20/29................. 8,737 9,925
7.00% due 07/20/29................. 31,283 35,534
7.00% due 09/20/29................. 3,021 3,431
7.00% due 10/20/29................. 5,814 6,604
7.00% due 11/20/29................. 2,051 2,330
7.00% due 03/20/30................. 3,286 3,735
7.00% due 06/20/30................. 3,148 3,578
7.00% due 08/20/30................. 9,576 10,885
7.00% due 09/20/30................. 13,068 14,854
7.00% due 10/20/30................. 15,858 18,025
8.00% due 11/15/26................. 75,581 88,873
8.00% due 12/15/29................. 8,664 10,241
8.00% due 04/15/30................. 28,146 33,312
8.00% due 05/15/30................. 1,319 1,561
8.00% due 08/15/30................. 27,808 32,913
8.50% due 03/15/17................. 9,668 10,872
8.50% due 05/15/21................. 6,392 6,450
8.50% due 12/15/22................. 25,703 30,213
8.50% due 01/15/23................. 91,466 108,138
8.50% due 09/15/24................. 13,425 15,900
9.00% due 07/15/16................. 22,780 25,211
9.00% due 10/15/16................. 3,944 3,970
------------
319,753,029
------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
6.30% due 06/01/18.................. 201,858 220,790
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $305,309,636)................ 319,973,819
------------
U.S. GOVERNMENT TREASURIES -- 9.8%
UNITED STATES TREASURY BONDS -- 2.8%
4.50% due 08/15/39.................. 9,000,000 10,305,000
------------
UNITED STATES TREASURY NOTES -- 7.0%
1.25% due 09/30/15................. 4,000,000 3,993,752
1.75% due 07/31/15................. 3,000,000 3,072,180
2.63% due 08/15/20................. 9,000,000 9,084,375
3.38% due 11/15/19................. 10,000,000 10,772,660
------------
26,922,967
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $35,000,095)................. 37,227,967
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $340,309,731)................ 357,201,786
------------
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 10.0%
State Street Bank & Trust Co., Joint
Repurchase Agreement(1).............. $34,331,000 $ 34,331,000
UBS Securities LLC Joint Repurchase
Agreement(1)......................... 3,642,000 3,642,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $37,973,000)................... 37,973,000
------------
TOTAL INVESTMENTS
(cost $378,282,731)(2)............... 103.7% 395,174,786
Liabilities in excess of other assets... (3.7) (13,921,183)
----------- ------------
NET ASSETS 100.0% $381,253,603
=========== ============
- --------
(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 September 30, 2010 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- - ------------------- ----------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:
U.S. Government Agencies:
Government National Mtg. Assoc... $ -- $319,753,029 $ -- $319,753,029
Small Business Administration.... -- 220,790 -- 220,790
U.S. Government Treasuries........ -- 37,227,967 -- 37,227,967
Repurchase Agreements............... -- 37,973,000 -- 37,973,000
----------- ------------ ----------- ------------
TOTAL............................... $ -- $395,174,786 $ -- $395,174,786
=========== ============ =========== ============
See Notes to Financial Statements
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Foreign Government Agencies............ 23.4%
Federal Home Loan Mtg. Corp............ 5.7
Federal National Mtg. Assoc............ 4.5
Diversified Financial Services......... 4.3
Time Deposits.......................... 4.2
Oil Companies-Exploration & Production. 2.8
Banks-Commercial....................... 2.3
United States Treasury Notes........... 2.2
Diversified Banking Institutions....... 2.0
Telephone-Integrated................... 1.7
Medical-Hospitals...................... 1.7
Pipelines.............................. 1.6
Banks-Super Regional................... 1.5
Steel-Producers........................ 1.4
Electric-Integrated.................... 1.4
Independent Power Producers............ 1.3
Electric-Generation.................... 1.2
Special Purpose Entities............... 1.2
Paper & Related Products............... 1.0
Casino Hotels.......................... 1.0
Telecom Services....................... 0.9
Cable/Satellite TV..................... 0.9
Insurance-Multi-line................... 0.9
Airlines............................... 0.9
Coal................................... 0.8
Government National Mtg. Assoc......... 0.7
Repurchase Agreements.................. 0.7
Oil Companies-Integrated............... 0.7
Medical-Drugs.......................... 0.7
Satellite Telecom...................... 0.6
Chemicals-Plastics..................... 0.6
Building-Residential/Commercial........ 0.6
Insurance-Mutual....................... 0.6
Insurance-Life/Health.................. 0.6
Rental Auto/Equipment.................. 0.6
Multimedia............................. 0.5
United States Treasury Bonds........... 0.5
Distribution/Wholesale................. 0.5
Broadcast Services/Program............. 0.5
Funeral Services & Related Items....... 0.5
Real Estate Investment Trusts.......... 0.5
Cellular Telecom....................... 0.5
Finance-Other Services................. 0.5
Auto/Truck Parts & Equipment-Original.. 0.4
Building & Construction Products-Misc.. 0.4
Chemicals-Specialty.................... 0.4
Gas-Transportation..................... 0.4
Chemicals-Diversified.................. 0.4
Transport-Air Freight.................. 0.4
Oil-Field Services..................... 0.4
Television............................. 0.4
Enterprise Software/Service............ 0.4
Finance-Investment Banker/Broker....... 0.4
Gambling (Non-Hotel)................... 0.4
Electronic Components-Semiconductors... 0.4
Electronic Components-Misc............. 0.4
Non-Hazardous Waste Disposal........... 0.4
Retail-Regional Department Stores...... 0.4
Containers-Metal/Glass................. 0.3
Physicians Practice Management......... 0.3
Computer Services...................... 0.3
Retail-Drug Store.................... 0.3%
Real Estate Operations & Development. 0.3
Retail-Toy Stores.................... 0.3
Commercial Services.................. 0.3
Containers-Paper/Plastic............. 0.3
Retail-Restaurants................... 0.3
Web Hosting/Design................... 0.3
Retail-Propane Distribution.......... 0.3
Medical-Biomedical/Gene.............. 0.3
Food-Misc............................ 0.3
Firearms & Ammunition................ 0.2
Import/Export........................ 0.2
Music................................ 0.2
Storage/Warehousing.................. 0.2
Finance-Auto Loans................... 0.2
Energy-Alternate Sources............. 0.2
Capacitors........................... 0.2
Auto-Heavy Duty Trucks............... 0.2
Retail-Apparel/Shoe.................. 0.2
Beverages-Wine/Spirits............... 0.2
Photo Equipment & Supplies........... 0.2
Petrochemicals....................... 0.2
Building Products-Cement............. 0.2
Decision Support Software............ 0.2
Printing-Commercial.................. 0.2
Advertising Services................. 0.2
Semiconductor Equipment.............. 0.2
Transport-Services................... 0.2
Direct Marketing..................... 0.2
Cosmetics & Toiletries............... 0.2
Home Furnishings..................... 0.2
Building-Heavy Construction.......... 0.2
Aerospace/Defense.................... 0.2
Machinery-Farming.................... 0.2
Hazardous Waste Disposal............. 0.2
Seismic Data Collection.............. 0.2
Publishing-Books..................... 0.2
Wireless Equipment................... 0.2
Real Estate Management/Services...... 0.2
Aerospace/Defense-Equipment.......... 0.1
Municipal Bonds...................... 0.1
Mining Services...................... 0.1
Computers-Memory Devices............. 0.1
Medical Products..................... 0.1
Publishing-Newspapers................ 0.1
Engineering/R&D Services............. 0.1
Medical Instruments.................. 0.1
Medical-HMO.......................... 0.1
Advertising Agencies................. 0.1
Finance-Commercial................... 0.1
Banks-Fiduciary...................... 0.1
Investment Companies................. 0.1
Commercial Services-Finance.......... 0.1
Transport-Rail....................... 0.1
Wire & Cable Products................ 0.1
Oil & Gas Drilling................... 0.1
Transport-Equipment & Leasing........ 0.1
Circuit Boards....................... 0.1
Diversified Minerals................. 0.1
Applications Software................ 0.1
Medical-Generic Drugs................ 0.1
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Banks-Money Center........................... 0.1%
Warehousing & Harbor Transportation Services. 0.1
Data Processing/Management................... 0.1
Finance-Credit Card.......................... 0.1
Diversified Manufacturing Operations......... 0.1
Oil Refining & Marketing..................... 0.1
Gold Mining.................................. 0.1
Forestry..................................... 0.1
Gas-Distribution............................. 0.1
Computers-Periphery Equipment................ 0.1
Metal-Diversified............................ 0.1
MRI/Medical Diagnostic Imaging............... 0.1
-----
100.3%
=====
CREDIT QUALITY+#
Government -- Treasury. 2.9%
Government -- Agency... 11.4
AAA.................... 5.0
AA..................... 2.4
A...................... 5.9
BBB.................... 18.8
BB..................... 23.3
B...................... 21.3
CCC.................... 4.7
C...................... 0.2
Below C................ 0.1
Not Rated@............. 4.0
-----
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.
COUNTRY ALLOCATION*
United States.......... 68.4%
Turkey................. 3.1
Brazil................. 2.6
Russia................. 2.5
Mexico................. 2.1
Canada................. 1.9
United Kingdom......... 1.7
Venezuela.............. 1.5
Norway................. 1.1
Luxembourg............. 0.9
Australia.............. 0.9
Indonesia.............. 1.0
Philippines............ 0.8
Colombia............... 0.9
Peru................... 0.9
Cayman Islands......... 0.8
Sweden................. 0.7
Ireland................ 0.7
Netherlands............ 0.6
Argentina.............. 0.6
Ukrainian SSR.......... 0.6
Japan.................. 0.6
Switzerland............ 0.5
Poland................. 0.4
Hungary................ 0.4
El Salvador............ 0.4
Bermuda................ 0.4
Uruguay................ 0.4
Italy.................. 0.4
Georgia................ 0.3
Germany................ 0.3
British Virgin Islands. 0.3
Serbia................. 0.2
France................. 0.2
Barbados............... 0.2
Trinidad and Tobago.... 0.1
Bahrain................ 0.1
Kazakhstan............. 0.1
Dominican Republic..... 0.1
Jersey................. 0.1
Austria................ 0.1
Singapore.............. 0.1
United Arab Emirates... 0.1
Finland................ 0.1
New Zealand............ 0.1
-----
100.3%
=====
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
ASSET BACKED SECURITIES -- 3.3%
DIVERSIFIED FINANCIAL SERVICES -- 3.3%
Banc of America Commercial Mtg., Inc.
Series 2007-1, Class AJ
5.52% due 01/15/49(2)(3)....................... $1,750,000 $1,024,401
Bank of America Commercial Mtg., Inc.,
Series 2006-5, Class AM
5.45% due 09/10/47(3).......................... 500,000 456,294
Bank One Issuance Trust
Series 2003-C3, Class C3
4.77% due 02/16/16............................. 330,000 352,446
Bear Stearns Commercial Mtg. Securities, Inc.,
Series 2007-PW17, Class AM
5.92% due 06/11/50(2)(3)....................... 2,000,000 1,861,205
Carrington Mtg. Loan Trust
Series 2006-NC3, Class A2
0.36% due 08/25/36(4).......................... 2,440,453 1,846,744
Citigroup Commercial Mtg. Trust
Series 2006-C5, Class AM
5.46% due 10/15/49(3).......................... 500,000 499,052
Commercial Mtg.
Pass Through Certs.
Series 2006-CN2A, Class A2FL
0.52% due 02/05/19*(3)(4)...................... 1,575,000 1,406,505
Commercial Mtg.
Pass Through Certs.
Series 2006-C7, Class AM
5.99% due 06/10/46(2)(3)....................... 1,000,000 996,099
Dominos Pizza Master Issuer LLC
Series 2007-1, Class A2
5.26% due 04/25/37*............................ 391,000 391,000
JP Morgan Mtg. Acquisition Corp.,
Series 2006-CH2, Class AV3
0.36% due 10/25/36(4).......................... 1,500,000 1,140,975
LB-UBS Commercial Mtg. Trust,
Series 2007-C7, Class AM
6.37% due 09/15/45(2)(3)....................... 1,500,000 1,351,391
Merrill Lynch/Countrywide
Commercial Mtg. Trust,
Series 2007-8, Class AM
6.16% due 08/12/49(2)(3)....................... 2,000,000 1,907,249
Morgan Stanley Capital I
Series 2007-IQ14, Class A4
5.69% due 04/15/49(2)(3)....................... 1,500,000 1,557,073
Morgan Stanley Capital I
Series 2007-IQ15, Class AM
6.08% due 06/11/49(2)(3)....................... 500,000 457,745
Morgan Stanley Capital I
Pass Through Certs.,
Series 2006-HQ9, Class B
5.83% due 07/05/44(2)(3)....................... 500,000 395,304
Morgan Stanley Capital I,
Series 2006-HQ9, Class AJ
5.79% due 07/12/44(2)(3)....................... 1,400,000 1,211,025
Saxon Asset Securities Trust,
Series 2004-1, Class M1
1.05% due 03/25/35(4).......................... 1,759,025 1,443,060
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Sonic Capital LLC
Series 2006-1A, Class A2
5.10% due 12/20/31*..................... $ 391,203 $ 392,400
Soundview Home Equity Loan Trust
Series 2007-OPT1, Class 2A1
0.34% due 06/25/37(4)................... 731,334 641,041
-----------
TOTAL ASSET BACKED SECURITIES
(cost $19,123,841)...................... 19,331,009
-----------
CONVERTIBLE BONDS & NOTES -- 0.0%
TELECOM SERVICES -- 0.0%
ICO North America, Inc.
Senior Sec. Notes
7.50% due 08/15/09+(5)(6)(8)(9)(10)
(cost $312,925)......................... 297,000 252,450
-----------
U.S. CORPORATE BONDS & NOTES -- 44.1%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
6.25% due 11/15/14...................... 664,000 705,500
-----------
ADVERTISING SERVICES -- 0.2%
Visant Corp.
Senior Notes
10.00% due 10/01/17..................... 1,125,000 1,175,625
-----------
AEROSPACE/DEFENSE -- 0.2%
Spirit Aerosystems, Inc.
Company Guar. Notes
7.50% due 10/01/17...................... 1,002,000 1,034,565
-----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.1%
BE Aerospace, Inc.
Senior Notes
6.88% due 10/01/20...................... 800,000 816,000
-----------
AGRICULTURAL CHEMICALS -- 0.0%
Incitec Pivot Finance LLC
Company Guar. Notes
6.00% due 12/10/19*..................... 51,000 54,070
-----------
AIRLINES -- 0.9%
Continental Airlines, Inc.
Pass Through Certs.
Series 1991, Class A
6.55% due 02/02/19...................... 403,572 420,724
Delta Air Lines, Inc.
Pass Through Certs.
6.82% due 02/10/24...................... 1,218,838 1,278,195
Delta Air Lines, Inc.
Senior Sec.Notes
9.50% due 09/15/14*..................... 1,035,000 1,122,975
Delta Air Lines, Inc.
Senior Sec. Notes
12.25% due 03/15/15*.................... 800,000 884,000
United AirLines, Inc.
Pass Through Certs.
Series 2009-2, Class A
9.75% due 01/15/17...................... 1,137,312 1,273,789
-----------
4,979,683
-----------
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
APPLICATIONS SOFTWARE -- 0.1%
SS&C Technologies, Inc.
Company Guar.Notes
11.75% due 12/01/13........................ $ 474,000 $ 494,145
----------
AUTO-HEAVY DUTY TRUCKS -- 0.2%
Navistar International Corp.
Company Guar. Notes
8.25% due 11/01/21......................... 1,230,000 1,313,025
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.4%
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.50% due 05/01/18*........................ 1,250,000 1,296,875
Lear Corp.
Company Guar. Notes
8.13% due 03/15/20......................... 1,205,000 1,287,844
----------
2,584,719
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.0%
Exide Corp.
Escrow Notes
10.00% due 03/15/25+(5)(6)................. 225,000 0
----------
BANKS-COMMERCIAL -- 0.6%
Branch Banking & Trust Co.
Sub. Notes
0.64% due 05/23/17(4)...................... 280,000 250,174
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/17......................... 1,560,714 1,527,549
Credit Suisse New York
Sub. Notes
6.00% due 02/15/18......................... 593,000 654,889
KeyBank NA
Sub. Notes
7.41% due 10/15/27......................... 128,000 143,635
Regions Financial Corp.
Senior Notes
5.75% due 06/15/15......................... 222,000 225,832
US Bank NA
Sub. Notes
3.78% due 04/29/20(2)...................... 170,000 177,101
Wachovia Bank NA
Sub. Notes
6.00% due 11/15/17......................... 412,000 470,909
----------
3,450,089
----------
BANKS-FIDUCIARY -- 0.1%
State Street Capital Trust IV
Limited Guar. Notes
1.29% due 06/15/37(4)...................... 919,000 662,789
----------
BANKS-SUPER REGIONAL -- 1.4%
BAC Capital Trust XIII
Limited Guar. Notes
0.94% due 03/15/12(4)(11).................. 1,070,000 680,675
BAC Capital Trust XV
Limited Guar. Notes
1.10% due 06/01/56(4)...................... 250,000 157,706
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
BANKS-SUPER REGIONAL (CONTINUED)
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27.......................... $ 135,000 $ 172,411
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 10/01/17.......................... 382,000 433,611
PNC Preferred Funding Trust II
Jr. Sub. Bonds
6.11% due 03/15/12*(4)(11).................. 390,000 284,937
SunTrust Banks, Inc.
Senior Notes
6.00% due 09/11/17.......................... 205,000 222,030
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/26.......................... 38,000 37,038
USB Capital IX
Limited Guar. Notes
6.19% due 04/15/11(4)(11)................... 111,000 87,135
Wachovia Capital Trust III
Limited Guar. Notes
5.80% due 03/15/11(4)(11)................... 5,315,000 4,663,912
Wells Fargo & Co.
Senior Notes
0.69% due 10/28/15(4)....................... 470,000 444,070
Wells Fargo & Co.
Jr. Sub. Bonds
7.98% due 03/15/18(4)(11)................... 235,000 247,338
Wells Fargo Bank NA
Sub. Notes
5.75% due 05/16/16.......................... 421,000 472,570
----------
7,903,433
----------
BEVERAGES-WINE/SPIRITS -- 0.2%
Constellation Brands, Inc.
Company Guar. Notes
7.25% due 05/15/17.......................... 1,225,000 1,306,156
----------
BROADCAST SERVICES/PROGRAM -- 0.5%
Clear Channel Communications, Inc.
Company Guar. Notes
10.75% due 08/01/16......................... 895,000 698,100
Fisher Communications, Inc.
Senior Notes
8.63% due 09/15/14.......................... 865,000 856,350
Nexstar Broadcasting, Inc./Mission
Broadcasting, Inc.
Senior Sec. Notes
8.88% due 04/15/17*......................... 1,250,000 1,303,125
----------
2,857,575
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Interline Brands, Inc.
Senior Sub. Notes
8.13% due 06/15/14.......................... 752,000 776,440
----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16.......................... 675,000 679,250
----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-HEAVY CONSTRUCTION -- 0.2%
New Enterprise Stone & Lime Co.
Senior Notes
11.00% due 09/01/18*.................. $1,150,000 $1,075,250
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.6%
KB Home
Company Guar. Notes
9.10% due 09/15/17.................... 850,000 873,375
Lennar Corp.
Company Guar. Notes
6.95% due 06/01/18.................... 850,000 788,375
Standard Pacific Corp.
Company Guar. Notes
7.00% due 08/15/15.................... 1,200,000 1,149,000
Standard Pacific Corp.
Sec. Notes
8.38% due 05/15/18.................... 775,000 775,000
----------
3,585,750
----------
CABLE/SATELLITE TV -- 0.9%
Comcast Corp.
Company Guar. Notes
5.90% due 03/15/16.................... 1,030,000 1,189,789
Comcast Corp.
Company Guar. Notes
6.45% due 03/15/37.................... 180,000 199,957
COX Communications, Inc.
Notes
7.13% due 10/01/12.................... 211,000 233,597
CSC Holdings LLC
Senior Notes
8.63% due 02/15/19.................... 1,025,000 1,153,125
DIRECTV Holdings LLC/DIRECTV
Financing Co, Inc.
Company Guar. Notes
3.13% due 02/15/16.................... 165,000 166,606
DIRECTV Holdings LLC/DIRECTV
Financing Co., Inc.
Company Guar. Notes
6.38% due 06/15/15.................... 195,000 201,825
DIRECTV Holdings LLC/DIRECTV
Financing Co., Inc.
Company Guar. Notes
7.63% due 05/15/16.................... 195,000 217,425
Echostar DBS Corp.
Company Guar. Notes
7.13% due 02/01/16.................... 600,000 630,750
Echostar DBS Corp.
Company Guar. Notes
7.75% due 05/31/15.................... 912,000 972,420
Time Warner Cable, Inc.
Company Guar. Notes
5.85% due 05/01/17.................... 312,000 355,747
----------
5,321,241
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CAPACITORS -- 0.2%
Kemet Corp.
Sec. Notes
10.50% due 05/01/18*................... $1,275,000 $1,329,188
----------
CASINO HOTELS -- 1.0%
Eldorado Casino Corp. (Shreveport)
Sec. Bonds
10.00% due 08/01/12(6)(12)............. 946,489 875,502
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(5)(6)............... 425,000 375,254
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17.................... 1,300,000 1,423,500
MGM Mirage, Inc.
Company Guar. Notes
6.75% due 04/01/13..................... 757,000 703,064
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17.................... 1,055,000 1,201,381
Turning Stone Resort Casino Enterprise
Senior Notes
9.13% due 09/15/14*.................... 968,000 981,310
----------
5,560,011
----------
CASINO SERVICES -- 0.0%
FireKeepers Development Authority
Senior Notes
13.88% due 05/15/15*................... 127,000 147,955
----------
CELLULAR TELECOM -- 0.2%
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/15..................... 1,125,000 1,130,625
----------
CHEMICALS-DIVERSIFIED -- 0.2%
Solutia, Inc.
Company Guar. Notes
7.88% due 03/15/20..................... 1,190,000 1,271,812
Union Carbide Corp.
Senior Notes
7.75% due 10/01/96..................... 150,000 137,625
----------
1,409,437
----------
CHEMICALS-PLASTICS -- 0.4%
Hexion US Finance Corp./Hexion
Nova Scotia Finance ULC
Senior Sec. Notes
8.88% due 02/01/18..................... 2,485,000 2,435,300
----------
CHEMICALS-SPECIALTY -- 0.4%
Ferro Corp.
Senior Notes
7.88% due 08/15/18..................... 1,075,000 1,115,312
Huntsman International LLC
Company Guar. Notes
8.63% due 03/15/21*.................... 1,400,000 1,449,000
----------
2,564,312
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CIRCUIT BOARDS -- 0.1%
Viasystems, Inc.
