UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4708
---------------------------------------------
SunAmerica Income Funds
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: March 31, 2011
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2011
SUNAMERICA
Income Funds
[LOGO]
MARCH 31, 2011 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............................................. 4
STATEMENT OF ASSETS AND LIABILITIES......................... 6
STATEMENT OF OPERATIONS..................................... 8
STATEMENT OF CHANGES IN NET ASSETS.......................... 9
FINANCIAL HIGHLIGHTS........................................ 12
PORTFOLIO OF INVESTMENTS.................................... 17
NOTES TO FINANCIAL STATEMENTS............................... 64
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 79
TRUSTEE AND OFFICER INFORMATION............................. 80
SHAREHOLDER TAX INFORMATION................................. 84
COMPARISONS: PORTFOLIOS VS. INDICES......................... 85
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholders,
We are pleased to present this annual update for the SunAmerica Income Funds
for the 12 months ended March 31, 2011--a period wherein low interest rates and
strengthening economic data led to continued demand for riskier fixed income
assets.
Indeed, as investors sustained their strong appetite for riskier assets, all
spread, or non-Treasury, sectors outperformed U.S. Treasuries for the annual
period. For the annual period overall, the Barclays Capital U.S. Aggregate Bond
Index*, a broad measure of the U.S. fixed income market, returned 5.12%.
Non-Treasury sectors began the annual period under pressure, as the second
quarter of 2010 was marked by a significant escalation in market concerns about
the solvency of Greece and other peripheral European countries. By May 2010,
solvency concerns had grown into a crisis that led to a bailout of Greece by
the European Union and International Monetary Fund. With the European sovereign
debt crisis weighing on investors' risk appetite--along with concerns over
banking regulation, China's efforts to slow its economic growth and the
potential impact of the disastrous oil spill in the Gulf of Mexico--demand for
U.S. government bonds increased in a classic flight to safe haven, while demand
for non-Treasury fixed income sectors fell. As a result, U.S. government bond
yields declined sharply and non-Treasury sectors underperformed. Remember,
there is typically an inverse relationship between yields, or interest rates,
and bond prices.
As the European debt crisis continued, confidence in the U.S. economic recovery
began to falter and concerns grew that the U.S. would suffer a double-dip
recession. Virtually every aspect of the economy lost momentum during the
spring and summer months of 2010 including manufacturing, consumer spending and
new hiring. While yields on U.S. government bonds continued to decline during
the third calendar quarter, non-Treasury sectors began to rebound after the
brief underperformance in the second calendar quarter. Most non-Treasury
sectors outperformed U.S. Treasuries during the third calendar quarter, led by
the high yield corporate bond sector.
In response to the weaker economic data, Federal Reserve Board (the "Fed")
Chairman Ben Bernanke strongly hinted in an August 2010 speech that the Fed
would resume asset purchases in an effort to support the economic recovery
through what is known as quantitative easing. By the time the Fed formally
announced its second round of quantitative easing in November 2010, economic
data had already begun to improve. The markets were also beginning to price
stronger economic growth and higher inflation risk into long-term bonds. As a
result, 10-year U.S. Treasury yields rose significantly during the fourth
quarter of 2010, from 2.53% at the end of September to 3.30% at the end of
December. Non-Treasury sectors continued to outperform U.S. Treasuries during
the fourth calendar quarter. Solid corporate earnings and increased investor
appetite for riskier assets drove the high yield corporate bond sector to the
lead once again.
As the turn of the calendar year approached, economic prospects appeared to be
improving. The Fed continued to implement its quantitative easing program, and
Congress and the Obama administration agreed on new fiscal stimulus, including
a payroll tax cut for 2011 that would boost consumers' disposable income. These
measures led to a general upgrade in expectations for 2011 economic growth,
which were supported by a string of improving economic data early in the first
calendar quarter. In the fixed income market, the reaction was a further
increase in long-term U.S. Treasury yields and continued outperformance in the
non-Treasury sectors. With the Fed holding short-term interest rates near zero
and long-term U.S. Treasury yields continuing to move sharply higher, the
difference between short-term and long-term bond yields dramatically increased.
The increase in the difference between short-term and long-term yields, known
as a steepening of the yield curve, reached its peak shortly after the turn of
the calendar year.
With the exception of the housing sector, economic data remained relatively
strong through the first quarter of 2011. However, risks to the economy began
to grow again, as political unrest emerged in Tunisia, followed by Egypt and
the broader Middle East and North Africa region. For the first time since 2008,
oil prices rose above $100 per barrel on concerns about potential supply
disruptions.
2
Meanwhile, the European sovereign debt crisis continued to spread to other
peripheral countries, adding another element of risk to the outlook. Then, in
March 2011, Japan was struck by the earthquake and tsunami, followed by the
disaster at its Fukushima Daiichi nuclear plant.
As the risks to economic growth mounted, U.S. government bond yields began
declining again. Between mid-February and mid-March, the 10-year U.S. Treasury
yield fell from about 3.75% to below 3.30%. However, the decline in yields was
relatively brief. By the end of the annual period, the 10-year U.S. Treasury
yield was at 3.47%, above the 2010 year-end level of 3.30%, though still below
the approximately 3.84% level seen at the start of the annual period.
Meanwhile, non-Treasury sectors were relatively resilient throughout the first
quarter of 2011, with all major non-Treasury fixed income sectors outperforming
U.S. Treasuries despite the risks that arose.
As of March 31, 2011, the Fed had purchased U.S. Treasury securities totaling
$488 billion, or approximately 81% of the total amount expected to be
purchased. Although many speculated that encouraging employment and economic
data seen in the first quarter of 2011 would influence the Fed to suspend
purchases short of the initial $600 billion target, statements from the Fed's
March meeting indicated that its quantitative easing program would continue as
expected, thereby fostering an environment of low rates for longer and a stable
yield curve.
Throughout the annual period, the Fed left the targeted federal funds rate
unchanged at a range of 0% to 0.25%, citing risks to economic growth, though
noting that the recovery was in better shape as overall conditions began to
improve in the labor market.
Against this backdrop, each of the SunAmerica Income Funds generated positive
absolute returns during the annual period, although only the Strategic Bond
Fund outperformed its benchmark. On the following pages, you will find detailed
financial statements and portfolio information for each of the SunAmerica
Income Funds.
We thank you for being a part of the SunAmerica Income Funds. As we continue to
actively manage your assets, we value your confidence in us and look forward to
serving your investment needs in the future. As always, if you have any
questions regarding your investments, please contact your financial adviser or
get in touch us directly at 800-858-8850 or www.sunamericafunds.com.
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. AGGREGATE BOND INDEX represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly in
an index.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2011 -- (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 Oct 1, 2010 and held until March 31, 2011.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2011" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2011" column does not include small account fees that may be charged if your
account balance is below $500 ($250 for retirement plan accounts). In addition,
the "Expenses Paid During the Six Months Ended March 31, 2011" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Trust's prospectus, your retirement plan document and/or
materials from your financial adviser for a full description of these fees. Had
these fees been included, the "Expenses Paid During the Six Months Ended March
31, 2011" column would have been higher and the "Ending Account Value" would
have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in these Funds and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. The "Expenses Paid During the Six Months
Ended March 31, 2011" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended March
31, 2011" column does not include administrative fees that may apply to
qualified retirement plan accounts. See the Fund's prospectus, your retirement
plan document and/or materials from your financial adviser for a full
description of these fees. Had these fees been included, the "Expenses Paid
During the Six Months Ended March 31, 2011" 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.
4
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2011 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ ------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSES PAID VALUE USING EXPENSES PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE EXPENSE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, MARCH 31,
FUND 2010 2011 2011 2010 2011 2011* 2011
---- ------------- -------------- ------------- ------------- -------------- ------------- ---------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $ 973.44 $ 4.87 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $ 969.31 $ 8.05 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $ 969.27 $ 8.05 $1,000.00 $1,016.75 $ 8.25 1.64%
GNMA
Class A#................. $1,000.00 $1,003.04 $ 4.94 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $ 999.85 $ 8.18 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C#................. $1,000.00 $ 999.04 $ 8.17 $1,000.00 $1,016.75 $ 8.25 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,033.19 $ 6.64 $1,000.00 $1,018.40 $ 6.59 1.31%
Class B.................. $1,000.00 $1,029.81 $ 9.97 $1,000.00 $1,015.11 $ 9.90 1.97%
Class C.................. $1,000.00 $1,029.93 $ 9.87 $1,000.00 $1,015.21 $ 9.80 1.95%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,067.01 $ 7.01 $1,000.00 $1,018.15 $ 6.84 1.36%
Class B#................. $1,000.00 $1,063.52 $10.34 $1,000.00 $1,014.91 $10.10 2.01%
Class C#................. $1,000.00 $1,066.45 $10.36 $1,000.00 $1,014.91 $10.10 2.01%
TAX EXEMPT INSURED
Class A#................. $1,000.00 $ 955.38 $ 4.58 $1,000.00 $1,020.24 $ 4.73 0.94%
Class B#................. $1,000.00 $ 949.86 $10.35 $1,000.00 $1,014.31 $10.70 2.13%
Class C#................. $1,000.00 $ 951.59 $ 7.78 $1,000.00 $1,016.95 $ 8.05 1.60%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
prospectus, your retirement plan documents and/or materials from your
financial adviser for more information.
# During the stated period, the investment adviser either waived a portion of
or all fees and assumed a portion of or all expenses for the Funds. As a
result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended March 31,
2011" and the "Expenses Ratios" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2011
STRATEGIC
U.S. GOVERNMENT GNMA BOND
SECURITIES FUND FUND FUND
--------------- ------------ ------------
ASSETS:
Investments at value (unaffiliated)*....................................... $146,095,357 $323,915,461 $556,107,288
Repurchase agreements (cost approximates value)............................ 16,580,000 -- 2,115,000
------------ ------------ ------------
Total investments........................................................ 162,675,357 323,915,461 558,222,288
------------ ------------ ------------
Cash....................................................................... 174 -- 76,635
Foreign cash*.............................................................. -- -- 893,678
Receivable for:
Shares of beneficial interest sold....................................... 61,713 799,270 2,279,493
Dividends and interest................................................... 820,040 1,724,929 8,521,982
Investments sold......................................................... -- 22,232,340 5,052,779
Prepaid expenses and other assets.......................................... 646 1,365 1,951
Due from investment adviser for expense reimbursements/fee waivers......... 49,957 38,286 --
------------ ------------ ------------
Total assets............................................................... 163,607,887 348,711,651 575,048,806
------------ ------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................................... 422,671 386,918 1,326,003
Investments purchased.................................................... -- 22,143,656 14,242,943
Investment advisory and management fees.................................. 90,600 128,242 298,731
Distribution and service maintenance fees................................ 59,508 142,911 332,325
Transfer agent fees and expenses......................................... 39,433 78,707 117,870
Trustees' fees and expenses.............................................. 12,981 6,681 6,986
Other accrued expenses................................................... 83,949 110,193 169,120
Line of credit........................................................... -- 1,034,107 --
Dividends payable........................................................ 48,907 276,417 797,562
------------ ------------ ------------
Total liabilities.......................................................... 758,049 24,307,832 17,291,540
------------ ------------ ------------
NET ASSETS................................................................. $162,849,838 $324,403,819 $557,757,266
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 171,328 $ 280,472 $ 1,607,096
Paid-in capital............................................................ 161,184,880 314,431,256 619,996,169
------------ ------------ ------------
161,356,208 314,711,728 621,603,265
Accumulated undistributed net investment income (loss)..................... 831,639 (70,930) (510,976)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short, and foreign exchange transactions....... (2,810,426) (3,935,246) (73,513,614)
Unrealized appreciation (depreciation) on investments...................... 3,472,417 13,698,267 10,129,934
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- -- 48,657
------------ ------------ ------------
NET ASSETS................................................................. $162,849,838 $324,403,819 $557,757,266
============ ============ ============
* Cost
Investments (unaffiliated)............................................... $142,622,940 $310,217,194 $545,977,354
============ ============ ============
Foreign cash............................................................. $ -- $ -- $ 875,673
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
------------ -----------
ASSETS:
Investments at value (unaffiliated)*....................................... $129,307,519 $65,421,348
Repurchase agreements (cost approximates value)............................ 1,650,000 --
------------ -----------
Total investments........................................................ 130,957,519 65,421,348
------------ -----------
Cash....................................................................... 36,704 --
Foreign cash*.............................................................. -- --
Receivable for:
Shares of beneficial interest sold....................................... 368,081 32,198
Dividends and interest................................................... 2,665,353 846,046
Investments sold......................................................... 754,906 --
Prepaid expenses and other assets.......................................... 466 256
Due from investment adviser for expense reimbursements/fee waivers......... 20,114 19,817
------------ -----------
Total assets............................................................... 134,803,143 66,319,665
------------ -----------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed................................... 482,732 82,518
Investments purchased.................................................... 2,416,513 --
Investment advisory and management fees.................................. 84,381 28,310
Distribution and service maintenance fees................................ 70,521 27,953
Transfer agent fees and expenses......................................... 34,898 16,728
Trustees' fees and expenses.............................................. 5,534 3,602
Other accrued expenses................................................... 165,482 60,727
Line of credit........................................................... -- --
Dividends payable........................................................ 268,350 90,892
------------ -----------
Total liabilities.......................................................... 3,528,411 310,730
------------ -----------
NET ASSETS................................................................. $131,274,732 $66,008,935
============ ===========
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01 par value............................. $ 373,850 $ 54,179
Paid-in capital............................................................ 191,912,630 64,904,032
------------ -----------
192,286,480 64,958,211
Accumulated undistributed net investment income (loss)..................... (1,048,757) 171,488
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, securities sold short, and foreign exchange transactions....... (54,893,880) (451,072)
Unrealized appreciation (depreciation) on investments...................... (5,069,111) 1,330,308
Unrealized appreciation (depreciation) on foreign exchange transactions.... -- --
------------ -----------
NET ASSETS................................................................. $131,274,732 $66,008,935
============ ===========
* Cost
Investments (unaffiliated)............................................... $134,376,630 $64,091,040
============ ===========
Foreign cash............................................................. $ -- $ --
============ ===========
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2011 (CONTINUED)
STRATEGIC
U.S. GOVERNMENT GNMA BOND
SECURITIES FUND FUND FUND
--------------- ------------ ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $143,978,307 $243,800,902 $255,546,161
Shares of beneficial interest issued and outstanding................................ 15,146,750 21,097,602 73,760,819
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 9.51 $ 11.56 $ 3.46
Maximum sales charge (4.75% of offering price)...................................... $ 0.47 $ 0.58 $ 0.17
------------ ------------ ------------
Maximum offering price to public.................................................... $ 9.98 $ 12.14 $ 3.63
============ ============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 5,710,054 $ 19,293,119 $ 52,170,828
Shares of beneficial interest issued and outstanding................................ 600,469 1,665,008 15,061,616
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 9.51 $ 11.59 $ 3.46
============ ============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $ 13,161,477 $ 61,309,798 $250,040,277
Shares of beneficial interest issued and outstanding................................ 1,385,581 5,284,637 71,887,173
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 9.50 $ 11.60 $ 3.48
============ ============ ============
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
----------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $76,156,446 $51,508,204
Shares of beneficial interest issued and outstanding................................ 21,731,886 4,228,753
Net asset value and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................. $ 3.50 $ 12.18
Maximum sales charge (4.75% of offering price)...................................... $ 0.17 $ 0.61
----------- -----------
Maximum offering price to public.................................................... $ 3.67 $ 12.79
=========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $15,817,588 $ 1,682,060
Shares of beneficial interest issued and outstanding................................ 4,505,790 137,860
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.51 $ 12.20
=========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets.......................................................................... $39,300,698 $12,818,671
Shares of beneficial interest issued and outstanding................................ 11,147,291 1,051,299
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge).................................................. $ 3.53 $ 12.19
=========== ===========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED MARCH 31, 2011
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ----------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................ $ -- $ -- $ 347,243
Interest (unaffiliated)......................................................... 5,059,897 13,149,121 38,427,461
---------- ----------- -----------
Total investment income*....................................................... 5,059,897 13,149,121 38,774,704
---------- ----------- -----------
EXPENSES:
Investment advisory and management fees......................................... 1,191,819 1,690,131 3,589,739
Distribution and service maintenance fees:
Class A........................................................................ 563,675 944,611 914,043
Class B........................................................................ 76,565 264,968 519,170
Class C........................................................................ 146,503 708,656 2,560,510
Transfer agent fees and expenses:
Class A........................................................................ 374,357 616,009 597,777
Class B........................................................................ 20,458 65,305 121,356
Class C........................................................................ 35,835 163,467 577,665
Registration fees:
Class A........................................................................ 25,245 23,855 22,481
Class B........................................................................ 11,276 13,775 14,467
Class C........................................................................ 11,613 19,413 30,395
Custodian and accounting fees................................................... 78,754 147,934 231,127
Reports to shareholders......................................................... 27,593 60,884 120,942
Audit and tax fees.............................................................. 38,164 38,676 44,821
Legal fees...................................................................... 9,803 12,535 20,218
Directors' fees and expenses.................................................... 21,788 43,722 68,545
Interest expense................................................................ -- 6,155 2,430
Other expenses.................................................................. 22,341 30,615 39,429
---------- ----------- -----------
Total expenses before fee waivers, expense reimbursements, expense
recoupments, and custody credits.............................................. 2,655,789 4,850,711 9,475,115
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)...................................................................... (695,558) (582,060) --
Custody credits earned on cash balances........................................ (5) (7) (745)
---------- ----------- -----------
Net expenses................................................................... 1,960,226 4,268,644 9,474,370
---------- ----------- -----------
Net investment income (loss)...................................................... 3,099,671 8,880,477 29,300,334
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................ 446,807 5,684,220 26,288,637
Net realized foreign exchange gain (loss) on other assets and liabilities......... -- -- 96,518
---------- ----------- -----------
Net realized gain (loss) on investments and foreign currencies.................... 446,807 5,684,220 26,385,155
---------- ----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 2,243,379 1,843,772 418,144
Change in unrealized foreign exchange gain (loss) on other assets and liabilities. -- -- 56,352
---------- ----------- -----------
Net unrealized gain (loss) on investments and foreign currencies.................. 2,243,379 1,843,772 474,496
---------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies..... 2,690,186 7,527,992 26,859,651
---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $5,789,857 $16,408,469 $56,159,985
========== =========== ===========
* Net of foreign withholding taxes on interest and dividends of................... $ -- $ -- $ 10,873
========== =========== ===========
HIGH YIELD TAX EXEMPT
BOND INSURED
FUND FUND
----------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................ $ 49,118 $ --
Interest (unaffiliated)......................................................... 11,934,806 3,230,535
----------- -----------
Total investment income*....................................................... 11,983,924 3,230,535
----------- -----------
EXPENSES:
Investment advisory and management fees......................................... 1,017,108 357,180
Distribution and service maintenance fees:
Class A........................................................................ 270,109 186,059
Class B........................................................................ 172,113 20,483
Class C........................................................................ 412,291 162,281
Transfer agent fees and expenses:
Class A........................................................................ 183,790 123,860
Class B........................................................................ 41,650 7,487
Class C........................................................................ 96,186 38,211
Registration fees:
Class A........................................................................ 20,500 16,095
Class B........................................................................ 11,511 8,024
Class C........................................................................ 11,782 14,452
Custodian and accounting fees................................................... 62,863 31,343
Reports to shareholders......................................................... 48,691 7,526
Audit and tax fees.............................................................. 49,899 37,665
Legal fees...................................................................... 14,882 8,929
Directors' fees and expenses.................................................... 15,872 8,340
Interest expense................................................................ 1,148 36
Other expenses.................................................................. 20,033 17,627
----------- -----------
Total expenses before fee waivers, expense reimbursements, expense
recoupments, and custody credits.............................................. 2,450,428 1,045,598
Net (fees waived and expenses reimbursed)/recouped by investment advisor
(Note 3)...................................................................... (226,007) (250,026)
Custody credits earned on cash balances........................................ (200) (7)
----------- -----------
Net expenses................................................................... 2,224,221 795,565
----------- -----------
Net investment income (loss)...................................................... 9,759,703 2,434,970
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................ 5,130,608 (452,099)
Net realized foreign exchange gain (loss) on other assets and liabilities......... -- --
----------- -----------
Net realized gain (loss) on investments and foreign currencies.................... 5,130,608 (452,099)
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 841,499 (2,079,146)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities. -- --
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies.................. 841,499 (2,079,146)
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies..... 5,972,107 (2,531,245)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $15,731,810 $ (96,275)
=========== ===========
* Net of foreign withholding taxes on interest and dividends of................... $ 1,404 $ --
=========== ===========
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS
U.S. GOVERNMENT SECURITIES FUND
--------------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 3,099,671 $ 3,919,646
Net realized gain (loss) on investments and foreign currencies......................... 446,807 6,326,315
Net unrealized gain (loss) on investments and foreign currencies....................... 2,243,379 (13,121,119)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 5,789,857 (2,875,158)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,888,602) (3,397,795)
Net investment income (Class B)........................................................ (85,980) (171,728)
Net investment income (Class C)........................................................ (168,004) (265,263)
Net realized gain on securities (Class A).............................................. (2,608,061) (3,256,689)
Net realized gain on securities (Class B).............................................. (124,871) (185,175)
Net realized gain on securities (Class C).............................................. (240,562) (329,316)
------------ ------------
Total distributions to shareholders...................................................... (6,116,080) (7,605,966)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (19,323,444) (21,878,250)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (19,649,667) (32,359,374)
NET ASSETS:
Beginning of period...................................................................... 182,499,505 214,858,879
------------ ------------
End of period+........................................................................... $162,849,838 $182,499,505
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 831,639 $ 608,325
============ ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
GNMA FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 8,880,477 $ 9,218,055
Net realized gain (loss) on investments and foreign currencies......................... 5,684,220 8,750,524
Net unrealized gain (loss) on investments and foreign currencies....................... 1,843,772 (3,494,156)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 16,408,469 14,474,423
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (8,232,111) (7,858,163)
Net investment income (Class B)........................................................ (618,229) (669,608)
Net investment income (Class C)........................................................ (1,701,181) (1,390,868)
Net realized gain on securities (Class A).............................................. (7,942,239) (4,876,043)
Net realized gain on securities (Class B).............................................. (708,768) (541,803)
Net realized gain on securities (Class C).............................................. (2,088,904) (1,223,760)
------------ ------------
Total distributions to shareholders...................................................... (21,291,432) (16,560,245)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (66,140,497) (68,988,018)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (71,023,460) (71,073,840)
NET ASSETS:
Beginning of period...................................................................... 395,427,279 466,501,119
------------ ------------
End of period+........................................................................... $324,403,819 $395,427,279
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (70,930) $ (110,822)
============ ============
STRATEGIC BOND FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 29,300,334 $ 32,371,634
Net realized gain (loss) on investments and foreign currencies......................... 26,385,155 4,900,823
Net unrealized gain (loss) on investments and foreign currencies....................... 474,496 102,325,908
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 56,159,985 139,598,365
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (15,979,693) (18,121,990)
Net investment income (Class B)........................................................ (2,838,945) (2,673,918)
Net investment income (Class C)........................................................ (14,059,880) (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...................................................... (32,878,518) (35,389,553)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (59,848,061) 24,052,943
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (36,566,594) 128,261,755
NET ASSETS:
Beginning of period...................................................................... 594,323,860 466,062,105
------------ ------------
End of period+........................................................................... $557,757,266 $594,323,860
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (510,976) $ (330,468)
============ ============
See Notes to Financial Statements
10
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 9,759,703 $ 12,557,527
Net realized gain (loss) on investments and foreign currencies......................... 5,130,608 (17,620,471)
Net unrealized gain (loss) on investments and foreign currencies....................... 841,499 57,056,606
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 15,731,810 51,993,662
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (6,153,999) (8,325,461)
Net investment income (Class B)........................................................ (1,260,941) (1,964,960)
Net investment income (Class C)........................................................ (3,016,895) (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...................................................... (10,431,835) (14,724,554)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6) (16,112,039) (4,803,623)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (10,812,064) 32,465,485
NET ASSETS:
Beginning of period...................................................................... 142,086,796 109,621,311
------------ ------------
End of period+........................................................................... $131,274,732 $142,086,796
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (1,048,757) $ (716,129)
============ ============
TAX EXEMPT INSURED FUND
------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2011 2010
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 2,434,970 $ 2,506,974
Net realized gain (loss) on investments and foreign currencies......................... (452,099) 929,445
Net unrealized gain (loss) on investments and foreign currencies....................... (2,079,146) 1,098,839
----------- -----------
Net increase (decrease) in net assets resulting from operations.......................... (96,275) 4,535,258
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,843,737) (1,927,828)
Net investment income (Class B)........................................................ (48,198) (52,109)
Net investment income (Class C)........................................................ (445,722) (434,279)
Net realized gain on securities (Class A).............................................. (139,614) --
Net realized gain on securities (Class B).............................................. (5,173) --
Net realized gain on securities (Class C).............................................. (44,279) --
----------- -----------
Total distributions to shareholders...................................................... (2,526,723) (2,414,216)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6) (4,201,330) 305,426
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,824,328) 2,426,468
NET ASSETS:
Beginning of period...................................................................... 72,833,263 70,406,795
----------- -----------
End of period+........................................................................... $66,008,935 $72,833,263
=========== ===========
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 171,488 $ 75,872
=========== ===========
See Notes to Financial Statements
11
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
-------
03/31/07 $ 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
03/31/11 9.55 0.17 0.13 0.30 (0.18) (0.16) (0.34) 9.51 3.12 143,978
CLASS B
-------
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
03/31/11 9.56 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.51 2.35 5,710
CLASS C
-------
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
03/31/11 9.55 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.50 2.35 13,161
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
0.99% 4.05% 243%
0.99 3.83 343
0.99 2.73 84
0.99 2.17 472
0.99 1.77 254
1.64% 3.40% 243%
1.64 3.20 343
1.64 2.08 84
1.64 1.59 472
1.64 1.10 254
1.64% 3.40% 243%
1.64 3.14 343
1.64 2.05 84
1.64 1.55 472
1.64 1.12 254
--------
(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):
03/31/07 03/31/08 03/31/09 03/31/10 03/31/11
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.38% 0.39% 0.35% 0.38% 0.37%
U.S. Government Securities Fund Class B. 0.43 0.48 0.40 0.50 0.53
U.S. Government Securities Fund Class C. 0.43 0.50 0.40 0.44 0.44
(4)The Fund's performance figure was increased by less than 0.01% from
reimbursements for losses realized from a violation of an investment
restriction.
See Notes to Financial Statements
12
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
-------
03/31/07 $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
03/31/11 11.72 0.31 0.24 0.55 (0.36) (0.35) (0.71) 11.56 4.79 243,801 0.99
CLASS B
-------
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
03/31/11 11.75 0.23 0.25 0.48 (0.29) (0.35) (0.64) 11.59 4.11 19,293 1.64
CLASS C
-------
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
03/31/11 11.77 0.23 0.24 0.47 (0.29) (0.35) (0.64) 11.60 4.02 61,310 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
4.19% 142%
4.15 354
3.32 73
2.28 104
2.59 148
3.53% 142%
3.52 354
2.67 73
1.63 104
1.89 148
3.53% 142%
3.49 354
2.55 73
1.63 104
1.94 148
--------
(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):
03/31/07 03/31/08 03/31/09 03/31/10 03/31/11
-------- -------- -------- -------- --------
GNMA Fund Class A............. 0.15% 0.15% 0.13% 0.15% 0.15%
GNMA Fund Class B............. 0.18 0.19 0.15 0.19 0.21
GNMA Fund Class C............. 0.17 0.22 0.15 0.16 0.17
See Notes to Financial Statements
13
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
-------
03/31/07 $3.53 $0.16 $ 0.12 $ 0.28 $(0.18) $-- $(0.18) $3.63 8.07% $453,893 1.31%(3)
03/31/08 3.63 0.19 (0.11) 0.08 (0.21) -- (0.21) 3.50 2.29 483,820 1.28(3)
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
03/31/11 3.33 0.19 0.15 0.34 (0.21) -- (0.21) 3.46 10.45 255,546 1.31
CLASS B
-------
03/31/07 $3.53 $0.15 $ 0.10 $ 0.25 $(0.15) $-- $(0.15) $3.63 7.36% $ 55,728 1.99%(3)
03/31/08 3.63 0.16 (0.10) 0.06 (0.19) -- (0.19) 3.50 1.61 52,528 1.96(3)
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
03/31/11 3.32 0.16 0.17 0.33 (0.19) -- (0.19) 3.46 10.04 52,171 1.98
CLASS C
-------
03/31/07 $3.54 $0.14 $ 0.12 $ 0.26 $(0.16) $-- $(0.16) $3.64 7.36% $217,755 1.98%(3)
03/31/08 3.64 0.17 (0.11) 0.06 (0.19) -- (0.19) 3.51 1.64 265,904 1.94(3)
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
03/31/11 3.34 0.17 0.16 0.33 (0.19) -- (0.19) 3.48 10.04 250,040 1.96
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
---------- ---------
4.79%(3) 134%(4)
5.30(3) 162(4)
6.54 112
6.13 157
5.50 152
4.12%(3) 134%(4)
4.63(3) 162(4)
6.00 112
5.44 157
4.83 152
4.12%(3) 134%(4)
4.65(3) 162(4)
6.03 112
5.48 157
4.85 152
--------
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Gross of custody credits of:
03/31/07 03/31/08
-------- --------
Strategic Bond Fund..................... 0.05% 0.02%
(4)Portfolio turnover includes "to be announced" ("TBA") transactions.
Previously, portfolio turnover was calculated excluding TBA transactions and
was as follows:
2007 2008
---- ----
Strategic Bond Fund. 131% 151%
See Notes to Financial Statements
14
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
-------
03/31/07 $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
03/31/11 3.36 0.25 0.16 0.41 (0.27) -- (0.27) 3.50 12.76 76,156 1.36
CLASS B
-------
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
03/31/11 3.37 0.23 0.16 0.39 (0.25) -- (0.25) 3.51 12.02 15,818 2.01
CLASS C
-------
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
03/31/11 3.38 0.23 0.17 0.40 (0.25) -- (0.25) 3.53 12.33 39,301 2.01
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
6.44% 86%
7.49 72
10.74 77
9.34 110
7.47 48
5.82% 86%
6.80 72
10.18 77
8.77 110
6.84 48
5.80% 86%
6.75 72
10.16 77
8.70 110
6.83 48
--------
(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):
03/31/07 03/31/08 03/31/09 03/31/10 03/31/11
-------- -------- -------- -------- --------
High Yield Bond Fund Class A............ 0.09% 0.17% 0.14% 0.18% 0.16%
High Yield Bond Fund Class B............ 0.11 0.20 0.16 0.23 0.21
High Yield Bond Fund Class C............ 0.10 0.18 0.15 0.18 0.16
See Notes to Financial Statements
15
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
-------
03/31/07 $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)
03/31/11 12.64 0.45 (0.44) 0.01 (0.44) (0.03) (0.47) 12.18 0.03 51,508 0.92(3)
CLASS B
-------
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)
03/31/11 12.66 0.32 (0.45) (0.13) (0.30) (0.03) (0.33) 12.20 (1.07) 1,682 2.06(3)
CLASS C
-------
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)
03/31/11 12.65 0.37 (0.45) (0.08) (0.35) (0.03) (0.38) 12.19 (0.67) 12,819 1.63(3)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
---------- ---------
3.28% 84%
3.35 57
3.49(3) 92
3.52(3) 38
3.60(3) 2
2.44% 84%
2.46 57
2.58(3) 92
2.33(3) 38
2.46(3) 2
2.60%(3) 84%
2.71(3) 57
2.92(3) 92
2.84(3) 38
2.89(3) 2
--------
(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):
03/31/07 03/31/08 03/31/09 03/31/10 03/31/11
-------- -------- -------- -------- --------
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......... 0.09 0.31 0.42 0.35 0.35
See Notes to Financial Statements
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 42.8%
United States Treasury Notes.... 38.3
Repurchase Agreements........... 10.2
United States Treasury Bonds.... 7.6
Federal Farm Credit Bank........ 0.7
Small Business Administration... 0.3
----
99.9%
====
CREDIT QUALITY ALLOCATION+#
Government -- Treasury. 51.2%
Government -- Agency... 48.4
Not Rated@............. 0.4
-----
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.