Senior Sec. Notes
12.00% due 01/15/15*.................. $ 500,000 $ 545,625
----------
COAL -- 0.5%
Consol Energy, Inc.
Company Guar. Notes
8.25% due 04/01/20*................... 675,000 737,437
Foresight Energy LLC/Foresight
Energy Corp.
Company Guar. Notes
9.63% due 08/15/17*................... 1,025,000 1,055,750
Patriot Coal Corp.
Company Guar. Notes
8.25% due 04/30/18.................... 1,025,000 1,025,000
----------
2,818,187
----------
COMMERCIAL SERVICES -- 0.3%
Ceridian Corp.
Company Guar. Notes
11.25% due 11/15/15................... 1,850,000 1,706,625
----------
COMMERCIAL SERVICES-FINANCE -- 0.1%
Interactive Data Corp.
Company Guar. Notes
10.25% due 08/01/18*.................. 600,000 642,000
----------
COMPUTER SERVICES -- 0.3%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/15.................... 234,000 254,538
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*.................. 1,095,000 1,177,125
International Business Machines Corp.
Senior Notes
6.22% due 08/01/27.................... 375,000 453,489
----------
1,885,152
----------
COMPUTERS-PERIPHERY EQUIPMENT -- 0.1%
Lexmark International, Inc.
Senior Notes
6.65% due 06/01/18.................... 298,000 337,683
----------
CONTAINERS-METAL/GLASS -- 0.3%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................... 700,000 761,250
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/26.................... 935,000 913,962
----------
1,675,212
----------
CONTAINERS-PAPER/PLASTIC -- 0.3%
Berry Plastics Corp.
Senior Sec. Notes
8.25% due 11/15/15.................... 475,000 488,062
Berry Plastics Corp.
Senior Sec. Notes
9.50% due 05/15/18.................... 360,000 338,400
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CONTAINERS-PAPER/PLASTIC (CONTINUED)
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/17.................... $ 750,000 $ 798,750
----------
1,625,212
----------
COSMETICS & TOILETRIES -- 0.2%
Revlon Consumer Products Corp.
Sec. Notes
9.75% due 11/15/15.................... 1,050,000 1,102,500
----------
DATA PROCESSING/MANAGEMENT -- 0.1%
Fiserv, Inc.
Company Guar. Notes
4.63% due 10/01/20.................... 425,000 429,564
----------
DECISION SUPPORT SOFTWARE -- 0.2%
PGS Solutions
Company Guar. Notes
9.63% due 02/15/15.................... 1,350,000 1,236,938
----------
DIRECT MARKETING -- 0.2%
Affinity Group, Inc.
Company Guar. Notes
9.00% due 02/15/12.................... 1,494,000 1,114,898
----------
DISTRIBUTION/WHOLESALE -- 0.5%
American Tire Distributors, Inc.
Senior Sec. Notes
9.75% due 06/01/17*................... 1,350,000 1,437,750
Ingram Micro, Inc.
Senior Notes
5.25% due 09/01/17.................... 165,000 170,904
McJunkin Red Man Corp.
Senior Sec. Notes
9.50% due 12/15/16*................... 1,425,000 1,254,000
----------
2,862,654
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.5%
Bank of America Corp.
Sub. Notes
5.42% due 03/15/17.................... 13,000 13,313
Bank of America Corp.
Jr. Sub. Bonds
8.00% due 01/30/18(4)(11)............. 2,320,000 2,393,173
Bank of America Corp.
Jr. Sub. Notes
8.13% due 05/15/18(4)(11)............. 1,305,000 1,346,160
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14.................... 253,000 262,776
Citigroup, Inc.
Sub. Notes
5.50% due 02/15/17.................... 674,000 695,959
Citigroup, Inc.
Senior Notes
6.00% due 12/13/13.................... 170,000 186,385
Citigroup, Inc.
Sub. Notes
6.00% due 10/31/33.................... 190,000 183,290
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
GMAC, Inc.
Company Guar. Notes
8.30% due 02/12/15*....................... $1,196,000 $1,303,640
Goldman Sachs Group, Inc.
Sub. Notes
5.63% due 01/15/17........................ 204,000 216,024
Goldman Sachs Group, Inc.
Senior Notes
5.95% due 01/18/18........................ 221,000 242,730
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/37........................ 383,000 398,100
JP Morgan Chase & Co.
Sub. Notes
1.55% due 09/01/15(4)..................... 451,000 447,616
JP Morgan Chase & Co.
Jr. Sub Notes
7.90% due 04/30/18(4)(11)................. 200,000 214,326
JP Morgan Chase Capital XXIII
Limited Guar. Bonds
1.38% due 05/15/77(4)..................... 105,000 75,585
Morgan Stanley
Senior Notes
5.55% due 04/27/17........................ 442,000 468,364
Morgan Stanley
Senior Notes
5.63% due 09/23/19........................ 263,000 273,823
Nationsbank Corp.
Sub. Notes
7.25% due 10/15/25........................ 117,000 132,082
----------
8,853,346
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.8%
Citigroup Capital XXI
Company Guar. Bonds
8.30% due 10/30/15(4)..................... 2,450,000 2,572,500
General Electric Capital Corp.
Notes
1.88% due 09/13/13........................ 485,000 486,459
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38........................ 504,000 511,873
General Electric Capital Corp.
Senior Notes
6.15% due 08/07/37........................ 881,000 922,619
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32........................ 279,000 310,175
----------
4,803,626
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.0%
General Electric Co.
Senior Notes
5.25% due 12/06/17........................ 190,000 213,845
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
E-COMMERCE/SERVICES -- 0.0%
Expedia, Inc.
Company Guar. Notes
5.95% due 08/15/20*............................ $ 236,000 $ 238,655
----------
ELECTRIC-GENERATION -- 1.2%
AES Corp.
Senior Notes
8.00% due 10/15/17............................. 1,120,000 1,209,600
AES Corp.
Senior Notes
8.00% due 06/01/20............................. 1,000,000 1,085,000
Allegheny Energy Supply Co. LLC
Senior Notes
6.75% due 10/15/39*............................ 384,000 387,021
Edison Mission Energy
Senior Notes
7.00% due 05/15/17............................. 1,275,000 921,188
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 1,200,000 807,000
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 434,700 407,531
Midwest Generation LLC
Pass Through Certs.,
Series B
8.56% due 01/02/16............................. 399,157 394,666
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series B
9.24% due 07/02/17............................. 482,792 501,500
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series C
9.68% due 07/02/26............................. 575,000 599,438
Sithe/Independence Funding Corp.
Senior Notes
9.00% due 12/30/13............................. 550,188 569,505
----------
6,882,449
----------
ELECTRIC-INTEGRATED -- 1.3%
Ameren Energy Generating Co.
Senior Notes
6.30% due 04/01/20............................. 308,000 304,391
CenterPoint Energy Houston Electric LLC
General Refunding Mtg.
7.00% due 03/01/14............................. 415,000 489,631
CMS Energy Corp.
Senior Notes
4.25% due 09/30/15............................. 293,000 295,528
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/33............................. 525,000 602,867
Entergy Corp.
Senior Notes
5.13% due 09/15/20............................. 590,000 588,073
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-INTEGRATED (CONTINUED)
Entergy Gulf States Louisiana LLC
1st Mtg. Notes
3.95% due 10/01/20.......................... $ 504,000 $ 505,362
Exelon Generation Co. LLC
Senior Notes
4.00% due 10/01/20.......................... 480,000 480,508
Exelon Generation Co. LLC
Senior Notes
5.75% due 10/01/41.......................... 576,000 577,823
Great Plains Energy, Inc.
Senior Notes
2.75% due 08/15/13.......................... 165,000 165,729
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21.......................... 1,380,000 1,328,250
Mirant Mid-Atlantic LLC
Pass Through Certs.
Series B
9.13% due 06/30/17.......................... 463,365 488,850
Nevada Power Co.
Notes
5.38% due 09/15/40.......................... 456,000 470,357
Southern California Edison Co.
1st Mtg. Bonds
Series 04-G
5.75% due 04/01/35.......................... 80,000 91,913
Southern Energy, Inc.
Escrow Notes
7.90% due 07/15/09+(5)(6)................... 1,550,000 0
Texas Competitive Electric Holdings Co. LLC
Company Guar. Notes
10.25% due 11/01/15......................... 2,215,000 1,450,825
----------
7,840,107
----------
ELECTRONIC COMPONENTS-MISC. -- 0.4%
Jabil Circuit, Inc.
Senior Notes
7.75% due 07/15/16.......................... 1,100,000 1,205,875
Jabil Circuit, Inc.
Senior Notes
8.25% due 03/15/18.......................... 898,000 1,003,515
----------
2,209,390
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
Company Guar. Notes
9.13% due 12/15/14(7)....................... 625,000 625,000
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*......................... 725,000 754,000
Freescale Semiconductor, Inc.
Senior Sec. Notes
10.13% due 03/15/18*........................ 600,000 637,500
National Semiconductor Corp.
Senior Notes
6.15% due 06/15/12.......................... 184,000 196,178
----------
2,212,678
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
ELECTRONIC MEASUREMENT INSTRUMENTS -- 0.1%
Agilent Technologies, Inc.
Senior Notes
5.50% due 09/14/15......................... $ 247,000 $ 277,695
----------
ENERGY-ALTERNATE SOURCES -- 0.2%
Headwaters, Inc.
Senior Sec. Notes
11.38% due 11/01/14........................ 1,250,000 1,331,250
----------
ENGINEERING/R&D SERVICES -- 0.1%
Alion Science and Technology Corp.
Company Guar. Notes
10.25% due 02/01/15........................ 590,000 442,500
Alion Science and Technology Corp.
Senior Sec. Notes
12.00% due 11/01/14........................ 325,704 324,075
----------
766,575
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.4%
JDA Software Group, Inc.
Senior Notes
8.00% due 12/15/14*........................ 950,000 1,007,000
Mantech International Corp.
Company Guar. Notes
7.25% due 04/15/18......................... 1,200,000 1,245,000
----------
2,252,000
----------
FINANCE-AUTO LOANS -- 0.2%
Ford Motor Credit Co. LLC
Senior Notes
12.00% due 05/15/15........................ 945,000 1,190,197
Hyundai Capital America
Company Guar. Notes
3.75% due 04/06/16*........................ 168,000 167,815
----------
1,358,012
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13......................... 640,000 671,994
----------
FINANCE-CONSUMER LOANS -- 0.0%
SLM Corp.
Senior Notes
5.13% due 08/27/12......................... 236,000 238,579
----------
FINANCE-CREDIT CARD -- 0.1%
Discover Financial Services
Senior Notes
6.45% due 06/12/17......................... 399,000 429,207
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.3%
Lehman Brothers Holdings Capital Trust VII
Limited Guar. Notes
5.86% due 05/31/12+(8)(11)(13)............. 222,000 22
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17+(8)(13)................. 280,000 28
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38+(8)(13)................. 361,000 36
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-INVESTMENT BANKER/BROKER (CONTINUED)
Merrill Lynch & Co., Inc.
Sub. Notes
6.05% due 05/16/16........................ $ 400,000 $ 425,757
Merrill Lynch & Co., Inc.
Notes
6.88% due 04/25/18........................ 456,000 511,493
Merrill Lynch & Co., Inc.
Senior Notes
6.88% due 11/15/18........................ 263,000 294,602
TD Ameritrade Holding Corp.
Company Guar. Notes
4.15% due 12/01/14........................ 469,000 498,265
----------
1,730,203
----------
FINANCE-OTHER SERVICES -- 0.2%
SquareTwo Financial Corp.
Senior Sec. Notes
11.63% due 04/01/17*...................... 1,165,000 1,036,850
----------
FIREARMS & AMMUNITION -- 0.2%
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*...................... 1,325,000 1,401,188
----------
FOOD-CONFECTIONERY -- 0.0%
WM Wrigley Jr Co.
Senior Sec. Notes
3.70% due 06/30/14*....................... 175,000 181,217
----------
FOOD-MISC. -- 0.2%
Kraft Foods, Inc.
Senior Notes
6.50% due 02/09/40........................ 591,000 691,982
Kraft Foods, Inc.
Senior Notes
6.75% due 02/19/14........................ 416,000 483,727
----------
1,175,709
----------
FOOD-RETAIL -- 0.0%
Ahold Finance USA LLC
Company Guar. Notes
6.88% due 05/01/29........................ 226,000 268,025
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.5%
Carriage Services, Inc.
Company Guar. Notes
7.88% due 01/15/15........................ 1,675,000 1,649,875
Service Corp. International
Senior Notes
8.00% due 11/15/21........................ 1,125,000 1,203,750
----------
2,853,625
----------
GAMBLING (NON-HOTEL) -- 0.4%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*...................... 1,775,000 1,697,344
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*....................... 1,083,000 487,350
----------
2,184,694
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
GAS-DISTRIBUTION -- 0.0%
MXEnergy Holdings, Inc.
Senior Sec. Notes
13.25% due 08/01/14*(5)(6)............... $ 277,000 $ 247,915
----------
GAS-TRANSPORTATION -- 0.4%
Sabine Pass LNG LP
Senior Sec. Notes
7.50% due 11/30/16....................... 2,680,000 2,445,500
----------
HAZARDOUS WASTE DISPOSAL -- 0.2%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16....................... 990,000 1,029,600
----------
HEALTH CARE COST CONTAINMENT -- 0.0%
Team Health, Inc.
Company Guar. Notes
11.25% due 12/01/13...................... 223,000 230,805
----------
HOME FURNISHINGS -- 0.2%
Norcraft Cos., LP/Norcraft Finance Corp.
Senior Sec. Notes
10.50% due 12/15/15...................... 1,055,000 1,102,475
----------
INDEPENDENT POWER PRODUCERS -- 1.3%
Calpine Corp.
Senior Sec. Notes
7.88% due 07/31/20....................... 1,255,000 1,289,512
Calpine Corp.
Escrow Notes
8.75% due 07/15/13+(5)(6)................ 4,203,000 0
Dynegy-Roseton/Danskammer
Pass Through Certs.
Series B
7.67% due 11/08/16....................... 1,720,000 1,595,300
GenOn Escrow Corp.
Senior Notes
9.50% due 10/15/18*...................... 475,000 457,188
GenOn Escrow Corp.
Senior Notes
9.88% due 10/15/20*...................... 475,000 453,625
NGC Corp. Capital Trust I
Company Guar. Bonds
8.32% due 06/01/27....................... 1,090,000 523,200
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16....................... 1,535,000 1,579,131
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/20*...................... 1,175,000 1,211,719
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17....................... 232,000 216,340
----------
7,326,015
----------
INSURANCE-LIFE/HEALTH -- 0.6%
Jefferson-Pilot Corp.
Senior Notes
4.75% due 01/30/14....................... 227,000 240,968
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-LIFE/HEALTH (CONTINUED)
Lincoln National Corp.
Jr. Sub. Bonds
7.00% due 05/17/16(4)................... $2,200,000 $2,068,000
Nationwide Financial Services, Inc.
Senior Notes
5.90% due 07/01/12...................... 284,000 300,518
Protective Life Corp.
Senior Notes
8.45% due 10/15/39...................... 540,000 592,004
Unum Group
Senior Notes
5.63% due 09/15/20...................... 173,000 177,741
----------
3,379,231
----------
INSURANCE-MULTI-LINE -- 0.3%
Genworth Financial, Inc.
Senior Notes
4.95% due 10/01/15...................... 234,000 234,606
Hartford Financial Services Group, Inc.
Senior Notes
5.50% due 10/15/16...................... 187,000 199,041
MetLife, Inc.
Senior Notes
6.75% due 06/01/16...................... 230,000 274,564
Metropolitan Life Global Funding I
Senior Sec. Notes
2.88% due 09/17/12*..................... 460,000 473,416
Nationwide Mutual Insurance Co.
Notes
9.38% due 08/15/39*..................... 346,000 408,580
----------
1,590,207
----------
INSURANCE-MUTUAL -- 0.6%
Liberty Mutual Group, Inc.
Senior Notes
5.75% due 03/15/14*..................... 195,000 204,987
Liberty Mutual Group, Inc.
Senior Notes
6.50% due 03/15/35*..................... 274,000 250,902
Liberty Mutual Group, Inc.
Company Guar. Notes
7.80% due 03/07/37*..................... 727,000 687,015
Liberty Mutual Group, Inc.
Company Guar. Bonds
10.75% due 06/15/58*(4)................. 2,015,000 2,377,700
----------
3,520,604
----------
INVESTMENT COMPANIES -- 0.1%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*.................... 625,000 643,750
----------
MACHINERY-FARMING -- 0.2%
Case New Holland, Inc.
Senior Notes
7.88% due 12/01/17*..................... 950,000 1,031,938
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
MEDICAL INSTRUMENTS -- 0.1%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/17.................... $ 725,000 $ 739,500
----------
MEDICAL PRODUCTS -- 0.1%
Universal Hospital Services, Inc.
Senior Sec. Notes
8.50% due 06/01/15(7)................. 775,000 779,844
----------
MEDICAL-BIOMEDICAL/GENE -- 0.3%
Bio-Rad Laboratories, Inc.
Senior Sub. Notes
8.00% due 09/15/16.................... 1,140,000 1,236,900
Life Technologies Corp.
Senior Notes
3.38% due 03/01/13.................... 225,000 231,487
----------
1,468,387
----------
MEDICAL-DRUGS -- 0.5%
Schering-Plough Corp
Company Guar. Notes
6.00% due 09/15/17.................... 258,000 313,456
Valeant Pharmaceuticals International
Senior Notes
6.75% due 10/01/17*................... 800,000 816,000
Valeant Pharmaceuticals International
Company Guar. Notes
8.38% due 06/15/16.................... 1,575,000 1,827,000
----------
2,956,456
----------
MEDICAL-GENERIC DRUGS -- 0.1%
Watson Pharmaceuticals, Inc.
Senior Notes
6.13% due 08/15/19.................... 404,000 468,481
----------
MEDICAL-HMO -- 0.1%
Aetna, Inc.
Senior Notes.
6.75% due 12/15/37.................... 336,000 391,362
UnitedHealth Group, Inc.
Senior Notes
5.25% due 03/15/11.................... 325,000 331,177
----------
722,539
----------
MEDICAL-HOSPITALS -- 1.7%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/17*................... 1,350,000 1,444,500
HCA, Inc.
Senior Notes
7.50% due 11/15/95.................... 2,375,000 1,876,250
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19.................... 3,025,000 3,372,875
Select Medical Corp.
Company Guar. Notes
7.63% due 02/01/15.................... 1,895,000 1,849,994
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HOSPITALS (CONTINUED)
Tenet Healthcare Corp.
Senior Notes
9.25% due 02/01/15.................... $1,100,000 $1,181,125
----------
9,724,744
----------
MINING SERVICES -- 0.1%
Noranda Aluminum Acquisition Corp.
Company Guar. Notes
5.37% due 05/15/15(4)(7).............. 936,269 787,636
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.1%
Radnet Management, Inc.
Senior Notes
10.38% due 04/01/18*.................. 350,000 320,250
----------
MULTIMEDIA -- 0.5%
Haights Cross Operating Co.
Bonds
16.00% due 03/15/14+(4)(5)(6)......... 461,095 447,262
Historic TW, Inc.
Company Guar. Notes
6.63% due 05/15/29.................... 180,000 203,890
NBC Universal, Inc.
Senior Notes
5.95% due 04/01/41*................... 480,000 493,733
NBC Universal, Inc.
Senior Notes
6.40% due 04/30/40*................... 349,000 379,999
News America, Inc.
Company Guar. Notes
6.20% due 12/15/34.................... 495,000 534,736
Time Warner Cos., Inc.
Company Guar. Notes
6.95% due 01/15/28.................... 409,000 475,655
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/33.................... 250,000 324,001
----------
2,859,276
----------
MUSIC -- 0.2%
WMG Acquisition Corp.
Senior Sec. Notes
9.50% due 06/15/16.................... 1,300,000 1,391,000
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Bonds
11.50% due 07/01/03+(5)(6)(10)(14).... 500,000 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.4%
Allied Waste North America, Inc.
Company Guar. Notes
7.13% due 05/15/16.................... 673,000 720,951
Casella Waste Systems, Inc.
Senior Sec. Notes
11.00% due 07/15/14................... 700,000 766,500
Republic Services, Inc.
Company Guar. Notes
5.25% due 11/15/21.................... 267,000 295,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
NON-HAZARDOUS WASTE DISPOSAL (CONTINUED)
Waste Management, Inc.
Company Guar. Notes
6.13% due 11/30/39.......................... $ 331,000 $ 366,533
----------
2,148,984
----------
OIL & GAS DRILLING -- 0.1%
Pride International, Inc.
Senior Notes
6.88% due 08/15/20.......................... 257,000 279,809
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.1%
Atlas Energy Operating Co. LLC/
Atlas Energy Finance Corp.
Company Guar. Notes
10.75% due 02/01/18......................... 1,150,000 1,273,625
ATP Oil & Gas Corp.
Senior Sec. Notes
11.88% due 05/01/15*........................ 800,000 688,000
Belden & Blake Corp.
Company Guar. Sec.
Notes 8.75% due 07/15/12.................... 150,000 147,000
Chaparral Energy, Inc.
Company Guar. Notes
8.50% due 12/01/15.......................... 1,731,000 1,683,397
Chesapeake Energy Corp.
Company Guar. Notes
6.88% due 08/15/18.......................... 140,000 146,650
Chesapeake Energy Corp.
Company Guar. Notes
7.25% due 12/15/18.......................... 425,000 457,938
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 1,140,000 1,319,550
Denbury Resources, Inc.
Company Guar. Notes
9.75% due 03/01/16.......................... 225,000 252,563
Encore Acquisition Co.
Senior Notes
9.50% due 05/01/16.......................... 720,000 803,700
Hilcorp Energy I LP
Senior Notes
7.75% due 11/01/15*......................... 995,000 1,004,950
Kerr-McGee Corp.
Company Guar. Notes
6.95% due 07/01/24.......................... 312,000 340,351
Linn Energy LLC/Linn Energy Finance Corp.
Senior Notes
8.63% due 04/15/20*......................... 1,500,000 1,590,000
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16......................... 600,000 684,000
QEP Resources, Inc.
Senior Notes
6.88% due 03/01/21.......................... 900,000 974,250
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/20.......................... 125,000 130,000
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
SandRidge Energy, Inc.
Company Guar. Notes
8.75% due 01/15/20*........................ $575,000 $ 569,250
XTO Energy, Inc.
Senior Notes
6.50% due 12/15/18......................... 155,000 197,377
-----------
12,262,601
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
Hess Corp.
Senior Notes
5.60% due 02/15/41......................... 162,000 169,031
Hess Corp.
Senior Notes
7.88% due 10/01/29......................... 691,000 894,509
-----------
1,063,540
-----------
OIL REFINING & MARKETING -- 0.1%
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/17*....................... 425,000 399,500
-----------
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.