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 43.8%
FEDERAL FARM CREDIT BANK -- 0.7%
5.64% due 04/04/11.................... $ 500,000 $ 500,233
6.30% due 12/03/13.................... 500,000 565,728
----------
1,065,961
----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/23.................... 27,285 30,445
11.00% due 02/01/15................... 20 20
11.50% due 09/01/19................... 1,246 1,339
----------
31,804
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 42.8%
4.50% due 05/15/18.................... 437,536 465,485
4.50% due 08/15/18.................... 694,219 738,564
4.50% due 09/15/18.................... 1,857,301 1,975,942
4.50% due 10/15/18.................... 1,853,535 1,971,934
4.50% due 09/15/33.................... 2,932,250 3,048,777
4.50% due 02/15/39.................... 109,428 113,093
4.50% due 04/15/39.................... 674,984 697,589
4.50% due 05/15/39.................... 4,273,634 4,416,756
4.50% due 06/15/39.................... 1,519,155 1,570,030
4.50% due 07/15/39.................... 1,394,398 1,441,096
4.50% due 09/15/39.................... 2,519,406 2,603,780
4.50% due 10/15/39.................... 114,561 118,397
4.50% due 02/15/40.................... 4,546,009 4,698,252
4.50% due 04/15/40.................... 59,002 61,199
4.50% due 05/15/40.................... 105,892 109,439
4.50% due 06/15/40.................... 565,270 584,201
4.50% due 08/15/40.................... 4,479,218 4,629,225
4.50% due 09/15/40.................... 558,636 577,345
5.00% due 04/15/18.................... 1,836,701 1,976,019
5.00% due 04/15/33.................... 22,224 23,727
5.00% due 08/15/33.................... 1,022,298 1,091,528
5.00% due 09/15/33.................... 466,796 498,500
5.00% due 10/15/33.................... 335,368 358,097
5.00% due 04/15/34.................... 15,641 16,695
5.00% due 11/15/34.................... 114,195 121,885
5.00% due 02/15/35.................... 11,001 11,725
5.00% due 03/15/35.................... 372,390 396,886
5.00% due 04/15/35.................... 31,175 33,225
5.00% due 05/15/35.................... 857,535 913,945
5.00% due 09/15/35.................... 418,416 446,013
5.00% due 10/15/35.................... 78,899 84,090
5.00% due 12/15/35.................... 48,284 51,460
5.00% due 03/15/36.................... 567,978 604,954
5.00% due 05/15/36.................... 714,722 759,728
5.00% due 06/15/36.................... 465,889 495,225
5.00% due 09/15/36.................... 1,074,124 1,142,810
5.00% due 10/15/36.................... 314,563 334,370
5.00% due 11/15/36.................... 27,585 29,322
5.00% due 12/15/36.................... 174,551 185,541
5.00% due 01/15/37.................... 1,978,742 2,102,413
5.00% due 02/15/37.................... 983,547 1,045,754
5.00% due 03/15/37.................... 704,972 749,033
5.00% due 04/15/37.................... 694,925 738,357
5.00% due 08/15/38.................... 6,054,738 6,432,214
5.50% due 11/15/32.................... 5,838 6,364
5.50% due 03/15/33.................... 217,482 237,079
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 04/15/33....................... $ 305,110 $ 332,603
5.50% due 05/15/33....................... 672,293 732,871
5.50% due 06/15/33....................... 2,946,010 3,211,457
5.50% due 07/15/33....................... 864,220 942,091
5.50% due 10/15/33....................... 808,375 881,213
5.50% due 12/15/33....................... 166,629 181,643
5.50% due 01/15/34....................... 2,127,792 2,318,186
5.50% due 02/15/34....................... 1,124,313 1,229,349
6.00% due 01/15/28....................... 1,762 1,950
6.00% due 04/15/28....................... 626,391 692,813
6.00% due 10/15/28....................... 3,256 3,602
6.00% due 04/15/29....................... 23,062 25,517
6.00% due 05/15/29....................... 49,976 55,296
6.00% due 06/15/29....................... 18,102 20,029
6.00% due 04/15/31....................... 11,187 12,378
6.00% due 05/15/31....................... 22,644 25,054
6.00% due 11/15/31....................... 134,456 148,769
6.00% due 12/15/31....................... 11,806 13,062
6.00% due 01/15/32....................... 78,894 87,293
6.00% due 02/15/32....................... 17,204 19,033
6.00% due 03/15/32....................... 3,631 4,018
6.00% due 08/15/32....................... 154,002 170,397
6.00% due 11/15/32....................... 16,417 18,164
6.00% due 12/15/32....................... 5,293 5,857
6.00% due 01/15/33....................... 12,543 13,878
6.00% due 02/15/33....................... 20,434 22,610
6.00% due 03/15/33....................... 49,025 54,244
6.00% due 04/15/33....................... 202,619 224,190
6.00% due 07/15/33....................... 118,420 131,026
6.00% due 08/15/33....................... 1,135,955 1,256,887
6.00% due 09/15/33....................... 189,441 209,608
6.00% due 10/15/33....................... 519,060 574,318
6.00% due 11/15/33....................... 74,577 82,516
6.00% due 12/15/33....................... 394,142 436,103
6.00% due 02/15/34....................... 121,076 134,003
6.00% due 05/15/34....................... 9,056 10,010
6.00% due 06/15/34....................... 22,438 24,791
6.00% due 07/15/34....................... 651,317 722,730
6.00% due 08/15/34....................... 91,483 101,250
6.00% due 09/15/34....................... 429,661 474,809
6.00% due 10/15/34....................... 1,438,889 1,589,823
6.00% due 12/15/34....................... 205,374 226,917
6.00% due 06/15/35....................... 47,265 52,208
6.00% due 08/15/35....................... 109,085 121,448
6.50% due 02/15/29....................... 6,745 7,639
6.50% due 05/15/31....................... 10,034 11,364
6.50% due 06/15/31....................... 25,577 28,966
6.50% due 07/15/31....................... 20,767 23,519
6.50% due 08/15/31....................... 35,031 39,673
6.50% due 09/15/31....................... 109,495 124,003
6.50% due 10/15/31....................... 147,620 167,180
6.50% due 11/15/31....................... 6,093 6,900
6.50% due 01/15/32....................... 9,834 11,137
6.50% due 02/15/32....................... 218,469 247,416
7.00% due 07/15/23....................... 13,445 15,445
7.00% due 10/15/23....................... 25,207 28,957
18
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 09/15/25....................... $121,705 $ 140,236
7.00% due 03/20/29....................... 10,504 12,168
7.00% due 06/20/29....................... 1,672 1,928
7.00% due 11/20/30....................... 33,210 38,318
7.50% due 04/15/17....................... 6,901 7,736
7.50% due 08/15/23....................... 77,803 90,188
7.50% due 09/15/23....................... 312,623 362,382
9.00% due 12/15/16....................... 26,639 30,096
11.00% due 08/20/15...................... 45 45
11.00% due 09/20/15...................... 158 176
11.50% due 05/20/15...................... 835 841
12.50% due 09/15/14...................... 2,616 2,635
13.00% due 10/20/14...................... 572 576
13.00% due 11/15/14...................... 146 147
13.50% due 02/15/13...................... 2,466 2,536
15.00% due 02/15/12...................... 175 176
15.00% due 06/15/12...................... 1,375 1,386
15.00% due 09/15/12...................... 159 160
15.50% due 09/15/11...................... 4,376 4,408
-----------
69,712,414
-----------
SMALL BUSINESS ADMINISTRATION -- 0.3%
6.30% due 06/01/18....................... 524,406 571,964
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $68,110,753)....................... 71,382,143
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 45.9%
UNITED STATES TREASURY BONDS -- 7.6%
3.88% due 08/15/40.................. $ 1,000,000 $ 894,844
4.25% due 11/15/40.................. 12,000,000 11,476,872
------------
12,371,716
------------
UNITED STATES TREASURY NOTES -- 38.3%
1.25% due 10/31/15.................. 2,000,000 1,929,844
1.75% due 07/31/15.................. 1,000,000 992,500
2.63% due 11/15/20.................. 5,000,000 4,665,625
3.13% due 05/15/19.................. 1,000,000 999,922
3.63% due 02/15/21.................. 53,000,000 53,753,607
------------
62,341,498
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $74,512,187).................. 74,713,214
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $142,622,940)................. 146,095,357
------------
REPURCHASE AGREEMENT -- 10.2%
UBS Securities LLC Joint Repurchase
Agreement(1)
(cost $16,580,000).................. 16,580,000 16,580,000
------------
TOTAL INVESTMENTS --
(cost $159,202,940)(2).............. 99.9% 162,675,357
Other assets less liabilities.......... 0.1 174,481
----------- ------------
NET ASSETS 100.0% $162,849,838
=========== ============
--------
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 5 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2011 (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......... $ -- $ 1,065,961 $ -- $ 1,065,961
Federal National Mtg. Assoc...... -- 31,804 -- 31,804
Government National Mtg. Assoc... -- 69,712,414 -- 69,712,414
Small Business Administration.... -- 571,964 -- 571,964
U.S. Government Treasuries........ -- 74,713,214 -- 74,713,214
Repurchase Agreement................ -- 16,580,000 -- 16,580,000
----------- ------------ ----------- ------------
TOTAL............................... $ -- $162,675,357 $ -- $162,675,357
=========== ============ =========== ============
See Notes to Financial Statements
19
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 85.9%
United States Treasury Bonds.... 13.2
United States Treasury Notes.... 0.6
Small Business Administration... 0.1
----
99.8%
====
CREDIT QUALITY ALLOCATION+#
Government -- Treasury. 14.0%
Government -- Agency... 86.0
-----
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.
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 86.0%
GOVERNMENT NATIONAL MTG. ASSOC. -- 85.9%
4.50% due 05/15/18.................... $ 875,072 $ 930,970
4.50% due 08/15/18.................... 447,339 475,914
4.50% due 09/15/18.................... 1,453,465 1,546,310
4.50% due 10/15/18.................... 2,072,598 2,204,991
4.50% due 08/15/33.................... 1,543,472 1,604,809
4.50% due 09/15/33.................... 2,348,724 2,442,062
4.50% due 10/15/38.................... 834,718 863,194
4.50% due 02/15/39.................... 784,706 810,985
4.50% due 05/15/39.................... 8,340,093 8,619,400
4.50% due 06/15/39.................... 5,367,800 5,547,565
4.50% due 09/15/39.................... 330,709 341,784
4.50% due 01/15/40.................... 911,254 941,771
4.50% due 08/15/40.................... 925,410 956,401
4.50% due May TBA..................... 21,500,000 22,104,688
5.00% due 03/15/18.................... 249,070 267,962
5.00% due 04/15/18.................... 2,843,210 3,058,876
5.00% due 05/15/18.................... 4,525,002 4,868,231
5.00% due 01/15/33.................... 5,526 5,900
5.00% due 05/15/33.................... 6,990 7,463
5.00% due 08/15/33.................... 1,460,085 1,558,869
5.00% due 09/15/33.................... 1,378,142 1,473,069
5.00% due 10/15/33.................... 3,465,801 3,700,285
5.00% due 04/15/34.................... 29,288 31,260
5.00% due 05/15/34.................... 91,281 97,428
5.00% due 11/15/34.................... 390,711 417,023
5.00% due 12/15/34.................... 363,210 387,670
5.00% due 09/15/35.................... 10,982 11,705
5.00% due 10/15/35.................... 72,956 77,755
5.00% due 11/15/35.................... 70,911 75,576
5.00% due 12/15/35.................... 38,656 41,199
5.00% due 02/15/36.................... 94,558 100,662
5.00% due 04/15/36.................... 290,308 308,588
5.00% due 06/15/36.................... 837,094 889,805
5.00% due 07/15/36.................... 278,223 295,742
5.00% due 08/15/36.................... 16,448 17,483
5.00% due 09/15/36.................... 483,414 514,534
5.00% due 10/15/36.................... 24,918 26,750
5.00% due 11/15/36.................... 153,840 163,527
5.00% due 12/15/36.................... 557,454 592,557
5.00% due 01/15/37.................... 232,679 247,222
5.00% due 02/15/37.................... 564,488 599,768
5.00% due 04/15/37.................... 3,720,066 3,953,901
5.00% due 12/15/37.................... 13,169 13,992
5.00% due 04/15/38.................... 6,191,695 6,577,709
5.00% due 05/15/38.................... 4,000,030 4,249,408
5.00% due 06/15/38.................... 212,003 225,220
5.00% due 08/15/38.................... 481,875 511,917
5.00% due 10/15/38.................... 568,317 603,787
5.00% due 01/15/39.................... 818,767 869,812
5.00% due 02/15/39.................... 1,742,130 1,850,742
5.00% due 03/15/39.................... 3,106,235 3,299,890
5.00% due 04/15/39.................... 1,617,484 1,718,324
5.00% due 08/15/39.................... 1,796,137 1,908,115
5.00% due 09/15/39.................... 77,797 82,648
5.00% due 10/15/39.................... 6,722,204 7,141,292
5.00% due 11/15/39.................... 4,063,694 4,317,040
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 12/15/39....................... $ 3,565,763 $ 3,797,220
5.00% due 04/15/40....................... 3,512,122 3,731,082
5.00% due 05/15/40....................... 26,669,881 28,332,584
5.00% due 06/15/40....................... 370,944 394,070
5.50% due 06/15/29....................... 2,791 3,048
5.50% due 01/15/32....................... 25,163 27,430
5.50% due 12/15/32....................... 330,196 359,948
5.50% due 01/15/33....................... 294,129 320,632
5.50% due 02/15/33....................... 759,947 828,421
5.50% due 03/15/33....................... 532,215 580,170
5.50% due 04/15/33....................... 2,733,116 2,979,380
5.50% due 05/15/33....................... 3,519,225 3,836,332
5.50% due 06/15/33....................... 3,651,143 3,980,126
5.50% due 07/15/33....................... 199,330 217,291
5.50% due 08/15/33....................... 1,148,064 1,251,509
5.50% due 09/15/33....................... 197,824 215,649
5.50% due 10/15/33....................... 3,149,454 3,433,233
5.50% due 12/15/33....................... 3,204,776 3,493,540
5.50% due 01/15/34....................... 4,564,488 4,973,815
5.50% due 02/15/34....................... 726,656 794,287
5.50% due 04/15/35....................... 906,112 985,774
5.50% due 07/15/35....................... 1,356,875 1,476,166
5.50% due 09/15/35....................... 13,517,958 14,706,413
5.50% due 10/15/35....................... 8,844,375 9,621,943
5.50% due 11/15/35....................... 12,678,749 13,793,422
5.50% due 12/15/35....................... 8,888,331 9,669,930
5.50% due 02/15/36....................... 1,225,377 1,335,789
5.50% due 03/15/36....................... 5,693,045 6,201,420
5.50% due 04/15/36....................... 196,653 213,511
5.50% due 05/15/36....................... 1,580,306 1,718,890
6.00% due 11/15/23....................... 3,126 3,449
6.00% due 01/15/24....................... 4,734 5,229
6.00% due 07/15/28....................... 1,967 2,176
6.00% due 11/15/28....................... 188,383 208,438
6.00% due 12/15/28....................... 146,749 162,372
6.00% due 01/15/29....................... 317,509 351,310
6.00% due 02/15/29....................... 344,937 381,656
6.00% due 03/15/29....................... 328,159 363,095
6.00% due 04/15/29....................... 669,501 740,716
6.00% due 05/15/29....................... 33,367 36,919
6.00% due 06/15/29....................... 336,480 372,283
6.00% due 07/15/29....................... 103,918 114,980
6.00% due 08/15/29....................... 7,767 8,593
6.00% due 10/15/29....................... 95,894 106,103
6.00% due 04/15/31....................... 6,967 7,708
6.00% due 07/15/31....................... 14,135 15,639
6.00% due 10/15/31....................... 52,811 58,433
6.00% due 11/15/31....................... 383,716 424,563
6.00% due 12/15/31....................... 175,435 194,113
6.00% due 01/15/32....................... 311,568 344,737
6.00% due 02/15/32....................... 12,304 13,614
6.00% due 03/15/32....................... 235,346 260,268
6.00% due 07/15/32....................... 50,950 56,374
6.00% due 08/15/32....................... 723,744 800,792
6.00% due 09/15/32....................... 462,439 511,669
6.00% due 10/15/32....................... 94,226 104,257
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 11/15/32....................... $ 818 $ 905
6.00% due 12/15/32....................... 29,026 32,116
6.00% due 01/15/33....................... 706,538 781,754
6.00% due 02/15/33....................... 696,428 770,569
6.00% due 03/15/33....................... 624,691 691,194
6.00% due 04/15/33....................... 662,626 733,167
6.00% due 05/15/33....................... 711,844 787,627
6.00% due 06/15/33....................... 464,277 513,705
6.00% due 08/15/33....................... 708,533 783,963
6.00% due 10/15/33....................... 247,542 273,895
6.00% due 11/15/33....................... 768,821 850,664
6.00% due 12/15/33....................... 1,525,263 1,687,638
6.00% due 01/15/34....................... 819,683 905,718
6.00% due 02/15/34....................... 5,398,710 6,006,855
6.00% due 03/15/34....................... 74,938 82,799
6.00% due 04/15/34....................... 1,505,651 1,672,430
6.00% due 05/15/34....................... 110,717 122,642
6.00% due 06/15/34....................... 106,982 118,948
6.00% due 07/15/34....................... 1,408,486 1,566,315
6.00% due 08/15/34....................... 2,231,069 2,462,234
6.00% due 09/15/34....................... 131,220 144,834
6.00% due 10/15/34....................... 326,525 360,776
6.00% due 11/15/34....................... 466,710 516,106
6.00% due 12/15/34....................... 54,792 60,693
6.00% due 01/15/35....................... 51,171 56,546
6.00% due 02/15/35....................... 295,270 327,310
6.00% due 04/15/35....................... 34,468 38,062
6.00% due 05/15/35....................... 6,443 7,197
6.00% due 06/15/35....................... 154,473 170,580
6.00% due 11/15/35....................... 6,900 7,682
6.00% due 12/15/35....................... 737,312 820,367
6.00% due 01/15/36....................... 514,237 567,089
6.00% due 02/15/36....................... 806,319 898,614
6.00% due 03/15/36....................... 298,473 329,359
6.00% due 04/15/36....................... 1,595,538 1,766,573
6.00% due 05/15/36....................... 2,665,942 2,947,605
6.00% due 06/15/36....................... 960,413 1,059,056
6.00% due 07/15/36....................... 684,674 754,995
6.00% due 08/15/36....................... 8,829 9,720
6.00% due 09/15/36....................... 62,148 68,809
6.00% due 10/15/36....................... 589,761 650,320
6.00% due 11/15/36....................... 909,170 1,002,551
6.00% due 09/15/38....................... 7,141,381 7,865,934
6.50% due 03/15/28....................... 12,206 13,822
6.50% due 08/15/28....................... 24,120 27,316
6.50% due 01/15/29....................... 2,291 2,595
6.50% due 02/15/29....................... 801 907
6.50% due 03/15/29....................... 69,688 78,922
6.50% due 04/15/29....................... 805 912
6.50% due 05/15/29....................... 6,431 7,283
6.50% due 06/15/29....................... 23,425 26,528
6.50% due 07/15/29....................... 1,547 1,752
6.50% due 10/15/29....................... 3,014 3,414
6.50% due 08/15/31....................... 73,792 83,568
6.50% due 09/15/31....................... 10,163 11,509
6.50% due 10/15/31....................... 147,620 167,180
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 11/15/31....................... $ 83,357 $ 94,401
6.50% due 12/15/31....................... 89,459 101,312
6.50% due 02/15/32....................... 149,012 168,756
6.50% due 05/15/32....................... 552,319 625,503
6.50% due 06/15/32....................... 60,741 68,789
7.00% due 03/15/23....................... 14,466 16,618
7.00% due 01/20/24....................... 385 440
7.00% due 03/20/24....................... 358 409
7.00% due 07/20/25....................... 1,352 1,546
7.00% due 09/15/25....................... 52,854 60,901
7.00% due 01/20/29....................... 22,719 26,195
7.00% due 02/20/29....................... 3,866 4,458
7.00% due 06/20/29....................... 8,292 9,561
7.00% due 07/20/29....................... 29,062 33,507
7.00% due 09/20/29....................... 2,790 3,216
7.00% due 10/20/29....................... 5,536 6,383
7.00% due 11/20/29....................... 1,912 2,204
7.00% due 03/20/30....................... 3,077 3,551
7.00% due 06/20/30....................... 3,095 3,571
7.00% due 08/20/30....................... 8,356 9,642
7.00% due 09/20/30....................... 11,932 13,767
7.00% due 10/20/30....................... 13,852 15,982
8.00% due 11/15/26....................... 58,375 68,501
8.00% due 12/15/29....................... 8,308 9,294
8.00% due 04/15/30....................... 24,336 28,655
8.00% due 05/15/30....................... 1,297 1,525
8.00% due 08/15/30....................... 27,434 32,275
8.50% due 03/15/17....................... 9,087 10,404
8.50% due 05/15/21....................... 5,076 5,100
8.50% due 12/15/22....................... 24,917 29,467
8.50% due 01/15/23....................... 87,105 103,477
8.50% due 09/15/24....................... 13,110 15,621
9.00% due 07/15/16....................... 20,616 23,291
9.00% due 10/15/16....................... 3,598 3,617
------------
278,777,624
------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
6.30% due 06/01/18....................... 174,802 190,655
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $266,041,725)...................... 278,968,279
------------
U.S. GOVERNMENT TREASURIES -- 13.8%
UNITED STATES TREASURY BONDS -- 13.2%
4.25% due 11/15/40....................... 32,000,000 30,604,992
4.50% due 08/15/39....................... 4,000,000 3,998,752
4.75% due 02/15/41....................... 8,000,000 8,315,000
------------
42,918,744
------------
22
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT TREASURIES (CONTINUED)
UNITED STATES TREASURY NOTES -- 0.6%
3.63% due 02/15/21.................. $2,000,000 $ 2,028,438
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $44,175,469).................. 44,947,182
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $310,217,194)................. 323,915,461
------------
TOTAL INVESTMENTS --
(cost $310,217,194)(1).............. 99.8% 323,915,461
Other assets less liabilities.......... 0.2 488,358
---------- ------------
NET ASSETS 100.0% $324,403,819
========== ============
--------
(1) See Note 5 for cost of investments on a tax basis.
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2011 (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... $ -- $278,777,624 $ -- $278,777,624
Small Business Administration.... -- 190,655 -- 190,655
U.S. Government Treasuries........ -- 44,947,182 -- 44,947,182
----------- ------------ ----------- ------------
TOTAL............................... $ -- $323,915,461 $ -- $323,915,461
=========== ============ =========== ============
See Notes to Financial Statements
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Foreign Government Agencies............ 15.9%
Diversified Financial Services......... 7.2
Federal National Mtg. Assoc............ 6.5
Federal Home Loan Mtg. Corp............ 5.1
Oil Companies-Exploration & Production. 3.8
Diversified Banking Institutions....... 2.9
Banks-Commercial....................... 2.1
United States Treasury Notes........... 2.1
Telephone-Integrated................... 1.9
Medical-Hospitals...................... 1.8
Pipelines.............................. 1.7
Cellular Telecom....................... 1.4
Cable/Satellite TV..................... 1.4
Electric-Generation.................... 1.3
Special Purpose Entities............... 1.3
Insurance-Multi-line................... 1.2
Casino Hotels.......................... 1.2
Banks-Super Regional................... 1.1
Independent Power Producers............ 1.1
Building-Residential/Commercial........ 1.1
Telecom Services....................... 1.1
Coal................................... 1.0
Steel-Producers........................ 1.0
Auto/Truck Parts & Equipment-Original.. 0.9
Paper & Related Products............... 0.9
Rental Auto/Equipment.................. 0.8
Broadcast Services/Program............. 0.8
Oil Companies-Integrated............... 0.8
Government National Mtg. Assoc......... 0.7
Electric-Integrated.................... 0.7
Time Deposits.......................... 0.7
Real Estate Investment Trusts.......... 0.6
Containers-Paper/Plastic............... 0.6
Multimedia............................. 0.6
Oil-Field Services..................... 0.5
Containers-Metal/Glass................. 0.5
Distribution/Wholesale................. 0.5
Retail-Restaurants..................... 0.5
Real Estate Operations & Development... 0.5
Web Hosting/Design..................... 0.5
Retail-Apparel/Shoe.................... 0.5
Commercial Services.................... 0.5
Consumer Products-Misc................. 0.5
Airlines............................... 0.5
Chemicals-Diversified.................. 0.5
Banks-Money Center..................... 0.4
Electronic Components-Semiconductors... 0.4
Gambling (Non-Hotel)................... 0.4
Electronic Components-Misc............. 0.4
Building Products-Cement............... 0.4
Insurance-Mutual....................... 0.4
Decision Support Software.............. 0.4
Transport-Air Freight.................. 0.4
Repurchase Agreements.................. 0.4
Advertising Services................... 0.4
Transport-Services..................... 0.4
Chemicals-Specialty.................... 0.4
Computers-Memory Devices............... 0.4
Computer Services...................... 0.4
Building & Construction Products-Misc.. 0.4
Retail-Drug Store...................... 0.3
Finance-Investment Banker/Broker..... 0.3
Non-Hazardous Waste Disposal......... 0.3
Funeral Services & Related Items..... 0.3
Building-Heavy Construction.......... 0.3
Finance-Other Services............... 0.3
United States Treasury Bonds......... 0.3
Retail-Toy Stores.................... 0.3
Insurance-Life/Health................ 0.3
Office Automation & Equipment........ 0.3
Finance-Auto Loans................... 0.3
Financial Guarantee Insurance........ 0.3
Retail-Regional Department Stores.... 0.3
Computers-Periphery Equipment........ 0.3
Marine Services...................... 0.3
Medical-Biomedical/Gene.............. 0.3
Music................................ 0.3
Oil Refining & Marketing............. 0.3
Chemicals-Plastics................... 0.3
Satellite Telecom.................... 0.3
Diversified Manufacturing Operations. 0.3
Consulting Services.................. 0.3
Firearms & Ammunition................ 0.3
Food-Canned.......................... 0.3
MRI/Medical Diagnostic Imaging....... 0.3
Retail-Jewelry....................... 0.2
Auto-Heavy Duty Trucks............... 0.2
Auto-Cars/Light Trucks............... 0.2
Enterprise Software/Service.......... 0.2
Medical-Drugs........................ 0.2
Semiconductor Equipment.............. 0.2
Capacitors........................... 0.2
Home Furnishings..................... 0.2
Medical Products..................... 0.2
Retail-Propane Distribution.......... 0.2
Cosmetics & Toiletries............... 0.2
Gold Mining.......................... 0.2
Energy-Alternate Sources............. 0.2
Aerospace/Defense.................... 0.2
Seismic Data Collection.............. 0.2
Dialysis Centers..................... 0.2
Machinery-Farming.................... 0.2
Oil & Gas Drilling................... 0.2
Advanced Materials................... 0.2
Metal-Iron........................... 0.2
Gas-Distribution..................... 0.2
Publishing-Books..................... 0.2
Gas-Transportation................... 0.2
Oil Field Machinery & Equipment...... 0.2
Food-Misc............................ 0.2
Printing-Commercial.................. 0.2
Sovereign Agency..................... 0.1
Medical Instruments.................. 0.1
Casino Services...................... 0.1
Banks-Fiduciary...................... 0.1
Investment Companies................. 0.1
Food-Retail.......................... 0.1
Medical Labs & Testing Services...... 0.1
Metal-Aluminum....................... 0.1
Wireless Equipment................... 0.1
Wire & Cable Products................ 0.1
Diversified Operations............... 0.1
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Circuit Boards............. 0.1%
Diamonds/Precious Stones... 0.1
Steel-Specialty............ 0.1
Storage/Warehousing........ 0.1
Motion Pictures & Services. 0.1
Transport-Marine........... 0.1
Petrochemicals............. 0.1
Import/Export.............. 0.1
Agricultural Operations.... 0.1
Transport-Rail............. 0.1
Finance-Commercial......... 0.1
Advertising Agencies....... 0.1
Medical-Generic Drugs...... 0.1
E-Commerce/Services........ 0.1
Diversified Minerals....... 0.1
-----
100.1%
=====
CREDIT QUALITY+#
Government -- Treasury. 2.4%
Government -- Agency... 12.4
AAA.................... 5.0
AA..................... 2.1
A...................... 5.8
BBB.................... 14.6
BB..................... 21.8
B...................... 22.0
CCC.................... 7.5
CC..................... 0.3
C...................... 0.1
Not Rated@............. 6.0
-----
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.......... 74.4%
Canada................. 2.0
Mexico................. 1.6
Turkey................. 1.5
Luxembourg............. 1.5
Brazil................. 1.4
United Kingdom......... 1.3
Russia................. 1.3
Norway................. 1.1
Peru................... 1.1
Sweden................. 1.0
Australia.............. 0.8
Cayman Islands......... 0.8
Ireland................ 0.8
Bermuda................ 0.7
Indonesia.............. 0.7
Netherlands............ 0.7
Ukrainian SSR.......... 0.6
Switzerland............ 0.5
Venezuela.............. 0.5
Hungary................ 0.5
Colombia............... 0.5
Philippines............ 0.5
Argentina.............. 0.4
Japan.................. 0.4
South Africa........... 0.4
Poland................. 0.3
Chile.................. 0.2
Qatar.................. 0.2
Dominican Republic..... 0.2
South Korea............ 0.2
British Virgin Islands. 0.2
Germany................ 0.2
Gabon.................. 0.2
France................. 0.1
Sri Lanka.............. 0.1
Uruguay................ 0.1
Croatia................ 0.1
Italy.................. 0.1
Kazakhstan............. 0.1
Spain.................. 0.1
Austria................ 0.1
Ivory Coast............ 0.1
India.................. 0.1
Thailand............... 0.1
United Arab Emirates... 0.1
El Salvador............ 0.1
Netherlands Antilles... 0.1
-----
100.1%
=====
--------
*Calculated as a percentage of net assets
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
ASSET BACKED SECURITIES -- 6.3%
DIVERSIFIED FINANCIAL SERVICES -- 6.3%
Avis Budget Rental Car Funding AESOP LLC
Series 2010-5A, Class A
3.15% due 03/20/16*...................... $ 500,000 $ 498,319
Bank of America Commercial Mtg., Inc.
Series 2006-5, Class AM
5.45% due 09/10/47(1).................... 500,000 495,441
Cajun Global LLC
Series 2011-1A, Class A2
6.00% due 02/20/41*...................... 500,000 506,505
Citibank Credit Card Issuance Trust
Series 2008-A1, Class A1
5.35% due 02/07/20....................... 1,500,000 1,660,646
Citibank Omni Master Trust
Series 2009-A17, Class A17
4.90% due 11/15/18*...................... 1,000,000 1,069,469
Citigroup Commercial Mtg. Trust VRS
Series 2008-C7, Class AJ
6.29% due 12/10/17*...................... 1,000,000 886,185
Citigroup Mortgage Loan Trust, Inc. FRS
Series 2007-AMC1, Class A2A
0.30% due 12/25/36....................... 1,042,165 937,688
Commercial Mtg. Pass Through Certs. VRS
Series 2005-C6, Class B
5.24% due 06/10/44(1).................... 1,300,000 1,227,604
Credit Suisse Mortgage Capital Certs.
Series 2007-1, Class 5A13
6.00% due 02/25/37(2).................... 577,738 500,672
DBUBS Mortgage Trust VRS
Series 2011-LC1A, Class F
5.56% due 02/01/21*(1)................... 2,000,000 1,821,132
Dominos Pizza Master Issuer LLC
Series 2007-1, Class A2
5.26% due 04/25/37*...................... 391,000 397,843
Entergy Arkansas Restoration Funding LLC
Series 2010A, Class A1
2.30% due 08/01/21....................... 250,000 244,475
Extended Stay America Trust
Series 2010-ESHA, Class D
5.50% due 11/05/15*(1)................... 1,000,000 1,001,890
Greenwich Capital Commercial
Funding Corp., VRS
Series 2007-GG11, Class AM
5.87% due 12/10/49(1).................... 2,000,000 1,968,642
Greenwich Capital Commercial
Funding Corp., VRS
Series 2007-GG11, Class AJ
5.87% due 12/10/49(1).................... 3,000,000 2,604,186
GS Mtg. Securities Corp. II
Series 2006-GG8, Class AM
5.59% due 11/10/39(1).................... 1,000,000 1,011,369
GSAA Trust, FRS
Series 2006-11, Class 2A2
0.41% due 07/25/36....................... 5,657,768 2,978,549
Harborview Mtg. Loan Trust, FRS
Series 2006-14, Class 2A1A
0.40% due 01/25/47(2).................... 2,373,382 1,495,648
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
JP Morgan Chase Commercial Mtg.
Securities Corp., VRS
Series 2010-RR1, Class WBB
5.74% due 05/20/17*(1).................. $1,500,000 $ 1,513,758
JP Morgan Mtg. Acquisition Corp. FRS
Series 2006-CH2, Class AV3
0.35% due 10/25/36...................... 1,500,000 1,227,903
LB-UBS Commercial Mtg. Trust VRS
Series 2007-C7, Class AM
6.17% due 09/15/45(1)................... 1,500,000 1,524,954
Merrill Lynch/Countrywide
Commercial Mtg. Trust, VRS
Series 2007-8, Class AM
5.96% due 08/12/49(1)................... 500,000 502,018
Morgan Stanley Capital I VRS
Series 2005-IQ10, Class B
5.31% due 09/15/42(1)................... 200,000 197,356
Morgan Stanley Capital I,
Series 2006-IQ12, Class AJ
5.40% due 12/15/43(1)................... 3,000,000 2,707,903
Morgan Stanley Capital I, VRS
Series 2007-T27, Class AJ
5.65% due 06/11/42(1)................... 2,500,000 2,434,193
Morgan Stanley Capital I VRS
Series 2006-HQ9, Class AJ
5.79% due 07/12/44(1)................... 1,400,000 1,403,011
Morgan Stanley Capital I Pass
Through Certs. VRS
Series 2006-HQ9, Class B
5.83% due 07/05/44(1)................... 1,000,000 988,448
Morgan Stanley Capital I VRS
Series 2007-IQ15, Class AM
5.88% due 06/11/49(1)................... 500,000 497,737
Sierra Receivables Funding Co.
Series 2010-3A, Class A
3.51% due 11/20/25*..................... 162,587 163,132
Sonic Capital LLC
Series 2006-1A, Class A2
5.10% due 12/20/31*..................... 366,627 373,959
Soundview Home Equity Loan Trust FRS
Series 2007-OPT1, Class 2A1
0.33% due 06/25/37...................... 651,302 568,833
-----------
TOTAL ASSET BACKED SECURITIES
(cost $34,841,677)...................... 35,409,468
-----------
CONVERTIBLE BONDS & NOTES -- 0.1%
TELECOM SERVICES -- 0.1%
ICO North America, Inc.
Senior Sec. Notes
7.50% due 08/15/09+(3)(4)(5)(6)(7)
(cost $312,925)......................... 297,000 359,370
-----------
U.S. CORPORATE BONDS & NOTES -- 50.7%
ADVANCED MATERIALS -- 0.2%
Polymer Group, Inc.
Senior Sec. Notes
7.75% due 02/01/19*..................... 1,000,000 1,031,250
-----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
6.25% due 11/15/14......................... $ 341,000 $ 372,543
----------
ADVERTISING SERVICES -- 0.4%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/15*.................. 1,220,000 796,050
Visant Corp.
Company Guar. Notes
10.00% due 10/01/17........................ 1,200,000 1,296,000
----------
2,092,050
----------
AEROSPACE/DEFENSE -- 0.2%
Spirit Aerosystems, Inc.
Company Guar. Notes
7.50% due 10/01/17......................... 1,002,000 1,077,150
----------
AGRICULTURAL CHEMICALS -- 0.0%
Incitec Pivot Finance LLC
Company Guar. Notes
6.00% due 12/10/19*........................ 51,000 53,439
----------
AGRICULTURAL OPERATIONS -- 0.1%
Archer-Daniels-Midland Co.
Notes
4.48% due 03/01/21......................... 240,000 243,057
Archer-Daniels-Midland Co.
Senior Bonds
5.77% due 03/01/41......................... 245,000 250,849
----------
493,906
----------
AIRLINES -- 0.5%
Delta Air Lines, Inc.
Senior Sec. Notes
9.50% due 09/15/14*........................ 2,360,000 2,507,500
----------
APPLICATIONS SOFTWARE -- 0.0%
SS&C Technologies, Inc.
Company Guar. Notes
11.75% due 12/01/13........................ 237,000 244,999
----------
AUTO-CARS/LIGHT TRUCKS -- 0.2%
Daimler Finance North America LLC FRS
Company Guar. Notes
0.92% due 03/28/14*........................ 626,000 626,191
Daimler Finance North America LLC
Company Guar. Notes
3.00% due 03/28/16*........................ 667,000 662,114
----------
1,288,305
----------
AUTO-HEAVY DUTY TRUCKS -- 0.2%
Navistar International Corp.
Company Guar. Notes
8.25% due 11/01/21......................... 1,230,000 1,363,762
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.9%
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.50% due 05/01/18......................... 1,250,000 1,337,500
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL (CONTINUED)
Dana Holding Corp.
Senior Notes
6.50% due 02/15/19............................. $ 125,000 $ 124,375
Dana Holding Corp.
Senior Notes
6.75% due 02/15/21............................. 1,175,000 1,175,000
Johnson Controls, Inc.
Senior Notes
5.70% due 03/01/41............................. 210,000 210,267
Lear Corp.
Company Guar. Notes
8.13% due 03/15/20............................. 2,155,000 2,370,500
----------
5,217,642
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.0%
Exide Corp.
Escrow Notes
10.00% due 03/15/25+(4)(5)..................... 225,000 0
----------
BANKS-COMMERCIAL -- 0.8%
BB&T Corp.
Senior Notes
3.20% due 03/15/16............................. 374,000 371,440
Branch Banking & Trust Co. FRS
Sub. Notes
0.61% due 05/23/17............................. 280,000 254,245
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/17............................. 1,560,714 1,562,665
Credit Suisse New York
Sub. Notes
6.00% due 02/15/18............................. 593,000 629,825
First Horizon National Corp.
Senior Notes
5.38% due 12/15/15............................. 355,000 370,895
KeyBank NA
Sub. Notes
7.41% due 10/15/27............................. 128,000 144,961
Regions Bank
Sub. Notes
7.50% due 05/15/18............................. 224,000 236,780
Regions Financial Corp.
Senior Notes
5.75% due 06/15/15............................. 222,000 226,162
US Bank NA FRS
Sub. Notes
3.78% due 04/29/20............................. 360,000 366,616
Wachovia Bank NA
Sub. Notes
6.00% due 11/15/17............................. 402,000 446,341
----------
4,609,930
----------
BANKS-FIDUCIARY -- 0.1%
State Street Capital Trust IV FRS
Limited Guar. Notes
1.31% due 06/15/37............................. 919,000 758,310
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BANKS-MONEY CENTER -- 0.2%
Dresdner Funding Trust I
Jr. Sub. Bonds
8.15% due 06/30/31*................... $1,375,000 $1,278,750
----------
BANKS-SUPER REGIONAL -- 0.9%
BAC Capital Trust XIII FRS
Limited Guar. Notes
0.71% due 03/15/12(8)................. 1,070,000 750,673
BAC Capital Trust XV FRS
Limited Guar. Notes
1.11% due 06/01/56.................... 250,000 172,917
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27.................... 135,000 163,371
Bank of America NA
Sub. Notes
5.30% due 03/15/17.................... 436,000 447,626
Fifth Third Bancorp
Senior Notes
3.63% due 01/25/16.................... 207,000 206,818
Huntington Bancshares, Inc.
Sub. Notes
7.00% due 12/15/20.................... 213,000 235,153
JPMorgan Chase Bank NA
Sub. Notes
5.88% due 06/13/16.................... 213,000 234,533
KeyCorp
Senior Notes
5.10% due 03/24/21.................... 192,000 190,815
PNC Preferred Funding Trust II FRS
Jr. Sub. Bonds
6.11% due 03/15/12*(8)................ 427,000 356,545
SunTrust Banks, Inc.
Senior Notes
6.00% due 09/11/17.................... 205,000 225,680
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/26.................... 38,000 36,736
Wachovia Capital Trust III FRS
Limited Guar. Notes
5.80% due 03/15/11(8)................. 319,000 292,683
Wachovia Corp. FRS
Senior Notes
0.58% due 06/15/17.................... 410,000 393,163
Wells Fargo & Co. FRS
Senior Notes
0.50% due 10/28/15.................... 470,000 459,380
Wells Fargo & Co.
Notes
4.60% due 04/01/21.................... 527,000 521,153
Wells Fargo & Co. FRS
Jr. Sub. Bonds
7.98% due 03/15/18.................... 235,000 257,325
Wells Fargo Bank NA FRS
Sub. Notes
0.52% due 05/16/16.................... 350,000 333,863
----------
5,278,434
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
BROADCAST SERVICES/PROGRAM -- 0.8%
Clear Channel Communications, Inc.
Company Guar. Notes
9.00% due 03/01/21*......................... $1,400,000 $1,396,500
Clear Channel Communications, Inc.
Company Guar. Notes
10.75% due 08/01/16......................... 895,000 852,488
Fisher Communications, Inc.
Company Guar. Notes
8.63% due 09/15/14.......................... 865,000 887,706
Nexstar Broadcasting, Inc./Mission
Broadcasting, Inc.
Senior Sec. Notes
8.88% due 04/15/17.......................... 1,250,000 1,353,125
----------
4,489,819
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Euramax International, Inc.
Senior Sec. Notes
9.50% due 04/01/16*......................... 375,000 380,625
----------
BUILDING PRODUCTS-CEMENT -- 0.3%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16.......................... 1,755,000 1,889,778
----------
BUILDING-HEAVY CONSTRUCTION -- 0.2%
New Enterprise Stone & Lime Co.
Senior Notes
11.00% due 09/01/18*........................ 1,238,000 1,253,475
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 1.1%
Beazer Homes USA, Inc.
Senior Notes
9.13% due 05/15/19*......................... 800,000 809,000
K. Hovnanian Enterprises, Inc.
Senior Sec. Notes
10.63% due 10/15/16......................... 725,000 770,313
KB Home
Company Guar. Notes
9.10% due 09/15/17.......................... 850,000 901,000
Lennar Corp.
Company Guar. Notes
6.95% due 06/01/18.......................... 850,000 841,500
M/I Homes, Inc.
Company Guar. Notes
8.63% due 11/15/18*......................... 755,000 755,000
Standard Pacific Corp.
Company Guar. Notes
8.38% due 05/15/18*......................... 1,000,000 1,038,750
Standard Pacific Corp.
Sec. Notes
8.38% due 05/15/18.......................... 775,000 805,031
----------
5,920,594
----------
CABLE/SATELLITE TV -- 1.4%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.00% due 01/01/19.......................... 1,175,000 1,204,375
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CABLE/SATELLITE TV (CONTINUED)
Comcast Corp.
Company Guar. Notes
5.90% due 03/15/16............................... $1,030,000 $1,145,717
COX Communications, Inc.
Notes
7.13% due 10/01/12............................... 211,000 229,055
CSC Holdings LLC
Senior Notes
8.63% due 02/15/19............................... 1,025,000 1,173,625
Echostar DBS Corp.
Company Guar. Notes
7.13% due 02/01/16............................... 225,000 240,188
Echostar DBS Corp.
Company Guar. Notes
7.75% due 05/31/15............................... 912,000 998,640
Insight Communications Co., Inc.
Senior Notes
9.38% due 07/15/18*.............................. 2,150,000 2,386,500
TCI Communications, Inc.
Senior Bonds
7.13% due 02/15/28............................... 250,000 283,562
----------
7,661,662
----------
CAPACITORS -- 0.2%
Kemet Corp.
Senior Sec. Notes
10.50% due 05/01/18.............................. 1,075,000 1,212,062
----------
CASINO HOTELS -- 1.2%
CityCenter Holdings LLC/CityCenter Finance Corp.
Senior Sec. Notes
10.75% due 01/15/17*(9).......................... 1,425,000 1,471,313
Eldorado Casino Shreveport/Shreveport Capital
Corp. 1st Mtg. Notes
10.00% due 08/01/12(4)(5)(10).................... 1,571,489 1,457,556
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(4)(5)......................... 425,000 388,386
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17.............................. 1,300,000 1,477,125
MGM Resorts International, Inc.
Senior Sec. Notes
11.13% due 11/15/17.............................. 551,000 630,895
Turning Stone Resort Casino Enterprise
Senior Notes
9.13% due 09/15/14*.............................. 968,000 997,040
----------
6,422,315
----------
CASINO SERVICES -- 0.1%
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*.............................. 1,045,000 773,300
----------
CELLULAR TELECOM -- 1.0%
Cricket Communications, Inc.
Company Guar. Notes
7.75% due 10/15/20............................... 1,500,000 1,511,250
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
CELLULAR TELECOM (CONTINUED)
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/15.......................... $2,525,000 $2,534,469
NII Capital Corp.
Company Guar. Notes
7.63% due 04/01/21.......................... 1,300,000 1,329,250
----------
5,374,969
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Dow Chemical Co.
Senior Notes
4.25% due 11/15/20.......................... 180,000 171,906
EI du Pont de Nemours & Co. FRS
Senior Notes
0.73% due 03/25/14.......................... 240,000 240,497
PPG Industries, Inc.
Senior Notes
1.90% due 01/15/16.......................... 64,000 60,638
PPG Industries, Inc.
Senior Notes
3.60% due 11/15/20.......................... 282,000 265,521
PPG Industries, Inc.
Senior Notes
5.50% due 11/15/40.......................... 129,000 125,681
Solutia, Inc.
Company Guar. Notes
7.88% due 03/15/20.......................... 540,000 585,900
----------
1,450,143
----------
CHEMICALS-SPECIALTY -- 0.4%
Eastman Chemical Co.
Debentures
7.25% due 01/15/24.......................... 471,000 546,357
Huntsman International LLC
Company Guar. Notes
8.63% due 03/15/21*......................... 1,075,000 1,171,750
Lubrizol Corp.
Company Guar. Bonds
6.50% due 10/01/34.......................... 248,000 270,451
----------
1,988,558
----------
CIRCUIT BOARDS -- 0.1%
Viasystems, Inc.
Senior Sec. Notes
12.00% due 01/15/15*........................ 500,000 565,000
----------
COAL -- 1.0%
Consol Energy, Inc.
Company Guar. Notes
8.25% due 04/01/20.......................... 675,000 748,406
Foresight Energy LLC/Foresight Energy Corp.
Company Guar. Notes
9.63% due 08/15/17*......................... 1,350,000 1,452,938
James River Escrow, Inc.
Senior Notes
7.88% due 04/01/19*......................... 1,450,000 1,500,750
Patriot Coal Corp.
Company Guar. Notes
8.25% due 04/30/18.......................... 1,799,000 1,915,935
----------
5,618,029
----------
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
COMMERCIAL SERVICES -- 0.5%
Ceridian Corp.
Company Guar. Notes
11.25% due 11/15/15................................. $2,465,000 $2,563,600
----------
COMMERCIAL SERVICES-FINANCE -- 0.0%
Moody's Corp.
Senior Notes
5.50% due 09/01/20.................................. 77,000 78,102
----------
COMPUTER SERVICES -- 0.4%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/15.................................. 234,000 252,339
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*................................ 1,188,000 1,284,525
International Business Machines Corp.
Senior Notes
6.22% due 08/01/27.................................. 375,000 431,523
----------
1,968,387
----------
COMPUTERS-MEMORY DEVICES -- 0.2%
Spansion LLC
Company Guar. Notes
7.88% due 11/15/17*................................. 825,000 839,438
----------
COMPUTERS-PERIPHERY EQUIPMENT -- 0.3%
CDW Escrow Corp.
Senior Notes
8.50% due 04/01/19*................................. 1,550,000 1,551,937
----------
CONSULTING SERVICES -- 0.3%
FTI Consulting, Inc.
Company Guar. Notes
6.75% due 10/01/20*................................. 1,450,000 1,468,125
----------
CONSUMER PRODUCTS-MISC. -- 0.5%
American Achievement Corp.
Senior Sec. Notes
10.88% due 04/15/16*................................ 1,170,000 1,149,525
Kimberly-Clark Corp.
Senior Notes
5.30% due 03/01/41.................................. 84,000 84,873
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Company Guar. Notes
9.00% due 04/15/19*................................. 1,253,000 1,296,855
----------
2,531,253
----------
CONTAINERS-METAL/GLASS -- 0.5%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19.................................. 700,000 757,750
Crown Americas LLC/Crown Americas Capital Corp. III
Senior Notes
6.25% due 02/01/21*................................. 950,000 966,625
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/26.................................. 1,285,000 1,267,331
----------
2,991,706
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
CONTAINERS-PAPER/PLASTIC -- 0.6%
Berry Plastics Corp.
Senior Sec. Notes
8.25% due 11/15/15.................... $ 475,000 $ 504,094
Berry Plastics Corp.
Senior Sec. Notes
9.50% due 05/15/18.................... 375,000 373,125
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/17*................... 750,000 832,500
Packaging Dynamics Corp.
Senior Sec. Notes
8.75% due 02/01/16.................... 1,475,000 1,508,187
----------
3,217,906
----------
COSMETICS & TOILETRIES -- 0.2%
Revlon Consumer Products Corp.
Senior Sec. Notes
9.75% due 11/15/15.................... 1,050,000 1,136,625
----------
DECISION SUPPORT SOFTWARE -- 0.4%
PGS Solutions
Company Guar. Notes
9.63% due 02/15/15.................... 2,197,000 2,186,015
----------
DIALYSIS CENTERS -- 0.2%
DaVita, Inc.
Company Guar. Notes
6.63% due 11/01/20.................... 1,050,000 1,063,125
----------
DISTRIBUTION/WHOLESALE -- 0.5%
American Tire Distributors, Inc.
Senior Sec. Notes
9.75% due 06/01/17.................... 1,350,000 1,485,000
McJunkin Red Man Corp.
Senior Sec. Notes
9.50% due 12/15/16*................... 1,425,000 1,442,812
----------
2,927,812
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.1%
Bank of America Corp. FRS
Senior Notes
1.72% due 01/30/14.................... 170,000 172,779
Bank of America Corp.
Sub. Notes
5.42% due 03/15/17.................... 13,000 13,272
Bank of America Corp.
Notes
6.50% due 08/01/16.................... 711,000 786,810
Bank of America Corp. FRS
Jr. Sub. Notes
8.00% due 01/30/18(8)................. 1,995,000 2,145,363
Bank of America Corp. FRS
Jr. Sub. Notes
8.13% due 05/15/18(8)................. 1,305,000 1,403,358
Citigroup, Inc.
Senior Notes
4.59% due 12/15/15.................... 263,000 271,955
Citigroup, Inc.
Sub. Notes
5.00% due 09/15/14.................... 651,000 679,776
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Citigroup, Inc.
Sub. Notes
6.00% due 10/31/33........................ $ 190,000 $ 181,429
GMAC LLC
Sub. Notes
8.00% due 12/31/18........................ 1,825,000 1,959,594
Goldman Sachs Group, Inc.
Sub. Notes
5.63% due 01/15/17........................ 420,000 442,600
Goldman Sachs Group, Inc.
Senior Notes
5.95% due 01/18/18........................ 221,000 237,310
Goldman Sachs Group, Inc.
Senior Notes
6.25% due 02/01/41........................ 220,000 219,089
JPMorgan Chase & Co. FRS
Sub. Notes
1.54% due 09/01/15........................ 451,000 450,998
JPMorgan Chase & Co.
Senior Notes
3.45% due 03/01/16........................ 235,000 234,161
JPMorgan Chase & Co.
Sub. Notes
6.13% due 06/27/17........................ 445,000 484,249
JPMorgan Chase & Co. FRS
Jr. Sub Notes
7.90% due 04/30/18(8)..................... 200,000 218,822
JPMorgan Chase Capital XXIII FRS
Limited Guar. Bonds
1.31% due 05/15/77........................ 105,000 86,909
Morgan Stanley
Sub. Notes
4.75% due 04/01/14........................ 289,000 301,143
Morgan Stanley
Senior Notes
5.55% due 04/27/17........................ 770,000 809,921
Morgan Stanley
Senior Notes
5.95% due 12/28/17........................ 263,000 282,498
Nationsbank Corp.
Sub. Notes
7.25% due 10/15/25........................ 117,000 122,742
-----------
11,504,778
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.9%
Citigroup Capital XXI FRS
Company Guar. Bonds
8.30% due 12/21/57........................ 2,950,000 3,068,000
General Electric Capital Corp.
Senior Notes
4.38% due 09/16/20........................ 335,000 325,553
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38........................ 504,000 497,586
General Electric Capital Corp.
Senior Notes
6.15% due 08/07/37........................ 881,000 900,652
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32........................ $ 279,000 $ 306,577
----------
5,098,368
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
General Electric Co.
Senior Notes
5.25% due 12/06/17........................ 190,000 206,910
Harland Clarke Holdings Corp.
Company Guar. Notes
9.50% due 05/15/15........................ 850,000 840,437
Harsco Corp.
Senior Notes
2.70% due 10/15/15........................ 436,000 428,864
----------
1,476,211
----------
E-COMMERCE/SERVICES -- 0.1%
Expedia, Inc.
Company Guar. Notes
8.50% due 07/01/16........................ 265,000 288,188
----------
ELECTRIC-DISTRIBUTION -- 0.0%
Oglethorpe Power Corp.
1st. Mtg. Notes
5.38% due 11/01/40........................ 215,000 201,622
----------
ELECTRIC-GENERATION -- 1.1%
AES Corp.
Senior Notes
8.00% due 10/15/17........................ 1,120,000 1,204,000
AES Corp.
Senior Notes
8.00% due 06/01/20........................ 1,000,000 1,080,000
Allegheny Energy Supply Co. LLC
Senior Notes
6.75% due 10/15/39*....................... 381,000 361,750
Edison Mission Energy
Senior Notes
7.00% due 05/15/17........................ 1,275,000 1,023,187
Edison Mission Energy
Senior Notes
7.63% due 05/15/27........................ 1,200,000 894,000
Homer City Funding LLC
Senior Sec. Notes
8.14% due 10/01/19........................ 416,070 378,624
Midwest Generation LLC
Pass Through Certs.,
Series B
8.56% due 01/02/16(4)..................... 362,762 370,018
Reliant Energy Mid-Atlantic Power
Holdings LLC Pass Through Certs.,
Series B
9.24% due 07/02/17(4)..................... 482,792 523,829
Sithe/Independence Funding Corp.
Senior Sec. Notes
9.00% due 12/30/13........................ 481,927 492,139
----------
6,327,547
----------
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-INTEGRATED -- 0.6%
Ameren Energy Generating Co.
Senior Notes
6.30% due 04/01/20........................ $ 308,000 $ 302,746
Cleco Power LLC
Senior Notes
6.00% due 12/01/40........................ 224,000 213,909
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/33........................ 525,000 567,415
Entergy Louisiana LLC
1st Mtg. Notes
4.80% due 05/01/21........................ 384,000 379,341
Exelon Generation Co. LLC
Senior Notes
5.75% due 10/01/41........................ 262,000 240,331
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/31........................ 260,000 281,633
Great Plains Energy, Inc.
Senior Notes
2.75% due 08/15/13........................ 165,000 167,056
Mirant Mid-Atlantic LLC
Pass Through Certs.,
Series B
9.13% due 06/30/17(4)..................... 463,314 503,854
Oncor Electric Delivery Co. LLC
Senior Sec. Notes
7.00% due 09/01/22........................ 430,000 494,574
Progress Energy, Inc.
Senior Notes
6.00% due 12/01/39........................ 245,000 251,854
Southern Energy, Inc.
Escrow Notes
7.90% due 07/15/09+(4)(5)................. 1,550,000 0
Teco Finance, Inc.
Company Guar. Notes
6.57% due 11/01/17........................ 160,000 181,780
----------
3,584,493
----------
ELECTRONIC COMPONENTS-MISC. -- 0.4%
Jabil Circuit, Inc.
Senior Notes
5.63% due 12/15/20........................ 537,000 533,644
Jabil Circuit, Inc.
Senior Notes
7.75% due 07/15/16........................ 615,000 698,025
Jabil Circuit, Inc.
Senior Notes
8.25% due 03/15/18........................ 948,000 1,075,980
----------
2,307,649
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
Company Guar. Notes
9.13% due 12/15/14(9)..................... 625,000 643,750
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*....................... 725,000 793,875
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS (CONTINUED)
Freescale Semiconductor, Inc.
Senior Sec. Notes
10.13% due 03/15/18*.................. $ 600,000 $ 672,000
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/17.................... 262,000 288,303
----------
2,397,928
----------
ELECTRONICS-MILITARY -- 0.0%
L-3 Communications Corp.
Company Guar. Notes
4.95% due 02/15/21.................... 195,000 196,138
----------
ENERGY-ALTERNATE SOURCES -- 0.2%
Headwaters, Inc.
Senior Sec. Notes
7.63% due 04/01/19*................... 1,100,000 1,100,000
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.2%
Mantech International Corp.
Company Guar. Notes
7.25% due 04/15/18.................... 1,225,000 1,286,250
----------
FINANCE-AUTO LOANS -- 0.3%
Ford Motor Credit Co., LLC
Senior Notes
5.75% due 02/01/21.................... 475,000 469,062
Ford Motor Credit Co., LLC
Senior Notes
12.00% due 05/15/15................... 945,000 1,189,425
----------
1,658,487
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13.................... 377,000 396,431
----------
FINANCE-CREDIT CARD -- 0.0%
Capital One Capital III
Limited Guar. Bonds
7.69% due 08/15/36.................... 132,000 135,795
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
Jefferies Group, Inc.
Senior Notes
3.88% due 11/09/15.................... 360,000 359,223
Lehman Brothers Holdings Capital
Trust VII FRS
Limited Guar. Notes
5.86% due 05/31/12+(6)(8)(11)......... 222,000 22
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17+(6)(11)............ 280,000 28
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38+(6)(11)............ 361,000 36
Merrill Lynch & Co., Inc.
Sub. Notes
6.05% due 05/16/16.................... 400,000 422,756
----------
782,065
----------
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-OTHER SERVICES -- 0.3%
ERAC USA Finance LLC
Company Guar. Notes
2.25% due 01/10/14*................... $ 261,000 $ 260,373
SquareTwo Financial Corp.
Senior Sec. Notes
11.63% due 04/01/17*.................. 1,509,000 1,531,635
----------
1,792,008
----------
FINANCIAL GUARANTEE INSURANCE -- 0.3%
Assured Guaranty Municipal
Holdings, Inc. FRS
Company Guar. Notes
6.40% due 12/15/66*................... 2,475,000 1,621,125
----------
FIREARMS & AMMUNITION -- 0.3%
FGI Operating Co, Inc.
Senior Sec. Notes
10.25% due 08/01/15................... 1,325,000 1,412,781
----------
FOOD-CANNED -- 0.3%
Blue Merger Sub, Inc.
Senior Notes
7.63% due 02/15/19*................... 1,375,000 1,393,906
----------
FOOD-MISC. -- 0.1%
Kraft Foods, Inc.
Senior Notes
6.50% due 02/09/40.................... 591,000 631,239
----------
FOOD-RETAIL -- 0.0%
Ahold Finance USA LLC
Company Guar. Notes
6.88% due 05/01/29.................... 226,000 247,621
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.3%
Carriage Services, Inc.
Company Guar. Notes
7.88% due 01/15/15.................... 1,785,000 1,820,700
----------
GAMBLING (NON-HOTEL) -- 0.4%
Downstream Development Authority
Senior Sec. Notes
12.00% due 10/15/15*.................. 1,841,000 1,942,255
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*................... 1,136,394 397,738
----------
2,339,993
----------
GAS-DISTRIBUTION -- 0.2%
KeySpan Gas East Corp.
Senior Bonds
5.82% due 04/01/41*................... 490,000 490,065
Sempra Energy FRS
Senior Notes
1.07% due 03/15/14.................... 240,000 241,187
Southern Union Co.
Senior Notes
7.60% due 02/01/24.................... 240,000 267,045
----------
998,297
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
GAS-TRANSPORTATION -- 0.2%
Sabine Pass LNG LP
Senior Sec. Notes
7.25% due 11/30/13.......................... $ 950,000 $ 971,375
----------
HOME FURNISHINGS -- 0.2%
Norcraft Cos., LP/Norcraft Finance Corp.
Senior Sec. Notes
10.50% due 12/15/15......................... 1,128,000 1,205,550
----------
INDEPENDENT POWER PRODUCERS -- 1.1%
Calpine Corp.
Senior Sec. Notes
7.88% due 07/31/20*......................... 1,280,000 1,360,000
Calpine Corp.
Escrow Notes
8.75% due 07/15/13+(4)(5)................... 4,203,000 0
Dynegy Roseton/Danskammer
Pass Through Certs.
Series B
7.67% due 11/08/16(4)....................... 909,000 859,005
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/18*......................... 950,000 988,000
NGC Corp. Capital Trust I
Company Guar. Bonds
8.32% due 06/01/27.......................... 1,090,000 577,700
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.......................... 345,000 357,075
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/18*......................... 575,000 596,562
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/20*......................... 1,175,000 1,222,000
----------
5,960,342
----------
INSURANCE-LIFE/HEALTH -- 0.3%
Jefferson-Pilot Corp.
Senior Notes
4.75% due 01/30/14.......................... 227,000 238,620
Nationwide Financial Services, Inc.