Company Guar. Notes
9.50% due 01/15/16*........................ 990,000 1,002,375
-----------
1,964,875
-----------
PAPER & RELATED PRODUCTS -- 0.8%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(5)(6)(7)............... 200,821 187,767
Cellu Tissue Holdings, Inc.
Senior Sec. Notes
11.50% due 06/01/14........................ 625,000 734,375
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*........................ 365,000 386,444
Georgia-Pacific LLC
Senior Notes
7.75% due 11/15/29......................... 277,000 290,850
Verso Paper Holdings LLC/Verso Paper, Inc.
Senior Sec. Notes
9.13% due 08/01/14......................... 200,000 200,500
Verso Paper Holdings LLC/Verso Paper, Inc.
Senior Sec. Notes
11.50% due 07/01/14........................ 500,000 547,500
Westvaco Corp.
Company Guar. Notes
7.95% due 02/15/31......................... 198,000 213,766
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
Westvaco Corp.
Company Guar. Notes
8.20% due 01/15/30.......................... $1,970,000 $2,154,603
----------
4,715,805
----------
PHOTO EQUIPMENT & SUPPLIES -- 0.2%
Eastman Kodak Co.
Senior Sec. Notes
9.75% due 03/01/18*......................... 1,330,000 1,296,750
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.3%
US Oncology, Inc.
Senior Sec. Notes
9.13% due 08/15/17.......................... 1,820,000 1,929,200
----------
PIPELINES -- 1.5%
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16.......................... 685,000 698,700
Crosstex Energy LP/Crosstex Energy
Finance Corp.
Company Guar. Notes
8.88% due 02/15/18.......................... 650,000 680,875
El Paso Corp.
Senior Notes
6.50% due 09/15/20*......................... 150,000 152,625
El Paso Corp.
Senior Notes
6.88% due 06/15/14.......................... 625,000 668,217
El Paso Natural Gas Co.
Senior Notes
5.95% due 04/15/17.......................... 575,000 633,061
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
6.50% due 04/01/20.......................... 490,000 528,966
Energy Transfer Equity LP
Company Guar. Notes
7.50% due 10/15/20.......................... 1,225,000 1,289,312
Enterprise Products Operating LLC
Company Guar. Notes
6.45% due 09/01/40.......................... 300,000 333,496
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
8.50% due 07/15/16.......................... 550,000 580,250
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
8.75% due 04/15/18.......................... 525,000 567,000
Plains All American Pipeline LP
Company Guar. Notes
4.25% due 09/01/12.......................... 156,000 162,710
Plains All American Pipeline LP
Company Guar. Notes
5.63% due 12/15/13.......................... 370,000 404,635
Regency Energy Partners LP/Regency
Energy Finance Corp.
Company Guar. Notes
8.38% due 12/15/13.......................... 415,000 432,638
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Rockies Express Pipeline LLC
Senior Notes
5.63% due 04/15/20*....................... $ 430,000 $ 432,350
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16........................ 650,000 656,500
Tennessee Gas Pipeline Co.
Senior Notes
8.00% due 02/01/16........................ 193,000 229,670
Williams Partners LP
Senior Notes
7.50% due 06/15/11........................ 544,000 567,366
----------
9,018,371
----------
PRINTING-COMMERCIAL -- 0.2%
Valassis Communications, Inc.
Company Guar. Notes
8.25% due 03/01/15........................ 1,137,000 1,193,850
----------
PUBLISHING-BOOKS -- 0.2%
TL Acquisitions, Inc.
Senior Notes
10.50% due 01/15/15*...................... 975,000 968,906
----------
PUBLISHING-NEWSPAPERS -- 0.1%
Gannett Co., Inc.
Company Guar. Notes
8.75% due 11/15/14*....................... 425,000 466,437
Gannett Co., Inc.
Company Guar. Notes
9.38% due 11/15/17*....................... 275,000 300,438
----------
766,875
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.5%
Brandywine Operating Partnership LP
Company Guar. Notes
5.70% due 05/01/17........................ 191,000 193,420
Developers Diversified Realty Corp.
Senior Notes
7.88% due 09/01/20........................ 900,000 932,541
DuPont Fabros Technology LP
Company Guar. Notes
8.50% due 12/15/17........................ 1,125,000 1,206,563
Federal Realty Investors Trust
Senior Notes
5.90% due 04/01/20........................ 95,000 105,644
Liberty Property LP
Senior Notes
4.75% due 10/01/20........................ 316,000 318,237
----------
2,756,405
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.2%
CB Richard Ellis Services, Inc.
Company Guar. Notes
11.63% due 06/15/17....................... 775,000 897,063
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.0%
Regency Centers LP
Company Guar. Notes
4.80% due 04/15/21........................ 246,000 245,656
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14+(7)(8)(13).......... $3,285,000 $ 8,213
----------
RENTAL AUTO/EQUIPMENT -- 0.6%
Avis Budget Car Rental LLC / Avis
Budget Finance, Inc.
Company Guar. Notes
9.63% due 03/15/18..................... 975,000 1,031,063
Hertz Corp. Company
Guar. Notes
7.50% due 10/15/18*.................... 1,000,000 1,000,000
RSC Equipment Rental, Inc.
Senior Notes
9.50% due 12/01/14..................... 1,230,000 1,274,587
----------
3,305,650
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Senior Notes
6.95% due 03/01/33..................... 847,000 775,005
Limited Brands, Inc.
Company Guar. Notes
7.00% due 05/01/20..................... 100,000 108,000
Limited Brands, Inc.
Company Guar. Notes
8.50% due 06/15/19..................... 365,000 424,313
----------
1,307,318
----------
RETAIL-DRUG STORE -- 0.3%
CVS Caremark Corp.
Senior Notes
6.25% due 06/01/27..................... 415,000 473,136
CVS Pass-Through Trust
Pass Through Certs.
7.51% due 01/10/32*.................... 185,952 218,189
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19.................... 600,000 624,750
Rite Aid Corp.
Senior Sec. Notes
10.38% due 07/15/16.................... 425,000 442,531
----------
1,758,606
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.0%
Sears Holdings Corp.
Senior Sec. Notes
6.63% due 10/15/18*.................... 250,000 250,828
----------
RETAIL-PROPANE DISTRIBUTION -- 0.3%
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.75% due 05/01/14..................... 539,000 548,432
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
7.00% due 10/01/18*.................... 281,000 288,025
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-PROPANE DISTRIBUTION (CONTINUED)
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
8.25% due 03/01/16........................ $ 725,000 $ 761,250
----------
1,597,707
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.4%
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.38% due 03/15/37........................ 421,000 416,790
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24........................ 450,000 457,875
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29........................ 400,000 405,000
Macy's Retail Holdings, Inc.
Company Guar. Notes
7.45% due 10/15/16........................ 679,000 755,387
----------
2,035,052
----------
RETAIL-RESTAURANTS -- 0.3%
Games Merger Corp.
Senior Notes
11.00% due 06/01/18*...................... 350,000 378,000
Landry's Restaurants, Inc.
Senior Sec. Notes
11.63% due 12/01/15....................... 575,000 606,625
Wendy's/Arby's Restaurants LLC
Company Guar. Notes
10.00% due 07/15/16....................... 600,000 638,250
----------
1,622,875
----------
RETAIL-TOY STORES -- 0.3%
Toys R Us Property Co. LLC
Senior Sec. Notes
8.50% due 12/01/17*....................... 1,625,000 1,718,437
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(5)(6)(10)(14)........ 100,000 0
----------
SAVINGS & LOANS/THRIFTS -- 0.0%
Amsouth Bank NA
Sub. Notes
4.85% due 04/01/13........................ 210,000 211,510
----------
SEISMIC DATA COLLECTION -- 0.2%
Geokinetics Holdings, Inc.
Senior Sec. Notes
9.75% due 12/15/14*....................... 1,115,000 975,625
----------
SPECIAL PURPOSE ENTITIES -- 0.6%
Capital One Capital V
Limited Guar. Notes
10.25% due 08/15/39....................... 1,150,000 1,244,875
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*....................... 1,045,000 611,325
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
SPECIAL PURPOSE ENTITIES (CONTINUED)
Goldman Sachs Capital III
Company Guar. Notes
1.07% due 09/01/12(4)(11)........... $ 224,000 $ 155,120
Local TV Finance LLC
Senior Notes
10.00% due 06/15/15*(7)............. 648,649 572,433
MassMutual Global Funding II
Senior Notes
2.30% due 09/28/15*................. 414,000 416,918
Teco Finance, Inc.
Company Guar. Notes
6.57% due 11/01/17.................. 160,000 187,090
Teco Finance, Inc.
Company Guar. Notes
7.00% due 05/01/12.................. 98,000 106,320
----------
3,294,081
----------
STEEL-PRODUCERS -- 1.0%
AK Steel Corp.
Company Guar. Notes
7.63% due 05/15/20.................. 750,000 759,375
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15................. 1,422,000 1,464,660
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15.................. 1,090,000 1,114,525
Steel Dynamics, Inc.
Company Guar. Notes
7.75% due 04/15/16.................. 975,000 1,011,562
United States Steel Corp.
Senior Notes
7.38% due 04/01/20.................. 1,150,000 1,198,875
----------
5,548,997
----------
STORAGE/WAREHOUSING -- 0.2%
Mobile Mini, Inc.
Company Guar. Notes
9.75% due 08/01/14.................. 1,310,000 1,368,950
----------
TELECOM EQUIPMENT-FIBER OPTICS -- 0.0%
Corning, Inc.
Senior Notes
5.75% due 08/15/40.................. 177,000 187,757
----------
TELECOM SERVICES -- 0.8%
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23.................. 50,000 37,531
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23.................. 225,000 168,891
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.27% due 12/11/23.................. 375,000 281,484
PAETEC Holding Corp
Senior Sec. Notes
8.88% due 06/30/17.................. 1,225,000 1,280,125
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELECOM SERVICES (CONTINUED)
Qwest Corp.
Senior Notes
8.88% due 03/15/12....................... $1,254,000 $1,376,265
SBA Telecommunications, Inc.
Company Guar. Notes
8.25% due 08/15/19....................... 1,475,000 1,622,500
----------
4,766,796
----------
TELEPHONE-INTEGRATED -- 1.3%
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/18....................... 1,050,000 1,147,125
Frontier Communications Corp.
Senior Notes
8.25% due 04/15/17....................... 350,000 382,813
Frontier Communications Corp.
Senior Notes
8.50% due 04/15/20....................... 350,000 386,312
Level 3 Financing, Inc.
Company Guar. Notes
10.00% due 02/01/18...................... 1,025,000 922,500
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15....................... 1,175,000 1,271,937
Sprint Capital Corp.
Company Guar. Notes
6.88% due 11/15/28....................... 1,500,000 1,372,500
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... 1,500,000 1,575,000
Verizon Virginia, Inc.
Senior Notes
4.63% due 03/15/13....................... 250,000 267,820
----------
7,326,007
----------
TELEVISION -- 0.3%
Paxson Communications Corp.
Escrow Notes
8.38% due 01/15/13*+(5)(6)............... 1,849,114 9,246
Umbrella Acquisition, Inc.
Company Guar. Notes
9.75% due 03/15/15*(7)................... 1,415,217 1,355,070
Viacom, Inc.
Company Guar. Notes
4.63% due 05/15/18....................... 276,000 285,365
Young Broadcasting, Inc.
Escrow Notes
8.75% due 01/15/14+(5)................... 380,000 0
Young Broadcasting, Inc.
Escrow Notes
10.00% due 03/01/11+(5).................. 1,075,000 0
----------
1,649,681
----------
TRANSPORT-AIR FREIGHT -- 0.4%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 01/02/11....................... 108,771 105,508
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
TRANSPORT-AIR FREIGHT (CONTINUED)
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/19........................ $1,289,403 $1,302,297
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B 7.63% due 01/02/15. 37,330 32,103
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20........................ 372,376 362,136
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17........................ 552,559 541,507
----------
2,343,551
----------
TRANSPORT-EQUIPMENT & LEASING -- 0.1%
GATX Corp.
Senior Notes
4.75% due 10/01/12........................ 332,000 348,985
GATX Corp.
Senior Notes
4.75% due 05/15/15........................ 195,000 208,493
----------
557,478
----------
TRANSPORT-RAIL -- 0.0%
Union Pacific Corp.
Senior Notes
5.75% due 11/15/17........................ 170,000 196,045
----------
TRANSPORT-SERVICES -- 0.2%
Bristow Group, Inc.
Company Guar. Notes
7.50% due 09/15/17........................ 699,000 716,475
PHI, Inc.
Company Guar. Notes
8.63% due 10/15/18*....................... 300,000 294,750
Ryder System, Inc.
Notes
3.60% due 03/01/16........................ 137,000 139,104
----------
1,150,329
----------
WEB HOSTING/DESIGN -- 0.3%
Equinix, Inc.
Senior Notes
8.13% due 03/01/18........................ 1,510,000 1,611,925
----------
WIRE & CABLE PRODUCTS -- 0.1%
Coleman Cable, Inc.
Company Guar. Notes
9.00% due 02/15/18........................ 600,000 613,500
----------
WIRELESS EQUIPMENT -- 0.2%
Motorola, Inc.
Senior Notes
5.38% due 11/15/12........................ 435,000 463,197
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
WIRELESS EQUIPMENT (CONTINUED)
Motorola, Inc.
Senior Notes
6.50% due 09/01/25.................... $ 441,000 $ 479,936
------------
943,133
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $254,129,258)................... 257,769,696
------------
FOREIGN CORPORATE BONDS & NOTES -- 9.2%
BANKS-COMMERCIAL -- 1.5%
Akbank TAS
Senior Notes
5.13% due 07/22/15*................... 1,275,000 1,270,027
ANZ National International, Ltd.
Bank Guar. Notes
6.20% due 07/19/13*................... 220,000 244,503
ATF Bank JSC
Bank Guar. Notes
9.25% due 02/21/14.................... 580,000 627,850
Banco ABC Brasil SA
Bonds
7.88% due 04/08/20*................... 710,000 740,175
Banco Bradesco SA
Sub. Notes
5.90% due 01/16/21*................... 680,000 690,200
Banco Cruzeiro do Sul SA
Sub. Notes
8.88% due 09/22/20*................... 630,000 664,589
Banco de Credito del Peru
Senior Notes
5.38% due 09/16/20*................... 620,000 626,833
Bank of Tokyo-Mitsubishi UFJ, Ltd.
Notes
2.45% due 09/11/15*................... 471,000 476,539
Barclays Bank PLC
Jr. Sub. Bonds
5.93% due 12/15/16*(4)(11)............ 396,000 370,260
Barclays Bank PLC
Sub. Notes
6.05% due 12/04/17*................... 185,000 200,630
Barclays Bank PLC
Jr. Sub. Notes
6.86% due 06/15/32*(4)(11)............ 180,000 170,100
BNP Paribas
Bank Guar. Notes
4.80% due 06/24/15*................... 195,000 209,779
BOM Capital PLC
Senior Notes
6.70% due 03/11/15*................... 650,000 660,595
Group BPCE SA
Senior Notes
2.38% due 10/04/13*................... 420,000 420,151
Groupe BPCE
Notes
2.78% due 06/30/10(4)(11)............. 141,000 92,349
Nordea Bank AB
Jr. Sub. Bonds
8.38% due 03/25/15(4)(11)............. 184,000 196,972
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
BANKS-COMMERCIAL (CONTINUED)
Royal Bank of Scotland PLC
Bank Guar. Notes
3.95% due 09/21/15.......................... $ 320,000 $ 323,346
The Royal Bank of Scotland PLC
Company Guar. Notes
5.63% due 08/24/20.......................... 251,000 263,164
Westpac Banking Corp.
Jr. Sub. Notes
0.65% due 03/31/10(4)(11)................... 1,050,000 630,000
----------
8,878,062
----------
BANKS-MONEY CENTER -- 0.1%
Lloyds TSB Bank PLC
Company Guar. Notes
6.50% due 09/14/20*......................... 450,000 454,336
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.3%
Corp GEO SAB de CV
Company Guar. Notes
9.25% due 06/30/20*......................... 320,000 362,800
Desarrolladora Homex SAB de CV
Company Guar. Notes
9.50% due 12/11/19*......................... 720,000 810,000
Urbi Desarrollos Urbanos SAB de CV
Company Guar. Notes
9.50% due 01/21/20*......................... 550,000 625,625
----------
1,798,425
----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Rearden G Holdings EINS GmbH
Company Guar. Notes
7.88% due 03/30/20*......................... 540,000 577,800
----------
CELLULAR TELECOM -- 0.3%
MTS International Funding, Ltd.
Senior Sec. Notes
8.63% due 06/22/20*......................... 850,000 973,250
Telemovil Finance Co., Ltd.
Company Guar. Notes
8.00% due 10/01/17*......................... 630,000 647,223
----------
1,620,473
----------
CHEMICALS-DIVERSIFIED -- 0.2%
OXEA Finance/Cy SCA
Senior Sec. Notes
9.50% due 07/15/17*......................... 950,000 1,025,365
----------
CHEMICALS-PLASTICS -- 0.2%
Montell Finance Co. BV
Company Guar. Notes
8.10% due 03/15/27*......................... 1,325,000 1,228,937
----------
COAL -- 0.3%
Adaro Indonesia PT
Company Guar. Notes
7.63% due 10/22/19.......................... 500,000 545,000
Bumi Investment Pte, Ltd.
Company Guar. Notes
10.75% due 10/06/17*........................ 530,000 530,000
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
COAL (CONTINUED)
Indo Integrated Energy II BV
Company Guar. Notes
9.75% due 11/05/16*....................... $590,000 $ 675,550
----------
1,750,550
----------
COMPUTERS-MEMORY DEVICES -- 0.1%
Seagate HDD Cayman
Company Guar. Notes
6.88% due 05/01/20*....................... 800,000 782,000
----------
CONTAINERS-METAL/GLASS -- 0.1%
Ardagh Packaging Finance PLC
Senior Sec. Notes
7.38% due 10/15/17*....................... 150,000 150,000
Ardagh Packaging Finance PLC
Company Guar. Notes
9.13% due 10/15/20*....................... 150,000 150,000
----------
300,000
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
Credit Agricole SA
Jr. Sub. Bonds
6.64% due 05/31/17*(4)(11)................ 239,000 217,490
Natixis
Sub. Notes
0.78% due 01/15/19(4)..................... 150,000 129,308
----------
346,798
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.0%
Tyco International Finance
Company Guar. Notes
3.38% due 10/15/15........................ 200,000 211,058
----------
DIVERSIFIED MINERALS -- 0.1%
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
6.42% due 03/01/26........................ 454,000 542,392
----------
ELECTRIC-INTEGRATED -- 0.0%
Iberdrola Finance Ireland, Ltd.
Company Guar. Notes
3.80% due 09/11/14*....................... 221,000 227,038
----------
FINANCE-OTHER SERVICES -- 0.3%
Biz Finance PLC for Ukreximbank
Senior Notes
8.38% due 04/27/15........................ 480,000 492,000
DTEK Finance BV
Company Guar. Notes
9.50% due 04/28/15*....................... 675,000 691,740
Sydney Airport Finance Co. Property, Ltd.
Company Guar. Notes
5.13% due 02/22/21*....................... 435,000 434,574
----------
1,618,314
----------
FORESTRY -- 0.1%
Tembec Industries, Inc.
Senior Sec. Notes
11.25% due 12/15/18*...................... 400,000 374,500
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
GOLD MINING -- 0.1%
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/20*......................... $ 396,000 $ 393,216
----------
IMPORT/EXPORT -- 0.2%
Marfrig Overseas, Ltd.
Company Guar. Notes
9.50% due 05/04/20*......................... 690,000 732,262
Minerva Overseas II, Ltd.
Company Guar. Notes
10.88% due 11/15/19*........................ 630,000 668,270
----------
1,400,532
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(5)(6)(13)(15).......... 725,000 0
----------
INSURANCE-MULTI-LINE -- 0.6%
Aegon NV
Sub. Notes
3.23% due 07/15/14(4)(11)................... 111,000 71,412
Catlin Insurance Co., Ltd.
Notes
7.25% due 01/19/17*(4)(11).................. 3,117,000 2,524,770
XL Capital, Ltd.
Senior Notes
5.25% due 09/15/14.......................... 488,000 520,021
XL Capital, Ltd.
Senior Notes
6.38% due 11/15/24.......................... 318,000 330,449
----------
3,446,652
----------
METAL-DIVERSIFIED -- 0.1%
Xstrata Canada Corp.
Company Guar. Notes
7.35% due 06/05/12.......................... 308,000 335,484
----------
OIL & GAS DRILLING -- 0.1%
Transocean, Inc.
Company Guar. Notes
4.95% due 11/15/15.......................... 297,000 308,841
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.6%
Alliance Oil Co., Ltd.
Senior Notes
9.88% due 03/11/15*......................... 700,000 733,250
Compton Petroleum Finance Corp.
Company Guar. Notes
7.63% due 12/01/13.......................... 965,000 839,550
Gazprom Via Gaz Capital SA
Senior Notes
9.25% due 04/23/19.......................... 540,000 672,300
Nexen, Inc.
Senior Notes
5.88% due 03/10/35.......................... 256,000 261,243
OPTI Canada, Inc.
Senior Sec. Notes
7.88% due 12/15/14.......................... 1,805,000 1,358,263
----------
3,864,606
----------
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-INTEGRATED -- 0.5%
BP Capital Markets PLC
Company Guar. Notes
3.13% due 10/01/15........................ $387,000 $ 389,033
BP Capital Markets PLC
Company Guar. Notes
3.88% due 03/10/15........................ 350,000 364,149
BP Capital Markets PLC
Company Guar. Notes
4.50% due 10/01/20........................ 280,000 286,332
ENI SpA
Senior Notes
5.70% due 10/01/40*....................... 384,000 393,047
Norsk Hydro A/S
Company Guar. Notes
7.15% due 11/15/25........................ 552,000 708,411
Petroleum Co. of Trinidad & Tobago, Ltd.
Senior Notes
9.75% due 08/14/19*....................... 710,000 869,750
----------
3,010,722
----------
OIL-FIELD SERVICES -- 0.1%
Weatherford International, Ltd.,
Bermuda
Company Guar. Notes
6.75% due 09/15/40........................ 349,000 363,754
----------
PAPER & RELATED PRODUCTS -- 0.1%
Celulosa Arauco y Constitucion SA
Senior Notes
5.00% due 01/21/21*....................... 145,000 146,888
PE Paper Escrow GmbH
Senior Sec. Notes
12.00% due 08/01/14*...................... 475,000 544,469
----------
691,357
----------
PETROCHEMICALS -- 0.2%
Braskem Finance, Ltd.
Company Guar. Notes
7.00% due 05/07/20*....................... 620,000 654,875
Braskem Finance, Ltd.
Company Guar. Notes
7.38% due 10/04/15*(11)................... 620,000 614,370
----------
1,269,245
----------
PIPELINES -- 0.0%
TransCanada Pipelines, Ltd.
Jr. Sub. Notes
6.35% due 05/15/17(4)(11)................. 272,000 254,320
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.2%
Atlantic Finance, Ltd.
Company Guar. Notes
8.75% due 05/27/14........................ 525,000 569,100
Country Garden Holdings Co.
Senior Notes
11.25% due 04/22/17*...................... 855,000 906,300
----------
1,475,400
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
SATELLITE TELECOM -- 0.6%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Bonds
9.50% due 02/01/15(16).................... $2,430,000 $2,515,050
Intelsat Subsidiary Holding Co., Ltd.
Company Guar. Notes
8.88% due 01/15/15........................ 1,185,000 1,226,475
----------
3,741,525
----------
SEMICONDUCTOR EQUIPMENT -- 0.2%
MagnaChip Semiconductor SA/
MagnaChip Semiconductor Finance Co.
Senior Notes
10.50% due 04/15/18*...................... 1,100,000 1,163,250
----------
SPECIAL PURPOSE ENTITIES -- 0.4%
Alfa Bank OJSC Via Alfa Bond Issuance PLC
Company Guar. Notes
7.88% due 09/25/17*....................... 940,000 942,720
Hellas Telecommunications Luxembourg II
Sub. Notes
6.03% due 01/15/15+*(4)................... 1,330,000 26,600
Kazakhstan Temir Zholy Finance BV
Company Guar. Notes
6.38% due 10/06/20*....................... 200,000 207,000
LBG Capital No.1 PLC
Bank Guar. Notes
8.00% due 06/15/20*(4)(11)................ 1,325,000 1,219,000
SMFG Preferred Capital, Ltd.
Jr. Sub. Notes
6.08% due 01/25/17*(4)(11)................ 373,000 367,405
----------
2,762,725
----------
STEEL-PRODUCERS -- 0.5%
Essar Steel Algoma, Inc.
Senior Sec. Notes
9.38% due 03/15/15*....................... 1,250,000 1,256,250
Evraz Group SA
Notes
8.88% due 04/24/13........................ 470,000 500,550
Gerdau Trade, Inc.
Company Guar. Notes
5.75% due 01/30/21*....................... 999,000 1,013,608
----------
2,770,408
----------
SUPRANATIONAL BANKS -- 0.0%
Asian Development Bank
Senior Bonds
5.82% due 06/16/28........................ 181,000 214,385
----------
TELECOM SERVICES -- 0.1%
Indosat Palapa Co., BV
Company Guar. Notes
7.38% due 07/29/20*....................... 310,000 341,775
----------
TELEPHONE-INTEGRATED -- 0.5%
Axtel SAB de CV
Company Guar. Notes
9.00% due 09/22/19........................ 540,000 498,150
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Telecom Italia Capital SA
Company Guar. Bonds
5.25% due 10/01/15................... $ 621,000 $ 670,143
Telefonica Emisiones SAU
Company Guar. Notes
0.77% due 02/04/13(4)................ 180,000 176,202
Telefonos de Mexico SAB de CV
Senior Notes
5.50% due 01/27/15................... 197,000 219,069
Telemar Norte Leste SA
Senior Notes
5.50% due 10/23/20*.................. 600,000 607,500
Virgin Media Finance PLC
Company Guar. Notes
8.38% due 10/15/19................... 553,000 606,918
-----------
2,777,982
-----------
TELEVISION -- 0.1%
Myriad International Holding BV
Company Guar. Notes
6.38% due 07/28/17*.................. 630,000 652,428
-----------
TRANSPORT-RAIL -- 0.1%
Canadian Pacific Railway Co.
Notes
6.50% due 05/15/18................... 350,000 419,688
-----------
WAREHOUSING & HARBOR TRANSPORTATION SERVICES -- 0.1%
DP World, Ltd.
Notes
6.85% due 07/02/37................... 470,000 439,585
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $52,295,267)................... 53,833,928
-----------
FOREIGN GOVERNMENT AGENCIES -- 23.4%
SOVEREIGN -- 23.4%
Dominican Republic
Bonds
7.50% due 05/06/21*.................. 540,000 608,310
Federal Republic of Brazil
Bonds
5.63% due 01/07/41................... 2,360,000 2,590,100
Federal Republic of Brazil
Notes
5.88% due 01/15/19................... 880,000 1,031,800
Federal Republic of Brazil
Senior Bonds
7.13% due 01/20/37................... 900,000 1,183,500
Federal Republic of Brazil
Notes
8.00% due 01/15/18................... 1,091,667 1,305,088
Federal Republic of Brazil
Bonds
8.25% due 01/20/34................... 1,695,000 2,466,225
Federal Republic of Brazil
Notes
8.75% due 02/04/25................... 1,820,000 2,670,541
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
SOVEREIGN (CONTINUED)
Federal Republic of Brazil
Senior Bonds
8.88% due 10/14/19............. $ 1,840,000 $2,589,800
Federal Republic of Germany
Bonds
4.25% due 07/04/39............. EUR 675,000 1,164,110
Government of Australia
Bonds
5.75% due 06/15/11............. AUD 880,000 856,934
Government of Barbados
Notes
7.00% due 08/04/22*............ 1,000,000 1,050,151
Government of Bermuda
Senior Notes
5.60% due 07/20/20*............ 340,000 367,540
Government of Canada
Bonds
1.25% due 06/01/11............. CAD 2,990,000 2,907,091
Government of Canada
Bonds
4.25% due 06/01/18............. CAD 1,398,000 1,523,601
Government of Canada
Bonds
5.75% due 06/01/29............. CAD 1,030,000 1,338,179
Government of Finland
Bonds
4.38% due 07/04/19............. EUR 220,000 345,628
Government of Japan
Bonds
2.10% due 03/20/27............. JPY 257,200,000 3,341,764
Government of Poland
Bonds
5.75% due 04/25/14............. PLN 3,600,000 1,268,041
Government of Poland
Bonds
6.25% due 10/24/15............. PLN 3,400,000 1,224,765
Government of United Kingdom
Bonds
4.00% due 09/07/16............. GBP 1,875,000 3,259,567
Hungarian Government
Bonds
7.50% due 10/24/13............. HUF 240,000,000 1,217,883
Kingdom of Bahrain
Senior Notes
5.50% due 03/31/20*............ 640,000 670,483
Kingdom of Norway
Bonds
5.00% due 05/15/15............. NOK 31,345,000 5,878,810
Kingdom of Sweden
Bonds
4.25% due 03/12/19............. SEK 10,500,000 1,768,862
Kingdom of Sweden
Bonds
4.50% due 08/12/15............. SEK 12,910,000 2,129,273
New South Wales Treasury Corp.
Government Guar. Bonds
6.00% due 05/01/12............. AUD 3,148,000 3,087,535
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Argentina
Senior Bonds
0.68% due 08/03/12(4)... AUD 2,700,000 $ 614,250
Republic of Argentina
Notes
2.50% due 12/31/38(16).. 3,044,761 1,236,173
Republic of Argentina
Senior Bonds
8.28% due 12/31/33...... 2,172,642 1,806,552
Republic of Colombia
Notes
7.38% due 01/27/17...... 440,000 542,300
Republic of Colombia
Notes
7.38% due 03/18/19...... 1,263,000 1,597,695
Republic of Colombia
Bonds
7.38% due 09/18/37...... 1,870,000 2,463,725
Republic of Colombia
Bonds
8.13% due 05/21/24...... 360,000 483,300
Republic of El Salvador
Senior Bonds
7.38% due 12/01/19...... 1,000,000 1,110,000
Republic of El Salvador
Senior Bonds
7.75% due 01/24/23...... 654,000 739,020
Republic of El Salvador
Bonds
8.25% due 04/10/32...... 420,000 478,800
Republic of Georgia
Bonds
7.50% due 04/15/13...... 1,870,000 1,891,505
Republic of Hungary
Bonds
8.00% due 02/12/15...... HUF 240,000,000 1,248,679
Republic of Indonesia
Senior Bonds
6.63% due 02/17/37...... 2,226,000 2,702,856
Republic of Indonesia
Senior Bonds
8.50% due 10/12/35...... 620,000 903,650
Republic of Indonesia
Bonds
11.63% due 03/04/19..... 800,000 1,240,000
Republic of Italy
Bonds
4.00% due 09/01/20...... EUR 1,185,000 1,640,006
Republic of Peru
Bonds
6.55% due 03/14/37...... 820,000 994,250
Republic of Peru
Notes
7.35% due 07/21/25...... 1,826,000 2,369,235
Republic of Peru
Senior Bonds
8.75% due 11/21/33...... 720,000 1,071,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Serbia
Notes
6.75% due 11/01/24(16)...... EUR 1,284,700 $1,252,583
Republic of the Philippines
Bonds
7.75% due 01/14/31.......... 1,000,000 1,330,000
Republic of the Philippines
Senior Notes
9.50% due 02/02/30.......... 1,570,000 2,408,066
Republic of the Philippines
Notes
10.63% due 03/16/25......... 865,000 1,392,650
Republic of Turkey
Bonds
6.75% due 05/30/40.......... 1,710,000 1,953,675
Republic of Turkey
Notes
6.88% due 03/17/36.......... 4,380,000 5,091,750
Republic of Turkey
Notes
7.00% due 06/05/20.......... 1,470,000 1,760,325
Republic of Turkey
Notes
7.38% due 02/05/25.......... 2,160,000 2,667,600
Republic of Turkey
Bonds
7.50% due 11/07/19.......... 2,090,000 2,570,700
Republic of Turkey
Notes
8.00% due 02/14/34.......... 611,000 797,355
Republic of Turkey
Senior Bonds
11.88% due 01/15/30......... 1,295,000 2,288,913
Republic of Uruguay
Bonds
6.88% due 09/28/25.......... 370,000 444,925
Republic of Uruguay
Notes
7.63% due 03/21/36.......... 1,260,000 1,625,400
Republic of Venezuela
Bonds
5.75% due 02/26/16.......... 1,515,000 1,051,107
Republic of Venezuela
Bonds
7.65% due 04/21/25.......... 490,000 298,900
Republic of Venezuela
Notes
8.50% due 10/08/14.......... 1,380,000 1,159,200
Republic of Venezuela
Senior Bonds
9.25% due 09/15/27.......... 4,897,000 3,587,052
Republic of Venezuela
Bonds
9.25% due 05/07/28.......... 1,540,000 1,042,580
Republic of Venezuela
Bonds
9.38% due 01/13/34.......... 2,000,000 1,360,000
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Russian Federation
Bonds
5.00% due 04/29/20*............... EUR 1,400,000 $ 1,458,800
Russian Federation
Senior Bonds
7.50% due 03/31/30(16)............ 8,097,065 9,669,515
Russian Federation
Notes
12.75% due 06/24/28............... 2,100,000 3,822,000
Swiss Government
Bonds
3.00% due 05/12/19................ CHF 1,390,000 1,610,360
Ukraine Government International
Bond Bonds
7.75% due 09/23/20*............... 3,450,000 3,462,937
United Mexican States
Senior Notes
5.13% due 01/15/20................ 2,184,000 2,440,620
United Mexican States
Senior Notes
6.05% due 01/11/40................ 1,220,000 1,396,900
United Mexican States
Notes
6.75% due 09/27/34................ 1,205,000 1,497,213
United Mexican States
Bonds
7.50% due 04/08/33................ 840,000 1,113,000
United Mexican States
Notes
8.13% due 12/30/19................ 950,000 1,284,875
United Mexican States
Bonds
8.30% due 08/15/31................ 1,430,000 2,041,325
------------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $123,704,029)............... 136,858,903
------------
U.S. GOVERNMENT AGENCIES -- 11.0%
FEDERAL HOME LOAN MTG. CORP. -- 5.7%
4.50% due 02/01/20................ 111,565 118,291
4.50% due 08/01/20................ 225,062 238,631
4.50% due 01/01/39................ 506,072 527,190
5.00% due 09/01/18................ 258,099 275,475
5.00% due 07/01/20................ 390,539 416,465
5.00% due 01/01/24................ 641,951 681,221
5.00% due 02/01/34................ 271,457 287,633
5.00% due 03/01/34................ 1,935,144 2,047,436
5.00% due 05/01/34................ 193,969 207,307
5.00% due 02/01/35................ 371,176 392,715
5.00% due 07/01/35................ 585,927 619,195
5.00% due 08/01/35................ 598,551 632,536
5.00% due 04/01/36................ 319,768 337,924
5.00% due 05/01/36................ 206,761 217,726
5.00% due 08/01/36................ 270,046 284,366
5.00% due 03/01/39................ 1,637,822 1,724,148
5.00% due 08/01/39................ 3,376,685 3,554,479
5.50% due 05/01/37................ 968,135 1,027,603
5.50% due 06/01/37................ 257,498 273,315
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FEDERAL HOME LOAN MTG. CORP. (CONTINUED)
5.50% due 09/01/37.................... $ 781,190 $ 829,175
5.50% due 10/01/37.................... 2,981,569 3,164,713
5.50% due 11/01/37.................... 930,988 1,000,836
5.50% due 12/01/37.................... 744,367 790,090
5.50% due 01/01/38.................... 1,833,441 1,950,461
5.50% due 02/01/38.................... 556,622 590,812
5.50% due 07/01/38.................... 458,485 486,648
6.00% due 10/01/37.................... 787,983 846,280
6.00% due 10/01/39.................... 2,084,487 2,236,096
6.50% due 05/01/29.................... 4,401 4,886
6.50% due 02/01/35.................... 99,063 109,359
6.50% due 11/01/37.................... 3,843,248 4,191,045
7.00% due 06/01/29.................... 12,655 14,342
Federal Home Loan Mtg. Corp. REMIC
Series 3116, Class PD
5.00% due 10/15/34(1)................. 3,000,000 3,239,541
Series 41, Class F
10.00% due 05/15/20(1)................ 7,413 8,173
Series 1103, Class N
11.57% due 06/15/21(1)................ 4,271 1,068
-----------
33,327,181
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 4.5%
2.13% due 01/25/13.................... 369,000 370,941
4.00% due 06/01/39.................... 901,024 932,788
4.00% due 09/01/40.................... 1,498,770 1,542,345
4.50% due 06/01/19.................... 283,992 301,646
4.50% due 11/01/22.................... 515,146 546,043
4.50% due 06/01/23.................... 564,280 594,156
4.50% due 01/01/39.................... 3,106,179 3,240,166
4.50% due 07/01/40.................... 1,994,172 2,080,192
4.50% due 08/01/40.................... 2,986,466 3,113,423
5.00% due 06/01/19.................... 136,334 145,587
5.00% due 01/01/23.................... 98,888 104,919
5.00% due 03/01/34.................... 188,783 200,033
5.00% due 05/01/35.................... 93,569 98,911
5.00% due 02/01/37.................... 165,281 174,259
5.00% due 04/01/37.................... 703,563 741,201
5.00% due 05/01/37.................... 220,668 232,474
5.00% due 06/01/37.................... 13,424 14,142
5.00% due 07/01/37.................... 181,608 191,323
5.00% due 05/01/39.................... 4,254,596 4,510,274
5.50% due 11/01/19.................... 851,179 920,365
5.50% due 08/01/20.................... 197,811 213,766
5.50% due 11/01/22.................... 386,027 415,754
5.50% due 08/01/23.................... 289,258 311,533
5.50% due 01/01/29.................... 5,197 5,580
5.50% due 02/01/35.................... 315,739 337,662
5.50% due 12/01/35.................... 450,653 481,944
5.50% due 12/01/36.................... 339,579 361,991
5.50% due 04/01/37.................... 178,700 190,121
5.50% due 03/01/38.................... 22,264 23,687
6.00% due 02/01/32.................... 71,166 78,354
6.00% due 05/01/34.................... 10,761 11,747
6.00% due 10/01/34.................... 298,170 325,494
6.00% due 06/01/35.................... 89,233 96,936
6.00% due 07/01/37.................... 2,649,934 2,851,362
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 08/01/37..................... $ 136,559 $ 146,939
6.00% due 10/01/37..................... 380,825 413,479
6.50% due 02/01/35..................... 42,047 46,312
7.50% due 01/01/30..................... 9,599 10,953
7.50% due 09/01/30..................... 3,253 3,714
8.00% due 11/01/28..................... 13,975 16,156
13.00% due 11/01/15.................... 772 876
Federal National Mtg. Assoc. REMIC
Series 1989-2, Class D
8.80% due 01/25/19(1).................. 24,342 29,819
Series 1989-17, Class E
10.40% due 04/25/19(1)................. 1,859 2,277
-----------
26,431,644
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.8%
5.00% due 04/15/40..................... 3,947,528 4,223,252
7.50% due 07/15/27..................... 9,135 10,436
7.50% due 10/15/27..................... 57,467 65,653
-----------
4,299,341
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $61,288,760)..................... 64,058,166
-----------
U.S. GOVERNMENT TREASURIES -- 2.7%
UNITED STATES TREASURY BONDS -- 0.5%
2.13% due 02/15/40..................... 580,982 649,203
4.50% due 08/15/39..................... 756,000 865,620
4.63% due 02/15/40..................... 219,000 255,888
5.25% due 11/15/28..................... 750,000 947,578
6.25% due 08/15/23..................... 166,000 224,826
-----------
2,943,115
-----------
UNITED STATES TREASURY NOTES -- 2.2%
1.50% due 12/31/13..................... 6,000,000 6,149,532
1.75% due 07/31/15..................... 1,170,000 1,198,150
2.38% due 02/28/15..................... 152,000 160,336
2.38% due 07/31/17..................... 2,000,000 2,065,000
2.63% due 02/29/16..................... 750,000 797,050
2.75% due 11/30/16..................... 15,000 15,938
3.50% due 05/15/20..................... 367,000 398,367
3.63% due 02/15/20..................... 1,781,000 1,953,395
4.38% due 12/15/10..................... 1,000 1,009
-----------
12,738,777
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $15,423,641)..................... 15,681,892
-----------
LOANS(18)(19) -- 0.2%
MEDICAL-DRUGS -- 0.2%
Triax Pharmaceuticals LLC
BTL
14.00% due 08/30/11+(5)(6)(9)(13)(20)
(cost $1,687,744)...................... 1,732,399 1,076,772
-----------
MUNICIPAL BONDS & NOTES -- 0.2%
Texas State Transportation Commission
Bonds, Series B
5.18% due 04/01/30..................... 80,000 85,980
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
MUNICIPAL BONDS (CONTINUED)
State of Utah
Series B
3.54% due 07/01/25........................ $810,000 $ 809,077
----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $890,000)........................... 895,057
----------
COMMON STOCK -- 0.3%
BANKS-COMMERCIAL -- 0.1%
Lloyds Banking Group PLC+.................. 600,576 699,281
----------
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.+(5)(6)................ 135,000 0
----------
FOOD-MISC. -- 0.1%
Wornick Co.+(5)(6)(9)...................... 4,592 284,314
----------
GAMBLING (NON-HOTEL) -- 0.0%
Shreveport Gaming Holdings, Inc.+(5)(6)(9). 2,441 34,382
----------
GAS-DISTRIBUTION -- 0.0%
MXEnergy Holdings, Inc.+(5)(6)............. 138,937 123,932
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(5)(6)(9)(21).... 128,418 642
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(5)(6)(9)............................ 4,107 513
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(5)(6)... 47,723 185,881
----------
PAPER & RELATED PRODUCTS -- 0.1%
Caraustar Industries, Inc.+(5)(6).......... 89 243,668
----------
TOTAL COMMON STOCK
(cost $1,686,772)......................... 1,572,613
----------
PREFERRED STOCK -- 1.0%
BANKS-COMMERCIAL -- 0.1%
CoBank ACB
11.00%*................................... 12,063 661,957
----------
BANKS-SUPER REGIONAL -- 0.1%
US Bancorp
7.19%..................................... 685 529,377
Wachovia Capital Trust IX
6.38%..................................... 12,800 320,640
----------
850,017
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.4%
Ally Financial, Inc.
7.00%*.................................... 2,374 2,136,971
HSBC Holdings PLC
8.00%..................................... 9,360 252,533
----------
2,389,504
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.2%
Citigroup Capital XIII
7.88%..................................... 32,520 813,000
General Electric Capital Corp.
4.50%(16)................................. 8,582 220,643
----------
1,033,643
----------
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
PREFERRED STOCK (CONTINUED)
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
JPMorgan Chase Capital XXIX
6.70%.................................... 19,440 $ 493,776
------------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Freddie Mac
8.38%+(4)................................ 11,300 4,859
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC,
Class C+(5)(6)(9)........................ 39,177 196
------------
SPECIAL PURPOSE ENTITY -- 0.1%
Structured Repackaged Asset-Backed Trust
Securities
3.00%(4)................................. 29,200 661,964
------------
TOTAL PREFERRED STOCK
(cost $5,902,448)........................ 6,095,916
------------
WARRANTS+ -- 0.0%
ENGINEERING/R&D SERVICES -- 0.0%
Alion Science & Technology Corp.
Expires 11/14/10
(Strike price $0.00)(5)(6)............... 325 3
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(5)(6)............... 13,811 0
------------
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Association, Inc.
Expires 02/19/14(5)(6)................... 6,739 0
------------
TOTAL WARRANTS
(cost $44,958)........................... 3
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $536,489,643)...................... 557,426,405
------------
SHORT-TERM INVESTMENT SECURITIES -- 4.2%
TIME DEPOSIT -- 4.2%
Euro Time Deposit with State Street
Bank & Trust Co.
0.01% due 10/01/10
(cost $24,430,000)....................... $24,430,000 24,430,000
------------
REPURCHASE AGREEMENT -- 0.7%
State Street Bank & Trust Co., Joint
Repurchase Agreement(22)
(cost $4,259,000)........................ 4,259,000 4,259,000
------------
TOTAL INVESTMENTS
(cost $565,178,643) (17)................. 100.3% 586,115,405
Liabilities in excess of other assets....... (0.3) (1,748,989)
----------- ------------
NET ASSETS 100.0% $584,366,416
=========== ============
- --------
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At September 30, 2010, the aggregate value
of these securities was $102,596,706 representing 17.8% of net assets.
Unless otherwise indicated these securities are not considered to be
illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1)Collateralized Mortgage Obligation
(2)Variable Rate Security -- the rate reflected is as of September 30, 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 September 30, 2010.
(5)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(6)Illiquid security. At September 30, 2010, the aggregate value of these
securities was $4,345,699 representing 0.7% 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, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of September 30, 2010, the SunAmerica
Strategic Bond Fund held the following restricted securities:
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- --------- ----------- -------- ------ ------
Critical Care
Systems
International,
Inc.