Senior Notes
5.90% due 07/01/12.......................... 284,000 294,421
Protective Life Corp.
Senior Notes
8.45% due 10/15/39.......................... 540,000 602,337
Prudential Financial, Inc.
Senior Notes
4.50% due 11/15/20.......................... 370,000 362,417
----------
1,497,795
----------
INSURANCE-MULTI-LINE -- 0.5%
Genworth Financial, Inc.
Senior Notes
7.63% due 09/24/21.......................... 216,000 216,691
Hartford Financial Services Group, Inc. FRS
Jr. Sub. Debentures
8.13% due 06/15/68.......................... 2,075,000 2,272,125
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-MULTI-LINE (CONTINUED)
Metropolitan Life Global Funding I
Senior Sec. Notes
2.88% due 09/17/12*................... $ 460,000 $ 469,079
----------
2,957,895
----------
INSURANCE-MUTUAL -- 0.4%
Liberty Mutual Group, Inc.
Senior Notes
5.75% due 03/15/14*................... 195,000 204,704
Liberty Mutual Group, Inc.
Company Guar. Notes
7.80% due 03/07/37*................... 727,000 723,365
Liberty Mutual Group, Inc. FRS
Company Guar. Notes
10.75% due 06/15/38*.................. 990,000 1,287,000
----------
2,215,069
----------
INVESTMENT COMPANIES -- 0.1%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*.................. 672,000 749,280
----------
MACHINERY-FARMING -- 0.2%
Case New Holland, Inc.
Senior Notes
7.88% due 12/01/17*................... 950,000 1,055,687
----------
MARINE SERVICES -- 0.3%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/19*................... 1,525,000 1,544,062
----------
MEDICAL INSTRUMENTS -- 0.1%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/17.................... 725,000 777,563
----------
MEDICAL LABS & TESTING SERVICES -- 0.1%
Quest Diagnostics, Inc. FRS
Company Guar. Notes
1.16% due 03/24/14.................... 342,000 343,002
Quest Diagnostics, Inc.
Company Guar. Notes
4.70% due 04/01/21.................... 386,000 382,050
----------
725,052
----------
MEDICAL PRODUCTS -- 0.2%
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/27.................... 295,000 348,588
Universal Hospital Services, Inc.
Senior Sec. Notes
8.50% due 06/01/15(9)................. 775,000 808,906
----------
1,157,494
----------
MEDICAL-BIOMEDICAL/GENE -- 0.3%
Bio-Rad Laboratories, Inc.
Senior Sub. Notes
8.00% due 09/15/16.................... 1,140,000 1,262,550
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENE (CONTINUED)
Genzyme Corp.
Company Guar. Notes
3.63% due 06/15/15.................. $ 240,000 $ 249,322
-----------
1,511,872
-----------
MEDICAL-HMO -- 0.0%
CIGNA Corp.
Senior Bonds
5.88% due 03/15/41.................. 125,000 122,667
-----------
MEDICAL-HOSPITALS -- 1.8%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/17*................. 1,350,000 1,437,750
HCA, Inc.
Senior Notes
7.50% due 11/15/95.................. 2,375,000 1,947,500
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19.................. 2,100,000 2,331,000
Select Medical Corp.
Company Guar. Notes
7.63% due 02/01/15.................. 1,710,000 1,739,925
Tenet Healthcare Corp.
Senior Notes
9.25% due 02/01/15.................. 2,375,000 2,615,469
-----------
10,071,644
-----------
METAL-IRON -- 0.1%
Cliffs Natural Resources, Inc.
Senior Notes
4.88% due 04/01/21.................. 173,000 170,642
Cliffs Natural Resources, Inc.
Senior Bonds
6.25% due 10/01/40.................. 245,000 243,365
-----------
414,007
-----------
MOTION PICTURES & SERVICES -- 0.1%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/17*................. 500,000 535,000
-----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.3%
Radnet Management, Inc.
Company Guar. Notes
10.38% due 04/01/18................. 1,370,000 1,385,412
-----------
MULTIMEDIA -- 0.6%
Haights Cross Operating Co. FRS
Limited Guar. Notes
16.00% due 03/15/14+(4)(5).......... 461,095 296,830
Historic TW, Inc.
Company Guar. Notes
6.63% due 05/15/29.................. 180,000 191,937
NBC Universal, Inc.
Senior Notes
2.88% due 04/01/16*................. 375,000 366,340
NBC Universal, Inc.
Senior Notes
6.40% due 04/30/40*................. 349,000 358,329
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA (CONTINUED)
News America, Inc.
Company Guar. Notes
6.20% due 12/15/34.................... $ 495,000 $ 497,832
Time Warner Cos., Inc.
Company Guar. Notes
6.95% due 01/15/28.................... 409,000 447,954
Time Warner, Inc.
Company Guar. Notes
4.75% due 03/29/21.................... 240,000 238,416
Time Warner, Inc.
Company Guar. Bonds
6.25% due 03/29/41.................... 343,000 340,788
Viacom, Inc.
Senior Notes
3.50% due 04/01/17.................... 336,000 330,804
----------
3,069,230
----------
MUSIC -- 0.3%
WMG Acquisition Corp.
Senior Sec. Notes
9.50% due 06/15/16.................... 1,425,000 1,506,937
----------
NETWORKING PRODUCTS -- 0.0%
Juniper Networks, Inc.
Senior Notes
5.95% due 03/15/41.................... 240,000 237,003
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Company Guar. Notes
11.50% due 07/01/03+(3)(4)(5)(12)..... 500,000 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.3%
Allied Waste North America, Inc.
Company Guar. Notes
6.88% due 06/01/17.................... 370,000 403,300
Allied Waste North America, Inc.
Company Guar. Notes
7.13% due 05/15/16.................... 113,000 117,944
Casella Waste Systems, Inc.
Company Guar. Notes
7.75% due 02/15/19*................... 525,000 525,000
Casella Waste Systems, Inc.
Senior Sec. Notes
11.00% due 07/15/14................... 700,000 792,750
----------
1,838,994
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.3%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
11.00% due 10/12/15................... 1,575,000 1,708,875
----------
OIL & GAS DRILLING -- 0.1%
Pride International, Inc.
Senior Notes
6.88% due 08/15/20.................... 650,000 736,938
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 3.1%
Alta Mesa Holdings/Alta Mesa
Finance Services Corp.
Senior Notes
9.63% due 10/15/18*......................... $1,010,000 $1,025,150
Carrizo Oil & Gas, Inc.
Company Guar. Notes
8.63% due 10/15/18*......................... 975,000 1,033,500
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/21*......................... 1,800,000 1,854,000
Chesapeake Energy Corp.
Company Guar. Notes
6.63% due 08/15/20.......................... 2,035,000 2,167,275
Chesapeake Energy Corp.
Company Guar. Notes
6.88% due 08/15/18.......................... 140,000 152,250
Denbury Resources, Inc.
Company Guar. Notes
6.38% due 08/15/21.......................... 516,000 528,900
Encore Acquisition Co.
Company Guar. Notes
9.50% due 05/01/16.......................... 720,000 811,800
EV Energy Partners LP / EV Energy
Finance Corp.
Company Guar. Notes
8.00% due 04/15/19*......................... 945,000 961,538
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
7.63% due 04/15/21*......................... 550,000 576,125
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
7.75% due 11/01/15*......................... 995,000 1,029,825
Kerr-McGee Corp.
Company Guar. Notes
7.88% due 09/15/31.......................... 824,000 939,916
Linn Energy LLC/Linn Energy
Finance Corp.
Senior Notes
8.63% due 04/15/20*......................... 1,500,000 1,665,000
Pioneer Natural Resources Co.
Senior Notes
7.50% due 01/15/20.......................... 540,000 608,163
Plains Exploration & Production Co.
Company Guar. Notes
10.00% due 03/01/16......................... 600,000 676,500
QEP Resources, Inc.
Senior Notes
6.88% due 03/01/21.......................... 900,000 945,000
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/20.......................... 125,000 133,125
SandRidge Energy, Inc.
Company Guar. Notes
7.50% due 03/15/21*......................... 1,175,000 1,219,063
SM Energy Co.
Senior Notes
6.63% due 02/15/19*......................... 175,000 179,594
Union Pacific Resources Group, Inc.
Senior Bonds
7.15% due 05/15/28.......................... 518,000 547,999
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
W&T Offshore, Inc.
Company Guar. Notes
8.25% due 06/15/14*................... $ 130,000 $ 134,550
-----------
17,189,273
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
Hess Corp.
Senior Notes
7.88% due 10/01/29.................... 691,000 853,208
-----------
OIL FIELD MACHINERY & EQUIPMENT -- 0.2%
Dresser-Rand Group, Inc.
Company Guar. Notes
6.50% due 05/01/21*................... 890,000 917,813
-----------
OIL REFINING & MARKETING -- 0.3%
Reliance Holdings USA, Inc.
Company Guar. Notes
4.50% due 10/19/20*................... 310,000 292,054
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/17*.................. 1,075,000 1,214,750
-----------
1,506,804
-----------
OIL-FIELD SERVICES -- 0.5%
Basic Energy Services, Inc.
Company Guar. Notes
7.75% due 02/15/19*................... 240,000 247,200
Exterran Holdings, Inc.
Company Guar. Notes
7.25% due 12/01/18*................... 745,000 759,900
Helix Energy Solutions Group, Inc.
Company Guar. Notes
9.50% due 01/15/16*................... 1,195,000 1,260,725
Key Energy Services, Inc.
Company Guar. Notes
6.75% due 03/01/21.................... 720,000 732,600
-----------
3,000,425
-----------
PAPER & RELATED PRODUCTS -- 0.8%
Caraustar Industries, Inc.
Senior Sec. Notes
10.00% due 08/15/14(5)(9)............. 198,001 187,111
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/20*................... 255,000 251,806
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*................... 365,000 387,356
Georgia-Pacific LLC
Senior Notes
7.75% due 11/15/29.................... 277,000 304,354
Mercer International, Inc.
Company Guar. Notes
9.50% due 12/01/17*................... 545,000 596,775
Verso Paper Holdings LLC/Verso
Paper, Inc.
Sec. Notes
8.75% due 02/01/19*................... 447,000 464,880
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
Verso Paper Holdings LLC/Verso
Paper, Inc.
Senior Sec. Notes
11.50% due 07/01/14................. $ 450,000 $ 491,625
Westvaco Corp.
Company Guar. Notes
8.20% due 01/15/30.................. 1,423,000 1,518,662
----------
4,202,569
----------
PIPELINES -- 1.7%
CenterPoint Energy Resources Corp.
Senior Notes
4.50% due 01/15/21*................. 504,000 494,049
Copano Energy LLC
Company Guar. Notes
8.13% due 03/01/16.................. 685,000 714,112
Copano Energy LLC / Copano Energy
Finance Corp.
Company Guar. Notes
7.13% due 04/01/21.................. 335,000 339,188
Copano Energy LLC/Copano Energy
Finance Corp.
Company Guar. Notes
7.75% due 06/01/18.................. 315,000 329,175
El Paso Corp.
Senior Notes
6.50% due 09/15/20*................. 150,000 161,625
El Paso Natural Gas Co.
Senior Notes
8.38% due 06/15/32.................. 225,000 275,588
Energy Transfer Equity LP
Company Guar. Notes
7.50% due 10/15/20.................. 1,225,000 1,332,187
Enterprise Products Operating LLC
Company Guar. Notes
5.95% due 02/01/41.................. 420,000 408,517
Genesis Energy LP/Genesis Energy
Finance Corp.
Company Guar. Notes
7.88% due 12/15/18*................. 915,000 924,150
Kinder Morgan Energy Partners LP
Senior Notes
6.38% due 03/01/41.................. 89,000 89,768
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
6.50% due 08/15/21.................. 1,495,000 1,493,131
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
6.75% due 11/01/20.................. 390,000 399,750
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
8.75% due 04/15/18.................. 210,000 228,900
Plains All American Pipeline LP/PAA
Finance Corp.
Company Guar. Notes
5.00% due 02/01/21.................. 251,000 251,746
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES -- (CONTINUED)
Plains All American Pipeline LP/PAA
Finance Corp.
Company Guar. Notes
5.63% due 12/15/13......................... $ 370,000 $ 403,317
Plains All American Pipeline LP/PAA
Finance Corp.
Company Guar. Notes
6.50% due 05/01/18......................... 328,000 368,712
Regency Energy Partners LP/Regency
Energy Finance Corp.
Company Guar. Notes
6.88% due 12/01/18......................... 525,000 559,125
Regency Energy Partners LP/Regency
Energy Finance Corp.
Company Guar. Notes
9.38% due 06/01/16......................... 25,000 28,438
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16......................... 650,000 659,750
----------
9,461,228
----------
PRINTING-COMMERCIAL -- 0.2%
Valassis Communications, Inc.
Company Guar. Notes
6.63% due 02/01/21*........................ 875,000 849,844
----------
PUBLISHING-BOOKS -- 0.2%
TL Acquisitions, Inc.
Senior Notes
10.50% due 01/15/15*....................... 975,000 994,500
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.6%
BioMed Realty LP
Company Guar. Notes
3.85% due 04/15/16......................... 240,000 237,416
Brandywine Operating Partnership LP
Company Guar. Notes
4.95% due 04/15/18......................... 240,000 237,255
Brandywine Operating Partnership LP
Company Guar. Notes
5.70% due 05/01/17......................... 111,000 114,977
DuPont Fabros Technology LP
Company Guar. Notes
8.50% due 12/15/17......................... 1,125,000 1,238,906
HCP, Inc.
Senior Notes
3.75% due 02/01/16......................... 200,000 201,011
HCP, Inc.
Senior Notes
5.38% due 02/01/21......................... 213,000 215,105
Health Care REIT, Inc.
Senior Bonds
6.50% due 03/15/41......................... 216,000 208,569
Sabra Health Care LP / Sabra Capital Corp.
Company Guar. Notes
8.13% due 11/01/18......................... 850,000 896,750
----------
3,349,989
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.3%
First Industrial LP
Senior Notes
5.75% due 01/15/16........................ $1,535,000 $1,463,079
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/14+(4)(5)................. 3,285,000 329
----------
RENTAL AUTO/EQUIPMENT -- 0.8%
Avis Budget Car Rental LLC/Avis
Budget Finance, Inc.
Company Guar. Notes
9.63% due 03/15/18........................ 975,000 1,077,375
Hertz Corp.
Company Guar. Notes
7.50% due 10/15/18*....................... 1,000,000 1,035,000
RSC Equipment Rental, Inc./RSC
Holdings III LLC
Senior Notes
8.25% due 02/01/21*....................... 1,150,000 1,196,000
RSC Equipment Rental, Inc./RSC
Holdings III LLC
Senior Notes
9.50% due 12/01/14........................ 48,000 50,280
United Rentals North America, Inc.
Company Guar. Notes
8.38% due 09/15/20........................ 1,100,000 1,149,500
----------
4,508,155
----------
RETAIL-APPAREL/SHOE -- 0.5%
Giraffe Acquisition Corp.
Senior Notes
9.13% due 12/01/18*....................... 1,150,000 1,115,500
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/21........................ 550,000 562,375
Limited Brands, Inc.
Senior Notes
6.95% due 03/01/33........................ 397,000 369,210
Limited Brands, Inc.
Company Guar. Notes
7.00% due 05/01/20........................ 100,000 105,875
Limited Brands, Inc.
Company Guar. Notes
8.50% due 06/15/19........................ 365,000 418,837
----------
2,571,797
----------
RETAIL-BUILDING PRODUCTS -- 0.0%
Home Depot, Inc.
Senior Bonds
5.95% due 04/01/41........................ 245,000 244,317
----------
RETAIL-DRUG STORE -- 0.3%
CVS Caremark Corp.
Senior Notes
6.25% due 06/01/27........................ 547,000 599,133
CVS Pass-Through Trust
Company Guar. Notes
5.77% due 01/31/33*....................... 214,187 216,025
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-DRUG STORE (CONTINUED)
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19.................... $ 600,000 $ 656,250
Rite Aid Corp.
Senior Sec. Notes
10.38% due 07/15/16.................... 425,000 457,937
----------
1,929,345
----------
RETAIL-JEWELRY -- 0.2%
Claire's Stores, Inc.
Senior Sec. Notes
8.88% due 03/15/19..................... 1,450,000 1,384,750
----------
RETAIL-PROPANE DISTRIBUTION -- 0.2%
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/21*.................... 505,000 489,850
Inergy LP/Inergy Finance Corp.
Senior Notes
6.88% due 08/01/21*.................... 345,000 359,662
Inergy LP/Inergy Finance Corp.
Company Guar. Notes
7.00% due 10/01/18*.................... 281,000 292,240
----------
1,141,752
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.3%
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24..................... 450,000 459,000
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..................... 679,000 743,505
----------
1,607,505
----------
RETAIL-RESTAURANTS -- 0.5%
Dave & Buster's, Inc.
Company Guar. Notes
11.00% due 06/01/18.................... 350,000 379,750
DineEquity, Inc.
Senior Notes
9.50% due 10/30/18*.................... 1,150,000 1,247,750
Landry's Restaurants, Inc.
Senior Sec. Notes
11.63% due 12/01/15.................... 575,000 619,562
Wendy's/Arby's Restaurants LLC
Company Guar. Notes
10.00% due 07/15/16.................... 600,000 660,000
----------
2,907,062
----------
RETAIL-TOY STORES -- 0.3%
Toys R Us Property Co. II LLC
Senior Sec. Notes
8.50% due 12/01/17..................... 1,625,000 1,746,875
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(3)(4)(5)(12)...... 100,000 0
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
SAVINGS & LOANS/THRIFTS -- 0.0%
Amsouth Bank NA
Sub. Notes
4.85% due 04/01/13................ $ 210,000 $ 213,675
----------
SEISMIC DATA COLLECTION -- 0.2%
Geokinetics Holdings USA, Inc.
Senior Sec. Notes
9.75% due 12/15/14................ 1,115,000 1,071,794
----------
SPECIAL PURPOSE ENTITIES -- 0.6%
Capital One Capital V
Limited Guar. Notes
10.25% due 08/15/39............... 1,150,000 1,247,750
Goldman Sachs Capital III FRS
Company Guar. Notes
1.08% due 09/02/12(8)............. 224,000 173,175
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(9)............ 681,081 662,351
Nexeo Solutions LLC / Nexeo
Solutions Finance Corp.
Senior Sub.Notes
8.38% due 03/01/18*............... 1,225,000 1,249,500
----------
3,332,776
----------
STEEL-PRODUCERS -- 0.7%
JMC Steel Group
Senior Notes
8.25% due 03/15/18*............... 975,000 996,937
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15............... 1,422,000 1,542,870
Steel Dynamics, Inc.
Company Guar. Notes
6.75% due 04/01/15................ 340,000 348,075
Steel Dynamics, Inc.
Company Guar. Notes
7.75% due 04/15/16................ 975,000 1,038,375
----------
3,926,257
----------
STORAGE/WAREHOUSING -- 0.1%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/20*............... 520,000 551,200
----------
TELECOM SERVICES -- 0.7%
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23................ 50,000 38,250
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23................ 225,000 172,125
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.27% due 12/11/23................ 375,000 286,875
Clearwire Communications
LLC/Clearwire Finance, Inc.
Senior Sec. Notes
12.00% due 12/01/15*.............. 75,000 81,000
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELECOM SERVICES (CONTINUED)
Embarq Corp.
Senior Notes
7.08% due 06/01/16....................... $ 332,000 $ 377,547
PAETEC Holding Corp.
Senior Sec. Notes
8.88% due 06/30/17....................... 1,550,000 1,670,125
PAETEC Holding Corp.
Senior Notes
9.88% due 12/01/18*...................... 350,000 369,250
Qwest Corp.
Senior Notes
8.88% due 03/15/12....................... 839,000 897,730
----------
3,892,902
----------
TELEPHONE-INTEGRATED -- 1.4%
CenturyLink, Inc.
Senior Notes
6.88% due 01/15/28....................... 245,000 247,571
CenturyTel, Inc.
Senior Notes
7.60% due 09/15/39....................... 245,000 262,446
Cincinnati Bell, Inc.
Company Guar. Notes
8.25% due 10/15/17....................... 750,000 755,625
Cincinnati Bell, Inc.
Company Guar. Notes
8.38% due 10/15/20....................... 675,000 663,188
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/18....................... 1,050,000 1,130,062
Level 3 Financing, Inc.
Company Guar. Notes
10.00% due 02/01/18...................... 1,025,000 1,026,281
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15....................... 1,175,000 1,296,906
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/32....................... 1,825,000 1,941,344
Verizon Communications, Inc.
Senior Notes
1.95% due 03/28/14....................... 480,000 480,400
Verizon Virginia, Inc.
Senior Notes
4.63% due 03/15/13....................... 250,000 263,655
----------
8,067,478
----------
TOOLS-HAND HELD -- 0.0%
Snap-On, Inc.
Senior Notes
4.25% due 01/15/18....................... 204,000 208,679
----------
TRANSPORT-AIR FREIGHT -- 0.4%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 07/02/11(4).................... 86,819 85,082
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(4) $1,173,034 $ 1,149,573
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15(4) 35,810 31,871
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class A
8.71% due 01/02/20(4) 325,737 325,737
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17(4) 552,559 558,084
------------
2,150,347
------------
TRANSPORT-EQUIPMENT & LEASING -- 0.0%
GATX Corp.
Senior Notes
3.50% due 07/15/16 195,000 192,630
------------
TRANSPORT-SERVICES -- 0.2%
Bristow Group, Inc.
Company Guar. Notes
7.50% due 09/15/17 699,000 734,824
Ryder System, Inc.
Senior Notes
3.15% due 03/02/15 133,000 133,504
Ryder System, Inc.
Senior Notes
3.60% due 03/01/16 137,000 138,411
------------
1,006,739
------------
WEB HOSTING/DESIGN -- 0.5%
Equinix, Inc.
Senior Notes
8.13% due 03/01/18 2,410,000 2,608,825
------------
WIRE & CABLE PRODUCTS -- 0.1%
Coleman Cable, Inc.
Company Guar. Notes
9.00% due 02/15/18 600,000 631,500
------------
WIRELESS EQUIPMENT -- 0.1%
American Tower Corp.
Senior Notes
4.50% due 01/15/18 360,000 353,551
Motorola, Inc.
Senior Notes
6.50% due 09/01/25 241,000 253,591
Motorola, Inc.
Senior Notes
6.63% due 11/15/37 67,445 72,369
------------
679,511
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $276,184,239) 282,512,625
------------
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES -- 9.8%
BANKS-COMMERCIAL -- 1.1%
Banco ABC Brasil SA
Sub. Notes
7.88% due 04/08/20*.................. $ 500,000 $ 500,000
Banco Cruzeiro do Sul SA
Sub. Notes
8.88% due 09/22/20*.................. 630,000 614,809
Banco de Credito del Peru
Senior Notes
4.75% due 03/16/16*.................. 390,000 385,207
Banco Internacional del Peru SAA
Senior Notes
5.75% due 10/07/20*.................. 350,000 325,500
Bangkok Bank PCL
Senior Notes
4.80% due 10/18/20*.................. 520,000 494,961
Barclays Bank PLC FRS
Jr. Sub. Bonds
5.93% due 12/15/16*(8)............... 396,000 368,280
Barclays Bank PLC
Sub. Notes
6.05% due 12/04/17*.................. 185,000 192,747
Barclays Bank PLC FRS
Jr. Sub. Notes
6.86% due 06/15/32*(8)............... 180,000 168,300
Credit Suisse AG
Sub. Notes
5.40% due 01/14/20................... 203,000 205,025
Groupe BPCE FRS
Jr. Sub Notes
3.77% due 03/30/11(8)................ 141,000 94,266
ICICI Bank, Ltd.
Senior Notes
5.75% due 11/16/20*.................. 525,000 515,812
ING Bank NV
Senior Notes
2.00% due 10/18/13*.................. 269,000 266,007
ING Bank NV
Senior Notes
4.00% due 03/15/16*.................. 502,000 501,299
Intesa Sanpaolo SpA FRS
Notes
2.71% due 02/24/14*.................. 200,000 202,566
Nordea Bank AB
Senior Notes
2.13% due 01/14/14*.................. 200,000 199,537
Nordea Bank AB FRS
Jr. Sub. Bonds
8.38% due 03/25/15(8)................ 184,000 199,640
Rabobank Nederland NV
Company Guar. Notes
2.13% due 10/13/15................... 281,000 270,989
Westpac Banking Corp. FRS
Jr. Sub. Notes
0.65% due 09/30/11(8)................ 1,050,000 661,500
----------
6,166,445
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
BANKS-MONEY CENTER -- 0.2%
ABN Amro Bank NV FRS
Senior Notes
2.07% due 01/30/14*................ $ 399,000 $ 399,217
ABN Amro Bank NV
Senior Notes
3.00% due 01/31/14*................ 323,000 322,427
Lloyds TSB Bank PLC FRS
Senior Notes
2.65% due 01/24/14................. 370,000 379,291
Lloyds TSB Bank PLC
Company Guar. Notes
6.50% due 09/14/20*................ 205,000 201,537
----------
1,302,472
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.3%
Corp GEO SAB de CV
Company Guar. Notes
9.25% due 06/30/20*................ 320,000 356,000
Desarrolladora Homex SAB de CV
Company Guar. Notes
9.50% due 12/11/19*................ 450,000 504,000
Urbi Desarrollos Urbanos SAB de CV
Company Guar. Notes
9.50% due 01/21/20*................ 550,000 616,000
----------
1,476,000
----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Rearden G Holdings EINS GmbH
Company Guar. Notes
7.88% due 03/30/20*................ 380,000 412,300
----------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
Empresas ICA SAB de CV
Company Guar. Notes
8.90% due 02/04/21*................ 525,000 543,375
----------
CELLULAR TELECOM -- 0.4%
Telefonica Moviles Chile SA
Senior Notes
2.88% due 11/09/15*................ 142,000 136,617
Vimpel Communications Via VIP
Finance Ireland, Ltd. OJSC
Notes
7.75% due 02/02/21*................ 2,150,000 2,257,500
----------
2,394,117
----------
CHEMICALS-DIVERSIFIED -- 0.2%
OXEA Finance & Cy SCA
Senior Sec. Notes
9.50% due 07/15/17*................ 950,000 1,036,120
----------
CHEMICALS-PLASTICS -- 0.3%
Montell Finance Co. BV
Company Guar. Notes
8.10% due 03/15/27*................ 1,325,000 1,484,000
----------
COMPUTERS-MEMORY DEVICES -- 0.2%
Seagate HDD Cayman
Company Guar. Notes
7.75% due 12/15/18*................ 1,100,000 1,138,500
----------
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIAMONDS/PRECIOUS STONES -- 0.1%
ALROSA Finance SA
Company Guar. Notes
7.75% due 11/03/20*.................. $ 525,000 $ 561,015
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
BNP Paribas
Bank Guar. Notes
4.80% due 06/24/15*.................. 195,000 202,776
Credit Agricole SA FRS
Jr. Sub. Bonds
6.64% due 05/31/17*(8)............... 239,000 213,905
HSBC Holdings PLC
Senior Notes
5.10% due 04/05/21................... 278,000 279,427
Natixis FRS
Sub. Notes
0.55% due 01/15/19................... 150,000 128,918
----------
825,026
----------
DIVERSIFIED MINERALS -- 0.1%
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
6.42% due 03/01/26................... 239,000 274,106
----------
DIVERSIFIED OPERATIONS -- 0.1%
Votorantim Cimentos SA
Company Guar. Bonds
7.25% due 04/05/41*.................. 625,000 621,219
----------
ELECTRIC-GENERATION -- 0.2%
AES Andres Dominicana /
Itabo Dominicana
Company Guar. Notes
9.50% due 11/12/20*.................. 540,000 575,100
Emgesa SA ESP
Senior Notes
8.75% due 01/25/21*.................. COP1,378,000,000 775,995
----------
1,351,095
----------
ELECTRIC-INTEGRATED -- 0.1%
Dubai Electricity & Water Authority
Senior Notes
7.38% due 10/21/20*.................. 500,000 485,000
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
Macquarie Bank, Ltd.
Sub. Notes
6.63% due 04/07/21*.................. 590,000 589,681
----------
FOOD-RETAIL -- 0.1%
Cencosud SA
Company Guar. Notes
5.50% due 01/20/21*.................. 490,000 483,255
----------
FORESTRY -- 0.0%
Sino-Forest Corp.
Company Guar. Notes
6.25% due 10/21/17*.................. 250,000 234,422
----------
GOLD MINING -- 0.2%
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/20*.................. 1,176,000 1,128,534
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
IMPORT/EXPORT -- 0.1%
Marfrig Overseas, Ltd.
Company Guar. Notes
9.50% due 05/04/20*.................... $ 480,000 $ 500,400
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10(3)(4)(5)(13)....... 725,000 0
----------
INSURANCE-LIFE/HEALTH -- 0.0%
Dai-ichi Life Insurance Co., Ltd. FRS
Sub. Notes
7.25% due 07/25/21*(8)................. 214,000 211,551
----------
INSURANCE-MULTI-LINE -- 0.7%
Aegon NV FRS
Jr. Sub. Notes
3.54% due 07/15/14(8).................. 111,000 81,308
Catlin Insurance Co., Ltd. FRS
Jr. Sub. Notes
7.25% due 01/19/17*(8)................. 3,117,000 2,937,772
XL Capital, Ltd.
Senior Notes
5.25% due 09/15/14..................... 488,000 514,097
XL Capital, Ltd.
Senior Notes
6.38% due 11/15/24..................... 318,000 330,764
----------
3,863,941
----------
INSURANCE-REINSURANCE -- 0.0%
Validus Holdings, Ltd.
Senior Notes
8.88% due 01/26/40..................... 229,000 240,484
----------
MEDICAL-DRUGS -- 0.1%
AstraZeneca PLC
Senior Notes
5.90% due 09/15/17..................... 250,000 285,411
Sanofi-Aventis SA
Senior Notes
4.00% due 03/29/21..................... 240,000 236,040
----------
521,451
----------
MEDICAL-GENERIC DRUGS -- 0.1%
Teva Pharmaceutical Finance III BV FRS
Company Guar. Notes
0.81% due 03/21/14..................... 288,000 289,015
----------
METAL-ALUMINUM -- 0.1%
Novelis, Inc.
Company Guar. Notes
8.75% due 12/15/20*.................... 625,000 687,500
----------
METAL-IRON -- 0.1%
Ferrexpo Finance PLC
Company Guar. Notes
7.88% due 04/07/16*.................... 600,000 600,000
----------
OIL & GAS DRILLING -- 0.1%
Transocean, Inc.
Company Guar. Notes
4.95% due 11/15/15..................... 297,000 313,872
----------
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.7%
Alliance Oil Co., Ltd.
Senior Notes
9.88% due 03/11/15*................. $470,000 $ 511,172
Compton Petroleum Finance Corp.
Company Guar. Notes
10.00% due 09/15/17................. 875,929 621,910
KazMunayGas National Co.
Senior Notes
6.38% due 04/09/21*................. 540,000 557,550
MEG Energy Corp.
Company Guar. Notes
6.50% due 03/15/21*................. 965,000 980,681
Nexen, Inc.
Senior Notes
7.50% due 07/30/39.................. 441,000 496,576
OPTI Canada, Inc.