Common Stock..... 7/20/2006 $ 4,107 $ 37,181 $ 513 $ 0.12 0.00%
Haights Cross
Communications
Common Stock..... 3/11/2010 47,723 373,272 185,881 3.89 0.03
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
-------- --------
297,000 312,925 252,450 85.00 0.04
Shreveport Gaming
Holdings, Inc.
Common Stock..... 7/29/2005 2,047 47,128
7/21/2005 394 9,051
-------- --------
2,441 56,179 34,382 14.09 0.01
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- ---------- ------ ------
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
4/28/2010 88,897 109,316
9/17/2010 46,990 102,687
---------- ----------
1,732,399 1,732,399 $1,076,772 $62.15 0.18%
Triax
Pharmaceuticals
LLC
Common
Stock........... 8/31/2007 128,418 53,936 642 0.00 0.00
Triax
Pharmaceuticals
LLC
Preferred
Stock........... 8/31/2007 39,177 78,353 196 0.01 0.00
Wornick Co.
Common
Stock........... 8/8/2008 4,592 596,039 284,314 61.92 0.05
---------- ----
$1,835,150 0.31%
========== ====
(10) Bond is in default and did not pay principal at maturity.
(11) Perpetual maturity -- maturity date reflects the next call date.
(12) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(13) Security in default
(14) Company has filed for Chapter 7 bankruptcy.
(15) Company has filed for bankruptcy in country of issuance.
(16) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(17) See Note 5 for cost of investments on a tax basis.
(18) 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.
(19) Senior loans in the Fund 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.
(20) A portion of the interest was paid in additional bonds/loans.
(21) Consists of more than one type of securities traded together as a unit.
(22) See Note 2 for details of Joint Repurchase Agreements.
REMIC --Real Estate Mortgage Investment Conduit
AUD --Australian Dollar
CAD --Canadian Dollar
CHF --Swiss Franc
EUR --Euro Dollar
GBP --British Pound
HUF --Hungarian Forint
JPY --Japanese Yen
NOK --Norwegian Krone
PLN --Polish Zloty
SEK --Swedish Krona
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2010 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:..
Asset Backed Securities......... $ -- $ 19,331,009 $ -- $ 19,331,009
Convertible Bonds & Notes....... -- -- 252,450 252,450
U.S. Corporate Bonds & Notes.... -- 251,584,280 6,185,416 257,769,696
Foreign Corporate Bonds & Notes. -- 53,833,928 0 53,833,928
Foreign Government Agencies..... -- 136,858,903 -- 136,858,903
U.S. Government Agencies........ -- 64,058,166 -- 64,058,166
U.S. Government Treasuries...... -- 15,681,892 -- 15,681,892
Loans........................... -- -- 1,076,772 1,076,772
Municipal Bond & Notes.......... -- 895,057 -- 895,057
Common Stock.................... 699,281 -- 873,332 1,572,613
Preferred Stock................. 2,767,415 3,328,305 196 6,095,916
Warrants........................ -- -- 3 3
Short Term Investment Securities:.
Time Deposit.................... -- 24,430,000 -- 24,430,000
Repurchase Agreement.............. -- 4,259,000 -- 4,259,000
---------- ------------ ---------- ------------
TOTAL............................. $3,466,696 $574,260,540 $8,388,169 $586,115,405
========== ============ ========== ============
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
BONDS & NOTES BONDS & NOTES BONDS & NOTES LOANS COMMON STOCK PREFERRED STOCK
------------- -------------- ----------------- ---------- ------------ ---------------
Balance as of 3/31/2010................ $207,900 $ 5,723,382 $ 0 $2,472,826 $785,034 $ 392
Accrued discounts/premiums............. -- 962 -- 24,662 -- --
Realized gain (loss)................... -- (1,849,133) -- 115,828 --
Change in unrealized appreciation
(depreciation)(1)..................... 44,550 2,118,058 -- (672,431) 88,298 (196)
Net purchases (sales).................. -- (683,355) -- (864,113) -- --
Transfers in and/or out of Level 3 (2). -- 875,502 0 -- -- --
-------- ----------- ----------- ---------- -------- -----
Balance as of 09/30/2010............... $252,450 $ 6,185,416 $ 0 $1,076,772 $873,332 $ 196
======== =========== =========== ========== ======== =====
WARRANTS
--------
Balance as of 3/31/2010................ $ 0
Accrued discounts/premiums............. --
Realized gain (loss)................... (1,281)
Change in unrealized appreciation
(depreciation)(1)..................... (5,694)
Net purchases (sales).................. 6,978
Transfers in and/or out of Level 3 (2). --
-------
Balance as of 09/30/2010............... $ 3
=======
- --------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
September 30, 2010 includes:
CONVERTIBLE U.S. CORPORATE FOREIGN CORPORATE
BONDS & NOTES BONDS & NOTES BONDS & NOTES LOANS COMMON STOCK PREFERRED STOCK WARRANTS
------------- -------------- ----------------- --------- ------------ --------------- --------
$44,550 $192,715 $-- $(533,528) $-- $(196) $(6,975)
======= ======== === ========= === ===== =======
- --------
(2)The Fund's policy is to recognize transfers in and transfers out as of the
end of the reporting period.
See Notes to Financial Statements
47
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Medical-Hospitals.......................... 4.1%
Diversified Banking Institutions........... 3.7
Repurchase Agreements...................... 3.7
Casino Hotels.............................. 3.5
Banks-Commercial........................... 3.5
Auto/Truck Parts & Equipment-Original...... 3.3
Finance-Auto Loans......................... 3.0
Telephone-Integrated....................... 2.8
Special Purpose Entities................... 2.8
Auto-Cars/Light Trucks..................... 2.3
Computer Services.......................... 2.2
Casino Services............................ 2.1
Retail-Regional Department Stores.......... 2.1
Cellular Telecom........................... 2.0
Paper & Related Products................... 2.0
Telecom Services........................... 2.0
Independent Power Producers................ 1.9
Pipelines.................................. 1.8
Oil Companies-Exploration & Production..... 1.7
Banks-Super Regional....................... 1.7
Data Processing/Management................. 1.7
Cable/Satellite TV......................... 1.7
Diversified Manufacturing Operations....... 1.6
Medical-Drugs.............................. 1.5
Theaters................................... 1.5
Electric-Generation........................ 1.4
Oil-Field Services......................... 1.4
Broadcast Services/Program................. 1.2
Diversified Financial Services............. 1.2
Chemicals-Diversified...................... 1.2
Satellite Telecom.......................... 1.2
Multimedia................................. 1.2
Auto/Truck Parts & Equipment-Replacement... 1.1
Coal....................................... 1.1
Electronic Components-Semiconductors....... 1.0
Machinery-Farming.......................... 0.9
Oil Field Machinery & Equipment............ 0.9
Machinery-General Industrial............... 0.9
Web Hosting/Design......................... 0.8
Banks-Money Center......................... 0.8
Banks-Mortgage............................. 0.8
Investment Companies....................... 0.8
Medical Products........................... 0.8
Publishing-Periodicals..................... 0.7
Computers-Memory Devices................... 0.7
Electric-Integrated........................ 0.7
Medical Information Systems................ 0.7
Insurance-Multi-line....................... 0.7
Chemicals-Plastics......................... 0.7
Containers-Paper/Plastic................... 0.7
Metal-Aluminum............................. 0.6
Commercial Services........................ 0.6
Transport-Marine........................... 0.6
Television................................. 0.6
Agricultural Chemicals..................... 0.6
Diagnostic Kits............................ 0.5
Athletic Equipment......................... 0.5
Diversified Operations/Commercial Services. 0.5
Aerospace/Defense-Equipment................ 0.5
Pharmacy Services.......................... 0.5
Resorts/Theme Parks........................ 0.5
Rubber-Tires............................ 0.5%
Medical Labs & Testing Services......... 0.5
Medical-Outpatient/Home Medical......... 0.5
Printing-Commercial..................... 0.5
Building Products-Cement................ 0.4
Funeral Services & Related Items........ 0.4
Agricultural Operations................. 0.4
Physical Therapy/Rehabilitation Centers. 0.4
Telecommunication Equipment............. 0.4
Building Products-Air & Heating......... 0.4
Food-Meat Products...................... 0.4
Office Supplies & Forms................. 0.4
Retail-Drug Store....................... 0.4
Direct Marketing........................ 0.3
Airlines................................ 0.3
Beverages-Non-alcoholic................. 0.3
Finance-Consumer Loans.................. 0.3
Food-Misc............................... 0.3
Diversified Minerals.................... 0.3
Steel Pipe & Tube....................... 0.3
Enterprise Software/Service............. 0.2
Chemicals-Specialty..................... 0.2
Retail-Arts & Crafts.................... 0.2
Firearms & Ammunition................... 0.2
Consumer Products-Misc.................. 0.2
Building & Construction-Misc............ 0.2
Oil & Gas Drilling...................... 0.2
Diversified Operations.................. 0.2
Hazardous Waste Disposal................ 0.1
Gambling (Non-Hotel).................... 0.1
E-Commerce/Services..................... 0.1
Investment Management/Advisor Services.. 0.1
Gas-Distribution........................ 0.1
Containers-Metal/Glass.................. 0.1
Aerospace/Defense....................... 0.1
----
99.8%
====
CREDIT QUALITY ALLOCATION+#
A.......... 2.5%
BBB........ 1.0
BB......... 30.0
B.......... 48.9
CCC........ 10.2
Not Rated@. 7.4
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 0.6%
AUTO-CARS/LIGHT TRUCKS -- 0.6%
Ford Motor Co.
Senior Notes
4.25% due 11/15/16
(cost $514,000)............................ $ 514,000 $ 767,145
----------
U.S. CORPORATE BONDS & NOTES -- 79.4%
AEROSPACE/DEFENSE -- 0.1%
Esterline Technologies Corp.
Company Guar. Notes
7.00% due 08/01/20*........................ 85,000 87,975
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.5%
BE Aerospace, Inc.
Senior Notes
6.88% due 10/01/20......................... 705,000 719,100
----------
AGRICULTURAL CHEMICALS -- 0.6%
CF Industries, Inc.
Senior Notes
6.88% due 05/01/18......................... 165,000 177,581
CF Industries, Inc.
Company Guar. Notes
7.13% due 05/01/20......................... 540,000 590,625
----------
768,206
----------
AGRICULTURAL OPERATIONS -- 0.4%
Southern States Cooperative, Inc.
Senior Notes
11.25% due 05/15/15*....................... 555,000 588,300
----------
AIRLINES -- 0.3%
Continental Airlines, Inc.
Senior Notes
4.50% due 01/15/15......................... 325,000 470,438
----------
ATHLETIC EQUIPMENT -- 0.5%
Easton-Bell Sports, Inc.
Senior Sec. Notes
9.75% due 12/01/16......................... 700,000 760,375
----------
AUTO-CARS/LIGHT TRUCKS -- 1.7%
Ford Motor Co.
Senior Notes
7.45% due 07/16/31......................... 2,300,000 2,397,750
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 2.2%
Accuride Corp.
Company Guar. Notes
9.50% due 08/01/18*........................ 305,000 320,250
ArvinMeritor, Inc.
Senior Notes
8.13% due 09/15/15......................... 705,000 713,812
ArvinMeritor, Inc.
Company Guar. Notes
10.63% due 03/15/18........................ 515,000 570,363
Tenneco, Inc.
Senior Notes
7.75% due 08/15/18*........................ 145,000 148,625
Tenneco, Inc.
Company Guar. Notes
8.13% due 11/15/15......................... 90,000 94,163
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (CONTINUED)
Tenneco, Inc.
Company Guar. Notes
8.63% due 11/15/14............................. $ 405,000 $ 415,125
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/17*............................ 725,000 770,312
----------
3,032,650
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 1.1%
Affinia Group Holdings, Inc.
Company Guar. Notes
9.00% due 11/30/14............................. 755,000 777,650
Affinia Group Holdings, Inc.
Senior Sec. Notes
10.75% due 08/15/16*........................... 730,000 812,125
Exide Corp.
Escrow Notes
10.00% due 03/15/25+(1)(2)..................... 1,650,000 0
----------
1,589,775
----------
BANKS-COMMERCIAL -- 2.9%
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/14............................. 440,918 439,816
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/15............................. 440,918 437,611
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/16............................. 1,129,863 1,112,915
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/17............................. 2,073,809 2,029,740
----------
4,020,082
----------
BANKS-MONEY CENTER -- 0.8%
NB Capital Trust IV
Limited Guar. Notes
8.25% due 04/15/27............................. 1,100,000 1,127,500
----------
BANKS-MORTGAGE -- 0.8%
Provident Funding Associates
Senior Sec. Notes
10.25% due 04/15/17*........................... 1,065,000 1,096,950
----------
BANKS-SUPER REGIONAL -- 1.7%
BAC Capital Trust XI
Limited Guar. Notes
6.63% due 05/23/36............................. 423,000 436,660
Wells Fargo & Co.
Jr. Sub. Bonds
7.98% due 03/15/18(6)(18)...................... 1,840,000 1,936,600
----------
2,373,260
----------
BROADCAST SERVICES/PROGRAM -- 1.2%
Clear Channel Worldwide Holdings, Inc.
Class A
Company Guar. Notes
9.25% due 12/15/17............................. 55,000 58,300
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BROADCAST SERVICES/PROGRAM (CONTINUED)
Clear Channel Worldwide Holdings, Inc.
Class B
Company Guar. Notes
9.25% due 12/15/17.......................... $ 230,000 $ 245,525
Liberty Media LLC
Senior Notes
8.25% due 02/01/30.......................... 855,000 825,075
Liberty Media LLC
Senior Notes
8.50% due 07/15/29.......................... 620,000 598,300
----------
1,727,200
----------
BUILDING & CONSTRUCTION-MISC. -- 0.2%
Esco Corp.
Senior Notes
8.63% due 12/15/13*......................... 255,000 261,375
----------
BUILDING PRODUCTS-AIR & HEATING -- 0.4%
Goodman Global Group, Inc.
Senior Disc. Notes
zero coupon due 12/15/14.................... 885,000 566,400
----------
BUILDING PRODUCTS-CEMENT -- 0.4%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16*......................... 615,000 618,813
----------
CABLE/SATELLITE TV -- 1.7%
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
13.50% due 11/30/16......................... 735,867 873,842
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.88% due 04/30/18*......................... 240,000 249,000
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
8.13% due 04/30/20*......................... 170,000 180,200
Mediacom LLC/Mediacom Capital Corp.
Notes
9.13% due 08/15/19.......................... 1,000,000 1,035,000
----------
2,338,042
----------
CASINO HOTELS -- 3.5%
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(1)(2).................... 2,675,000 2,361,891
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17......................... 910,000 996,450
MGM Mirage, Inc.
Senior Sec. Notes
9.00% due 03/15/20*......................... 155,000 163,138
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17......................... 675,000 768,656
Wynn Las Vegas LLC/Wynn Las
Vegas Capital Corp.
1st Mtg. Notes
7.75% due 08/15/20*......................... 605,000 638,275
----------
4,928,410
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------
CASINO SERVICES -- 1.0%
Greektown, Inc. LLC
Escrow Notes
10.75% due 12/01/13+(1)(2)............ $ 489,000 $ 0
Peninsula Gaming LLC
Senior Sec. Notes
8.38% due 08/15/15.................... 600,000 624,000
Scientific Games International, Inc.
Company Guar. Notes
9.25% due 06/15/19.................... 700,000 743,750
----------
1,367,750
----------
CELLULAR TELECOM -- 2.0%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16.................... 575,000 610,219
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/14.................... 938,000 833,647
MetroPCS Wireless, Inc.
Company Guar. Notes
7.88% due 09/01/18.................... 485,000 499,550
MetroPCS Wireless, Inc.
Company Guar. Notes
9.25% due 11/01/14.................... 550,000 576,125
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/15.................... 328,000 329,640
----------
2,849,181
----------
CHEMICALS-DIVERSIFIED -- 1.2%
Celanese US Holdings LLC
Company Guar. Notes
6.63% due 10/15/18*................... 395,000 403,887
Momentive Performance Materials, Inc.
Company Guar. Notes
9.75% due 12/01/14.................... 915,000 937,875
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14................... 297,000 333,383
----------
1,675,145
----------
CHEMICALS-PLASTICS -- 0.7%
Hexion US Finance Corp.
Senior Notes
9.75% due 11/15/14.................... 900,000 936,000
----------
CHEMICALS-SPECIALTY -- 0.2%
Ferro Corp.
Senior Notes
7.88% due 08/15/18.................... 285,000 295,688
----------
COAL -- 1.1%
Arch Coal, Inc.
Company Guar. Notes
7.25% due 10/01/20.................... 225,000 237,656
Peabody Energy Corp.
Company Guar. Notes
6.50% due 09/15/20.................... 1,201,000 1,292,576
----------
1,530,232
----------
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
COMPUTER SERVICES -- 2.2%
Stream Global Services, Inc.
Senior Sec. Notes
11.25% due 10/01/14.......................... $ 340,000 $ 334,900
SunGard Data Systems, Inc.
Company Guar. Notes
10.63% due 05/15/15.......................... 550,000 613,250
Unisys Corp.
Senior Sec. Notes
12.75% due 10/15/14*......................... 1,220,000 1,451,800
Unisys Corp.
Senior Sec. Notes
14.25% due 09/15/15*......................... 620,000 737,800
----------
3,137,750
----------
CONSUMER PRODUCTS-MISC. -- 0.2%
Yankee Acquisition Corp.
Company Guar. Notes
9.75% due 02/15/17........................... 253,000 263,120
----------
CONTAINERS-METAL/GLASS -- 0.1%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19........................... 145,000 157,688
----------
DATA PROCESSING/MANAGEMENT -- 1.7%
Fidelity National Information Services, Inc.
Company Guar. Notes
7.63% due 07/15/17*.......................... 115,000 122,763
Fidelity National Information Services, Inc.
Company Guar. Notes
7.88% due 07/15/20*.......................... 90,000 96,975
First Data Corp.
Company Guar. Notes
9.88% due 09/24/15........................... 1,205,000 985,087
First Data Corp.
Company Guar. Notes
10.55% due 09/24/15(5)....................... 1,433,896 1,159,663
----------
2,364,488
----------
DIAGNOSTIC KITS -- 0.5%
Alere, Inc.
Senior Notes
7.88% due 02/01/16........................... 745,000 761,762
----------
DIRECT MARKETING -- 0.3%
Sitel LLC/Sitel Finance Corp.
Senior Notes
11.50% due 04/01/18*......................... 595,000 476,000
----------
DIVERSIFIED BANKING INSTITUTIONS -- 3.7%
Ally Financial, Inc.
Company Guar. Notes
7.50% due 09/15/20*.......................... 675,000 718,875
Citigroup, Inc.
Senior Sub. Notes
5.88% due 02/22/33........................... 660,000 631,871
GMAC LLC
Sub. Notes
8.00% due 12/31/18........................... 1,100,000 1,130,250
GMAC LLC
Company Guar. Notes
8.00% due 11/01/31........................... 1,840,000 1,973,400
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
GMAC, Inc.
Company Guar. Notes
8.00% due 03/15/20*............................ $ 630,000 $ 688,275
----------
5,142,671
----------
DIVERSIFIED FINANCIAL SERVICES -- 1.2%
Citigroup Capital XXI
Company Guar. Bonds
8.30% due 12/21/57(6).......................... 1,630,000 1,711,500
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 1.1%
Harland Clarke Holdings Corp.
Company Guar. Notes
6.00% due 05/15/15(6).......................... 500,000 420,000
Harland Clarke Holdings Corp.
Company Guar. Notes
9.50% due 05/15/15............................. 1,225,000 1,160,687
----------
1,580,687
----------
DIVERSIFIED OPERATIONS -- 0.2%
Reynolds Group DL Escrow, Inc./Reynolds Group
Escrow LLC
Senior Sec. Notes
7.75% due 10/15/16*............................ 210,000 213,675
----------
DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES -- 0.5%
ARAMARK Corp.
Company Guar. Notes
8.50% due 02/01/15............................. 700,000 728,000
----------
E-COMMERCE/SERVICES -- 0.1%
NetFlix, Inc.
Company Guar. Notes
8.50% due 11/15/17............................. 165,000 183,975
----------
ELECTRIC-GENERATION -- 1.3%
AES Corp.
Senior Notes
8.00% due 10/15/17............................. 805,000 869,400
Homer City Funding LLC
Senior Notes
8.14% due 10/01/19............................. 304,500 285,469
Midwest Generation LLC
Pass Thru Certs., Series B
8.56% due 01/02/16............................. 242,965 240,232
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/17............................. 441,992 459,119
----------
1,854,220
----------
ELECTRIC-INTEGRATED -- 0.7%
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 715,000 688,187
Mirant Mid-Atlantic LLC
Pass Through Certs. Series B
9.13% due 06/30/17............................. 289,827 305,768
Southern Energy, Inc.
Escrow Notes
7.90% due 07/15/09+(1)(2)...................... 3,525,000 0
----------
993,955
----------
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.0%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.88% due 12/15/14........................ $ 925,000 $ 923,844
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*....................... 435,000 452,400
----------
1,376,244
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.2%
Mantech International Corp.
Company Guar. Notes
7.25% due 04/15/18........................ 300,000 311,250
----------
FINANCE-AUTO LOANS -- 3.0%
Credit Acceptance Corp.
Company Guar. Notes
9.13% due 02/01/17*....................... 685,000 718,394
Ford Motor Credit Co., LLC
Senior Notes
6.63% due 08/15/17........................ 495,000 527,391
Ford Motor Credit Co., LLC
Senior Notes
8.13% due 01/15/20........................ 750,000 861,799
Ford Motor Credit Co., LLC
Senior Notes
8.70% due 10/01/14........................ 1,885,000 2,114,732
----------
4,222,316
----------
FINANCE-CONSUMER LOANS -- 0.3%
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
13.25% due 07/15/15*...................... 420,000 458,325
----------
FIREARMS & AMMUNITION -- 0.2%
Freedom Group, Inc.
Senior Sec. Notes
10.25% due 08/01/15*...................... 250,000 264,375
----------
FOOD-MEAT PRODUCTS -- 0.4%
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14*...................... 475,000 546,250
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.4%
Stonemor Operating LLC/Cornerstone Family
Services/Osiris Holdings
Company Guar. Notes
10.25% due 12/01/17*...................... 575,000 612,375
----------
HAZARDOUS WASTE DISPOSAL -- 0.1%
Clean Harbors, Inc.
Senior Sec. Notes
7.63% due 08/15/16........................ 198,000 205,920
----------
INDEPENDENT POWER PRODUCERS -- 1.9%
Calpine Corp.
Escrow Notes
8.75% due 07/15/13+(1)(2)................. 3,485,000 0
Dynegy-Roseton / Danskammer
Pass Through Certs. Series B
7.67% due 11/08/16........................ 715,000 663,162
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
INDEPENDENT POWER PRODUCERS (CONTINUED)
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16...................... $ 740,000 $ 761,275
NRG Energy, Inc.
Company Guar. Notes
7.38% due 01/15/17...................... 750,000 768,750
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17...................... 440,000 410,300
----------
2,603,487
----------
INSURANCE-MULTI-LINE -- 0.7%
Hartford Financial Services Group, Inc.
Junior Sub. Notes
8.13% due 06/15/38(6)................... 965,000 974,650
----------
INVESTMENT COMPANIES -- 0.5%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*.................... 625,000 643,750
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.1%
Pinafore LLC/Pinafore, Inc.
Senior Sec. Notes
9.00% due 10/01/18*..................... 170,000 178,500
----------
MACHINERY-FARMING -- 0.9%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13...................... 925,000 1,004,781
Case New Holland, Inc.
Senior Notes
7.88% due 12/01/17*..................... 230,000 249,838
----------
1,254,619
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.9%
CPM Holdings, Inc.
Senior Sec. Notes
10.63% due 09/01/14*.................... 1,105,000 1,190,637
----------
MEDICAL INFORMATION SYSTEMS -- 0.7%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/18*.................... 840,000 978,600
----------
MEDICAL LABS & TESTING SERVICES -- 0.5%
American Renal Holdings
Senior Sec. Notes
8.38% due 05/15/18*..................... 650,000 669,500
----------
MEDICAL PRODUCTS -- 0.8%
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17..................... 473,000 522,074
LVB Acquisition Holding LLC
Company Guar. Notes
10.38% due 10/15/17(17)................. 481,000 533,910
----------
1,055,984
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HOSPITALS -- 4.1%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15.......................... $1,435,000 $1,524,687
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/20.......................... 1,030,000 1,126,562
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19.......................... 550,000 613,250
HCA, Inc.
Sec. Notes
9.25% due 11/15/16.......................... 875,000 947,188
Tenet Healthcare Corp.
Senior Sec. Notes
9.00% due 05/01/15.......................... 1,370,000 1,489,875
----------
5,701,562
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.5%
Radiation Therapy Services, Inc.
Senior Sub. Notes
9.88% due 04/15/17*......................... 660,000 651,750
----------
MULTIMEDIA -- 0.1%
Haights Cross Operating Co.
Bonds
16.00% due 03/15/14+(1)(2)(6)............... 187,319 181,699
----------
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......................... 475,000 530,813
----------
OIL & GAS DRILLING -- 0.2%
Pride International, Inc.
Senior Notes
6.88% due 08/15/20.......................... 200,000 217,750
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.6%
Anadarko Petroleum Corp.
Senior Notes
6.38% due 09/15/17.......................... 420,000 462,821
Antero Resources Finance Corp.
Company Guar. Notes
9.38% due 12/01/17.......................... 535,000 568,437
Chesapeake Energy Corp.
Senior Notes
9.50% due 02/15/15.......................... 375,000 434,063
Petroleum Development Corp.
Senior Notes
12.00% due 02/15/18......................... 90,000 99,900
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/18.......................... 630,000 648,900
----------
2,214,121
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
OIL FIELD MACHINERY & EQUIPMENT -- 0.5%
Complete Production Services, Inc.
Company Guar. Notes
8.00% due 12/15/16........................... $ 25,000 $ 25,750
Thermon Industries, Inc.
Senior Sec. Notes
9.50% due 05/01/17*.......................... 625,000 648,438
----------
674,188
----------
OIL-FIELD SERVICES -- 1.4%
Aquilex Holdings LLC/Aquilex
Finance Corp.
Company Guar. Notes
11.13% due 12/15/16.......................... 570,000 564,300
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........................... 655,000 639,444
----------
1,973,744
----------
PAPER & RELATED PRODUCTS -- 1.6%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(1)(2)(17)................ 165,290 154,546
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*.......................... 290,000 307,038
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/16*.......................... 425,000 472,281
Neenah Paper, Inc.
Senior Notes
7.38% due 11/15/14........................... 975,000 976,219
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14.......................... 385,000 348,425
----------
2,258,509
----------
PHARMACY SERVICES -- 0.5%
BioScrip, Inc.
Company Guar. Notes
10.25% due 10/01/15.......................... 685,000 700,412
----------
PHYSICAL THERAPY/REHABILITATION CENTERS -- 0.4%
Healthsouth Corp.
Company Guar. Notes
7.25% due 10/01/18........................... 565,000 576,300
----------
PIPELINES -- 1.8%
El Paso Corp.
Senior Notes
6.50% due 09/15/20*.......................... 545,000 554,538
El Paso Corp.
Senior Notes
6.88% due 06/15/14........................... 700,000 748,403
El Paso Corp.
Senior Notes
7.00% due 06/15/17........................... 505,000 536,242
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Energy Transfer Equity LP
Company Guar. Notes
7.50% due 10/15/20.......................... $ 681,000 $ 716,752
----------
2,555,935
----------
PRINTING-COMMERCIAL -- 0.5%
Cenveo Corp.
Company Guar. Notes
7.88% due 12/01/13.......................... 670,000 646,550
----------
PUBLISHING-PERIODICALS -- 0.7%
Nielsen Finance LLC/Nielsen Finance Co.
Company Guar. Bonds
12.50% due 08/01/16(4)...................... 840,000 841,050
Nielsen Finance LLC/Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16......................... 175,000 198,625
----------
1,039,675
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Company Guar. Notes
9.00% due 12/15/14+(8)(9)(17)............... 2,145,000 5,363
----------
RESORT/THEME PARKS -- 0.5%
Cedar Fair LP/Canada's Wonderland Co/Magnum
Management Corp.
Company Guar. Notes
9.13% due 08/01/18*......................... 650,000 682,500
----------
RETAIL-ARTS & CRAFTS -- 0.2%
Michaels Stores, Inc.
Company Guar. Notes
11.38% due 11/01/16......................... 250,000 271,563
----------
RETAIL-DRUG STORE -- 0.4%
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16.......................... 125,000 133,594
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19......................... 375,000 390,469
----------
524,063
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 2.1%
Federated Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16.......................... 1,487,000 1,583,655
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24.......................... 172,000 175,010
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.70% due 09/15/28.......................... 72,000 70,920
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29.......................... 233,000 235,913
Macy's Retail Holdings, Inc.
Company Guar. Notes
7.00% due 02/15/28.......................... 80,000 83,200
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
RETAIL-REGIONAL DEPARTMENT STORES (CONTINUED)
The Neiman-Marcus Group, Inc.
Company Guar. Notes
9.00% due 10/15/15(17)..................... $ 710,000 $ 737,512
----------
2,886,210
----------
RUBBER-TIRES -- 0.5%
The Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16........................ 600,000 679,500
----------
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 ENTITY -- 0.2%
UCI Holdco, Inc.
Senior Notes
9.25% due 12/15/13(6)(17).................. 267,746 259,714
----------
STEEL PIPE & TUBE -- 0.3%
Mueller Water Products, Inc.
Company Guar. Notes
8.75% due 09/01/20*........................ 395,000 414,750
----------
TELECOM SERVICES -- 1.1%
Qwest Corp.
Senior Notes
8.38% due 05/01/16......................... 225,000 266,063
West Corp.
Company Guar. Notes
9.50% due 10/15/14......................... 1,165,000 1,218,881
----------
1,484,944
----------
TELECOMMUNICATION EQUIPMENT -- 0.4%
Sorenson Communications, Inc.
Senior Sec. Notes
10.50% due 02/01/15*....................... 980,000 573,300
----------
TELEPHONE-INTEGRATED -- 2.8%
Cincinnati Bell, Inc.
Company Guar. Notes
8.75% due 03/15/18......................... 600,000 585,000
Citizens Utility Co.
Senior Notes
7.13% due 03/15/19......................... 350,000 358,750
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15......................... 570,000 617,025
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32......................... 656,000 688,800
Windstream Corp.
Senior Notes
7.75% due 10/15/20*........................ 1,330,000 1,339,975
Windstream Corp.
Company Guar. Notes
8.13% due 09/01/18*........................ 275,000 284,625
----------
3,874,175
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELEVISION -- 0.6%
LIN Television Corp.
Company Guar. Notes
8.38% due 04/15/18*.................... $ 200,000 $ 211,250
Paxson Communications Corp.
Escrow Notes
8.38% due 01/15/13+*(1)(2)............. 1,862,605 9,313
Sinclair Television Group, Inc.
Senior Sec. Notes
9.25% due 11/01/17*.................... 540,000 579,150
Young Broadcasting, Inc.
Escrow Notes
8.75% due 01/15/14+(1)(2).............. 685,000 0
Young Broadcasting, Inc.
Escrow Notes
10.00% due 03/01/11+(1)(2)............. 635,000 0
------------
799,713
------------
THEATERS -- 1.0%
AMC Entertainment, Inc.
Senior Notes
8.75% due 06/01/19..................... 425,000 447,844
Marquee Holdings, Inc.
Senior Disc. Notes
9.51% due 08/15/14(4).................. 840,000 688,800
Regal Entertainment Group
Company Guar. Notes
9.13% due 08/15/14..................... 215,000 225,481
------------
1,362,125
------------
TRANSPORT-MARINE -- 0.6%
Marquette Transportation Co./Marquette
Transportation Finance Corp.
Senior Sec. Notes
10.88% due 01/15/17*................... 785,000 802,662
------------
WEB HOSTING/DESIGN -- 0.8%
Terremark Worldwide, Inc.
Senior Sec. Notes
12.00% due 06/15/17.................... 1,000,000 1,142,500
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $106,147,132).................... 110,928,960
------------
FOREIGN CORPORATE BONDS & NOTES -- 10.3%
BANKS-COMMERCIAL -- 0.6%
Barclays Bank PLC
Sub. Notes
8.55% due 06/15/11(6)(18)*............. 800,000 818,000
------------
COMPUTERS-MEMORY DEVICES -- 0.7%
Seagate Technologies
Company Guar. Notes
6.88% due 05/01/20*.................... 685,000 669,587
Seagate Technologies
Company Guar. Notes
6.80% due 10/01/16..................... 360,000 367,200
------------
1,036,787
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.5%
Bombardier, Inc.
Senior Notes
8.00% due 11/15/14*......................... $ 710,000 $ 741,063
----------
DIVERSIFIED MINERALS -- 0.3%
Teck Resources, Ltd.
Senior Sec. Notes
10.75% due 05/15/19......................... 350,000 440,755
----------
ELECTRIC-GENERATION -- 0.1%
Intergen NV
Senior Sec. Notes
9.00% due 06/30/17*......................... 125,000 132,188
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(1)(2)(8)(10)........... 4,460,000 0
----------
INVESTMENT COMPANIES -- 0.3%
Offshore Group Investments, Ltd.
Senior Sec. Notes
11.50% due 08/01/15*........................ 415,000 435,750
----------
MEDICAL-DRUGS -- 0.8%
Elan Corp. PLC
Company Guar. Notes
8.75% due 10/15/16.......................... 530,000 535,300
Elan Corp. PLC
Company Guar. Notes
8.88% due 12/01/13.......................... 575,000 589,375
----------
1,124,675
----------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Escrow Notes
10.75% due 02/01/08+(1)(2).................. 2,150,000 0
----------
METAL-ALUMINUM -- 0.6%
Novelis, Inc.
Company Guar. Notes
11.50% due 02/15/15......................... 760,000 868,300
----------
MULTIMEDIA -- 1.0%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... 1,280,000 1,320,000
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.1%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/17*......................... 160,000 163,200
----------
OIL FIELD MACHINERY & EQUIPMENT -- 0.4%
Sevan Marine ASA
Sec. Notes
12.00% due 08/10/15*........................ 500,000 522,500
----------
PAPER & RELATED PRODUCTS -- 0.2%
Cascades, Inc.
Company Guar. Notes
7.88% due 01/15/20.......................... 320,000 333,600
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
SATELLITE TELECOM -- 1.2%
Intelsat Intermediate Holding Co., Ltd.
Company Guar. Bonds
9.50% due 02/01/15(4)...................... $ 700,000 $ 724,500
Intelsat Subsidiary Holding Co., Ltd.
Senior Notes
8.88% due 01/15/15*........................ 915,000 942,450
-----------
1,666,950
-----------
SPECIAL PURPOSE ENTITIES -- 2.6%
Fibria Overseas Finance, Ltd.
Company Guar. Notes
7.50% due 05/04/20*........................ 1,022,000 1,084,597
Hellas Telecommunications
Luxembourg II
Sub. Notes
6.03% due 01/15/15*(6)..................... 1,025,000 20,500
LBG Capital No.1 PLC
Bank Guar. Notes
7.88% due 11/01/20......................... 2,520,000 2,482,200
-----------
3,587,297
-----------
TELECOM SERVICES -- 0.9%
Wind Acquisition Finance SA
Sec. Notes
11.75% due 07/15/17*....................... 810,000 907,706
Wind Acquisition Finance SA
Company Guar. Bonds
12.00% due 12/01/15*....................... 261,000 276,334
-----------
1,184,040
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $18,692,594)......................... 14,375,105
-----------
LOANS(13)(14) -- 4.7%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.8%
Federal Mogul Corp.
Term Loan B
2.22% due 12/29/14(2)...................... 671,431 590,125
Federal Mogul Corp.
Term Loan B D6
2.22% due 12/27/15(2)...................... 17,149 15,073
Federal Mogul Corp.
Term Loan B A2
2.28% due 12/27/15(2)...................... 42,873 37,681
Federal Mogul Corp.
Tranche C F1
2.28% due 12/27/15(2)...................... 52,519 46,159
Federal Mogul Corp.
Tranche B/bo
2.28% due 12/27/15(2)...................... 85,746 75,362
Federal Mogul Corp.
Term Loan C
2.28% due 12/27/15(2)...................... 364,419 320,290
-----------
1,084,690
-----------
BEVERAGES-NON-ALCOHOLIC -- 0.3%
Le-Natures, Inc.
9.39% due 03/01/11+(2)(8)(9)............... 1,200,000 465,000
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
12.25% due 08/15/13(2)(5)....................... $1,419,838 $ 24,847
----------
CASINO SERVICES -- 1.1%
Herbst Gaming, Inc.
Tranche 1
12.50% due 12/02/11+(2)(8)(9)................... 262,573 146,121
Herbst Gaming, Inc.
Delayed Draw
12.50% due 12/02/11+(2)(8)(9)................... 718,859 400,046
Holding Gaming Borrower LP
9.25% due 02/19/13(2)........................... 995,000 988,781
----------
1,534,948
----------
COMMERCIAL SERVICES -- 0.6%
Vertrue, Inc.
7.26% due 08/14/15(2)........................... 1,010,000 818,100
----------
CONTAINERS-PAPER/PLASTIC -- 0.7%
Consolidated Container Company
5.88% due 09/28/14(2)........................... 1,000,000 901,250
----------
MEDICAL-DRUGS -- 0.7%
Triax Pharmaceuticals LLC
14.00% due 08/30/11+(1)(2)(8)(15)............... 1,632,703 1,014,807
----------
THEATERS -- 0.5%
AMC Entertainment Holdings, Inc.
5.25% due 06/15/12(2)........................... 761,695 748,365
----------
TOTAL LOANS
(cost $9,272,993)............................... 6,592,007
----------
COMMON STOCK -- 0.8%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings+..................... 692 25,604
----------
CASINO SERVICES -- 0.0%
Capital Gaming International, Inc.+(1)(2)........ 77 0
Greektown, Inc.(1)(2)............................ 370 0
----------
0
----------
ENERGY-ALTERNATE SOURCES -- 0.0%
VeraSun Energy Corp.+ (1)(2)..................... 20,000 0
----------
FOOD-MISC. -- 0.3%
Wornick Co.+ (1)(2).............................. 7,270 450,122
----------
GAMBLING (NON-HOTEL) -- 0.1%
Shreveport Gaming Holdings, Inc.+(1)(2).......... 14,150 199,303
----------
GAS-DISTRIBUTION -- 0.1%
MXEnergy Holdings, Inc.+ (1)(2).................. 192,375 171,598
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(1)(2)(16)............. 128,418 642
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International, Inc.+(1)(2). 69,700 8,713
----------
MULTIMEDIA -- 0.1%
Haights Cross Communication, Inc.+(1)(2)......... 19,388 75,516
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
COMMON STOCK (CONTINUED)
PAPER & RELATED PRODUCTS -- 0.2%
Caraustar Industries, Inc.+(1)(2)........... $ 73 $ 199,863
------------
TOTAL COMMON STOCK
(cost $3,096,832).......................... 1,131,361
------------
PREFERRED STOCK -- 0.2%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.2%
Lear Corp. Series A+(2)..................... 4,680 331,344
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C+(1)(2)... 39,177 196
------------
TOTAL PREFERRED STOCK
(cost $226,944)............................ 331,540
------------
WARRANTS+ -- 0.1%
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.1%
Lear Corp.
Expires 11/09/14
(strike price $.01)........................ 1,164 83,808
------------
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings
Expires 06/09/14
(strike price $55.31)(2)................... 3,355 5,871
Masonite Worldwide Holdings
Expires 06/09/16
(strike price $55.31)(2)................... 2,517 8,810
------------
14,681
------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Transmeridian Exploration, Inc.
Expires 12/15/10
(Strike price $4.31)(1)(2)................. 44,885 0
------------
PUBLISHING-PERIODICALS -- 0.0%
The Reader's Digest Association, Inc.
Expires 02/19/14(1)(2)..................... 3,250 0
------------
TOTAL WARRANTS
(cost $159,979)............................ 98,489
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $138,110,474)........................ 134,224,607
------------
REPURCHASE AGREEMENTS -- 3.7%
Bank of America Securities Joint
Repurchase Agreement(3).................... $2,990,000 2,990,000
UBS Securities LLC Joint Repurchase
Agreement(3)............................... 2,140,000 2,140,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $5,130,000).......................... 5,130,000
------------
TOTAL INVESTMENTS
(cost $143,240,474)(7)..................... 99.8% 139,354,607
Other assets less liabilities................. 0.2 327,308
---------- ------------
NET ASSETS 100.0% $139,681,915
========== ============
- --------
+ Non-income producing security
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At September 30, 2010, the aggregate value
of these securities was $32,053,777 representing 22.9% of net assets. Unless
otherwise indicated these securities are not considered to be illiquid.
(1)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(2)Illiquid security. At September 30, 2010, the aggregate value of these
securities was $16,241,071 representing 7.3% of net assets.
(3)See Note 2 for details of Joint Repurchase Agreements.
(4)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(5)PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds or preferred stocks.
(6)Floating rate security where the rate fluctuates. The rate moves up or down
at each reset date. The rate reflected is as of September 30, 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/loans.
(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.
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2010 (see Note 2):
LEVEL 2--OTHER
LEVEL 1--UNADJUSTED OBSERVABLE LEVEL 3--SIGNIFICANT
QUOTED PRICES INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- -------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes....... $ -- $ 767,145 $ -- 767,145
U.S. Corporate Bonds & Notes.... -- 108,221,511 2,707,449 110,928,960
Foreign Corporate Bonds & Notes. -- 14,375,105 0 14,375,105
Loans........................... -- 1,084,690 5,507,317 6,592,007
Common Stock.................... 25,604 -- 1,105,757 1,131,361
Preferred Stock................. 331,344 -- 196 331,540
Warrants........................ 98,489 -- 0 98,489
Repurchase Agreements............. -- 5,130,000 -- 5,130,000
-------- ------------ ---------- ------------
TOTAL............................. $455,437 $129,578,451 $9,320,719 $139,354,607
======== ============ ========== ============
The following is a reconciliation of Level 3 assets which significant
unobservable inputs were used to determine fair value:
U.S. CORPORATE FOREIGN CORPORATE
BONDS & NOTES BONDS & NOTES LOANS COMMON STOCK PREFERRED STOCK
-------------- ----------------- ---------- ------------ ---------------
Balance as of 3/31/2010............................. $ 3,648,860 $ 0 $5,950,256 $ 916,380 $ 392
Accrued discounts/premiums.......................... 248 -- 88,393 -- --
Realized gain (loss)................................ (1,307,470) -- 8,351 -- --
Change in unrealized appreciation (depreciation)(1). 1,397,749 -- (545,033) (321,365) (196)
Net purchases (sales)............................... (1,031,938) -- (862,150) 510,742 --
Transfers in and/or out of Level 3 (2).............. -- 0 867,500 -- --
----------- -------------- ---------- ---------- -----
Balance as of 09/30/2010............................ $ 2,707,449 $ 0 $5,507,317 $1,105,757 $ 196
=========== ============== ========== ========== =====
WARRANTS
--------
Balance as of 3/31/2010............................. $ 0
Accrued discounts/premiums.......................... --
Realized gain (loss)................................ (5,569)
Change in unrealized appreciation (depreciation)(1). 2,204
Net purchases (sales)............................... 3,365
Transfers in and/or out of Level 3 (2).............. --
-------
Balance as of 09/30/2010............................ $ 0
=======
- --------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
September 30, 2010 includes:
U.S. CORPORATE FOREIGN CORPORATE
BONDS & NOTES BONDS & NOTES LOANS COMMON STOCK PREFERRED STOCK WARRANTS
-------------- ----------------- --------- ------------ --------------- --------
$37,233 $-- $(517,613) $(321,365) $(196) $(3,365)
======= === ========= ========= ===== =======
- --------
(2)The Fund's policy is to recognize transfers in and transfers out as of the
end of the reporting period.