Senior Sec. Notes
7.88% due 12/15/14.................. 978,000 517,117
----------
3,685,006
----------
OIL COMPANIES-INTEGRATED -- 0.6%
BP Capital Markets PLC
Company Guar. Notes
3.13% due 10/01/15.................. 387,000 389,164
BP Capital Markets PLC
Company Guar. Notes
3.88% due 03/10/15.................. 350,000 363,429
BP Capital Markets PLC
Company Guar. Notes
4.74% due 03/11/21.................. 480,000 480,895
ConocoPhillips Canada Funding Co. I
Notes
5.63% due 10/15/16.................. 405,000 457,409
ENI SpA
Senior Notes
5.70% due 10/01/40*................. 419,000 385,603
Norsk Hydro A/S
Company Guar. Notes
7.15% due 11/15/25.................. 552,000 674,353
Total Capital SA
Company Guar. Notes
2.30% due 03/15/16.................. 609,000 593,072
----------
3,343,925
----------
PAPER & RELATED PRODUCTS -- 0.1%
Inversiones CMPC SA
Company Guar. Notes
4.75% due 01/19/18*................. 276,000 271,566
PE Paper Escrow GmbH
Senior Sec. Notes
12.00% due 08/01/14*................ 475,000 549,813
----------
821,379
----------
PETROCHEMICALS -- 0.1%
Braskem Finance, Ltd.
Company Guar. Notes
7.00% due 05/07/20*................. 470,000 509,950
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
PIPELINES -- 0.0%
TransCanada Pipelines, Ltd. FRS
Jr. Sub. Notes
6.35% due 05/15/17(8).............. $ 272,000 $ 273,109
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.2%
Country Garden Holdings Co.
Senior Notes
11.13% due 02/23/18*............... 410,000 416,150
Country Garden Holdings Co.
Senior Notes
11.25% due 04/22/17*............... 500,000 518,125
Longfor Properties Co., Ltd.
Company Guar. Notes
9.50% due 04/07/16*................ 450,000 450,000
----------
1,384,275
----------
SATELLITE TELECOM -- 0.3%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/19*................ 1,475,000 1,476,844
----------
SEMICONDUCTOR EQUIPMENT -- 0.2%
MagnaChip Semiconductor
SA/MagnaChip Semiconductor
Finance Co.
Company Guar. Notes
10.50% due 04/15/18................ 1,100,000 1,229,250
----------
SOVEREIGN AGENCY -- 0.1%
Eskom Holdings, Ltd.
Senior Notes
5.75% due 01/26/21*................ 430,000 435,912
----------
SPECIAL PURPOSE ENTITIES -- 0.6%
Alfa Bank OJSC Via Alfa Bond
Issuance PLC
Company Guar. Notes
7.88% due 09/25/17*................ 400,000 423,163
Hellas Telecommunications
Luxembourg II FRS
Sub. Notes
6.03% due 01/15/15*+(11)(13)....... 1,330,000 16,625
LBG Capital No.1 PLC FRS
Bank Guar. Notes
8.00% due 06/15/20*(8)............. 2,600,000 2,483,000
SMFG Preferred Capital, Ltd. FRS
Jr. Sub. Notes
6.08% due 01/25/17*(8)............. 373,000 358,080
----------
3,280,868
----------
STEEL-PRODUCERS -- 0.3%
Essar Steel Algoma, Inc.
Senior Sec. Notes
9.38% due 03/15/15*................ 1,025,000 1,025,000
Severstal OAO Via Steel Capital SA
Notes
6.70% due 10/25/17*................ 520,000 531,839
----------
1,556,839
----------
STEEL-SPECIALTY -- 0.1%
APERAM
Senior Notes
7.38% due 04/01/16*................ 275,000 279,812
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
STEEL-SPECIALTY (CONTINUED)
APERAM
Senior Notes
7.75% due 04/01/18*................ $ 270,000 $ 275,400
-----------
555,212
-----------
SUPRANATIONAL BANKS -- 0.0%
Asian Development Bank
Senior Bonds
5.82% due 06/16/28................. 181,000 199,786
-----------
TELECOM SERVICES -- 0.3%
Wind Acquisition Finance SA
Senior Sec. Notes
7.25% due 02/15/18*................ 1,370,000 1,431,650
-----------
TELEPHONE-INTEGRATED -- 0.5%
Axtel SAB de CV
Company Guar. Notes
9.00% due 09/22/19................. 540,000 518,400
Telecom Italia Capital SA
Company Guar. Bonds
5.25% due 10/01/15................. 621,000 642,772
Telecom Italia Capital SA
Company Guar. Notes
7.18% due 06/18/19................. 384,000 419,762
Telefonica Emisiones SAU FRS
Company Guar. Notes
0.64% due 02/04/13................. 365,000 361,550
Telefonica Emisiones SAU
Company Guar. Notes
3.99% due 02/16/16................. 190,000 190,920
Telemar Norte Leste SA
Senior Notes
5.50% due 10/23/20*................ 600,000 589,500
-----------
2,722,904
-----------
TRANSPORT-MARINE -- 0.1%
SCF Capital, Ltd.
Company Guar. Notes
5.38% due 10/27/17*................ 540,000 525,789
-----------
TRANSPORT-RAIL -- 0.1%
Canadian Pacific Railway Co.
Notes
6.50% due 05/15/18................. 350,000 400,321
-----------
TRANSPORT-SERVICES -- 0.2%
Asciano Finance, Ltd.
Company Guar. Notes
5.00% due 04/07/18*................ 147,000 146,203
Inversiones Alsacia SA
Company Guar. Notes
8.00% due 08/18/18*................ 640,000 604,743
Transnet, Ltd.
Senior Notes
4.50% due 02/10/16*................ 300,000 306,257
-----------
1,057,203
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $54,608,847)................. 54,625,118
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES -- 15.9%
SOVEREIGN -- 15.9%
Bolivarian Republic of Venezuela
Bonds
12.75% due 08/23/22.............. $ 1,830,000 $1,582,950
Dominican Republic
Bonds
7.50% due 05/06/21............... 750,000 763,125
Dominican Republic
Senior Notes
7.50% due 05/06/21*.............. 540,000 549,450
Federal Republic of Brazil
Senior Notes
4.88% due 01/22/21............... 650,000 663,000
Federal Republic of Brazil
Senior Notes
5.63% due 01/07/41............... 724,000 711,330
Federal Republic of Brazil
Senior Bonds
7.13% due 01/20/37............... 430,000 508,475
Federal Republic of Brazil
Notes
8.00% due 01/15/18............... 1,018,889 1,197,194
Federal Republic of Brazil
Bonds
8.25% due 01/20/34............... 495,000 654,638
Federal Republic of Brazil
Notes
8.75% due 02/04/25............... 1,820,000 2,457,000
Federal Republic of Germany
Bonds
4.25% due 07/04/39............... EUR 292,000 443,328
Gabonese Republic
Bonds
8.20% due 12/12/17............... 700,000 820,750
Government of Australia
Bonds
5.75% due 06/15/11............... AUD 2,190,000 2,269,688
Government of Bermuda
Senior Notes
5.60% due 07/20/20*.............. 340,000 359,550
Government of Canada
Bonds
4.25% due 06/01/18............... CAD 2,500,000 2,774,085
Government of Canada
Bonds
5.75% due 06/01/29............... CAD 2,220,000 2,903,952
Government of Japan
Senior Bonds
2.10% due 03/20/27............... JPY 163,600,000 2,039,298
Government of Poland
Bonds
5.00% due 10/24/13............... PLN 4,020,000 1,410,739
Kingdom of Norway
Bonds
4.25% due 05/19/17............... NOK 14,970,000 2,816,114
Kingdom of Norway
Bonds
5.00% due 05/15/15............... NOK 14,275,000 2,746,536
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN -- 15.9%
Kingdom of Sweden
Bonds
4.25% due 03/12/19............. SEK 12,230,000 $2,065,492
Kingdom of Sweden
Bonds
4.50% due 08/12/15............. SEK 19,640,000 3,299,211
New South Wales Treasury Corp.
Government Guar. Bonds
6.00% due 05/01/12............. AUD 1,228,000 1,283,927
Republic of Argentina
Notes
2.50% due 12/31/38(14)......... 1,764,761 761,494
Republic of Argentina
Senior Bonds
8.28% due 12/31/33............. 2,043,794 1,822,043
Republic of Colombia
Senior Bonds
6.13% due 01/18/41............. 510,000 520,200
Republic of Colombia
Senior Bonds
7.38% due 09/18/37............. 970,000 1,151,875
Republic of Colombia
Senior Bonds
8.13% due 05/21/24............. 360,000 455,940
Republic of Croatia
Bonds
6.38% due 03/24/21*............ 610,000 610,763
Republic of El Salvador
Senior Bonds
8.25% due 04/10/32............. 420,000 455,700
Republic of Hungary
Senior Notes
6.25% due 01/29/20............. 530,000 539,275
Republic of Hungary
Bonds
6.38% due 03/29/21............. 1,270,000 1,271,270
Republic of Hungary
Bonds
7.63% due 03/29/41............. 1,256,000 1,257,256
Republic of Indonesia
Senior Bonds
5.88% due 03/13/20............. 900,000 959,625
Republic of Indonesia
Senior Bonds
6.88% due 01/17/18............. 880,000 996,600
Republic of Indonesia
Senior Bonds
8.50% due 10/12/35............. 620,000 798,250
Republic of Indonesia
Senior Notes
11.63% due 03/04/19............ 800,000 1,148,000
Republic of Ivory Coast
Senior Bonds
2.50% due 12/31/32(11)......... 1,140,000 527,250
Republic of Peru
Senior Bonds
5.63% due 11/18/50............. 740,000 669,700
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Peru
Senior Bonds
6.55% due 03/14/37.......... $ 820,000 $ 887,650
Republic of Peru
Senior Bonds
7.35% due 07/21/25.......... 856,000 1,017,356
Republic of Peru
Senior Bonds
7.84% due 08/12/20.......... PEN 2,497,000 954,829
Republic of Peru
Senior Bonds
8.75% due 11/21/33.......... 720,000 966,600
Republic of South Africa
Senior Notes
5.88% due 05/30/22.......... 1,100,000 1,179,750
Republic of South Korea
Senior Bonds
7.13% due 04/16/19.......... 1,000,000 1,178,656
Republic of Sri Lanka
Senior Notes
6.25% due 10/04/20.......... 810,000 787,725
Republic of the Philippines
Senior Bonds
6.25% due 01/14/36.......... PHP 37,000,000 805,262
Republic of the Philippines
Senior Bonds
7.75% due 01/14/31.......... 330,000 398,063
Republic of the Philippines
Senior Bonds
10.63% due 03/16/25......... 865,000 1,283,444
Republic of Turkey
Senior Bonds
5.63% due 03/30/21.......... 1,125,000 1,147,500
Republic of Turkey
Bonds
6.00% due 01/14/41.......... 600,000 561,000
Republic of Turkey
Senior Notes
6.75% due 04/03/18.......... 1,040,000 1,159,600
Republic of Turkey
Senior Notes
6.88% due 03/17/36.......... 475,000 502,788
Republic of Turkey
Senior Notes
7.00% due 06/05/20.......... 2,350,000 2,655,500
Republic of Turkey
Senior Notes
7.38% due 02/05/25.......... 805,000 927,762
Republic of Turkey
Senior Notes
7.50% due 11/07/19.......... 690,000 803,850
Republic of Turkey
Senior Notes
8.00% due 02/14/34.......... 611,000 732,283
Republic of Ukraine
Bonds
6.58% due 11/21/16.......... 390,000 395,460
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Uruguay
Bonds
8.00% due 11/18/22..... $ 610,000 $ 759,450
Republic of Venezuela
Senior Bonds
5.75% due 02/26/16..... 1,015,000 751,100
Republic of Venezuela
Senior Bonds
8.50% due 10/08/14..... 880,000 802,560
Russian Federation
Senior Bonds
5.00% due 04/29/20*.... 1,400,000 1,415,750
Russian Federation
Senior Bonds
7.50% due 03/31/30(14). 1,250,315 1,457,405
Russian Federation
Bonds
7.85% due 03/10/18*.... RUB 45,000,000 1,619,126
Russian Federation
Notes
12.75% due 06/24/28.... 1,100,000 1,923,625
State of Qatar
Bonds
5.25% due 01/20/20..... 750,000 778,500
State of Qatar
Bonds
6.55% due 04/09/19..... 560,000 631,400
Swiss Confederation
Bonds
2.00% due 10/12/16..... CHF 1,210,000 1,350,525
Swiss Confederation
Bonds
3.00% due 05/12/19..... CHF 1,370,000 1,628,710
Ukraine Government
Bonds
7.75% due 09/23/20..... 1,000,000 1,030,000
Ukraine Government
Senior Notes
7.95% due 02/23/21*.... 1,550,000 1,588,966
United Mexican States
Senior Notes
5.13% due 01/15/20..... 1,084,000 1,133,864
United Mexican States
Senior Notes
6.05% due 01/11/40..... 20,000 20,600
United Mexican States
Bonds
7.25% due 12/15/16..... MXN 19,600,000 1,666,126
United Mexican States
Senior Notes
7.50% due 04/08/33..... 840,000 1,028,580
United Mexican States
Senior Notes
8.13% due 12/30/19..... 950,000 1,274,900
United Mexican States
Senior Bonds
8.30% due 08/15/31..... 870,000 1,159,710
-----------
88,631,048
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
SOVEREIGN AGENCY -- 0.0%
European Union
Bonds
3.25% due 04/04/18................. EUR 190,000 $ 265,622
-----------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $86,577,458)................. 88,896,670
-----------
U.S. GOVERNMENT AGENCIES -- 12.3%
FEDERAL HOME LOAN MTG. CORP. -- 5.1%
4.50% due 02/01/20................. 92,859 97,993
4.50% due 08/01/20................. 175,105 184,785
4.50% due 01/01/39................. 341,336 347,586
5.00% due 09/01/18................. 215,301 230,421
5.00% due 07/01/20................. 322,582 344,832
5.00% due 01/01/24................. 483,142 513,146
5.00% due 02/01/34................. 212,844 223,691
5.00% due 03/01/34................. 1,499,256 1,574,261
5.00% due 05/01/34................. 170,319 179,031
5.00% due 02/01/35................. 288,348 302,773
5.00% due 07/01/35................. 451,882 473,923
5.00% due 08/01/35................. 494,989 519,133
5.00% due 04/01/36................. 270,548 283,744
5.00% due 05/01/36................. 163,106 170,756
5.00% due 08/01/36................. 222,767 233,215
5.00% due 03/01/39................. 1,375,293 1,439,456
5.00% due 08/01/39................. 3,030,935 3,172,334
5.00% due 07/01/40................. 1,000,000 1,045,027
5.50% due 05/01/37................. 746,469 800,691
5.50% due 06/01/37................. 224,463 239,961
5.50% due 09/01/37................. 631,518 675,121
5.50% due 10/01/37................. 2,409,111 2,575,446
5.50% due 11/01/37................. 772,365 831,123
5.50% due 12/01/37................. 609,959 652,074
5.50% due 01/01/38................. 1,487,362 1,592,612
5.50% due 02/01/38................. 444,103 474,765
5.50% due 07/01/38................. 373,932 399,750
6.00% due 10/01/37................. 663,469 722,029
6.00% due 12/01/37................. 1,329,954 1,447,340
6.00% due 10/01/39................. 1,790,842 1,947,228
6.50% due 05/01/29................. 3,914 4,424
6.50% due 02/01/35................. 91,017 102,521
6.50% due 11/01/37................. 3,006,832 3,369,946
7.00% due 06/01/29................. 7,970 9,164
Federal Home Loan Mtg. Corp. REMIC
Series 3572, Class JS
6.55% due 09/15/39(15) FRS......... 7,146,507 1,011,503
Series 41, Class F.................
10.00% due 05/15/20(2)............. 6,818 7,569
Series 1103, Class N...............
15.65% due 06/15/21(2)(15)......... 3,730 818
-----------
28,200,192
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 6.5%
4.00% due 06/01/39................. 861,807 850,551
4.00% due 09/01/40................. 1,436,570 1,415,114
4.50% due 06/01/19................. 224,991 237,816
4.50% due 11/01/22................. 416,292 439,501
4.50% due 06/01/23................. 362,328 380,604
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 10/01/24.................... $ 746,206 $ 783,612
4.50% due 03/01/25.................... 876,586 921,075
4.50% due 05/01/25.................... 852,379 895,639
4.50% due 07/01/25.................... 1,097,756 1,153,470
4.50% due 01/01/39.................... 2,621,952 2,674,464
4.50% due 07/01/40.................... 1,976,400 2,017,835
4.50% due 08/01/40.................... 2,788,928 2,842,169
5.00% due 06/01/19.................... 109,006 116,644
5.00% due 01/01/23.................... 80,536 85,626
5.00% due 03/01/34.................... 157,386 165,733
5.00% due 05/01/35.................... 82,291 86,604
5.00% due 02/01/37.................... 143,531 150,511
5.00% due 04/01/37.................... 593,395 621,897
5.00% due 05/01/37.................... 199,193 208,761
5.00% due 06/01/37.................... 13,307 13,946
5.00% due 07/01/37.................... 164,396 172,293
5.50% due 11/01/19.................... 810,146 880,229
5.50% due 08/01/20.................... 177,659 192,806
5.50% due 11/01/22.................... 301,100 326,048
5.50% due 08/01/23.................... 221,751 240,124
5.50% due 01/01/29.................... 4,757 5,140
5.50% due 02/01/35.................... 268,710 288,764
5.50% due 12/01/35.................... 375,401 403,419
5.50% due 12/01/36.................... 276,542 296,576
5.50% due 04/01/37.................... 130,759 140,150
5.50% due 08/01/37.................... 3,630,184 3,890,903
5.50% due 03/01/38.................... 19,574 20,956
6.00% due 02/01/32.................... 69,796 76,851
6.00% due 05/01/34.................... 9,879 10,853
6.00% due 10/01/34.................... 277,940 305,638
6.00% due 06/01/35.................... 77,277 84,604
6.00% due 07/01/37.................... 2,368,434 2,580,439
6.00% due 08/01/37.................... 114,268 124,496
6.00% due 10/01/37.................... 301,163 329,364
6.00% due 11/01/38.................... 2,550,563 2,778,871
6.00% due 12/01/38.................... 3,407,687 3,711,653
6.00% due 04/01/40.................... 1,005,846 1,097,045
6.50% due 02/01/35.................... 41,706 46,945
6.50% due 10/01/38.................... 1,928,794 2,174,680
7.50% due 01/01/30.................... 8,644 10,029
7.50% due 09/01/30.................... 3,012 3,497
8.00% due 11/01/28.................... 12,630 14,728
13.00% due 11/15/15................... 413 467
Federal National Mtg. Assoc. REMIC
Series 1989-2, Class D
8.80% due 01/25/19(2)................. 22,642 27,033
Series 1989-17, Class E
10.40% due 04/25/19(2)................ 1,520 1,762
-----------
36,297,935
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.7%
5.00% due 04/15/40.................... 3,751,550 3,997,159
7.50% due 07/15/27.................... 9,003 10,456
7.50% due 10/15/27.................... 56,268 65,352
-----------
4,072,967
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
SOVEREIGN AGENCY -- 0.0%
Tennessee Valley Authority
Senior Notes
3.88% due 02/15/21..................... $ 173,000 $ 173,571
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $66,811,581)..................... 68,744,665
-----------
U.S. GOVERNMENT TREASURIES -- 2.4%
UNITED STATES TREASURY BONDS -- 0.3%
3.88% due 08/15/40..................... 298,000 266,663
4.25% due 11/15/40..................... 1,556,000 1,488,168
-----------
1,754,831
-----------
UNITED STATES TREASURY NOTES -- 2.1%
1.25% due 03/15/14..................... 215,000 214,933
1.38% due 02/15/13..................... 2,000,000 2,023,672
1.38% due 11/30/15..................... 105,000 101,678
2.13% due 12/31/15..................... 195,000 195,046
2.13% due 02/29/16..................... 209,000 208,347
2.63% due 11/15/20..................... 944,000 880,870
3.00% due 02/28/17..................... 5,000,000 5,115,625
3.63% due 02/15/21..................... 2,745,000 2,784,031
-----------
11,524,202
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $13,283,246)..................... 13,279,033
-----------
LOANS(16)(17) -- 0.1%
MEDICAL-DRUGS -- 0.1%
Triax Pharmaceuticals LLC
BTL
16.50% due 08/30/11+(4)(5)(7)(11)(21)
(cost $1,636,526)...................... 1,657,560 709,436
-----------
MUNICIPAL BONDS & NOTES -- 0.0%
Texas State Transportation Commission
Bonds
Series B
5.18% due 04/01/30
(cost $80,000)......................... 80,000 78,622
-----------
COMMON STOCK -- 0.2%
BANKS-COMMERCIAL -- 0.1%
Lloyds Banking Group PLC+............... 600,576 559,664
-----------
FOOD-MISC. -- 0.1%
Wornick Co.+(4)(5)(7)................... 4,592 284,451
-----------
GAMBLING (NON-HOTEL) -- 0.0%
Shreveport Gaming Holdings,
Inc.+(4)(5)(7)......................... 2,441 32,221
-----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals
LLC+(4)(5)(7)(18)...................... 128,418 642
-----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(4)(5)(7)......................... 4,107 103
-----------
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
------------------------------------------------------------------
COMMON STOCK (CONTINUED)
MULTIMEDIA -- 0.0%
Haights Cross Communication,
Inc.+(4)(5)(7).............................. 47,723 $ 56,552
----------
TOTAL COMMON STOCK
(cost $1,447,343)........................... 933,633
----------
PREFERRED STOCK -- 1.2%
BANKS-COMMERCIAL -- 0.1%
CoBank ACB
11.00%*..................................... 12,063 671,004
----------
BANKS-SUPER REGIONAL -- 0.2%
US Bancorp FRS
7.19%....................................... 759 645,158
Wachovia Capital Trust IX
6.38%....................................... 12,800 320,640
----------
965,798
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.7%
Ally Financial, Inc.
7.00%*...................................... 2,538 2,361,609
Goldman Sachs Group, Inc.
6.13%....................................... 48,000 1,168,800
HSBC Holdings PLC
8.00%....................................... 9,360 255,341
----------
3,785,750
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
General Electric Capital Corp.
5.50%....................................... 8,582 222,789
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
JP Morgan Chase Capital XXIX
6.70%....................................... 19,440 495,331
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Federal Home Loan Mgt. Corp. VRS+
8.38%....................................... 11,300 19,210
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C+(4)(5)(7). 39,177 196
----------
SPECIAL PURPOSE ENTITY -- 0.1%
Structured Repackaged Asset-Backed
Trust Securities FRS
3.00%....................................... 29,200 608,820
----------
TOTAL PREFERRED STOCK
(cost $6,497,534)........................... 6,768,898
----------
WARRANTS+ -- 0.0%
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Association, Inc.
Expires 02/19/14(4)(5)...................... 6,739 0
----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
TELEVISION -- 0.0%
Ion Media Networks, Inc.
Expires 12/18/16
(strike price $687.50)(4)(5)........ 325 $ 42,250
Ion Media Networks, Inc.
Expires 12/18/16
(strike price $500)(4)(5)........... 325 58,500
------------
100,750
------------
TOTAL WARRANTS
(cost $6,978)....................... 100,750
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $542,288,354)................. 552,418,288
------------
SHORT-TERM INVESTMENT SECURITIES -- 0.7%
TIME DEPOSITS -- 0.7%
Euro Time Deposit with State Street
Bank & Trust Co.
0.01% due 04/01/11
(cost $3,689,000)................... $3,689,000 3,689,000
------------
REPURCHASE AGREEMENT -- 0.4%
State Street Bank & Trust Co.,
Joint Repurchase Agreement(19)
(cost $2,115,000)................... 2,115,000 2,115,000
------------
TOTAL INVESTMENTS --
(cost $548,092,354) (20)............ 100.1% 558,222,288
Liabilities in excess of other assets.. (0.1) (465,022)
---------- ------------
NET ASSETS 100.0% $ 557,757,266
========== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At March 31, 2011, the aggregate value of
these securities was $145,860,619 representing 26.2% of net assets. Unless
otherwise indicated these securities are not considered to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1)Commercial Mortgage Backed Security
(2)Collateralized Mortgage Obligation
(3)Security is in default and did not pay principal at maturity.
(4)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(5)Illiquid security. At March 31, 2011, the aggregate value of these
securities was $3,873,933 representing 0.7% of net assets.
(6)Company has filed for Chapter 11 bankruptcy protection.
(7)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
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
security. In addition, certain restricted securities may exhibit greater
price volatility than securities for which secondary markets exist. As of
March 31, 2011, 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 $ -- $ 103 $ 0.03 0.00%
Haights Cross
Communications
Common
Stock........... 3/11/2010 47,723 373,272 56,552 1.19 0.01
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
---------- ----------
297,000 312,925 359,370 121.00 0.06
Shreveport
Gaming
Holdings, Inc.
Common
Stock........... 7/29/2005 2,047 47,128
7/21/2005 394 9,051
---------- ----------
2,441 56,179 32,221 13.20 0.01
Triax
Pharmaceuticals
LLC 16.50%
due 08/30/11
Loan
Agreement....... 8/31/2007 1,500,000 1,478,967
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
10/7/2009 11,885 11,885
12/22/2010 48,346 48,347
3/17/2011 91 91
3/29/2011 12,611 12,611
---------- ----------
1,657,560 1,636,526 709,436 42.80 0.13
Triax
Pharmaceuticals
LLC Common
Stock........... 8/31/2007 128,418 53,936 642 0.01 0.00
VALUE % OF
ACQUISITION ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ------ ----------- ---------- ------ ------
Triax
Pharmaceuticals
LLC Preferred
Stock........... 8/31/2007 39,177 $ 78,353 $ 196 $ 0.01 0.00%
Wornick Co.
Common
Stock........... 8/8/2008 4,592 596,039 284,451 61.94 0.05
---------- ----
$1,442,971 0.26%.
========== ====
(8) Perpetual maturity--maturity date reflects the next call date.
(9) Income may be received in cash or additional bonds at the discretion of
the issuer.
(10) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays
interest/dividends in the form of additional bonds, preferred stocks or
loans.
(11) Bond in default
(12) Company has filed for Chapter 7 bankruptcy.
(13) Company has filed for bankruptcy in country of issuance.
(14) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. The rate reflected is as of March 31, 2011.
(15) Interest Only
(16) 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.
(17) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior
loans are generally considered to be restrictive in that the Fund is
ordinarily contractually obligated to receive approval from the Agent Bank
and/or borrower prior to the disposition of a senior loan.
(18) Consists of more than one type of securities traded together as a unit.
(19) See Note 2 for details of Joint Repurchase Agreements.
(20) See Note 5 for cost of investments on a tax basis.
(21) A portion of the interest was paid in additional bonds/loans.
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at March 31, 2011 and
unless noted otherwise, the dates shown are the original maturity dates.
REMIC --Real Estate Mortgage Investment Conduit
AUD Australian Dollar
CAD Canadian Dollar
CHF Swiss Franc
COP Columbian Peso
EUR Euro
GBP British Pound
JPY Japanese Yen
MXN Mexican Peso
NOK Norwegian Krone
PEN Peruvian New Sol
PHP Philippine Peso
PLN Polish Zloty
RUB Russian Ruble
SEK Swedish Krona
USD U.S. Dollar
48
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2011 (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......... $ -- $ 35,409,468 $ -- $ 35,409,468
Convertible Bonds & Notes....... -- -- 359,370 359,370
U.S. Corporate Bonds & Notes.... -- 275,962,471 6,550,154 282,512,625
Foreign Corporate Bonds & Notes. -- 54,625,118 0 54,625,118
Foreign Government Agencies..... -- 88,896,670 -- 88,896,670
U.S. Government Agencies........ -- 68,744,665 -- 68,744,665
U.S. Government Treasuries...... -- 13,279,033 -- 13,279,033
Loans........................... -- -- 709,436 709,436
Municipal Bonds & Notes......... -- 78,622 -- 78,622
Common Stock.................... 559,664 -- 373,969 933,633
Preferred Stock................. 6,768,702 -- 196 6,768,898
Warrants........................ -- -- 100,750 100,750
Short-Term Investment Securities
Time Deposits................... -- 3,689,000 -- 3,689,000
Repurchase Agreement.............. -- 2,115,000 -- 2,115,000
---------- ------------ ---------- ------------
TOTAL............................. $7,328,366 $542,800,047 $8,093,875 $558,222,288
========== ============ ========== ============
The following is a reconciliation of Level 3 assets which significant
unobeservable inputs were used to determine fair value:
CONVERTIBLE U.S. CORPORATE FOREIGN CORPORATE COMMON
BONDS & NOTES BONDS & NOTES BONDS & NOTES LOANS STOCK
------------- -------------- ----------------- ---------- ---------
Balance as of 3/31/2010............................. $207,900 $ 5,723,382 $ 0 $2,472,826 $ 785,034
Accrued discounts/premiums.......................... -- 962 -- 48,284 --
Realized gain (loss)................................ -- (1,758,675) 77,900 115,828 133,905
Change in unrealized appreciation (depreciation)(1). 151,470 2,149,239 -- (988,550) (171,636)
Net purchases (sales)............................... -- (3,092,233) (77,900) (938,952) (373,334)
Transfers in and/or out of Level 3(2)............... -- 3,527,479 0 -- --
-------- ----------- -------- ---------- ---------
Balance as of 03/31/2011............................ $359,370 $ 6,550,154 $ 0 $ 709,436 $ 373,969
======== =========== ======== ========== =========
PREFERRED
STOCK WARRANTS
--------- --------
Balance as of 3/31/2010............................. $ 392 $ 0
Accrued discounts/premiums.......................... -- --
Realized gain (loss)................................ -- (39,261)
Change in unrealized appreciation (depreciation)(1). (196) 133,033
Net purchases (sales)............................... -- 6,978
Transfers in and/or out of Level 3(2)............... -- --
----- --------
Balance as of 03/31/2011............................ $ 196 $100,750
===== ========
--------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
March 31, 2011 includes:
CONVERTIBLE U.S. CORPORATE FOREIGN CORPORATE COMMON PREFERRED
BONDS & NOTES BONDS & NOTES BONDS & NOTES LOANS STOCK STOCK WARRANTS
------------- -------------- ----------------- --------- -------- --------- --------
$151,470 $(65,528) $-- $(849,647) $(96,704) $(196) $93,772
======== ======== === ========= ======== ===== =======
--------
(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
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Casino Hotels............................ 4.0%
Paper & Related Products................. 3.7
Special Purpose Entities................. 3.6
Banks-Commercial......................... 3.5
Telephone-Integrated..................... 3.4
Medical-Hospitals........................ 3.0
Auto-Cars/Light Trucks................... 2.9
Finance-Auto Loans....................... 2.7
Cellular Telecom......................... 2.6
Independent Power Producers.............. 2.6
Pipelines................................ 2.5
Oil Companies-Exploration & Production... 2.5
Data Processing/Management............... 2.1
Casino Services.......................... 1.8
Cable/Satellite TV....................... 1.8
Electric-Integrated...................... 1.8
Auto/Truck Parts & Equipment-Original.... 1.8
Oil-Field Services....................... 1.7
Retail-Regional Department Stores........ 1.7
Diversified Manufacturing Operations..... 1.7
Telecom Services......................... 1.6
Electric-Generation...................... 1.5
Finance-Consumer Loans................... 1.5
Diversified Banking Institutions......... 1.4
Aerospace/Defense-Equipment.............. 1.4
Banks-Mortgage........................... 1.3
Repurchase Agreements.................... 1.3
Electronic Components-Semiconductors..... 1.2
Coal..................................... 1.2
Auto/Truck Parts & Equipment-Replacement. 1.2
Transport-Marine......................... 1.1
Multimedia............................... 1.1
Theaters................................. 1.1
Computer Services........................ 1.1
Printing-Commercial...................... 1.0
Machinery-Farming........................ 1.0
Oil Field Machinery & Equipment.......... 0.9
Chemicals-Diversified.................... 0.9
Investment Companies..................... 0.9
Banks-Money Center....................... 0.9
Medical-Drugs............................ 0.9
Office Automation & Equipment............ 0.8
Containers-Metal/Glass................... 0.8
Real Estate Investment Trusts............ 0.8
Computers-Memory Devices................. 0.8
Insurance-Multi-line..................... 0.8
Medical Products......................... 0.8
Medical Information Systems.............. 0.8
Consumer Products-Misc................... 0.7
Diversified Financial Services........... 0.7
Commercial Services...................... 0.6
Retail-Arts & Crafts..................... 0.6
Athletic Equipment....................... 0.6
Diagnostic Kits.......................... 0.6
Telecommunication Equipment.............. 0.6
Pharmacy Services........................ 0.5
Television............................... 0.6
Computers-Periphery Equipment............ 0.5
Medical Labs & Testing Services.......... 0.5
Medical-Outpatient/Home Medical.......... 0.5
Rubber-Tires............................ 0.5%
Shipbuilding............................ 0.5
Building & Construction Products-Misc... 0.5
Building Products-Cement................ 0.5
Retail-Apparel/Shoe..................... 0.5
Satellite Telecom....................... 0.5
Advertising Services.................... 0.5
Machinery-General Industrial............ 0.5
Agricultural Operations................. 0.5
Funeral Services & Related Items........ 0.5
Physical Therapy/Rehabilitation Centers. 0.5
Food-Meat Products...................... 0.4
Direct Marketing........................ 0.4
Retail-Drug Store....................... 0.4
Office Supplies & Forms................. 0.4
Beverages-Non-alcoholic................. 0.4
Food-Misc............................... 0.4
Airlines................................ 0.3
Chemicals-Plastics...................... 0.3
Alternative Waste Technology............ 0.3
Retail-Propane Distribution............. 0.3
Diversified Minerals.................... 0.3
Internet Connectivity Services.......... 0.3
Enterprise Software/Service............. 0.2
Broadcast Services/Program.............. 0.2
Chemicals-Specialty..................... 0.2
Gambling (Non-Hotel).................... 0.2
E-Commerce/Services..................... 0.1
Agricultural Chemicals.................. 0.1
Gas-Distribution........................ 0.1
Motion Pictures & Services.............. 0.1
Publishing-Periodicals.................. 0.1
Medical-Biomedical/Gene................. 0.1
Aerospace/Defense....................... 0.1
Resorts/Theme Parks..................... 0.1
----
99.8%
====
CREDIT QUALITY ALLOCATION+#
BBB........ 1.8%
BB......... 33.4
B.......... 44.3
CCC........ 12.3
CC......... 0.6
Not Rated@. 7.6
-----
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.
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 2.6%
AIRLINES -- 0.3%
Continental Airlines, Inc.
Senior Notes
4.50% due 01/15/15.......................... $ 325,000 $ 464,344
----------
AUTO-CARS/LIGHT TRUCKS -- 0.7%
Ford Motor Co.
Senior Notes
4.25% due 11/15/16.......................... 514,000 931,625
----------
CELLULAR TELECOM -- 0.7%
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/14.......................... 938,000 905,170
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.9%
Chesapeake Energy Corp.
Company Guar. Notes
2.50% due 05/15/37.......................... 1,070,000 1,152,925
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $2,693,179)........................... 3,454,064
----------
U.S. CORPORATE BONDS & NOTES -- 79.2%
ADVERTISING SERVICES -- 0.5%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/15*................... 995,000 649,237
----------
AEROSPACE/DEFENSE -- 0.1%
Esterline Technologies Corp.
Company Guar. Notes
7.00% due 08/01/20.......................... 85,000 88,931
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 1.4%
BE Aerospace, Inc.
Senior Notes
6.88% due 10/01/20.......................... 705,000 729,675
TransDigm, Inc.
Senior Sub. Notes
7.75% due 12/15/18*......................... 1,025,000 1,100,594
----------
1,830,269
----------
AGRICULTURAL CHEMICALS -- 0.1%
CF Industries, Inc.
Company Guar. Notes
6.88% due 05/01/18.......................... 165,000 185,213
----------
AGRICULTURAL OPERATIONS -- 0.5%
Southern States Cooperative, Inc.
Senior Notes
11.25% due 05/15/15*........................ 555,000 603,562
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.3%
Darling International, Inc.
Company Guar. Notes
8.50% due 12/15/18*......................... 331,000 359,963
----------
ATHLETIC EQUIPMENT -- 0.6%
Easton-Bell Sports, Inc.
Senior Sec. Notes
9.75% due 12/01/16.......................... 700,000 787,500
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS -- 1.9%
Ford Motor Co.
Senior Notes
7.45% due 07/16/31......................... $2,300,000 $2,490,003
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.8%
ArvinMeritor, Inc.
Company Guar. Notes
8.13% due 09/15/15......................... 705,000 733,200
ArvinMeritor, Inc.
Company Guar. Notes
10.63% due 03/15/18........................ 515,000 579,375
Tenneco, Inc.
Company Guar. Notes
7.75% due 08/15/18......................... 145,000 154,787
Tenneco, Inc.
Company Guar. Notes
8.13% due 11/15/15......................... 90,000 96,300
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/17*........................ 725,000 797,500
----------
2,361,162
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 1.2%
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*....................... 657,000 746,516
Exide Corp.
Escrow Notes
10.00% due 03/15/25+(1)(2)................. 1,650,000 0
----------
1,524,166
----------
BANKS-COMMERCIAL -- 3.5%
CIT Group, Inc.
Sec. Notes
6.63% due 04/01/18*........................ 35,000 35,512
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/14......................... 440,918 449,185
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/15......................... 440,918 444,776
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/16......................... 1,129,863 1,131,275
CIT Group, Inc.
Senior Sec. Notes
7.00% due 05/01/17......................... 2,563,809 2,567,014
----------
4,627,762
----------
BANKS-MONEY CENTER -- 0.9%
NB Capital Trust IV
Limited Guar. Notes
8.25% due 04/15/27......................... 1,100,000 1,130,250
----------
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BANKS-MORTGAGE -- 1.3%
Provident Funding Associates LP/PFG
Finance Corp.
Senior Notes
10.13% due 02/15/15*............................. $ 545,000 $ 568,844
Provident Funding Associates LP/PFG
Finance Corp.
Senior Sec. Notes
10.25% due 04/15/17*............................. 1,065,000 1,187,475
----------
1,756,319
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes,
Series A
9.25% due 12/15/17............................... 55,000 60,088
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes,
Series B
9.25% due 12/15/17............................... 230,000 252,137
----------
312,225
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.5%
Roofing Supply Group LLC/Roofing Supply
Finance, Inc.
Senior Sec. Notes
8.63% due 12/01/17*.............................. 630,000 663,075
----------
BUILDING PRODUCTS-CEMENT -- 0.5%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16*.............................. 615,000 662,662
----------
CABLE/SATELLITE TV -- 1.8%
CCH II LLC/CCH II Capital Corp.
Company Guar. Notes
13.50% due 11/30/16.............................. 735,867 881,201
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.88% due 04/30/18............................... 240,000 255,000
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
8.13% due 04/30/20............................... 170,000 184,875
Mediacom LLC / Mediacom Capital Corp.
Senior Notes
9.13% due 08/15/19............................... 1,000,000 1,070,000
----------
2,391,076
----------
CASINO HOTELS -- 4.0%
CityCenter Holdings LLC/CityCenter Finance Corp.
Senior Sec. Notes
7.63% due 01/15/16*.............................. 180,000 185,850
Eldorado Resorts LLC
Senior Notes
9.00% due 04/15/14(1)(2)......................... 2,675,000 2,444,549
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17.............................. 910,000 1,033,987
MGM Resorts International, Inc.
Senior Sec. Notes
9.00% due 03/15/20............................... 155,000 169,919
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
CASINO HOTELS (CONTINUED)
MGM Resorts International, Inc.
Senior Sec. Notes
11.13% due 11/15/17........................ $675,000 $ 772,875
Wynn Las Vegas LLC/ Wynn Las Vegas
Capital Corp.
1st. Mtg. Notes
7.75% due 08/15/20......................... 605,000 641,300
----------
5,248,480
----------
CASINO SERVICES -- 0.5%
Greektown, Inc. LLC
Escrow Notes
10.75% due 12/01/13+(1)(2)................. 489,000 0
Peninsula Gaming LLC
Sec. Notes
8.38% due 08/15/15......................... 600,000 640,500
----------
640,500
----------
CELLULAR TELECOM -- 1.9%
Buccaneer Merger Sub, Inc.
Senior Notes
9.13% due 01/15/19*........................ 405,000 429,300
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16......................... 575,000 610,937
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 11/15/20......................... 645,000 644,194
MetroPCS Wireless, Inc.
Company Guar. Notes
7.88% due 09/01/18......................... 485,000 518,950
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/15......................... 328,000 329,230
----------
2,532,611
----------
CHEMICALS-DIVERSIFIED -- 0.9%
Celanese US Holdings LLC
Company Guar. Notes
6.63% due 10/15/18*........................ 395,000 406,850
Momentive Performance Materials, Inc.
Sec. Notes
9.00% due 01/15/21*........................ 471,000 486,896
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14........................ 297,000 329,670
----------
1,223,416
----------
CHEMICALS-PLASTICS -- 0.3%
Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC
Sec. Notes
9.00% due 11/15/20*........................ 355,000 368,091
----------
CHEMICALS-SPECIALTY -- 0.2%
Ferro Corp.
Senior Notes
7.88% due 08/15/18......................... 285,000 302,100
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
COAL -- 1.2%
Arch Coal, Inc.
Company Guar. Notes
7.25% due 10/01/20............................ $ 225,000 $ 241,313
Peabody Energy Corp.
Company Guar. Notes
6.50% due 09/15/20............................ 1,201,000 1,288,072
----------
1,529,385
----------
COMPUTER SERVICES -- 1.1%
SunGard Data Systems, Inc.
Senior Notes
7.38% due 11/15/18*........................... 556,000 568,510
SunGard Data Systems, Inc.
Senior Notes
7.63% due 11/15/20*........................... 275,000 282,563
SunGard Data Systems, Inc.
Company Guar. Notes
10.63% due 05/15/15........................... 550,000 602,937
----------
1,454,010
----------
COMPUTERS-PERIPHERY EQUIPMENT -- 0.5%
CDW Escrow Corp.
Senior Notes
8.50% due 04/01/19*........................... 691,000 691,864
----------
CONSUMER PRODUCTS-MISC. -- 0.7%
Reynolds Group DL Escrow, Inc./Reynolds Group
Escrow LLC
Senior Sec. Notes
7.75% due 10/15/16*........................... 210,000 222,075
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
6.88% due 02/15/21*........................... 335,000 337,512
Yankee Acquisition Corp.
Company Guar. Notes
9.75% due 02/15/17............................ 253,000 269,129
YCC Holdings LLC / Yankee Finance, Inc.
Senior Notes
10.25% due 02/15/16*(3)....................... 140,000 141,050
----------
969,766
----------
CONTAINERS-METAL/GLASS -- 0.8%
Ball Corp.
Company Guar. Notes
5.75% due 05/15/21............................ 655,000 641,900
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19............................ 145,000 156,963
Crown Americas LLC/Crown
Americas Capital Corp. III
Senior Notes
6.25% due 02/01/21*........................... 265,000 269,637
----------
1,068,500
----------
DATA PROCESSING/MANAGEMENT -- 2.1%
First Data Corp.
Senior Sec. Notes
8.25% due 01/15/21*........................... 284,000 283,290
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
DATA PROCESSING/MANAGEMENT (CONTINUED)
First Data Corp.
Senior Sec. Notes
8.75% due 01/15/22*(3).................... $ 285,000 $ 283,575
First Data Corp.
Company Guar. Notes
9.88% due 09/24/15........................ 64,000 65,600
First Data Corp.
Company Guar. Notes
10.55% due 09/24/15(4).................... 1,509,534 1,564,255
First Data Corp.
Company Guar. Notes
12.63% due 01/15/21*...................... 570,000 618,450
----------
2,815,170
----------
DIAGNOSTIC KITS -- 0.6%
Alere, Inc.
Senior Notes
7.88% due 02/01/16........................ 745,000 777,594
----------
DIRECT MARKETING -- 0.4%
Sitel LLC/Sitel Finance Corp.
Senior Notes
11.50% due 04/01/18*...................... 595,000 554,094
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.4%
Ally Financial, Inc.
Company Guar. Notes
8.00% due 03/15/20........................ 630,000 685,912
GMAC LLC
Sub. Notes
8.00% due 12/31/18........................ 1,100,000 1,181,125
----------
1,867,037
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 1.3%
Harland Clarke Holdings Corp. FRS
Company Guar. Notes
6.00% due 05/15/15........................ 500,000 450,625
Harland Clarke Holdings Corp.
Company Guar. Notes
9.50% due 05/15/15........................ 1,225,000 1,211,219
----------
1,661,844
----------
E-COMMERCE/SERVICES -- 0.1%
NetFlix, Inc.
Company Guar. Notes
8.50% due 11/15/17........................ 165,000 185,831
----------
ELECTRIC-GENERATION -- 1.4%
AES Corp.
Senior Notes
8.00% due 10/15/17........................ 805,000 865,375
Homer City Funding LLC
Senior Sec. Notes
8.14% due 10/01/19........................ 291,450 265,219
Midwest Generation LLC
Pass Through Certs.,
Series B
8.56% due 01/02/16........................ 220,812 225,228
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-GENERATION (CONTINUED)
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.,
Series B
9.24% due 07/02/17............................. $ 441,992 $ 479,562
----------
1,835,384
----------
ELECTRIC-INTEGRATED -- 0.5%
Mirant Americas Generation LLC
Senior Notes
8.50% due 10/01/21............................. 315,000 327,600
Mirant Mid-Atlantic LLC
Pass Through Certs., Series B
9.13% due 06/30/17............................. 289,795 315,152
Southern Energy, Inc.
Escrow Notes
7.90% due 07/15/09+(1)(2)...................... 3,525,000 0
----------
642,752
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS --1.2%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.88% due 12/15/14............................. 925,000 958,531
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*............................ 435,000 476,325
Freescale Semiconductor, Inc.
Company Guar. Notes
10.75% due 08/01/20*........................... 165,000 185,213
----------
1,620,069
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.2%
Mantech International Corp.
Company Guar. Notes
7.25% due 04/15/18............................. 300,000 315,000
----------
FINANCE-AUTO LOANS -- 2.7%
Credit Acceptance Corp.
Senior Sec. Notes
9.13% due 02/01/17............................. 685,000 740,656
Ford Motor Credit Co., LLC
Senior Notes
6.63% due 08/15/17............................. 495,000 528,289
Ford Motor Credit Co. LLC
Senior Notes
8.13% due 01/15/20............................. 750,000 859,078
Ford Motor Credit Co., LLC
Senior Notes
8.70% due 10/01/14............................. 1,275,000 1,447,329
----------
3,575,352
----------
FINANCE-CONSUMER LOANS -- 1.5%
SLM Corp.
Senior Notes
6.25% due 01/25/16............................. 490,000 510,825
SLM Corp.
Senior Notes
8.00% due 03/25/20............................. 211,000 229,990
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
FINANCE-CONSUMER LOANS (CONTINUED)
SLM Corp.
Senior Notes
8.45% due 06/15/18.......................... $ 484,000 $ 542,080
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
13.25% due 07/15/15*........................ 580,000 643,800
----------
1,926,695
----------
FOOD-MEAT PRODUCTS -- 0.4%
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14......................... 475,000 559,313
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.5%
Stonemor Operating LLC / Cornerstone Family
Services of WV / Osiris Holding
Company Guar. Notes
10.25% due 12/01/17......................... 575,000 602,313
----------
INDEPENDENT POWER PRODUCERS -- 2.6%
Calpine Corp.
Senior Sec. Notes
7.50% due 02/15/21*......................... 705,000 729,675
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.......................... 715,000 675,675
NRG Energy, Inc.
Company Guar. Notes
7.38% due 02/01/16.......................... 740,000 765,900
NRG Energy, Inc.
Company Guar. Notes
7.38% due 01/15/17.......................... 750,000 781,875
RRI Energy, Inc.
Senior Notes
7.88% due 12/31/17.......................... 440,000 436,700
----------
3,389,825
----------
INSURANCE-MULTI-LINE -- 0.8%
Hartford Financial Services Group, Inc. FRS
Jr. Sub. Debentures
8.13% due 06/15/38.......................... 965,000 1,056,675
----------
INVESTMENT COMPANIES -- 0.5%
Fox Acquisition Sub LLC
Senior Notes
13.38% due 07/15/16*........................ 625,000 696,875
----------
MACHINERY-FARMING -- 1.0%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13.......................... 925,000 1,007,094
Case New Holland, Inc.
Senior Notes
7.88% due 12/01/17*......................... 230,000 255,587
----------
1,262,681
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MACHINERY-GENERAL INDUSTRIAL -- 0.5%
CPM Holdings, Inc.
Senior Sec. Notes
10.63% due 09/01/14*.................. $ 595,000 $ 642,600
----------
MEDICAL INFORMATION SYSTEMS -- 0.8%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/18*.................. 840,000 984,900
----------
MEDICAL LABS & TESTING SERVICES -- 0.5%
American Renal Holdings
Senior Sec. Notes
8.38% due 05/15/18.................... 650,000 685,750
----------
MEDICAL PRODUCTS -- 0.8%
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17................... 473,000 518,526
LVB Acquisition Holding LLC
Company Guar. Notes
10.38% due 10/15/17(3)................ 481,000 528,499
----------
1,047,025
----------
MEDICAL-BIOMEDICAL/GENE -- 0.1%
STHI Holding Corp.
Sec. Notes
8.00% due 03/15/18*................... 125,000 129,375
----------
MEDICAL-DRUGS -- 0.3%
Valeant Pharmaceuticals International
Company Guar. Notes
6.75% due 08/15/21*................... 425,000 403,219
----------
MEDICAL-HOSPITALS -- 3.0%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15.................... 630,000 664,650
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/20.................... 1,030,000 1,120,125
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19.................... 550,000 610,500
HCA, Inc.
Sec. Notes
9.25% due 11/15/16.................... 875,000 941,719
Tenet Healthcare Corp.
Senior Sec. Notes
9.00% due 05/01/15.................... 595,000 654,500
----------
3,991,494
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.5%
Radiation Therapy Services, Inc.
Senior Sub. Notes
9.88% due 04/15/17.................... 660,000 673,200
----------
MOTION PICTURES & SERVICES -- 0.1%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/17*................... 170,000 181,900
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
MULTIMEDIA -- 0.1%
Haights Cross Operating Co. FRS
Limited Guar. Notes
16.00% due 03/15/14+(1)(2).................. $ 187,319 $ 120,587
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Company Guar. Notes
11.50% due 07/01/03+(1)(2)(5)(6)............ 2,150,000 0
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.8%
CDW LLC / CDW Finance Corp.
Senior Sec. Notes
8.00% due 12/15/18*......................... 545,000 577,700
CDW LLC/CDW Finance Corp.
Company Guar. Notes
11.00% due 10/12/15......................... 220,000 238,700
CDW LLC/CDW Finance Corp.
Company Guar. Notes
11.50% due 10/12/15(4)...................... 235,000 253,800
----------
1,070,200
----------
OFFICE SUPPLIES & FORMS -- 0.4%
ACCO Brands Corp.
Senior Sec. Notes
10.63% due 03/15/15......................... 475,000 535,563
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.1%
Antero Resources Finance Corp.
Company Guar. Notes
9.38% due 12/01/17.......................... 535,000 583,150
Petroleum Development Corp.
Senior Notes
12.00% due 02/15/18......................... 90,000 102,037
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/18.......................... 630,000 699,300
----------
1,384,487
----------
OIL FIELD MACHINERY & EQUIPMENT -- 0.5%
Complete Production Services, Inc.
Company Guar. Notes
8.00% due 12/15/16.......................... 25,000 26,375
Thermon Industries, Inc.
Senior Sec. Notes
9.50% due 05/01/17.......................... 625,000 675,000
----------
701,375
----------
OIL-FIELD SERVICES -- 1.7%
Aquilex Holdings LLC/Aquilex Finance Corp.
Company Guar. Notes
11.13% due 12/15/16......................... 1,000,000 1,056,250
Basic Energy Services, Inc.
Company Guar. Notes
7.75% due 02/15/19*......................... 485,000 499,550
Hornbeck Offshore Services, Inc.
Company Guar. Notes
8.00% due 09/01/17.......................... 655,000 676,287
----------
2,232,087
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PAPER & RELATED PRODUCTS -- 2.4%
Clearwater Paper Corp.
Company Guar. Notes
7.13% due 11/01/18*.......................... $ 160,000 $ 167,600
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/20*.......................... 70,000 69,123
Georgia-Pacific LLC
Company Guar. Notes
7.13% due 01/15/17*.......................... 290,000 307,763
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/16*.......................... 425,000 479,188
Neenah Paper, Inc.
Company Guar. Notes
7.38% due 11/15/14........................... 691,000 710,002
NewPage Corp.
Senior Sec. Notes
11.38% due 12/31/14.......................... 710,000 710,887
Verso Paper Holdings LLC/Verso
Paper, Inc.
Sec. Notes
8.75% due 02/01/19*.......................... 650,000 676,000
----------
3,120,563
----------
PHARMACY SERVICES -- 0.5%
BioScrip, Inc.
Company Guar. Notes
10.25% due 10/01/15.......................... 685,000 713,256
----------
PHYSICAL THERAPY/REHABILITATION CENTERS -- 0.5%
Healthsouth Corp.
Company Guar. Notes
7.25% due 10/01/18........................... 565,000 584,069
----------
PIPELINES -- 2.5%
El Paso Corp.
Senior Notes
6.50% due 09/15/20*.......................... 545,000 587,237
El Paso Corp.
Senior Notes
6.88% due 06/15/14........................... 700,000 781,886
El Paso Corp.
Senior Notes
7.00% due 06/15/17........................... 505,000 565,197
Energy Transfer Equity LP
Company Guar. Notes
7.50% due 10/15/20........................... 681,000 740,587
Kinder Morgan Finance Co., LLC
Senior Sec. Notes
6.00% due 01/15/18*.......................... 535,000 554,394
----------
3,229,301
----------
PRINTING-COMMERCIAL -- 1.0%
Cenveo Corp.
Company Guar. Notes
7.88% due 12/01/13........................... 1,320,000 1,283,700
----------
PUBLISHING-PERIODICALS -- 0.1%
Nielsen Finance LLC/Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16.......................... 114,000 134,235
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 0.8%
Host Hotels & Resorts, Inc.
Company Guar. Notes
6.00% due 11/01/20....................... $1,080,000 $1,061,100
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/14+(1)(2)................ 2,145,000 215
----------
RESORT/THEME PARKS -- 0.1%
Palace Entertainment Holdings
LLC/Palace Entertainment Holdings Corp.
Senior Sec. Notes
8.88% due 04/15/17*...................... 85,000 86,913
----------
RETAIL-APPAREL/SHOE -- 0.5%
Chinos Acquisition Corp.
Senior Notes
8.13% due 03/01/19*...................... 675,000 662,344
----------
RETAIL-ARTS & CRAFTS -- 0.6%
Michaels Stores, Inc.
Senior Notes
7.75% due 11/01/18*...................... 775,000 790,500
----------
RETAIL-DRUG STORE -- 0.4%
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16....................... 125,000 138,750
Rite Aid Corp.
Senior Sec. Notes
10.25% due 10/15/19...................... 375,000 410,156
----------
548,906
----------
RETAIL-PROPANE DISTRIBUTION -- 0.3%
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/21*...................... 371,000 359,870
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 1.7%
Federated Retail Holdings, Inc.
Company Guar. Notes
5.90% due 12/01/16....................... 1,487,000 1,598,525
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.65% due 07/15/24....................... 172,000 175,440
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.70% due 09/15/28....................... 72,000 69,660
Macy's Retail Holdings, Inc.
Company Guar. Notes
6.90% due 04/01/29....................... 233,000 235,912
Macy's Retail Holdings, Inc.
Company Guar. Notes
7.00% due 02/15/28....................... 80,000 80,800
----------
2,160,337
----------
RUBBER-TIRES -- 0.5%
Goodyear Tire & Rubber Co.
Senior Notes
10.50% due 05/15/16...................... 600,000 672,000
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07+(1)(2)(5)(6)......... $ 550,000 $ 0
----------
SHIPBUILDING -- 0.5%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/18*...................... 275,000 287,031
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/21*...................... 361,000 376,343
----------
663,374
----------
SPECIAL PURPOSE ENTITY -- 0.2%
Nexeo Solutions LLC / Nexeo
Solutions Finance Corp.
Senior Sub. Notes
8.38% due 03/01/18*...................... 200,000 204,000
----------
TELECOM SERVICES -- 0.9%
West Corp.
Company Guar. Notes
7.88% due 01/15/19*...................... 1,120,000 1,141,000
----------
TELECOMMUNICATION EQUIPMENT -- 0.6%
Sorenson Communications, Inc.
Senior Sec. Notes
10.50% due 02/01/15*..................... 980,000 730,100
----------
TELEPHONE-INTEGRATED -- 3.4%
Frontier Communications Corp.
Senior Notes
7.13% due 03/15/19....................... 2,115,000 2,146,725
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15....................... 570,000 629,137
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/20....................... 1,330,000 1,366,575
Windstream Corp.
Company Guar. Notes
8.13% due 09/01/18....................... 275,000 293,563
----------
4,436,000
----------
TELEVISION -- 0.5%
Sinclair Television Group, Inc.
Senior Sec. Notes
9.25% due 11/01/17*...................... 540,000 602,100
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
----------
602,100
----------
THEATERS -- 0.5%
AMC Entertainment, Inc.
Company Guar. Notes
8.75% due 06/01/19....................... 425,000 461,125
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
THEATERS (CONTINUED)
Regal Entertainment Group
Company Guar. Notes
9.13% due 08/15/18........................ $ 215,000 $ 230,050
------------
691,175
------------
TRANSPORT-MARINE -- 1.1%
ACL I Corp.
Senior Notes
10.63% due 02/15/16*(4)................... 670,000 683,400
Marquette Transportation Co./Marquette
Transportation Finance Corp.
Senior Sec. Notes
10.88% due 01/15/17....................... 785,000 810,512
------------
1,493,912
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $100,255,719)....................... 103,949,334
------------
FOREIGN CORPORATE BONDS & NOTES -- 8.2%
COMPUTERS-MEMORY DEVICES -- 0.8%
Seagate HDD Cayman
Company Guar. Notes
6.88% due 05/01/20*....................... 685,000 683,287
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16........................ 360,000 377,550
------------
1,060,837
------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
Bombardier, Inc.
Senior Notes
7.75% due 03/15/20*....................... 445,000 483,381
------------
DIVERSIFIED MINERALS -- 0.3%
FMG Resources August 2006 Pty., Ltd.
Senior Notes
7.00% due 11/01/15*....................... 345,000 357,938
------------
ELECTRIC-GENERATION -- 0.1%
Intergen NV
Senior Sec. Notes
9.00% due 06/30/17*....................... 125,000 134,688
------------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10+(1)(2)(5)(9).......... 4,460,000 0
------------
INTERNET CONNECTIVITY SERVICES -- 0.3%
eAccess, Ltd.
Company Guar. Notes
8.25% due 04/01/18*(2).................... 340,000 348,925
------------
INVESTMENT COMPANIES -- 0.4%
Offshore Group Investments, Ltd.
Senior Sec. Notes
11.50% due 08/01/15....................... 455,000 505,050
------------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Escrow Notes
10.75% due 02/01/08+(1)(2)................ 2,150,000 0
------------
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA -- 1.0%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... 1,280,000 $ 1,328,000
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.5%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/17*......................... 640,000 667,200
-----------
OIL FIELD MACHINERY & EQUIPMENT -- 0.4%
Sevan Marine ASA
Sec. Notes
12.00% due 08/10/15......................... 500,000 536,250
-----------
PAPER & RELATED PRODUCTS -- 0.9%
Cascades, Inc.
Company Guar. Notes
7.88% due 01/15/20.......................... 320,000 337,600
Fibria Overseas Finance, Ltd.
Company Guar. Notes
7.50% due 05/04/20*......................... 802,000 870,170
-----------
1,207,770
-----------
SATELLITE TELECOM -- 0.5%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/19*......................... 660,000 660,825
-----------
SPECIAL PURPOSE ENTITIES -- 1.9%
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 01/15/15+*(7)(9).................. 1,025,000 12,812
LBG Capital No.1 PLC
Bank Guar. Notes
7.88% due 11/01/20*......................... 2,520,000 2,458,260
-----------
2,471,072
-----------
TELECOM SERVICES -- 0.7%
Wind Acquisition Finance SA
Company Guar. Notes
11.75% due 07/15/17*........................ 810,000 931,500
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $15,542,531).......................... 10,693,436
-----------
LOANS(10)(11) -- 4.6%
BEVERAGES-NON-ALCOHOLIC -- 0.4%
Le-Natures, Inc.
9.39% due 03/01/11+(2)(5)(8)................ 1,200,000 480,000
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
12.25% due 08/15/13(2)(4)................... 1,554,448 46,633
-----------
CASINO SERVICES -- 1.1%
Herbst Gaming, Inc.
5.50% due 12/31/15(2)....................... 410,185 428,131
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
CASINO SERVICES (CONTINUED)
Holding Gaming Borrower LP
9.25% due 02/19/13(2)........................... $ 995,000 $1,044,750
----------
1,472,881
----------
COMMERCIAL SERVICES -- 0.6%
Vertrue, Inc.
7.54% due 08/14/15(2)........................... 1,010,000 802,950
----------
ELECTRIC-INTEGRATED -- 1.3%
Texas Competitive Electric Holdings Co. LLC
3.85% due 10/10/14(2)........................... 2,051,952 1,732,067
----------
MEDICAL-DRUGS -- 0.6%
Triax Pharmaceuticals LLC
16.50% due 08/31/11+(1)(2)(7)(12)............... 1,657,560 709,436
----------
THEATERS -- 0.6%
AMC Entertainment Holdings, Inc.