See Notes to Financial Statements
58
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2010 -- (UNAUDITED)
ALLOCATION BY STATES*
New York...................... 19.2%
Massachusetts................. 18.0
New Jersey.................... 10.0
Ohio.......................... 8.6
Colorado...................... 7.8
California.................... 6.8
Texas......................... 6.4
New Mexico.................... 3.8
Connecticut................... 3.7
Georgia....................... 3.0
Missouri...................... 2.8
Hawaii........................ 2.8
Kentucky...................... 1.9
Arizona....................... 1.8
Pennsylvania.................. 1.5
Virginia...................... 1.0
Registered Investment Company. 0.1
----
99.2%
====
CREDIT QUALITY ALLOCATION+#
AAA........ 46.1%
AA......... 40.3
A.......... 7.9
Not Rated@. 5.7
-----
100.0%
=====
- --------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
59
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 92.3%
ARIZONA -- 1.8%
Arizona Health Facilities Authority
Revenue Bonds
5.50% due 01/01/31.................... $1,325,000 $1,391,793
----------
CALIFORNIA -- 6.8%
East Bay California Municipal Utility
District Water System Revenue,
Series A
5.00% due 06/01/32(1)................. 2,500,000 2,694,650
University of California Revenues,
Series J
4.50% due 05/15/35(1)................. 2,500,000 2,527,075
----------
5,221,725
----------
COLORADO -- 7.8%
Aurora Colorado Water Improvement
Revenue,
Series A
5.00% due 08/01/36(1)................. 3,000,000 3,186,600
Regional Transportation District
Colorado Sales Tax Revenue,
Series A
5.00% due 11/01/28(1)................. 2,500,000 2,737,825
----------
5,924,425
----------
CONNECTICUT -- 3.7%
State of Connecticut, Refunded,
Series B
5.00% due 06/01/14(1)................. 2,500,000 2,857,075
----------
GEORGIA -- 3.0%
Georgia Municipal Electric Authority,
Power Revenue,
Series Y
6.40% due 01/01/13(1)................. 85,000 90,311
Henry County Georgia School District,
General Obligation
4.38% due 08/01/24(1)................. 2,075,000 2,219,606
----------
2,309,917
----------
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 2,104,420
----------
MASSACHUSETTS -- 18.0%
Massachusetts State School Building
Authority,
Series A
5.00% due 08/15/24(1)................. 3,000,000 3,333,930
Massachusetts State Water Resources
Authority,
Revenue Bonds,
Series A
5.00% due 08/01/24(1)................. 3,910,000 4,238,792
Massachusetts State,
Series C
5.25% due 08/01/24(1)................. 2,300,000 2,656,914
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
University of Massachusetts Building
Authority Project Revenue,
Series 04-1
5.25% due 11/01/27(1)................. $3,000,000 $ 3,521,940
-----------
13,751,576
-----------
MISSOURI -- 2.8%
Missouri State Health & Educational
Facilities Authority,
Series 2003-B
5.50% due 11/15/32(1)................. 2,000,000 2,171,340
-----------
NEW JERSEY -- 10.0%
Garden State Preservation Trust New
Jersey Open Space & Farmland,
Series A
5.80% due 11/01/17(1)................. 2,500,000 3,000,100
New Jersey Economic Development
Authority Revenue Bond,
School Facility Construction
5.00% due 09/01/27 VRB(1)............. 2,000,000 2,211,600
New Jersey State Transportation
Transit Fund Authority,
Series C
zero coupon due 12/15/25(1)........... 5,000,000 2,414,050
-----------
7,625,750
-----------
NEW MEXICO -- 3.8%
New Mexico Finance Authority
Transportation,
Series A
5.25% due 06/15/21(1)................. 2,500,000 2,895,250
-----------
NEW YORK -- 15.3%
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/13(1)................. 410,000 462,074
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/13(1)................. 35,000 40,888
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/14(1)................. 510,000 597,108
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/14(1)................. 45,000 55,331
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 2,989,584
New York State Thruway Authority,
Series G
5.25% due 01/01/27(1)................. 1,500,000 1,638,975
Port Authority New York & New Jersey,
Revenue Bonds
4.50% due 09/15/39.................... 1,500,000 1,544,520
Sales Tax Asset Receivables Corp.,
Series A
5.25% due 10/15/27(1)................. 2,000,000 2,179,020
60
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
MUNICIPAL BONDS & NOTES (CONTINUED)
NEW YORK (CONTINUED)
Triborough Bridge & Tunnel
Authority,
Series A-2
5.25% due 11/15/34..................... $2,000,000 $ 2,200,720
-----------
11,708,220
-----------
OHIO -- 8.6%
Ohio State Higher Educational Facility
Commission,
Revenue Bonds
5.25% due 01/01/29..................... 1,845,000 1,987,397
Olentangy Local School District Ohio,
Series A
5.25% due 12/01/27(1).................. 3,250,000 3,752,158
Woodridge, Ohio, Woodmore Local
School District,
6.80% due 12/01/14(1).................. 755,000 840,594
-----------
6,580,149
-----------
PENNSYLVANIA -- 1.5%
Pennsylvania State Higher Educational
Facility Authority,
Series B
6.00% due 08/15/22..................... 1,000,000 1,173,470
-----------
TEXAS -- 6.4%
Austin Texas Water & Wastewater
System,
Series A
5.00% due 11/15/34(1).................. 2,140,000 2,251,366
Dallas Texas Area Rapid
Transportation,
Sales Tax Revenue
5.00% due 12/01/36(1).................. 2,500,000 2,633,700
-----------
4,885,066
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $65,085,884)..................... 70,600,176
-----------
SHORT-TERM INVESTMENT SECURITIES -- 6.9%
MUNICIPAL BONDS & NOTES -- 6.8%
KENTUCKY -- 1.9%
Louisville & Jefferson County
Kentucky Visitors & Convention
Commission,
Series B
0.31% due 12/01/2022 VRB(1)(2)......... 1,450,000 1,450,000
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
NEW YORK -- 3.9%
New York NY,
Subseries H-3
0.26% due 08/01/2023 VRB(1)(2)...... $ 100,000 $ 100,000
New York NY,
Subseries H-2
0.27% due 01/01/2036 VRB(2)......... 2,350,000 2,350,000
New York NY,
Subseries A-6
0.30% due 11/01/2026 VRB(1)(2)...... 540,000 540,000
-----------
2,990,000
-----------
VIRGINIA -- 1.0%
Roanoke Virginia Industrial
Development Authority,
Series C-2
0.28% due 07/01/2027 VRB(1)(2)...... 565,000 565,000
Roanoke Virginia Industrial
Development Authority,
Series C-1
0.29% due 07/01/2027 VRB(1)(2)...... 190,000 190,000
-----------
755,000
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $5,195,000)................... 5,195,000
-----------
REGISTERED INVESTMENT COMPANY -- 0.1%
SSGA Tax Free Money Market Fund
(cost $98,258)...................... 98,258 98,258
-----------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $5,293,258)................... 5,293,258
-----------
TOTAL INVESTMENTS --
(cost $70,379,142)(3)............... 99.2% 75,893,434
Other assets less liabilities.......... 0.8 585,908
---------- -----------
NET ASSETS -- 100.0% $76,479,342
========== ===========
- --------
(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 Ambac Assurance
Corporation ("AAC"). The aggregate value is $62,157,692 or 81.3% of Net
Assets. On November 8, 2010, Ambac Financial Group, Inc. ("AMBAC") the
parent company of AAC filed for Chapter 11 bankruptcy protection.
(2) The security's effective maturity date is less than one year.
(3) See Note 5 for cost of investments on a tax basis.
VRB -- Variable Rate Bond
The rates shown on VRB are the current interest rates at September 30, 2010.
The dates shown on debt obligations are the original maturity dates.
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2010 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- -----------
ASSETS:
Long-Term Investment Securities:
Municipal Bonds & Notes......... $ -- $70,600,176 $ -- 70,600,176
Short Term Investment Securities:
Municipal Bonds & Notes......... -- 5,195,000 -- 5,195,000
Registered Investment Company... -- 98,258 -- 98,258
----------- ----------- ----------- -----------
TOTAL............................. $ -- $75,893,434 $ -- $75,893,434
=========== =========== =========== ===========
See Notes to Financial Statements
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
Note 1. Organization
The SunAmerica Income Funds is an open-end diversified management investment
company organized as a Massachusetts business trust (the "Trust"). It
currently consists of five different series (each, a "Fund" and
collectively, the "Funds"). Each Fund is a separate series of the Trust with
distinct investment objectives and/or strategies. Each Fund is managed by
SunAmerica Asset Management Corp. (the "Adviser" or "SunAmerica"), an
indirect wholly-owned subsidiary of American International Group, Inc.
("AIG"). An investor may invest in one or more of the following Funds:
SunAmerica U.S. Government Securities Fund, SunAmerica GNMA Fund, SunAmerica
Strategic Bond Fund, SunAmerica High Yield Bond Fund and SunAmerica Tax
Exempt Insured Fund. The Funds are considered to be separate entities for
financial and tax reporting purposes. The investment objectives and
principal investment techniques for each of the Funds are as follows:
U.S. GOVERNMENT SECURITIES FUND seeks high current income consistent with
relative safety of capital by the active trading of U.S. Government
securities, without regard to the maturities of such securities. Under
normal market conditions, at least 80% of the Fund's net assets plus any
borrowing for investment purposes will be invested in such securities.
GNMA FUND seeks current income, with capital appreciation as a secondary
objective, by the active trading of mortgage-backed securities issued or
guaranteed by the Government National Mortgage Association (GNMA) without
regard to the maturities of such securities. Under normal market conditions,
at least 80% of the Fund's net assets plus any borrowing for investment
purposes will be invested in such securities. 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 or below BBB by S&P) or determined to be of comparable
quality by the investment advisor 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 (including the Federal Alternative Minimum Tax), 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.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions except as may otherwise be provided in the Trust's
registration statement. Class A, Class B and Class C shares each makes
distribution and account maintenance and service fee payments under the
distribution plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act") except that Class B and Class C shares are
subject to higher distribution fees.
INDEMNIFICATIONS: The Trust's organizational documents provide current and
former officers and trustees with a limited indemnification against
liabilities arising out of the performance of their duties to the Trust. In
addition, pursuant to Indemnification Agreements between the Trust and each
of the current trustees who is not an "interested person," as defined in
Section 2(a)(19) of the 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 U.S. 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.
Other securities are valued on the basis of last sale or bid price (if a
last sale price is not available) in what is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market. Senior secured floating rate loans
("Loans") for which an active secondary market exists to a reliable degree,
will be valued at
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
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, adjusted quoted prices on foreign equity
securities that were adjusted in accordance with pricing procedures approved
by the Board, etc.)
Level 3 -- Significant unobservable inputs (includes inputs that reflect the
Funds' own assumptions about the assumptions market participants would use
in pricing the security, developed based on the best information available
under the circumstances).
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.
The summary of the inputs used to value the Funds' net assets as of
September 30, 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.
MORTGAGE-BACKED DOLLAR ROLLS: Certain Funds may enter into dollar roll
transactions using "to be announced" ("TBA") mortgage-backed securities
("TBA Rolls"). The Funds' policy is to record the components of TBA Rolls as
purchase/sale transactions. Any difference between the purchase and sale
price is recorded as a realized gain or loss on the date the transaction is
entered into. During the period ended September 30, 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
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
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
period ended September 30, 2010, the U.S. Government Securities Fund and the
GNMA Fund had realized gains (losses) from mortgage-backed dollar rolls of
$1,289,141 and $5,610,547, respectively.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adapted by the board and
applicable guidance from the 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 September 30, 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. 13.02% $35,984,000
GNMA....................... 12.43 34,331,000
Strategic Bond............. 1.54 4,259,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 30, 2010, bearing interest at
a rate of 0.01% per annum, with a principal amount of $276,290,000, a
repurchase price of $276,290,077, and a maturity date of October 1, 2010.
The repurchase agreement is collateralized by the following:
MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL INTEREST RATE DATE AMOUNT VALUE
- ------------------ ------------- -------- ------------ ------------
U.S. Treasury Notes. 2.50% 04/30/15 $276,290,000 $281,818,947
At September 30, 2010, the following Portfolio held an undivided interest in
a joint repurchase agreement with UBS Securities, LLC.:
PERCENTAGE PRINCIPAL
PORTFOLIO INTEREST AMOUNT
- --------- ---------- ----------
GNMA.... 3.64% $3,642,000
As of that date, the repurchase agreement in the joint account and the
collateral therefore were as follows:
UBS Securities, LLC, dated September 30, 2010, bearing interest at a rate of
0.02% per annum, with a principal amount of $100,000,000, a repurchase price
of $100,000,556 and a maturity date of July 1, 2010. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
- ------------------ -------- -------- ------------ ------------
U.S. Treasury Inflation Index Note. 2.00% 07/15/14 $100,000,000 $102,000,088
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
As of September 30, 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. 1.71% $2,990,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America, dated September 30, 2010, bearing interest at a rate of
0.20% per annum, with a principal amount of $175,055,000, a repurchase price
of $175,055,973, and a maturity date of October 1, 2010. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
- ------------------ -------- -------- ------------ ------------
U.S. Treasury Bill. 1.88% 06/15/12 $173,093,000 $179,234,609
As of September 30, 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. 1.71% $2,140,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated September 30, 2010, bearing interest at a rate of
0.22% per annum, with a principal amount of $125,350,000 a repurchase price
of $125,350,766, and a maturity date of October 1, 2010. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
- ------------------ -------- -------- ------------ ------------
U.S. Treasury Bond. 3.50% 02/15/39 $131,794,800 $127,944,415
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
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(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 September 30, 2010, the amount of the investment
advisory fee waived was $129,003 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"). The High Yield Bond Fund is subadvised by Wellington
Management Company, LLP ("Wellington Management"). 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.
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(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
- --------
+ 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. For the
purposes of waived fees and/or reimbursed expense calculations annual Fund
operating expenses shall not include extraordinary expenses as determined
under generally accepted accounting principles, or acquired Fund fees and
expenses. The contractual fee waivers and expense 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.
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
For the period ended September 30, 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. $101,724
CLASS SPECIFIC
FUND EXPENSES
- ---- --------------
U.S. Government Securities Class A. $214,072
U.S. Government Securities Class B. 18,409
U.S. Government Securities Class C. 27,646
GNMA Class A....................... 204,270
GNMA Class B....................... 34,603
GNMA Class C....................... 67,329
High Yield Bond Class A............ 66,457
High Yield Bond Class B............ 20,324
High Yield Bond Class C............ 34,104
At September 30, 2010, expenses previously waived or reimbursed by
SunAmerica that are subject to recoupment are as follows:
OTHER EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities. $436,888
CLASS SPECIFIC
EXPENSES
FUND REIMBURSED
- ---- --------------
U.S. Government Securities Class A. $884,764
U.S. Government Securities Class B. 84,810
U.S. Government Securities Class C. 111,652
GNMA Class A....................... 900,830
GNMA Class B....................... 137,599
GNMA Class C....................... 236,732
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an
affiliate of the Adviser. Each Fund has adopted a Distribution Plan on
behalf of each Class in accordance with the provisions of Rule 12b-1 under
the 1940 Act (each a "Plan" and collectively the "Plans"), hereinafter
referred to as the "Class A Plan," the "Class B Plan" and the "Class C
Plan." In adopting the Class A Plan, the Class B Plan and the Class C Plan,
the Trustees determined that there was a reasonable likelihood that each
such Plan would benefit the Trust and the shareholders of the respective
class. The sales charge and distribution fees of a particular class will not
be used to subsidize the sale of shares of any other class.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated for include
fees paid to broker-dealers that have sold Fund shares, commissions, and
other expenses such as those incurred for sales literature, prospectus
printing and distribution and compensation to wholesalers. It is possible
that in any given year the amount paid to the Distributor under the Class A
Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution
costs as described above. The Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the period ended September
30, 2010, SACS received fees (see the Statement of Operations) based upon
the aforementioned rates.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(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 period
ended September 30, 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. $ 25,132 $14,883 $ 6,266 $ -- $10,494 $ 60
GNMA....................... 212,529 47,468 130,612 62 23,366 6,897
Strategic Bond............. 193,587 17,476 143,339 5,514 38,957 9,972
High Yield Bond............ 113,127 9,577 84,454 216 9,208 1,191
Tax Exempt Insured......... 70,793 6,088 52,292 -- 4,627 673
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the period ended September 30, 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 SEPTEMBER 30, 2010
- ---- -------- ------------------
U.S. Government Securities Class A. $184,174 $28,739
U.S. Government Securities Class B. 9,092 1,394
U.S. Government Securities Class C. 16,537 2,791
GNMA Class A....................... 303,852 48,672
GNMA Class B....................... 32,447 4,686
GNMA Class C....................... 79,898 13,362
Strategic Bond Class A............. 289,592 46,774
Strategic Bond Class B............. 56,264 9,390
Strategic Bond Class C............. 281,563 47,242
High Yield Bond Class A............ 83,638 13,381
High Yield Bond Class B............ 19,123 2,933
High Yield Bond Class C............ 45,158 7,298
Tax Exempt Insured Class A......... 59,563 9,872
Tax Exempt Insured Class B......... 2,458 375
Tax Exempt Insured Class C......... 18,848 3,223
At September 30, 2010, the following affiliates owned a percentage of the
outstanding shares of the following funds; Focused Balanced Portfolio,
Focused Fixed Income Strategy Portfolio, Focused Fixed Income and Equity
Strategy Portfolio and Focused Multi-Asset Strategy Portfolio owned 6.9%,
5.0%, 6.8% and 10.9%, respectively of the SunAmerica U.S. Government Fund;
Focused Balanced Strategy Portfolio and Focused Multi-Asset Strategy
Portfolio owned 14.3% and 6.7%, respectively of the SunAmerica GNMA Fund,
and Focused Multi-Asset Strategy Portfolio owned 11.1% of SunAmerica
Strategic Bond Fund.
On March 4, 2009, AIG, the ultimate parent of SunAmerica, SACS, SAFS and
AMG, 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. As of
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
September 30, 2010, 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.
Note 4. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the period ended September 30, 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)................................. $ -- $ -- $337,890,722 $29,740,828 $ --
Sales (excluding U.S. government securities). -- -- 388,027,067 35,091,192 3,108,750
Purchases of U.S. government securities...... 137,996,953 344,901,312 42,679,535 -- --
Sales of U.S. government securities.......... 145,783,553 287,563,680 36,828,356 -- --
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
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.......................................... $206,976,955 $379,429,145 $568,448,262 $145,449,236 $70,370,432
============ ============ ============ ============ ===========
Appreciation.................................. 8,111,620 16,977,645 34,045,280 12,665,607 5,514,292
Depreciation.................................. (835,440) (1,232,004) (16,378,137) (18,760,236) 8,710
------------ ------------ ------------ ------------ -----------
Unrealized appreciation (depreciation) -- net. $ 7,276,180 $ 15,745,641 $ 17,667,143 $ (6,094,629) $ 5,523,002
============ ============ ============ ============ ===========
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. -- -- -- -- -- -- -- --
- --------
* Included in this amount are tax exempt distributable earnings of $159,195
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
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......... -- --
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each series were as follows:
U.S. GOVERNMENT SECURITIES FUND
------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010 (UNAUDITED) MARCH 31, 2010
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)(3) 2,066,056 $ 19,978,750 4,951,835 $ 48,670,045 109,183 $ 1,078,598 190,591 $ 1,855,557
Reinvested shares... 112,378 1,112,623 578,905 5,603,767 2,412 23,868 25,168 243,951
Shares
redeemed(1)(2)..... (2,257,171) (22,187,909) (6,748,893) (65,210,789) (207,264) (2,035,150) (895,135) (8,716,473)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase
(decrease)......... (78,737) $ (1,096,536) (1,218,153) $(10,936,977) (95,669) $ (932,684) (679,376) $(6,616,965)
========== ============ ========== ============ ======== =========== ======== ===========
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold......... 244,630 $ 2,428,488 352,862 $ 3,451,796
Reinvested shares... 4,268 42,239 37,758 365,353
Shares redeemed(3).. (237,739) (2,324,656) (837,746) (8,141,457)
---------- ------------ ---------- ------------
Net increase
(decrease)......... 11,159 $ 146,071 (447,126) $ (4,324,308)
========== ============ ========== ============
- --------
(1)For the six months ended September 30, 2010, includes automatic conversion
of 88,048 shares of Class B shares in the amount of $867,839, to 88,048
shares of Class A shares in the amount of $867,839.
(2)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.
(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.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
GNMA FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- -------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010 (UNAUDITED) MARCH 31, 2010
------------------------- -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares sold(1)(2)(3) 3,350,958 $ 40,320,185 8,843,827 $ 103,866,817 156,430 $ 1,878,737 455,746 $ 5,370,482
Reinvested shares... 205,278 2,471,277 850,332 9,992,440 15,722 189,621 79,649 938,224
Shares
redeemed(1)(2)..... (5,226,854) (62,233,431) (14,279,708) (167,696,258) (676,175) (8,139,484) (1,602,886) (18,883,109)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease)......... (1,670,618) $(19,441,969) (4,585,549) $ (53,837,001) (504,023) $(6,071,126) (1,067,491) $(12,574,403)
=========== ============ =========== ============= ========== =========== ========== ============
GNMA FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares sold......... 1,143,527 $ 13,844,426 2,818,246 $ 33,248,319
Reinvested shares... 31,861 385,066 140,442 1,656,772
Shares redeemed(3).. (1,235,146) (14,818,181) (3,180,279) (37,481,705)
----------- ------------ ----------- -------------
Net increase
(decrease)......... (59,758) $ (588,689) (221,591) $ (2,576,614)
=========== ============ =========== =============
STRATEGIC BOND FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- -------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010 (UNAUDITED) MARCH 31, 2010
------------------------- -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares sold(4)(5)(6) 10,578,755 $ 35,644,943 28,833,017 $ 89,973,498 1,662,643 $ 5,594,787 3,900,120 $ 12,442,954
Reinvested shares... 1,504,871 5,066,460 3,807,770 12,072,891 216,151 727,144 508,364 1,608,679
Shares
redeemed(4)(5)..... (21,811,757) (73,041,604) (29,356,872) (92,555,446) (1,638,777) (5,507,998) (3,349,123) (10,498,692)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease)......... (9,728,131) $(32,330,201) 3,283,915 $ 9,490,943 240,017 $ 813,933 1,059,361 $ 3,552,941
=========== ============ =========== ============= ========== =========== ========== ============
STRATEGIC BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares sold......... 7,111,036 $ 23,964,460 19,933,246 $ 62,309,817
Reinvested shares... 989,815 3,346,694 2,424,904 7,721,208
Shares redeemed(6).. (8,655,167) (29,130,999) (18,604,628) (59,021,966)
----------- ------------ ----------- -------------
Net increase
(decrease)......... (554,316) $ (1,819,845) 3,753,522 $ 11,009,059
=========== ============ =========== =============
- --------
(1)For the six months ended September 30, 2010, includes automatic conversion
of 431,875 shares of Class B shares in the amount of $5,208,036 to shares
433,003 of Class A shares in the amount of $5,208,036.
(2)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.
(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 six months ended September 30, 2010, includes automatic conversion
of 517,620 shares of Class B shares in the amount of $1,743,610 to 517,620
shares of Class A shares in the amount of $1,743,610.
(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, 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.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
HIGH YIELD BOND FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- ----------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010 (UNAUDITED) MARCH 31, 2010
------------------------ ------------------------ --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- ---------- -----------
Shares sold(1)(2)(3) 5,844,689 $ 19,627,715 7,732,814 $ 23,414,767 441,505 $ 1,474,214 845,744 $ 2,570,744
Reinvested shares... 518,279 1,730,646 1,547,670 4,861,972 108,724 363,539 348,771 1,096,203
Shares
redeemed(1)(2)..... (6,309,167) (20,882,055) (9,167,809) (28,603,749) (778,397) (2,589,733) (2,524,892) (7,828,528)
---------- ------------ ---------- ------------ -------- ----------- ---------- -----------
Net increase
(decrease)......... 53,801 $ 476,306 112,675 $ (327,010) (228,168) $ (751,980) (1,330,377) $(4,161,581)
========== ============ ========== ============ ======== =========== ========== ===========
HIGH YIELD BOND FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold......... 1,003,992 $ 3,361,897 4,117,325 $ 12,443,591
Reinvested shares... 243,556 817,985 752,875 2,379,032
Shares redeemed(3).. (2,364,099) (7,882,262) (4,817,123) (15,137,655)
---------- ------------ ---------- ------------
Net increase
(decrease)......... (1,116,551) $ (3,702,380) 53,077 $ (315,032)
========== ============ ========== ============
TAX EXEMPT INSURED FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- ----------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010 (UNAUDITED) MARCH 31, 2010
------------------------ ------------------------ --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- ---------- -----------
Shares sold(4)(5)(6) 396,597 $ 5,098,237 932,988 $ 11,729,716 26,420 $ 340,020 64,400 $ 810,262
Reinvested shares... 40,212 $ 516,625 82,253 1,035,297 1,087 13,981 2,633 33,157
Shares
redeemed(4)(5)..... (373,212) (4,770,235) (1,116,262) (14,059,383) (49,068) (633,807) (126,131) (1,582,742)
---------- ------------ ---------- ------------ -------- ----------- ---------- -----------
Net increase
(decrease)......... 63,597 $ 844,627 (101,021) $ (1,294,370) (21,561) $ (279,806) (59,098) $ (739,323)
========== ============ ========== ============ ======== =========== ========== ===========
TAX EXEMPT INSURED FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2010 YEAR ENDED
(UNAUDITED) MARCH 31, 2010
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold......... 210,085 $ 2,695,544 544,809 $ 6,847,602
Reinvested shares... 9,330 119,929 19,393 244,223
Shares redeemed(6).. (146,964) (1,882,407) (379,122) (4,752,706)
---------- ------------ ---------- ------------
Net increase
(decrease)......... 72,451 $ 933,066 185,080 $ 2,339,119
========== ============ ========== ============
- --------
(1)For the six months ended September 30, 2010, includes automatic conversion
of 264,273 shares of Class B shares in the amount of $879,302 to 264,838
shares of Class A shares in the amount of $879,302.
(2)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.
(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 six months ended September 30, 2010, includes automatic conversion
of 10,002 shares of Class B shares in the amount of $127,780 to 10,017
shares of Class A shares in the amount of $127,780.
(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, 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.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(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 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 12.5 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 17, 2010 the commitment fee
was 15 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 period ending
September 30, 2010, the following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
- ---- ----------- -------- ---------- --------
Strategic Bond Fund..... 20 $1,021 $1,224,313 1.50%
High Yield Bond Fund.... 13 824 1,478,348 1.53
Tax Exempt Insured Fund. 1 22 520,110 1.56
At September 30, 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 period
ended September 30, 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.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF SEPTEMBER 30, 2010
- ---- -----------------------------------------------
U.S. Government Securities. $14,215 $342 $1,988
GNMA....................... 6,540 445 746
Strategic Bond............. 6,432 517 651
High Yield Bond............ 5,922 126 817
Tax Exempt Insured......... 3,880 87 1550
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. For the period ended September 30,
2010, the Funds had 42.6% and 83.9%, respectively, of their total net assets
invested in such securities.
76
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENTS
The Board of Trustees (the "Board" the members of which are referred to as
"Trustees") of SunAmerica Income Funds (the "Trust"), including the Trustees
who are not "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Trust or
its separate series (each a "Fund" and collectively, the "Funds"), SunAmerica
Asset Management Corp. ("SunAmerica") or the subadvisers to the respective
Funds (the "Disinterested Trustees"), approved the continuation of the
Investment Advisory and Management Agreement between the Trust, on behalf of
the Funds, and SunAmerica (the "Advisory Agreement") for a one-year period
ending August 31, 2011 at an in-person meeting held on August 24, 2010 (the
"Meeting"). The Trust currently consists of five separate Funds, including the
SunAmerica GNMA Fund ("GNMA Fund"), SunAmerica High Yield Bond Fund ("High
Yield Bond Fund"), SunAmerica Strategic Bond Fund ("Strategic Bond Fund"),
SunAmerica Tax Exempt Insured Fund ("Tax Exempt Insured Fund") and SunAmerica
U.S. Government Securities Fund ("U.S. Government Securities Fund"). At the
Meeting, the Board also approved the continuation of the Subadvisory Agreement
between SunAmerica and AIG Asset Management (U.S.), LLC ("AMG") (the "AMG
Subadvisory Agreement") with respect to the Tax Exempt Insured Fund for a
one-year period ending August 31, 2011./1/
In accordance with Section 15(c) of the 1940 Act, the Board requested and
SunAmerica and AMG provided materials relating to the Board's consideration of
whether to approve the continuation of the Advisory Agreement and AMG
Subadvisory Agreement,. These materials included (a) a summary of the services
provided by SunAmerica and its affiliates to the Funds and by AMG to the Tax
Exempt Insured Fund; (b) information independently compiled and prepared by
Lipper, Inc. ("Lipper") on Fund fees and expenses, and the investment
performance of the Fund as compared with a peer group of funds; (c) information
on the profitability of SunAmerica and its affiliates, and a discussion
relating to indirect benefits; (d) a report on economies of scale;
(e) information on SunAmerica's and AMG's risk management process; (f) a
discussion on general compliance policies and procedures; (g) a summary of
brokerage and soft dollar practices; (h) a discussion of the key personnel of
SunAmerica and its affiliates, and the Subadvisers, that are involved in the
investment management, administration, compliance and risk management
activities with respect to the Funds, as well as current and projected staffing
levels and compensation practices; and (i) an internal comparison of management
fees received for other mutual funds and accounts with similar investment
objectives and strategies for which SunAmerica serves as adviser or subadviser,
as applicable.
In determining whether to approve the continuation of the Advisory Agreement
and AMG Subadvisory Agreement, the Board, including Disinterested Trustees,
considered the following information:
NATURE, EXTENT AND QUALITY OF SERVICES PROVIDED BY SUNAMERICA AND THE
SUBADVISERS.
The Board, including the Disinterested Trustees, considered the nature, quality
and extent of services to be provided by SunAmerica and AMG. The Board noted
that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that SunAmerica
would provide office space, bookkeeping, accounting, legal, and compliance,
clerical and administrative services and has authorized any of its officers and
employees, if elected, to serve as officers or trustees of the Funds without
compensation. Finally, the Board noted that SunAmerica is responsible for
monitoring and reviewing the activities of affiliated and unaffiliated
third-party service providers, including the Subadvisers. In addition to the
quality of the advisory services, the Board considered the quality of the
administrative and non-investment advisory services provided to the Funds
pursuant to the Advisory Agreement and noted that such services include
(i) preparing disclosure documents, such as the prospectus, the statement of
additional information and shareholder reports; (ii) assisting with daily
accounting and pricing; (iii) organizing Board meetings and preparing the
materials for such Board meetings; (iv) providing legal and compliance support;
and (v) performing other administrative functions necessary for the operation
of the Funds, such as tax reporting and fulfilling regulatory filing
requirements.
- --------
/1/ The Subadvisory Agreement between SunAmerica and Wellington Management
Company, LLP ("Wellington") with respect to the High Yield Bond Fund, and
the Subadvisory Agreement between SunAmerica and PineBridge Investments,
LLC ("PineBridge") with respect to the Strategic Bond Fund, expire in 2011
and did not require approval at the Meeting. 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.
77
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting, legal and
compliance departments and concluded that they were adequate to meet the needs
of the Funds. The Board also reviewed the personnel responsible for providing
advisory services to the Funds and other key personnel of SunAmerica, in
addition to current and projected staffing levels and compensation practices
and concluded, based on its experience and interaction with SunAmerica, that:
(i) SunAmerica is able to retain quality portfolio managers, analysts and other
personnel; (ii) SunAmerica exhibited a high level of diligence and attention to
detail in carrying out its advisory and other responsibilities under the
Advisory Agreement; (iii) SunAmerica had been responsive to requests of the
Board; and (iv) SunAmerica had kept the Board apprised of developments relating
to the Funds and the industry in general. The Board concluded that the nature
and extent of services provided under the Advisory Agreement were reasonable
and appropriate in relation to the management fee and that the quality of
services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of June 30, 2010,
SunAmerica managed, advised an/or administered approximately $37.5 billion in
assets. The Board also considered SunAmerica's code of ethics and its risk
management process, and that it has developed internal procedures, adopted by
the Board, for monitoring compliance with the investment objectives, policies
and restrictions of the Funds as set forth in the Fund's prospectus.
Additionally, the Board considered SunAmerica's compliance and regulatory
history.
With respect to the Tax Exempt Insured Fund, for which SunAmerica has delegated
daily investment management responsibilities to AMG, the Board considered the
nature, quality and extent of subadvisory services provided by AMG. The Board
observed that AMG is responsible for providing investment management services,
including investment research, advice and supervision, and determining which
securities will be purchased or sold by the Tax Exempt Insured Fund, subject to
the oversight and review of SunAmerica. The Board reviewed AMG's history,
structure, size, visibility and resources, which are needed to attract and
retain highly qualified investment professionals. The Board reviewed the
personnel that are responsible for providing subadvisory services to the Tax
Exempt Insured Fund, in addition to the current and projected staffing levels
and compensation practices, and concluded, based on their experience with AMG,
that: (i) AMG is able to retain high quality portfolio managers and other
investment personnel; (ii) AMG exhibited a high level of diligence and
attention to detail in carrying out its responsibilities under the Subadvisory
Agreement; and (iii) AMG had been responsive to requests of the Board and of
SunAmerica. The Board considered that AMG has developed internal policies and
procedures for monitoring compliance with the investment objectives, policies
and restrictions of the Tax Exempt Insured Fund as set forth in the Fund's
prospectus. The Board also considered AMG's code of ethics, compliance and
regulatory history and risk management process. The Board noted that AMG has
not experienced any material regulatory problems nor has it been involved in
any material litigation or administrative proceedings that would potentially
impact it from effectively serving as a subadviser to the Tax Exempt Insured
Fund. The Board also discussed prior compliance matters with respect to AIGGIC.
The Board then concluded that the nature and extent of services to be provided
by AMG under the AMG Subadvisory Agreement were reasonable and appropriate in
relation to the subadvisory fees and that the quality of services continues to
be high.
INVESTMENT PERFORMANCE.
The Board, including the Disinterested Trustees, also considered the investment
performance of SunAmerica and AMG with respect to the Funds, as applicable. In
connection with its review, the Board received and reviewed information
regarding the investment performance of the Funds as compared to each Fund's
peer group ("Peer Group") and/or peer universe ("Peer Universe") as
independently determined by Lipper and to an appropriate index or combination
of indices, including the Funds' benchmarks. The Board was provided with a
description of the methodology used by Lipper to select the funds in the Peer
Groups and Universes. The Board also noted that it regularly reviews the
performance of the Funds throughout the year. The Board noted that, while it
monitors performance of the Funds closely, it generally attaches more
importance to performance over relatively long periods of time, typically three
to five years.
In preparation for the Meeting, the Board was provided with reports
independently prepared by Lipper. Based on the Lipper reports, the Board
reviewed each Fund's annualized total returns for the prior one-, two-, three-,
four-, five- and ten-year periods ended May 31, 2010. The Board noted that it
was also provided with a supplemental Lipper performance report for the periods
ended June 30, 2010. The Board also received a report prepared by SunAmerica
that detailed the Funds' performance for the three- and six-month periods ended
June 30, 2010.
78
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
For the U.S. Government Securities Fund, the Board considered that the Fund
ranked in the first quintile of its Peer Group for the ten-year period ended
May 31, 2010, ranked in the third quintile for the three-year period, ranked in
the fourth quintile for the two-, four- and five-year periods and ranked in the
fifth quintile for the one-year period. The Board noted its concern with regard
to the Fund's performance over certain periods, but the Board considered that
the Fund's performance had improved significantly during the three- and
six-months periods ended June 30, 2010 and that the Fund's ten-year performance
remained strong.
For the GNMA Fund, the Board considered that the Fund ranked in the second
quintile of its Peer Group for the two-, three-, four-, five- and ten-year
periods ended May 31, 2010 and ranked in the fifth quintile for the one-year
period. The Board noted that its concern with regard to one-year performance,
but also noted that it was pleased with the Fund's overall performance. The
Board further noted that recent performance had improved during the three- and
six-month periods ended June 30, 2010 and, as a result, the Fund ranked in the
third quintile of its Peer Group for the one-year period ended June 30, 2010.
For the High Yield Bond Fund, the Board considered that the Fund ranked in the
third quintile of its Peer Group for the one- and ten-year periods ended
May 31, 2010 and ranked in the fifth quintile of its Peer Group for the two-,
three, four- and five-year periods. The Board noted the recent improvement in
performance and further noted that Wellington had assumed its role as
subadviser to the Fund in May 2009.
For the Strategic Bond Fund, the Board considered that the Fund ranked in the
second quintile of its Peer Group for the ten-year period ended May 31, 2010
and ranked in the fourth quintile for the one-, two-, three-, four-, and
five-year periods ended May 31, 2010. The Board noted its concern regarding
performance, but also considered that the Fund's recent performance through
June 30, 2010 had improved.
For the Tax Exempt Insured Fund, the Board considered that the Fund ranked in
the first quintile of its larger Peer Universe, consisting of all funds in the
applicable Lipper classification, for the three- and four- year periods ended
May 31, 2010, ranked in the second quintile of its Peer Universe for the two-,
five- and ten-year periods ended May 31, 2010 and ranked in the fifth quintile
for the one-year period. The Board noted that it was pleased with the Fund's
overall performance. The Board further noted that quintile rankings were not
included in the Lipper report with respect to the Tax Exempt Insured Fund's
Peer Group because of the limited number of comparable funds in the Peer Group.
While the Board noted its concern with respect to the performance of certain of
the Funds, it also considered a presentation that had been provided by
SunAmerica at the Meeting outlining specific actions that had been taken, or
were under consideration, to address these performance concerns. In light of
this presentation and the fact that SunAmerica had agreed to provide the Board
with a more detailed action plan at a subsequent meeting within the next two to
three months, the Board therefore determined that it would defer consideration
of any specific measures to address its concerns relating to the performance of
these Funds at this time. The Board further noted that it would continue to
monitor the performance of these Funds closely and that SunAmerica would
provide periodic updates regarding its progress in addressing these performance
concerns.
CONSIDERATION OF THE MANAGEMENT FEES AND SUBADVISORY FEES AND THE COST OF THE
SERVICES AND PROFITS TO BE REALIZED BY SUNAMERICA AND THE SUBADVISERS AND THEIR
AFFILIATES FROM THE RELATIONSHIP WITH THE FUNDS.
The Board, including the Disinterested Trustees, received and reviewed
information regarding the fees to be paid by the Funds to SunAmerica pursuant
to the Advisory Agreement and the fees to be paid by SunAmerica to AMG pursuant
to the AMG Subadvisory Agreement. The Board examined this information in order
to determine the reasonableness of the fees in light of the nature and quality
of services to be provided and any potential additional benefits to be received
by SunAmerica, AMG or their affiliates in connection with providing such
services to the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe as determined by Lipper, including rankings within each category. In
considering the reasonableness of the management fee to be paid by each Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering each Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to each Fund.
The
79
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
Board also considered the voluntary fee waivers and/or expense reimbursements
agreed to by SunAmerica with respect to the Class C shares of the Tax Exempt
Insured Fund. The Board compared each Fund's net expense ratio (taking into
account the contractual fee caps and waivers) to those of other funds within
its Peer Group and/or Peer Universe as a guide to help assess the
reasonableness of the management fee for the Funds. The Board acknowledged that
it was difficult to make precise comparisons with other funds in the Peer
Groups and Peer Universes since the exact nature of services provided under the
various fund agreements is often not apparent. The Board noted, however, that
the comparative fee information provided by Lipper as a whole was useful in
assessing whether SunAmerica was providing services at a cost that was
competitive with other, similar funds.
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable. The Board noted, however, that a mutual
fund identified as similar to the U.S. Government Securities Fund is sold only
in the variable annuity market and, accordingly, is in an entirely different
Lipper classification, with a peer group consisting of funds underlying
variable insurance products. The Board noted the management fees paid by the
Funds were reasonable as compared to the fees SunAmerica was receiving from
other mutual funds and accounts for which it serves as adviser or subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to AMG pursuant to the AMG Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Fund's Peer Group that the Board used as a guide to help
assess the reasonableness of the subadvisory fees. The Board noted that Peer
Group information as a whole was useful in assessing whether AMG was providing
services at a cost that was competitive with other similar funds. The Board
also considered that the subadvisory fees are paid by SunAmerica out of its
management fee and not by the Tax Exempt Insured Fund, and that subadvisory
fees may vary widely within a Peer Group for various reasons, including market
pricing demands, existing relationships, experience and success, and individual
client needs. The Board further considered the amount of subadvisory fees paid
out by SunAmerica and the amount of the management fees which it retained. The
Board did not consider services and fees paid under investment advisory
contracts that AMG has with other registered investment companies or other
types of clients with similar investment strategies to the Funds since AMG
informed the Board that there were no such funds or accounts.
The Board also considered SunAmerica's profitability and the benefits
SunAmerica and its affiliates received from its relationship with the Funds.
The Board received and reviewed financial statements relating to SunAmerica's
financial condition and profitability with respect to the services it provided
the Funds and considered how profit margins could affect SunAmerica's ability
to attract and retain high quality investment professionals and other key
personnel. The Board was also provided with a profitability analysis that
detailed the revenues earned and the expenses incurred by SunAmerica and its
affiliates that provide services to the Funds on a Fund by Fund basis. In
particular, the Board considered the contractual and voluntary fee waivers
and/or expense reimbursements agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, and considered the profitability of SunAmerica's affiliate under the
Rule 12b-1 Plans and Service Agreements. Additionally, the Board considered
whether SunAmerica, AMG and their affiliates received any indirect benefits
from the relationship with the Funds. Specifically, the Board observed that AIG
Federal Savings Bank, an affiliate of SunAmerica and AMG, serves as custodian
with respect to certain shareholder retirement accounts that are administered
by SunAmerica and receives a fee payable by the qualifying shareholders. The
Board further considered whether there were any collateral or "fall-out"
benefits that SunAmerica and its affiliates may derive as a result of their
relationship with the Funds. The Board noted that SunAmerica believes that any
such benefits are de minimis and do not impact the reasonableness of the
management fees.
The Board also reviewed financial statements from AMG and its affiliates and
considered whether AMG had the financial resources necessary to attract and
retain high quality investment management personnel and to provide a high
quality of services.
The Board concluded that SunAmerica and AMG had the financial resources
necessary to perform their obligations under the Advisory Agreement and the AMG
Subadvisory Agreement, respectively, and to continue to provide the Funds with
the high quality services that they had provided in the past. The Board also
concluded that the management fee and subadvisory fees were reasonable in light
of the factors discussed above.
80
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2010 -- (UNAUDITED)
(CONTINUED)
ECONOMIES OF SCALE.
The Board, including the Disinterested Trustees, considered whether the
shareholders would benefit from economies of scale and whether there was
potential for future realization of economies with respect to the Funds. The
Board considered that as a result of being part of the SunAmerica fund complex,
the Funds share common resources and may share certain expenses, and if the
size of the complex increases, each Fund could incur lower expenses than they
otherwise would achieve as stand-alone entities. The Board also considered the
anticipated efficiencies in the processes of SunAmerica as it adds labor and
capital to expand the scale of operations. The Board also took into account
that each of the Funds had management fee arrangements that included
breakpoints that will adjust the fee downward as the size of the Fund
increases, thereby allowing the shareholders to potentially participate in any
economies of scale. The Board further noted that, with the exception of the Tax
Exempt Insured Fund, SunAmerica has agreed to contractually cap the total
annual operating expenses of the Funds, at certain levels. The Board also noted
that SunAmerica has contractually agreed to waive a portion of its management
fee with respect to the Tax Exempt Insured Fund. The Board observed that those
expense caps and fee waivers benefited shareholders by keeping total fees down
even in the absence of breakpoints or economies of scale. The Board concluded
that the Funds' management fee structure was reasonable and that it would
continue to review fees in connection with the renewal of the Advisory
Agreement, including whether the implementation of additional breakpoints would
be appropriate in the future due to an increase in asset size or otherwise.
The Board did not review specific information regarding whether there have been
economies of scale with respect to AMG's management of the Tax Exempt Insured
Fund because it regards that information as less relevant at the subadviser
level. Rather, the Board considered information regarding economies of scale in
the context of the renewal of the Advisory Agreement.
OTHER FACTORS.
In consideration of the Advisory Agreement and AMG Subadvisory Agreement, the
Board also received information regarding SunAmerica's and AMG's brokerage and
soft dollar practices. The Board considered that SunAmerica and AMG are
responsible for decisions to buy and sell securities for the portfolios they
manage, selection of broker-dealers and negotiation of commission rates. The
Board also considered the benefits SunAmerica and AMG may derive from soft
dollar arrangements, including arrangements under which brokers provide
brokerage and/or research services to SunAmerica and/or AMG in return for
allocating brokerage; however, the Board noted that the securities in which the
Funds invest are traded primarily in the over-the-counter market on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission (although the price of the security usually includes a profit to the
dealer) and, therefore, the Funds generally do not incur brokerage commissions.
Accordingly, the Board observed that SunAmerica and AMG typically would not
receive soft dollar benefits in return for allocating the Funds' brokerage
transactions. The Board further observed that when making purchases of new
issues with fixed underwriting fees, SunAmerica or AMG may designate the use of
broker-dealers who have agreed to provide certain statistical, research and
other information.
CONCLUSION.
After a full and complete discussion, the Board approved the Advisory Agreement
and the AMG Subadvisory Agreement, each for a one-year period ending August 31,
2011. Based upon their evaluation of all these factors in their totality, the
Board, including the Disinterested Trustees, was satisfied that the terms of
the Advisory Agreement and AMG Subadvisory Agreement were fair and reasonable
and in the best interests of the Funds and the Funds' shareholders. In arriving
at a decision to approve the Advisory Agreement and AMG Subadvisory Agreement
the Board did not identify any single factor or group of factors as
all-important or controlling, but considered all factors together. The
Disinterested Trustees were also assisted by the advice of independent counsel
in making this determination.
81
[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 The accompanying report
Services, Inc. 219186, Kansas City MO, has not been audited by
Harborside Financial 64121-9186. We will independent accountants
Center resume individual and accordingly no
3200 Plaza 5 mailings for your account opinion has been
Jersey City, NJ within thirty (30) days expressed thereon.
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
82
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO
WWW.SUNAMERICAFUNDS.COM
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.sunamericafunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
DISTRIBUTED BY:
SUNAMERICA CAPITAL SERVICES, INC.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
WWW.SUNAMERICAFUNDS.COM
INSAN - 9/10
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures as (defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: December 8, 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: December 8, 2010
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 8, 2010