5.54% due 06/15/12(2)(4)........................ 782,115 778,204
----------
TOTAL LOANS
(cost $9,144,223)............................... 6,022,171
----------
COMMON STOCK -- 1.1%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings+(16)................. 692 26,573
----------
CASINO SERVICES -- 0.0%
Capital Gaming International, Inc.+(1)(2)........ 77 0
Greektown, Inc.(1)(2)............................ 370 0
----------
0
----------
FOOD-MISC. -- 0.4%
Wornick Co.+(1)(2)............................... 7,270 450,340
----------
GAMBLING (NON-HOTEL) -- 0.2%
Shreveport Gaming Holdings, Inc.+(1)(2).......... 14,150 186,780
----------
GAS-DISTRIBUTION -- 0.1%
MXEnergy Holdings, Inc.+(1)(2)................... 192,375 183,600
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(1)(2)(13)............. 128,418 642
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International, Inc.+(1)(2). 69,700 1,742
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(1)(2)......... 19,388 22,975
----------
PAPER & RELATED PRODUCTS -- 0.4%
Caraustar Industries, Inc.+(1)(2)................ 73 580,545
----------
TOTAL COMMON STOCK
(cost $3,096,832)............................... 1,453,197
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.2%
CASINO SERVICES -- 0.2%
Herbst Gaming, Inc.(2)
(cost $232,721)................................. 23,439 290,059
----------
CONVERTIBLE PREFERRED STOCK -- 0.3%
AUTO-CARS/LIGHT TRUCKS -- 0.3%
General Motors Co.,
Series B 4.75%
(cost $405,000)................................. 8,100 390,420
----------
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
PREFERRED STOCK -- 2.2%
DIVERSIFIED FINANCIAL SERVICES -- 0.7%
Citigroup Capital XIII FRS
7.88%.................................... $ 34,000 $ 931,600
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC, Class C+(1)(2). 39,177 196
------------
SPECIAL PURPOSE ENTITY -- 1.5%
GMAC Capital Trust I FRS
8.13%.................................... 79,000 2,014,500
------------
TOTAL PREFERRED STOCK
(cost $3,003,060)........................ 2,946,296
------------
WARRANTS+ -- 0.1%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings
Expires 06/09/14
(strike price $55.31)(2)................. 3,355 4,026
Masonite Worldwide Holdings
Expires 06/09/16
(strike price $55.31)(2)................. 2,517 3,146
------------
7,172
------------
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Association, Inc.
Expires 02/19/14(1)(2)................... 3,250 0
------------
TELEVISION -- 0.1%
Ion Media Networks, Inc.
Expires 12/18/16
(strike price $687.50)(1)(2)............. 327 42,510
Ion Media Networks, Inc.
Expires 12/18/16
(strike price $500.00)(1)(2)............. 327 58,860
------------
101,370
------------
TOTAL WARRANTS
(cost $3,365)............................ 108,542
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $134,376,630)...................... 129,307,519
------------
REPURCHASE AGREEMENTS -- 1.3%
Bank of America Securities Joint
Repurchase Agreement(14)................. 1,320,000 1,320,000
UBS Securities LLC Joint
Repurchase Agreement(14)................. 330,000 330,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $1,650,000)........................ 1,650,000
------------
TOTAL INVESTMENTS
(cost $136,026,630)(15).................. 99.8% 130,957,519
Other assets less liabilities............... 0.2 317,213
---------- ------------
NET ASSETS 100.0% $131,274,732
========== ============
--------
+ 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 March 31, 2011, the aggregate value of
these securities was $36,285,158 representing 27.6% 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 March 31, 2011, the aggregate value of these
securities was $10,761,868 representing 8.2% of net assets.
(3) Income may be received in cash or additional bonds at the discretion of
the issuer.
(4) PIK ("Payment-in-Kind") security. Bond, loan or preferred stock that pays
interest/dividends in the form of additional bonds, preferred stocks or
loans.
(5) Security is in default and did not pay principal at maturity.
(6) Company has filed for Chapter 7 bankruptcy protection.
(7) Security in default
(8) Company has filed for Chapter 11 bankruptcy protection.
(9) Company has filed for bankruptcy in country of issuance.
(10) 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.
(11) 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.
(12) A portion of the interest is paid in the form of additional bonds/loans.
(13) Consist of more than one class of securities traded together as a unit.
(14) See Note 2 for details of Joint Repurchase Agreements.
(15) See Note 5 for cost of investments on a tax basis.
(16) Fair valued security. Securities are classified as Level 2 based on the
securities valuation inputs; see Note 2.
FRS --Floating Rate Securities
The rates shown on FRS are the current rates at March 31, 2011 and unless
noted otherwise, the dates shown are the original maturity dates.
59
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2011 (see Note 2):
LEVEL 1--UNADJUSTED LEVEL 2--OTHER LEVEL 3--SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
------------------- ----------------- -------------------- ------------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes........ $ -- $ 3,454,064 $ -- $ 3,454,064
U.S. Corporate Bonds & Notes..... -- 99,688,366 4,260,968 103,949,334
Foreign Corporate Bonds & Notes.. -- 10,693,436 0 10,693,436
Loans............................ -- 2,160,198 3,861,973 6,022,171
Common Stock..................... -- 26,573 1,426,624 1,453,197
Membership Interest Certificates. -- 290,059 -- 290,059
Convertible Preferred Stock...... 390,420 -- -- 390,420
Preferred Stock.................. 2,946,100 -- 196 2,946,296
Warrants......................... 7,172 -- 101,370 108,542
Repurchase Agreements.............. -- 1,650,000 -- 1,650,000
----------- ------------ ----------- ------------
TOTAL.............................. $ 3,343,692 $117,962,696 $ 9,651,131 $130,957,519
=========== ============ =========== ============
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 -- 168,433 -- --
Realized gain (loss)................................ (1,410,578) -- (1,523) -- --
Change in unrealized appreciation (depreciation)(1). 1,513,917 -- (672,330) (498) (196)
Net purchases (sales)............................... (1,187,310) -- (1,582,863) 510,742 --
Transfers in and/or out of Level 3(2)............... 1,695,831 0 -- -- --
----------- ----------- ----------- ---------- -----
Balance as of 3/31/2011............................. $ 4,260,968 $ 0 $ 3,861,973 $1,426,624 $ 196
=========== =========== =========== ========== =====
WARRANTS
---------
Balance as of 3/31/2010............................. $ 0
Accrued discounts/premiums.......................... --
Realized gain (loss)................................ (129,004)
Change in unrealized appreciation (depreciation)(1). 227,009
Net purchases (sales)............................... 3,365
Transfers in and/or out of Level 3(2)............... --
---------
Balance as of 3/31/2011............................. $ 101,370
=========
--------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
March 31, 2011 includes:
U.S. CORPORATE FOREIGN CORPORATE
BONDS & NOTES BONDS & NOTES LOANS COMMON STOCK PREFERRED STOCK WARRANTS
-------------- ----------------- --------- ------------ --------------- --------
$55,249 $-- $(965,348) $(498) $(196) $98,005
======= === ========= ===== ===== =======
--------
(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
60
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO PROFILE -- MARCH 31, 2011 -- (UNAUDITED)
ALLOCATION BY STATES*
Massachusetts................. 21.1%
New York...................... 16.4
New Jersey.................... 10.6
Colorado...................... 10.2
Ohio.......................... 9.4
Missouri...................... 5.8
Texas......................... 5.5
New Mexico.................... 4.3
Connecticut................... 4.2
California.................... 3.8
Hawaii........................ 3.0
Arizona....................... 1.9
Pennsylvania.................. 1.6
Kentucky...................... 1.1
Georgia....................... 0.1
Registered Investment Company. 0.1
----
99.1%
====
CREDIT QUALITY ALLOCATION+#
AAA........ 16.5%
AA......... 65.0
A.......... 10.9
BBB........ 1.8
Not Rated@. 5.8
-----
100.0%
=====
--------
*Calculated as a percentage of net assets.
+Source: Standard and Poor's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
61
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES -- 99.0%
ARIZONA -- 1.9%
Arizona Health Facilities Authority Revenue,
5.50% due 01/01/31................................... $1,325,000 $1,278,506
----------
CALIFORNIA -- 3.8%
East Bay California Municipal Utility District Water
System Revenue,
Series A
5.00% due 06/01/32(1)................................ 2,500,000 2,518,275
----------
COLORADO -- 10.2%
Aurora Colorado Water Improvement Revenue,
Series A
5.00% due 08/01/36(1)................................ 3,000,000 2,936,520
Regional Transportation District Colorado Sales
Tax Revenue,
Series A
4.50% due 11/01/35(1)................................ 1,375,000 1,221,316
Regional Transportation District Colorado Sales
Tax Revenue,
Series A
5.00% due 11/01/28(1)................................ 2,500,000 2,555,975
----------
6,713,811
----------
CONNECTICUT -- 4.2%
State of Connecticut, Refunded,
Series B
5.00% due 06/01/14(1)................................ 2,500,000 2,787,500
----------
GEORGIA -- 0.1%
Georgia Municipal Electric Authority,
Power Revenue,
Series Y
6.40% due 01/01/13(1)................................ 60,000 63,988
----------
HAWAII -- 3.0%
Honolulu Hawaii City & County Board
Water Supply,
Water System Revenue,
Series A
4.75% due 07/01/31(1)................................ 2,000,000 1,981,900
----------
KENTUCKY -- 1.1%
Louisville & Jefferson County Kentucky Visitors &
Convention Commission
Series B
0.24% due 12/01/22(1)................................ 750,000 750,000
----------
MASSACHUSETTS -- 21.1%
Commonwealth of Massachusetts VRS
General Obligation
0.28% due 12/01/30................................... 800,000 800,000
Massachusetts State School Building Authority,
Series A
5.00% due 08/15/24(1)................................ 3,000,000 3,134,700
Massachusetts State Water Resources Authority,
Revenue
Series A
5.00% due 08/01/24(1)................................ 3,910,000 4,072,304
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MASSACHUSETTS (CONTINUED)
Massachusetts State,
Series C
5.25% due 08/01/24(1).......................... $2,300,000 $ 2,497,869
University of Massachusetts Building Authority
Project Revenue,
Series 04-1
5.25% due 11/01/27(1).......................... 3,000,000 3,440,610
-----------
13,945,483
-----------
MISSOURI -- 5.8%
Missouri State Health & Educational Facilities
Authority Revenue VRS
0.22% due 06/01/16............................. 1,050,000 1,050,000
Missouri State Health & Educational Facilities
Authority Revenue VRS
0.25% due 09/01/30............................. 700,000 700,000
Missouri State Health & Educational Facilities
Authority,
Series 2003-B
5.50% due 11/15/32(1).......................... 2,000,000 2,033,420
-----------
3,783,420
-----------
NEW JERSEY -- 10.6%
Garden State Preservation Trust New Jersey
Open Space & Farmland,
Series A
5.80% due 11/01/17(1).......................... 2,500,000 2,865,950
New Jersey Economic Development
Authority Revenue, VRS
5.00% due 09/01/27(1).......................... 2,000,000 2,143,260
New Jersey State Transportation Transit Fund
Authority,
Series C
zero coupon due 12/15/25(1).................... 5,000,000 2,003,700
-----------
7,012,910
-----------
NEW MEXICO -- 4.3%
New Mexico Finance Authority Transportation,
Series A
5.25% due 06/15/21(1).......................... 2,500,000 2,828,975
-----------
NEW YORK -- 16.4%
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/13(1).......................... 410,000 450,159
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/13(1).......................... 35,000 39,597
City of Niagara Falls New York,
General Obligation
7.50% due 03/01/14(1).......................... 510,000 579,023
City of Niagara Falls New York,
Prerefunded,
General Obligation
7.50% due 03/01/14(1).......................... 45,000 53,527
62
SUNAMERICA TAX EXEMPT INSURED FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2011 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------------
MUNICIPAL BONDS & NOTES (CONTINUED)
NEW YORK (CONTINUED)
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 $ 2,740,478
New York State Thruway Authority,
Series G
5.25% due 01/01/27(1).......................... 1,500,000 1,525,500
Port Authority New York & New Jersey, Revenue
Bonds
4.50% due 09/15/39............................. 1,500,000 1,311,915
Sales Tax Asset Receivables Corp.,
Series A
5.25% due 10/15/27(1).......................... 2,000,000 2,064,860
Triborough Bridge & Tunnel Authority,
Series A-2
5.25% due 11/15/34............................. 2,000,000 2,022,380
-----------
10,787,439
-----------
OHIO -- 9.4%
Ohio State Higher Educational Facility
Commission, Revenue
5.25% due 01/01/29............................. 1,845,000 1,855,240
Olentangy Local School District Ohio,
Series A
5.25% due 12/01/27(1).......................... 3,250,000 3,667,137
Woodridge, Ohio, Woodmore Local
School District,
6.80% due 12/01/14(1).......................... 620,000 671,944
-----------
6,194,321
-----------
PENNSYLVANIA -- 1.6%
Pennsylvania State Higher Educational Facility
Authority, Series B
6.00% due 08/15/22............................. 1,000,000 1,082,630
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
TEXAS -- 5.5%
Austin Texas Water & Wastewater System,
Series A
5.00% due 11/15/34(1)................... $2,140,000 $ 2,151,321
Dallas Texas Area Rapid
Transportation, Sales Tax Revenue
5.00% due 12/01/36(1)................... 1,500,000 1,495,605
-----------
3,646,926
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $64,045,776)...................... 65,376,084
-----------
SHORT-TERM INVESTMENT SECURITIES -- 0.1%
REGISTERED INVESTMENT COMPANY -- 0.1%
SSGA Tax Free Money Market Fund
(cost $45,264).......................... 45,264 45,264
-----------
TOTAL INVESTMENTS --
(cost $64,091,040)(2)................... 99.1% 65,421,348
Other assets less liabilities.............. 0.9 587,587
---------- -----------
NET ASSETS 100.0% $66,008,935
========== ===========
--------
(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 $52,534,936 or 79.6% of Net
Assets. On November 8, 2010, Ambac Financial Group, Inc. ("AMBAC") the
parent company of AAC filed for Chapter 11 bankruptcy protection.
(2) See Note 5 for cost of investments on a tax basis.
VRS --Variable Rate Securities
The rates shown on VRS are the current rates at March 31, 2011 and unless noted
otherwise, the dates shown are the original maturity dates.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2011 (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......... $ -- $65,376,084 $ -- $65,376,084
Short-Term Investment Securities:
Registered Investment Company... -- 45,264 -- 45,264
----------- ----------- ----------- -----------
TOTAL............................. $ -- $65,421,348 $ -- $65,421,348
=========== =========== =========== ===========
See Notes to Financial Statements
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011
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.
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (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
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (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 March
31, 2011 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 year ended March 31, 2011, 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
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (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
year ended March 31, 2011, the U.S. Government Securities Fund and the GNMA
Fund had realized gains (losses) from mortgage-backed dollar rolls of
$1,326,641 and $5,661,328, respectively.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted 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 March 31, 2011, the following portfolios held an undivided interest in
the joint repurchase agreement with Bank of America Securities:
PERCENTAGE PRINCIPAL
FUNDS INTEREST AMOUNT
----- ---------- ----------
High Yield Bond. 0.50% $1,320,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America Securities, dated March 31, 2011, bearing interest at a rate
of 0.06% per annum, with a principal amount of $264,970,000, a repurchase
price of $264,970,442, and a maturity date of April 1, 2011. The repurchase
agreement is collateralized by the following securities:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 1.00% 12/31/2011 $200,000,000 $201,590,988
U.S. Treasury Notes. 2.13% 12/31/2015 68,375,000 68,640,083
As of March 31, 2011, the following portfolios held an undivided interest in
the joint repurchase agreement with State Street Bank & Trust Co.:
PERCENTAGE PRINCIPAL
FUNDS OWNERSHIP AMOUNT
----- ---------- ----------
Strategic Bond. 2.23% $2,115,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated March 31, 2011, bearing interest at a
rate of 0.01% per annum, with a principal amount of $94,912,000, a
repurchase price of $94,912,026, and a maturity date of April 1, 2011. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- --------- ----------- -----------
U.S. Treasury Bills. 0.05% 4/21/2011 $96,815,000 $96,812,289
As of March 31, 2011, the following portfolios held an undivided interest in
the joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
---- ---------- ---------
High Yield Bond. 0.51% $330,000
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated March 31, 2011, bearing interest at a rate of
0.10% per annum, with a principal amount of $65,085,000, a repurchase price
of $65,085,181, and a maturity date of April 1, 2011. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 3.25% 12/31/2016 $33,000,000 $34,509,300
U.S. Treasury Bonds. 8.13% 8/15/2021 22,472,000 31,766,997
As of March 31, 2011, the following portfolios held an undivided interest in
the joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND INTEREST AMOUNT
---- ---------- -----------
U.S. Government Securities. 9.47% $16,580,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated March 31, 2011, bearing interest at a rate of
0.08% per annum, with a principal amount of $175,000,000, a repurchase price
of $175,000,399, and a maturity date of April 1, 2011. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- --------- ------------ ------------
U.S. Treasury Inflation Index Bond. 3.88% 4/15/2029 $175,000,000 $178,500,081
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 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.
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
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 2007.
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 year ended March 31, 2011, the amount of the investment advisory fee
waived was $250,026 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.
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
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
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.
For the year ended March 31, 2011, 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. $221,343
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A. $395,622
U.S. Government Securities Class B. 31,178
U.S. Government Securities Class C. 47,415
GNMA Class A....................... 404,956
GNMA Class B....................... 55,968
GNMA Class C....................... 121,136
High Yield Bond Class A............ 124,993
High Yield Bond Class B............ 35,409
High Yield Bond Class C............ 65,605
At March 31, 2011, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment are as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities. $455,667
CLASS SPECIFIC
EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities Class A. $803,645
U.S. Government Securities Class B. 72,410
U.S. Government Securities Class C. 102,631
GNMA Class A....................... 894,593
GNMA Class B....................... 125,971
GNMA Class C....................... 248,051
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an
affiliate of the Adviser. Each Fund has adopted a Distribution Plan on
behalf of each Class in accordance with the provisions of Rule 12b-1 under
the 1940 Act (each a "Plan" and collectively the "Plans"), hereinafter
referred to as the "Class A Plan," the "Class B Plan" and the "Class C
Plan." In adopting the Class A Plan, the Class B Plan and the Class C Plan,
the Trustees determined that there was a reasonable likelihood that each
such Plan would benefit the Trust and the shareholders of the respective
class. The sales charge and distribution fees of a particular class will not
be used to subsidize the sale of shares of any other class.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated for include
fees paid to broker-dealers that have sold Fund shares, commissions, and
other expenses such as those incurred for sales literature, prospectus
printing and distribution and compensation to wholesalers. It is possible
that in any given year the amount paid to the Distributor under the Class A
Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution
costs as described above. The Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the year ended March 31,
2011, SACS received fees (see the Statement of Operations) based upon the
aforementioned rates.
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that for the year
ended
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
March 31, 2011, 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. $ 39,016 $19,916 $ 13,058 $ 34 $23,924 $ 183
GNMA....................... 292,851 76,578 168,442 6,299 54,406 15,255
Strategic Bond............. 353,684 38,221 259,642 5,979 70,733 23,039
High Yield Bond............ 196,428 23,703 140,459 216 21,323 2,147
Tax Exempt Insured......... 93,444 8,462 68,349 917 5,431 5,027
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the year ended March 31, 2011, the Funds incurred the following expenses
which are included in transfer agent fees and expenses in the Statement of
Operations to compensate SAFS pursuant to the terms of the Service Agreement:
PAYABLE AT
FUND EXPENSES MARCH 31, 2011
---- -------- --------------
US Government Securities Fund Class A. $352,802 $27,034
US Government Securities Fund Class B. 16,764 1,121
US Government Securities Fund Class C. 32,188 2,509
GNMA Fund Class A..................... 591,868 45,690
GNMA Fund Class B..................... 57,993 3,758
GNMA Fund Class C..................... 155,642 11,691
Strategic Bond Fund Class A........... 573,705 47,652
Strategic Bond Fund Class B........... 114,150 9,768
Strategic Bond Fund Class C........... 563,128 46,666
High Yield Bond Fund Class A.......... 169,240 14,211
High Yield Bond Fund Class B.......... 37,633 3,005
High Yield Bond Fund Class C.......... 90,577 7,536
Tax Exempt Insured Fund Class A....... 116,781 9,703
Tax Exempt Insured Fund Class B....... 4,506 320
Tax Exempt Insured Fund Class C....... 35,654 2,433
At March 31, 2011, the following affiliates owned a percentage of the
outstanding shares of the following funds; Focused Fixed Income and Equity
Strategy Portfolio and Focused Multi-Asset Strategy Portfolio owned 6.8% and
13.6%, respectively of the SunAmerica U.S. Government Fund; Focused Balanced
Strategy Portfolio and Focused Multi-Asset Strategy Portfolio owned 14.1%
and 8.1%, respectively of the SunAmerica GNMA Fund, and Focused Multi-Asset
Strategy Portfolio owned 11.6% of SunAmerica Strategic Bond Fund.
On September 22, 2008, AIG, the ultimate parent of SunAmerica, SACS, SAFS,
and AMG, entered into a revolving credit facility ("FRBNY Credit Facility")
with the Federal Reserve Bank of New York ("NY Fed"). In connection with the
FRBNY Credit Facility, on March 4, 2009, AIG issued its Series C Perpetual,
Convertible, Participating Preferred Stock (the "Series C Preferred Stock")
to the AIG Credit Facility Trust, a trust established for the sole benefit
of the United States Treasury (the "Trust"). The Series C Preferred Stock
was entitled to approximately 77.8% of the voting power of AIG's outstanding
stock.
On January 14, 2011, AIG completed a series of previously announced
integrated transactions (the "Recapitalization") to recapitalize AIG. In the
Recapitalization, AIG repaid the NY Fed approximately $21 billion in cash,
representing all amounts owing under the FRBNY Credit Facility and the
facility was terminated. Also as part of the Recapitalization, (i) the
Series C Preferred Stock was exchanged for shares of AIG Common Stock, which
was then transferred to the U.S. Department of the
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
Treasury, and the Trust, which had previously held all shares of the Series
C Preferred Stock, was terminated, and, (ii) AIG's Series E Preferred Shares
and Series F Preferred Shares were exchanged for shares of AIG Common Stock
and a new Series G Preferred Shares (which functions as a $2 billion
commitment to provide funding that AIG will have the discretion and option
to use). As a result of the Recapitalization, the United States Treasury
held a majority of outstanding shares of AIG Common Stock.
Note 4. Purchases and Sales of Investment Securities
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the year ended March 31, 2011 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)................................. $ -- $ -- $742,628,685 $63,949,026 $1,403,999
Sales (excluding U.S. government securities). -- -- 778,577,416 73,500,777 8,422,145
Purchases of U.S. government securities...... 367,739,135 558,351,151 97,684,975 -- --
Sales of U.S. government securities.......... 325,010,690 529,127,282 87,442,302 -- --
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, 2011 FOR THE YEAR ENDED MARCH 31, 2011
---------------------------------------- ------------------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
INCOME LOSS CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS TAX EXEMPT
- ---------- -------------- -------------- ----------- ------------- ----------
U.S. Government Securities Fund. $ 981,127 $ -- $ 2,900,118 $ 5,676,490 $439,590 $ --
GNMA Fund....................... 528,337 -- 12,908,407 21,291,432 -- --
Strategic Bond Fund............. 2,079,084 (70,758,609) 6,463,319 32,878,518 -- --
High Yield Bond Fund............ 658,410 (52,757,682) (7,567,558) 10,431,835 -- --
Tax Exempt Insured Fund......... 256,657* (10,707) 1,338,815 133,030 56,016 2,337,677
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2010
------------------------------------
ORDINARY LONG-TERM
INCOME CAPITAL GAINS TAX EXEMPT
- ----------- ------------- ----------
U.S. Government Securities Fund. $ 5,574,854 $2,031,112 $ --
GNMA Fund....................... 16,553,705 6,540 --
Strategic Bond Fund............. 35,389,553 -- --
High Yield Bond Fund............ 14,724,554 -- --
Tax Exempt Insured Fund......... 4,042 -- 2,410,174
--------
* Included in this amount are tax exempt distributable earnings of $256,657.
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.......................................... $159,775,239 $311,007,054 $551,807,626 $138,525,077 $64,082,533
============ ============ ============ ============ ===========
Appreciation.................................. 4,075,714 14,178,216 21,926,141 11,033,328 2,334,169
Depreciation.................................. (1,175,596) (1,269,809) (15,511,479) (18,600,886) (995,354)
------------ ------------ ------------ ------------ -----------
Unrealized appreciation (depreciation) -- net. $ 2,900,118 $ 12,908,407 $ 6,414,662 $ (7,567,558) $ 1,338,815
============ ============ ============ ============ ===========
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
As of March 31, 2011, 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 2012 2013 2014 2015 2016 2017 2018 2019
---- ------- ------- ------- ------- ---------- ----------- ---------- -------
U.S. Government
Securities............. $ -- $ -- $ -- $ -- $ -- $ -- -- $ --
GNMA.................... -- -- -- -- -- -- -- --
Strategic Bond.......... -- -- -- -- -- 15,633,479 55,125,130 --
High Yield Bond......... -- -- -- -- 4,051,423 9,384,737 39,321,522 --
Tax Exempt Insured Fund. -- -- -- -- -- -- -- 10,707
The Funds indicated below, utilized capital loss carryforwards, which offset
net realized taxable gains and had expired capital loss carryforwards in the
year ended March 31, 2011:
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND UTILIZED EXPIRED
---- ------------ ------------
U.S. Government Securities. $ -- $ --
GNMA....................... -- --
Strategic Bond............. 23,195,493 --
High Yield Bond............ 2,757,260 46,237,720
Tax Exempt Insured Fund.... -- --
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, 2011, the Funds elected
to defer losses as follows:
DEFERRED DEFERRED
POST-OCTOBER POST-OCTOBER
FUND CAPITAL LOSS CURRENCY LOSS
---- ------------ -------------
U.S. Government Securities. $2,327,030 $--
GNMA....................... 3,486,342 --
Strategic Bond............. -- --
High Yield Bond Fund....... -- --
Tax Exempt Insured Fund.... 439,699 --
For the period ended March 31, 2011, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net paydown adjustments, amortization of discount/premium, expiration
of capital loss carry forward amounts and treatment of foreign currency to
the components of net assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL PAID-
INCOME (LOSS) GAIN (LOSS) IN
- -------------- ------------- -------------
U.S. Government Securities. $ 266,229 $ (265,318) $ (911)
GNMA....................... 1,710,936 (1,686,778) (24,158)
Strategic Bond............. 3,397,676 (3,397,676) --
High Yield Bond............ 339,504 45,898,216 (46,237,720)
Tax Exempt Insured......... (1,697) 1,697 --
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each series were as follows:
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2011 MARCH 31, 2010
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares sold(1)(2)(3) 3,046,784 $ 29,548,060 4,951,835 $ 48,670,045 180,013 $ 1,766,350 190,591 $ 1,855,557
Reinvested shares... 497,819 4,807,911 578,905 5,603,767 14,515 139,900 25,168 243,951
Shares
redeemed(1)(2)..... (5,044,057) (49,165,213) (6,748,893) (65,210,789) (491,629) (4,766,732) (895,135) (8,716,473)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)......... (1,499,454) $ (14,809,242) (1,218,153) $ (10,936,977) (297,101) $ (2,860,482) (679,376) $ (6,616,965)
=========== ============= =========== ============= ========== ============ ========== ============
U.S. GOVERNMENT SECURITIES FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold......... 383,411 $ 3,767,034 352,862 $ 3,451,796
Reinvested shares... 29,503 283,865 37,758 365,353
Shares redeemed(3).. (587,418) (5,704,619) (837,746) (8,141,457)
----------- ------------- ----------- -------------
Net increase
(decrease)......... (174,504) $ (1,653,720) (447,126) $ (4,324,308)
=========== ============= =========== =============
GNMA FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2011 MARCH 31, 2010
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares sold(4)(5)(6) 5,379,295 $ 64,344,170 8,843,827 $ 103,866,817 263,241 $ 3,143,580 455,746 $ 5,370,482
Reinvested shares... 1,038,883 12,183,827 850,332 9,992,440 84,817 996,311 79,649 938,224
Shares
redeemed(4)(5)..... (10,123,858) (119,724,529) (14,279,708) (167,696,258) (1,381,943) (16,447,756) (1,602,886) (18,883,109)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)......... (3,705,680) $ (43,196,532) (4,585,549) $ (53,837,001) (1,033,885) $(12,307,865) (1,067,491) $(12,574,403)
=========== ============= =========== ============= ========== ============ ========== ============
GNMA FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Sharessold 1,530,789 $ 18,436,539 2,818,246 $ 33,248,319
Reinvested shares... 205,407 2,412,799 140,442 1,656,772
Shares redeemed(6).. (2,654,445) (31,485,438) (3,180,279) (37,481,705)
----------- ------------- ----------- -------------
Net increase
(decrease)......... (918,249) $ (10,636,100) (221,591) $ (2,576,614)
=========== ============= =========== =============
--------
(1)For the year ended March 31, 2011, includes automatic conversion of 193,580
shares of Class B shares in the amount of $1,879,855, to 193,616 shares of
Class A shares in the amount of $1,879,855.
(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.
(4)For the year ended March 31, 2011, includes automatic conversion of 843,418
shares of Class B shares in the amount of $10,050,720 to shares 845,598 of
Class A shares in the amount of $10,050,720.
(5)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.
(6)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.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
STRATEGIC BOND FUND
---------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2011 MARCH 31, 2010
-------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------ ---------- ------------ ---------- ------------
Shares sold(1)(2)(3) 22,628,092 $ 77,319,848 28,833,017 $ 89,973,498 2,765,629 $ 9,415,936 3,900,120 $ 12,442,954
Reinvested shares... 3,180,495 10,853,981 3,807,770 12,072,891 458,590 1,564,244 508,364 1,608,679
Shares
redeemed(1)(2)..... (38,630,452) (131,255,393) (29,356,872) (92,555,446) (3,238,059) (11,037,855) (3,349,123) (10,498,692)
----------- ------------- ----------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)......... (12,821,865) $ (43,081,564) 3,283,915 $ 9,490,943 (13,840) $ (57,675) 1,059,361 $ 3,552,941
=========== ============= =========== ============ ========== ============ ========== ============
STRATEGIC BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------
Shares sold......... 12,447,478 $ 42,527,651 19,933,246 $ 62,309,817
Reinvested shares... 2,079,522 7,121,755 2,424,904 7,721,208
Shares redeemed(3).. (19,380,988) (66,358,228) (18,604,628) (59,021,966)
----------- ------------- ----------- ------------
Net increase
(decrease)......... (4,853,988) $ (16,708,822) 3,753,522 $ 11,009,059
=========== ============= =========== ============
HIGH YIELD BOND FUND
---------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2011 MARCH 31, 2010
-------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------ ---------- ------------ ---------- ------------
Shares sold(4)(5)(6) 8,240,345 $ 27,927,583 7,732,814 $ 23,414,767 644,061 $ 2,176,466 845,744 $ 2,570,744
Reinvested shares... 1,013,613 3,444,144 1,547,670 4,861,972 204,366 694,841 348,771 1,096,203
Shares
redeemed(4)(5)..... (11,093,022) (37,411,064) (9,167,809) (28,603,749) (1,742,702) (5,929,013) (2,524,892) (7,828,528)
----------- ------------- ----------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease)......... (1,839,064) $ (6,039,337) 112,675 $ (327,010) (894,275) $ (3,057,706) (1,330,377) $ (4,161,581)
=========== ============= =========== ============ ========== ============ ========== ============
HIGH YIELD BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------
Shares sold......... 2,177,154 $ 7,443,311 4,117,325 $ 12,443,591
Reinvested shares... 463,761 1,583,986 752,875 2,379,032
Shares redeemed(6).. (4,700,769) (16,042,293) (4,817,123) (15,137,655)
----------- ------------- ----------- ------------
Net increase
(decrease)......... (2,059,854) $ (7,014,996) 53,077 $ (315,032)
=========== ============= =========== ============
--------
(1)For the year ended March 31, 2011, includes automatic conversion of 999,134
shares of Class B shares in the amount of $3,408,891 to 999,134 shares of
Class A shares in the amount of $3,408,891.
(2)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.
(3)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.
(4)For the year ended March 31, 2011, includes automatic conversion of 538,294
shares of Class B shares in the amount of $1,830,519 to 539,503 shares of
Class A shares in the amount of $1,830,519.
(5)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.
(6)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.
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
TAX EXEMPT INSURED FUND
-----------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- -------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010 MARCH 31, 2011 MARCH 31, 2010
------------------------ ------------------------ -------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ------- ----------- -------- -----------
Shares sold(1)(2)(3) 898,697 $ 11,225,341 932,988 $ 11,729,716 38,517 $ 489,913 64,400 $ 810,262
Reinvested shares... 87,153 $ 1,097,005 82,253 1,035,297 2,057 25,990 2,633 33,157
Shares
redeemed(1)(2)..... (1,021,652) (12,768,001) (1,116,262) (14,059,383) (81,782) (1,036,971) (126,131) (1,582,742)
---------- ------------ ---------- ------------ ------- ----------- -------- -----------
Net increase
(decrease)......... (35,802) $ (445,655) (101,021) $ (1,294,370) (41,208) $ (521,068) (59,098) $ (739,323)
========== ============ ========== ============ ======= =========== ======== ===========
TAX EXEMPT INSURED FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2011 MARCH 31, 2010
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold......... 258,954 $ 3,306,277 544,809 $ 6,847,602
Reinvested shares... 19,556 246,728 19,393 244,223
Shares redeemed(3).. (545,025) (6,787,612) (379,122) (4,752,706)
---------- ------------ ---------- ------------
Net increase
(decrease)......... (266,515) $ (3,234,607) 185,080 $ 2,339,119
========== ============ ========== ============
--------
(1)For the years ended March 31, 2011, includes automatic conversion of 25,424
shares of Class B shares in the amount of $319,316 to 25,464 shares of Class
A shares in the amount of $319,316.
(2)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.
(3)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.
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
March 31, 2011, the following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUNDS OUTSTANDING CHARGES UTILIZED INTEREST
----- ----------- -------- ---------- --------
GNMA............... 48 $6,155 $3,123,815 1.48%
Strategic Bond..... 51 2,430 1,147,257 1.49
High Yield Bond.... 25 1,148 1,083,593 1.51
Tax Exempt Insured. 2 36 422,571 1.52
The following balance was outstanding as of March 31, 2011 at a rate of
1.43%, GNMA Fund: $1,034,107
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2011 -- (CONTINUED)
Note 8. Interfund Lending Agreement
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating funds to borrow money
from and loan money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended March 31, 2011 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.
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
LIABILITY EXPENSE PAYMENTS
--------------- --------------- ---------------
FUND AS OF MARCH 31, 2011
---- -----------------------------------------------
U.S. Government Securities. $12,589 $ 514 $3,786
GNMA....................... 6,053 789 1,577
Strategic Bond............. 6,124 1,028 1,470
High Yield Bond............ 5,292 247 1,568
Tax Exempt Insured......... 3,454 152 1,041
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 year ended March 31, 2011, the
Funds had 43.8% and 86.0%, respectively, of their total net assets invested
in such securities.
78
SUNAMERICA INCOME FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Income Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the five
funds constituting SunAmerica Income Funds (the "Funds") at March 31, 2011, the
results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Funds' management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at March 31, 2011 by correspondence with the custodian and
brokers and the application of alternative auditing procedures where securities
purchased had not been received, provide a reasonable basis for the opinion
expressed above.
PricewaterhouseCoopers LLP
Houston, Texas
May 27, 2011
79
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2011 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers who oversee operations of the Funds and other investment companies
within the Fund Complex.
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ----------- -------------- --------------------------- ------------ ---------------------------
DISINTERESTED
TRUSTEES
Dr. Judith L. Craven Trustee 2001- Retired. 78 Director, Belo Corporation
DOB: October 6, 1945 present (1992-present); Director,
Sysco Corporation (1996-
present); Director, Luby's
Inc. (1998-present).
William F. Devin Trustee 2001- Retired. 78 Director, Boston Options
DOB: December 30, present Exchange (2001-2010).
1938
Richard W. Grant Trustee; 2011- Retired. 30 None
DOB: October 25, Chairman present
1945 of the
Board
Stephen J. Gutman Trustee 1985- Vice President and 39 None
DOB: May 10, 1943 present Associate Broker, Corcoran
Group (real estate) (2003-
present); President and
Managing Member, Beau-
Brummell Soho LLC
(licensing of menswear
specialty retailing) (1995-
2009); SJG Marketing, Inc.
(2009-present).
William J. Shea Trustee 2004- Executive Chairman, Lucid, 39 Chairman of the Board,
DOB: February 9, present Inc., (medical technology Royal and SunAlliance Co.
1948 and information) (2007- U.S.A., Inc. (2004-2006);
present); Managing Director, Boston Private
Director, DLB Capital, LLC Financial Holdings (2004-
(private equity) (2006- present); Chairman,
2007). Demoullas Supermarkets
(1999-present).
80
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2011 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
------------------- ----------- -------------- --------------------------- ------------ --------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1995- President, CEO and 87 None
DOB: January 23, present Director, SunAmerica,
1954 (1995-present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993-present); Chairman,
Advisor Group, Inc. (2004-
present).
OFFICERS
John T. Genoy President 2007- Chief Financial Officer, N/A N/A
DOB: November 8, present SunAmerica (2002-present);
1968 Senior Vice President,
SunAmerica (2003-present);
Chief Operating Officer,
SunAmerica (2006-present).
Donna M. Handel Treasurer 2002- Senior Vice President, N/A N/A
DOB: June 25, 1966 present SunAmerica (2004-present).
Gregory N. Bressler Chief 2005- Senior Vice President and N/A N/A
DOB: November 17, Legal present General Counsel,
1966 Officer SunAmerica (2005-present).
and
Secretary
81
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2011 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ------------- -------------- --------------------------- ------------ --------------------
Timothy Pettee Vice 2004- Chief Investment Officer, N/A N/A
DOB: April 7, 1958 President present SunAmerica (2003-
present).
Michael Cheah Vice 2000- Senior Vice President, N/A N/A
DOB: January 4, 1960 President present SunAmerica (1999-present).
James Nichols Vice 2006- Director, President and N/A N/A
DOB: April 7, 1966 President present CEO, SACS (2006-
present); Senior Vice
President, SACS (2002-
2006); Senior Vice
President, SunAmerica
(2002-present).
Cynthia Gibbons Vice 2002- Vice President, SunAmerica N/A N/A
Skrehot President present (2007-present); Chief
DOB: December 6, and Chief Compliance Officer,
1967 Compliance SunAmerica (2002-2006).
Officer
("CCO")
Gregory R. Kingston Vice 2002- Vice President, SunAmerica N/A N/A
DOB: January 18, President present (2001-present).
1966 and
Assistant
Treasurer
Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A
DOB: August 15, 1953 President present General Counsel,
and SunAmerica (2005-
Assistant present).
Secretary
82
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2011 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ------------- -------------- --------------------------- ------------ --------------------
Matthew J. Hackethal Anti- 2006- Chief Compliance Officer, N/A N/A
DOB: December 31, Money present SunAmerica (2006-present);
1971 Laundering Vice President, Credit
Compliance Suisse Asset Management,
Officer LLC (2001-2006); CCO,
Credit Suisse Alternative
Funds (2005-2006).
--------
* The business address for each Trustee and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the investment adviser. The "Fund
Complex" includes the Trust (5 funds), SunAmerica Equity Funds (3 funds),
SunAmerica Series, Inc. (14 portfolios), SunAmerica Focused Alpha Growth
Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc. (1
fund), SunAmerica Money Market Funds, Inc. (2 funds); Anchor Series Trust
(9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (35 portfolios), VALIC Company I (33 portfolios),
VALIC Company II (15 portfolios), Seasons Series Trust (21 portfolios) and
SunAmerica Specialty Series (3 portfolios).
(2) Trusteeships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies regulated under the 1940 Act.
(3) Mr. Harbeck is an "interested person" of the Funds, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustees' retirement plan as discussed in Note 9 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
83
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- MARCH 31, 2011 -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon each Fund's income and distributions for the taxable
year ended March 31, 2011. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calender year ending December 31, 2011. The information necessary to
complete your income tax returns will be included with your Form 1099-DIV which
will be sent to shareholders in early 2012.
For the year ended March 31, 2011, the Funds paid the following long-term
capital gains dividends along with percentage of ordinary income dividends that
qualified for the 70% dividends received deduction for corporations:
NET QUALIFYING % FOR THE
LONG-TERM 70% DIVIDENDS
CAPITAL GAINS RECEIVED DEDUCTION
------------- --------------------
U.S. Government Securities Fund Class A. $0.02 -- %
U.S. Government Securities Fund Class B. 0.02 --
U.S. Government Securities Fund Class C. 0.02 --
GNMA Fund Class A....................... -- --
GNMA Fund Class B....................... -- --
GNMA Fund Class C....................... -- --
Strategic Bond Fund Class A............. -- 0.98
Strategic Bond Fund Class B............. -- 0.98
Strategic Bond Fund Class C............. -- 0.98
High Yield Bond Fund Class A............ -- 0.48
High Yield Bond Fund Class B............ -- 0.48
High Yield Bond Fund Class C............ -- 0.48
Tax-Exempt Insured Fund Class A......... 0.01 --
Tax-Exempt Insured Fund Class B......... 0.01 --
Tax-Exempt Insured Fund Class C......... 0.01 --
For the year ended March 31, 2011, certain dividends paid by the Strategic Bond
Fund and High Yield Bond Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the
distributions paid during the fiscal year, the following represents the maximum
amount that may be considered qualified dividend income:
PORTFOLIO AMOUNT
--------- --------
Strategic Bond Fund.. $347,243
High Yield Bond Fund. 49,118
84
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited)
As required by the Securities and Exchange Commission, the graphs on the
following pages compare the performance of a $10,000 investment in the
SunAmerica Income Funds' portfolios to a similar investment in an index. Please
note that "inception", as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Income Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
85
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
The SunAmerica U.S. Government Securities Fund Class A shares gained 3.12%
(before maximum sales charge) for the 12-month period ended March 31, 2011. The
Fund underperformed its benchmark, the Barclays Capital U.S. Government Index*,
which returned 4.28% during the same period.
The yield on the 10-year U.S. Treasury note began the annual period at 3.83%,
fell below 3.00% by the end of June 2010 and then dropped to 2.48% by the end
of September. The 10-year U.S. Treasury yield then rose to 3.25% by the end of
December 2010 and closed the annual period at 3.47% on March 31, 2011, 36 basis
points lower than the one-year prior level. (A basis point is 1/100th of a
percent.) Not surprisingly, the Fund's performance was impacted most during the
annual period by such fluctuations in underlying U.S. Treasury security
performance. During the first half of the annual period, when U.S. Treasury
yields declined with intensifying investor concerns regarding the economy, the
Fund delivered positive returns. During the second half of the annual period,
when U.S. Treasury yields rose as improving economic data encouraged investors
to take on more risk and move their assets both to non-Treasury sectors of the
bond market and the equity market, the Fund lost ground.
Throughout the annual period, the Fund pursued a strategy of holding minimal
Freddie Mac, Fannie Mae and other credit securities. This negatively impacted
Fund performance as the market became increasingly encouraged to assume more
credit risk. As of March 31, 2011, the Fund held just 0.65% of its total assets
in government-related agency securities. This small percentage of assets was
held exclusively in the securities of the Federal Farm Credit Banks Funding
Corporation.
The Fund's performance was also hindered by its duration positioning. The Fund
held a longer duration position than the Barclays Capital U.S. Government Index
through much of the annual period. While this positioning helped during the
first half of the annual period when interest rates decreased, such positive
contribution was more than offset by the detracting impact of increasing
interest rates overall during the second half of the annual period.
Finally, holding a sizable position of the Fund's total assets in cash through
the first three quarters of the annual period detracted, as fixed income assets
overall generated a higher return than cash. While we dramatically reduced this
allocation to cash to a near-zero position during the first quarter of 2011 and
correspondingly increased allocations to both U.S. Treasuries and
mortgage-backed securities, it was not enough to offset the negative impact of
the cash position from earlier in the fiscal year.
On the positive side, the Fund's significant allocation to securitized product,
especially mortgage-backed pass-through securities, during the annual period
boosted relative results. Mortgage-backed securities, which are not a component
of the Barclays Capital U.S. Government Index, outperformed U.S. Treasuries
during the annual period. (Pass-through mortgages consist of a pool of
residential mortgage loans, where homeowners' monthly payments of principal,
interest and prepayments pass from the original bank through a government
agency or investment bank to investors.)
At the end of the annual period, the Fund had approximately 45.88% of its total
net assets invested in U.S. Treasuries, 43.18% in government guaranteed
mortgage-backed securities, 0.65% in government-related agency securities and
the remainder in repurchase agreements. (A repurchase agreement is an agreement
between a seller and a buyer, usually of U.S. government securities, whereby
the seller agrees to repurchase the securities at an agreed price and, usually,
at a stated time.) The Fund maintained a longer duration than its benchmark
index at the end of the annual period.
--------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares. Interest rates and bond prices
typically move inversely to each other, therefore, as with any bond fund, the
value of your investment in these Funds may go up or down in response to
changes in interest rates.
* The Barclays Capital U.S. Government Index is a broad market value-weighted
index of U.S. Treasury securities with maturities of one year or more,
securities issued by U.S. Government agencies and quasi-federal corporations,
and corporate or foreign debt guaranteed by the U.S. Government. Indices are
not managed and an investor cannot invest directly into an index.
Securities listed may or may not be a part of current portfolio construction.
86
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in U.S. Government Securities Fund
Class A shares would have increased to $14,872. The same amount invested in
securities mirroring the performance of the Barclays Capital U.S. Government
Index would be valued at $16,522.
[CHART]
U.S. Government
Securities Barclays Capital
Fund Class A# U.S. Government Index**
------------------ ---------------------
3/31/2001 9,529 10,000.00
4/30/2001 9,436 9,898.00
5/31/2001 9,453 9,930.66
6/30/2001 9,520 9,976.34
7/31/2001 9,754 10,215.78
8/31/2001 9,857 10,342.45
9/30/2001 10,025 10,522.41
10/31/2001 10,215 10,793.89
11/30/2001 9,972 10,552.11
12/31/2001 9,844 10,460.33
1/31/2002 9,939 10,528.05
2/28/2002 10,067 10,625.25
3/31/2002 9,857 10,394.15
4/30/2002 10,105 10,641.82
5/31/2002 10,189 10,705.61
6/30/2002 10,339 10,855.42
7/31/2002 10,537 11,093.75
8/31/2002 10,746 11,313.58
9/30/2002 11,001 11,578.85
10/31/2002 10,983 11,485.78
11/30/2002 10,917 11,386.87
12/31/2002 11,155 11,662.76
1/31/2003 11,135 11,633.53
2/28/2003 11,282 11,821.22
3/31/2003 11,250 11,787.51
4/30/2003 11,293 11,842.13
5/31/2003 11,572 12,149.50
6/30/2003 11,497 12,085.89
7/31/2003 10,863 11,586.31
8/31/2003 10,969 11,651.12
9/30/2003 11,359 11,989.81
10/31/2003 11,193 11,819.12
11/30/2003 11,204 11,832.74
12/31/2003 11,307 11,937.57
1/31/2004 11,407 12,036.44
2/29/2004 11,532 12,180.60
3/31/2004 11,620 12,287.84
4/30/2004 11,242 11,918.09
5/31/2004 11,196 11,874.01
6/30/2004 11,267 11,922.17
7/31/2004 11,375 12,033.23
8/31/2004 11,591 12,267.58
9/30/2004 11,610 12,292.52
10/31/2004 11,703 12,390.39
11/30/2004 11,610 12,243.14
12/31/2004 11,703 12,352.66
1/31/2005 11,797 12,430.13
2/28/2005 11,741 12,342.33
3/31/2005 11,691 12,301.20
4/30/2005 11,905 12,498.61
5/31/2005 12,007 12,643.37
6/30/2005 12,042 12,714.60
7/31/2005 11,912 12,561.18
8/31/2005 12,087 12,746.43
9/30/2005 11,934 12,595.61
10/31/2005 11,805 12,507.04
11/30/2005 11,859 12,563.60
12/31/2005 12,018 12,680.14
1/31/2006 12,011 12,658.45
2/28/2006 12,038 12,678.57
3/31/2006 11,887 12,564.40
4/30/2006 11,798 12,529.38
5/31/2006 11,776 12,531.90
6/30/2006 11,804 12,566.86
7/31/2006 11,966 12,716.89
8/31/2006 12,155 12,896.49
9/30/2006 12,264 13,011.29
10/31/2006 12,334 13,079.28
11/30/2006 12,470 13,212.02
12/31/2006 12,368 13,120.81
1/31/2007 12,331 13,104.68
2/28/2007 12,547 13,306.36
3/31/2007 12,511 13,309.83
4/30/2007 12,568 13,376.14
5/31/2007 12,437 13,270.94
6/30/2007 12,371 13,265.59
7/31/2007 12,540 13,454.63
8/31/2007 12,695 13,657.79
9/30/2007 12,763 13,744.33
10/31/2007 12,868 13,844.91
11/30/2007 13,203 14,225.35
12/31/2007 13,203 14,256.97
1/31/2008 13,469 14,598.34
2/29/2008 13,548 14,736.47
3/31/2008 13,613 14,834.15
4/30/2008 13,438 14,625.87
5/31/2008 13,248 14,465.90
6/30/2008 13,341 14,550.25
7/31/2008 13,351 14,613.86
8/31/2008 13,545 14,763.01
9/30/2008 13,652 14,829.71
10/31/2008 13,558 14,788.85
11/30/2008 14,251 15,490.04
12/31/2008 14,725 16,023.42
1/31/2009 14,318 15,624.79
2/28/2009 14,241 15,582.37
3/31/2009 14,531 15,865.47
4/30/2009 14,299 15,654.43
5/31/2009 14,155 15,535.74
6/30/2009 14,172 15,514.96
7/31/2009 14,273 15,589.16
8/31/2009 14,388 15,711.94
9/30/2009 14,517 15,829.42
10/31/2009 14,531 15,831.87
11/30/2009 14,643 16,034.34
12/31/2009 14,303 15,670.86
1/31/2010 14,473 15,898.59
2/28/2010 14,506 15,963.96
3/31/2010 14,422 15,844.46
4/30/2010 14,563 15,994.93
5/31/2010 14,825 16,239.90
6/30/2010 15,071 16,516.92
7/31/2010 15,104 16,628.97
8/31/2010 15,396 16,924.13
9/30/2010 15,278 16,932.36
10/31/2010 15,160 16,921.79
11/30/2010 15,105 16,808.08
12/31/2010 14,908 16,536.09
1/31/2011 14,795 16,536.81
2/28/2011 14,855 16,527.16
3/31/2011 14,872 16,522.24
U.S. GOVERNMENT SECURITIES FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -1.81% 3.12% -1.63% 2.35% 1.36% 2.35%
--------------------------------------------------------------------------
5 Year Return 3.56% 25.11% 3.56% 21.12% 3.91% 21.13%
--------------------------------------------------------------------------
10 Year Return 4.05% 56.07% 4.00% 48.09% 3.86% 45.99%
--------------------------------------------------------------------------
Since Inception* 4.86% 140.79% 5.67% 298.54% 4.37% 65.81%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/1/93; Class B: 03/3/86; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2011, the SunAmerica U.S. Government
Securities Fund Class A returned -1.81%, compared to 4.28% for the Barclays
Capital U.S. Government Index. (The performance table and graph do not reflect
the deduction of taxes that a shareholder would pay on fund distributions or
the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.sunamericafunds.com.
** The Barclays Capital U.S. Government Index is a broad market value-weighted
index of U.S. Treasury securities with maturities of one year or more,
securities issued by U.S. Government agencies and quasi-federal
corporations, and corporate or foreign debt guaranteed by the U.S.
Government. Indicies are not managed and an investor cannot invest directly
into an index.
87
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA GNMA FUND
The SunAmerica GNMA Fund Class A shares rose 4.79% (before maximum sales
charge) for the 12-month period ended March 31, 2011. The Fund underperformed
its benchmark, the Citigroup Mortgage GNMA Index*, which returned 5.41% during
the same period.
U.S. agency mortgage-backed securities turned in solid performance during the
annual period as the sector benefited from a benign prepayment environment and
robust demand from yield-focused investors. Still, there was volatility. U.S.
agency mortgage-backed securities recorded gains during the second quarter of
2010 as fears about the solvency of peripheral European nations drove
flight-to-quality buying. The sector then experienced a weak third calendar
quarter as U.S. Treasury yields fell and the spread--the difference in yields
between agency mortgage-backed securities and comparable-duration U.S.
Treasuries--widened. There were also mounting concerns about prepayment rates
and increased supply driven by the Fed's paydowns (or payments made toward
outstanding principal) of its mortgage-backed securities portfolio. The trend
reversed during the fourth calendar quarter, and agency mortgage-backed
securities outperformed largely as a result of attractive valuations and fading
fears of a refinancing wave. Performance remained strong during the first
quarter of 2011 despite pockets of volatility driven by the U.S. Treasury
Department's release of a white paper entitled "Reforming America's Housing
Finance Market" and its announcement that it planned to wind down its $136
billion agency mortgage-backed securities portfolio. In all, the Fund's sizable
allocation to GNMAs during the annual period contributed positively to its
results.
Conversely, however, the Fund's allocation to U.S. Treasuries detracted from
its results relative to its benchmark. U.S. Treasuries, which are not a
component of the Citigroup Mortgage GNMA Index, underperformed mortgage-backed
securities during the annual period.
In addition, throughout the annual period the Fund pursued a strategy of
holding minimal Freddie Mac, Fannie Mae and other credit securities. This
negatively impacted Fund performance as the market became increasingly
encouraged to assume more credit risk. As of March 31, 2011, the Fund did not
hold any Freddie Mac, Fannie Mae and other credit securities.
The Fund's performance was also hindered by its duration positioning. The Fund
held a longer duration position than the Citigroup Mortgage GNMA Index through
much of the annual period. While this positioning helped during the first half
of the period when interest rates decreased, this positive contribution was
more than offset by the detracting impact of increasing interest rates overall
during the second half of the annual period.
Finally, holding a sizable position of the Fund's total assets in cash through
the first three quarters of the annual period detracted, as fixed income assets
overall generated higher returns than cash. While we dramatically reduced this
allocation to cash to a zero position during the first quarter of 2011 and
correspondingly increased allocations to both GNMAs and U.S. Treasuries, it was
not enough to offset the negative impact of the position from earlier in the
fiscal year.
At the end of the annual period, the Fund had approximately 86% of its total
net assets invested in GNMAs and 14% in U.S. Treasuries. The Fund also
maintained a modestly longer duration than its benchmark index at the end of
the annual period.
--------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares. Interest rates and bond prices
typically move inversely to each other, therefore, as with any bond fund, the
value of your investment in these Funds may go up or down in response to
changes in interest rates.
* The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
Securities listed may or may not be a part of current portfolio construction.
88
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in GNMA Fund Class A shares would
have increased to $15,873. The same amount invested in securities mirroring the
performance of the Citigroup Mortgage GNMA Index would be valued at $17,396.
[CHART]
Citigroup Mortgage
GNMA Fund Class A# GNMA Index**
------------------- ------------------
3/31/2001 9,529 10,000.00
4/30/2001 9,488 10,021.20
5/31/2001 9,517 10,102.00
6/30/2001 9,547 10,122.71
7/31/2001 9,821 10,305.50
8/31/2001 9,903 10,381.66
9/30/2001 10,087 10,522.04
10/31/2001 10,285 10,658.89
11/30/2001 10,023 10,569.57
12/31/2001 9,914 10,541.05
1/31/2002 10,021 10,655.48
2/28/2002 10,181 10,756.99
3/31/2002 9,971 10,657.19
4/30/2002 10,223 10,840.10
5/31/2002 10,292 10,915.28
6/30/2002 10,414 10,998.15
7/31/2002 10,575 11,121.35
8/31/2002 10,716 11,212.01
9/30/2002 10,883 11,306.33
10/31/2002 10,916 11,341.79
11/30/2002 10,899 11,346.79
12/31/2002 11,056 11,460.72
1/31/2003 11,082 11,495.94
2/28/2003 11,192 11,558.21
3/31/2003 11,195 11,554.92
4/30/2003 11,255 11,582.22
5/31/2003 11,413 11,588.92
6/30/2003 11,388 11,621.33
7/31/2003 10,780 11,437.57
8/31/2003 10,912 11,505.69
9/30/2003 11,280 11,682.75
10/31/2003 11,168 11,656.54
11/30/2003 11,157 11,702.82
12/31/2003 11,291 11,805.52
1/31/2004 11,380 11,864.24
2/29/2004 11,471 11,942.70
3/31/2004 11,538 11,992.48
4/30/2004 11,236 11,804.22
5/31/2004 11,195 11,771.51
6/30/2004 11,291 11,879.31
7/31/2004 11,412 11,981.04
8/31/2004 11,591 12,162.85
9/30/2004 11,603 12,187.14
10/31/2004 11,697 12,289.05
11/30/2004 11,658 12,255.94
12/31/2004 11,736 12,345.51
1/31/2005 11,805 12,420.79
2/28/2005 11,739 12,379.86
3/31/2005 11,701 12,347.57
4/30/2005 11,829 12,476.76
5/31/2005 11,904 12,569.54
6/30/2005 11,936 12,610.49
7/31/2005 11,884 12,569.28
8/31/2005 11,990 12,674.03
9/30/2005 11,909 12,618.85
10/31/2005 11,838 12,559.22
11/30/2005 11,865 12,589.76
12/31/2005 12,003 12,757.84
1/31/2006 12,032 12,793.58
2/28/2006 12,046 12,820.68
3/31/2006 11,956 12,731.43
4/30/2006 11,898 12,685.19
5/31/2006 11,853 12,653.79
6/30/2006 11,862 12,658.93
7/31/2006 12,027 12,839.69
8/31/2006 12,193 13,051.03
9/30/2006 12,282 13,128.39
10/31/2006 12,362 13,223.20
11/30/2006 12,463 13,352.79
12/31/2006 12,431 13,334.58
1/31/2007 12,411 13,334.27
2/28/2007 12,589 13,501.38
3/31/2007 12,581 13,526.19
4/30/2007 12,639 13,593.01
5/31/2007 12,539 13,519.01
6/30/2007 12,459 13,435.21
7/31/2007 12,588 13,545.55
8/31/2007 12,740 13,713.59
9/30/2007 12,830 13,828.17
10/31/2007 12,975 13,969.82
11/30/2007 13,279 14,248.87
12/31/2007 13,292 14,267.11
1/31/2008 13,505 14,512.09
2/29/2008 13,618 14,583.84
3/31/2008 13,675 14,620.81
4/30/2008 13,586 14,604.63
5/31/2008 13,416 14,525.13
6/30/2008 13,481 14,532.80
7/31/2008 13,477 14,528.00
8/31/2008 13,641 14,685.69
9/30/2008 13,756 14,786.54
10/31/2008 13,591 14,573.91
11/30/2008 14,177 15,112.48
12/31/2008 14,446 15,380.08
1/31/2009 14,346 15,373.02
2/28/2009 14,413 15,465.06
3/31/2009 14,629 15,704.77
4/30/2009 14,594 15,740.48
5/31/2009 14,585 15,761.11
6/30/2009 14,550 15,751.76
7/31/2009 14,679 15,923.48
8/31/2009 14,783 16,022.74
9/30/2009 14,873 16,147.92
10/31/2009 14,966 16,241.18
11/30/2009 15,171 16,455.62
12/31/2009 14,878 16,204.30
1/31/2010 15,089 16,405.71
2/28/2010 15,155 16,490.52
3/31/2010 15,148 16,503.31
4/30/2010 15,269 16,625.14
5/31/2010 15,521 16,848.99
6/30/2010 15,694 17,071.92
7/31/2010 15,842 17,258.78
8/31/2010 15,912 17,314.54
9/30/2010 15,824 17,235.25
10/31/2010 15,944 17,413.78
11/30/2010 15,934 17,395.29
12/31/2010 15,790 17,279.11
1/31/2011 15,768 17,304.07
2/28/2011 15,851 17,363.14
3/31/2011 15,873 17,395.55
GNMA FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -0.16% 4.79% 0.16% 4.11% 3.03% 4.02%
--------------------------------------------------------------------------
5 Year Return 4.80% 32.76% 4.83% 28.61% 5.14% 28.48%
--------------------------------------------------------------------------
10 Year Return 4.73% 66.58% 4.55% 56.03% 4.55% 56.00%
--------------------------------------------------------------------------
Since Inception* 5.71% 177.10% 7.15% 588.11% 5.09% 80.04%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/11/93; Class B: 04/25/83; Class C: 06/1/99.
# For the purpose of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2011, the SunAmerica GNMA Fund Class A
returned -0.16%, compared to 5.41% for the Citigroup Mortgage GNMA Index. (The
performance table and graph do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.sunamericafunds.com.
**The Citigroup Mortgage GNMA Index is a market capitalization-weighted index
of 15- and 30-year fixed-rate securities backed by mortgage pools of the
Government National Mortgage Association (GNMA). Indices are not managed and
an investor cannot invest directly into an index.
89
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA STRATEGIC BOND FUND
The SunAmerica Strategic Bond Fund Class A shares advanced 10.45% (before
maximum sales charge) for the 12-month period ended March 31, 2011. The Fund
outperformed its benchmark, the Barclays Capital U.S. Aggregate Bond Index*,
which returned 5.12% during the same period. The Fund's relative outperformance
can be attributed primarily to credit quality selection, security selection and
yield curve positioning during the annual period.
Fund performance struggled in the spring of 2010 given concerns regarding a
confluence of events that included the sovereign debt crisis in Europe, pending
banking regulation reform in the U.S, and the Gulf of Mexico oil spill. At that
time, the yield differential between U.S. Treasury securities, which benefited
from safe-haven demand, and corporate bonds reached what proved to be the
widest of the annual period. Eventually, the financial regulation enacted
proved not as overbearing as feared, and the credit markets rebounded.
Fundamentally, corporate balance sheets continued to improve. These better
fundamentals at the corporate level, coupled with abundant liquidity, proved to
be a strong catalyst for the credit sector overall. In turn, the Fund quickly
recovered to post strong returns for the remainder of the annual period.
Indeed, as investors subsequently reached for yield, having an overweight
allocation to bonds rated B and BB (i.e. the higher yielding, lower rated
holdings within the Fund's portfolio), provided a notable boost to relative
results through the second half of 2010 and well into the first quarter of 2011
despite global uncertainty, rising tension in the Middle East and increased
concern surrounding heightened merger and acquisition activity and
shareholder-friendly actions.
Security selection overall was the greatest contributor to the Fund's
outperformance during the annual period. Top performing securities in the
portfolio included sovereign debt positions in Argentina and Russia. Positions
in Japanese government bonds and select high yield corporate bonds--such as the
long-dated bonds of Liberty Mutual Group and Sprint Capital--provided further
support to Fund results. Within its corporate bond sector exposure, an
overweight position in the financial industry contributed most positively to
overall Fund performance. Given that portions of the Fund are allocated to
non-U.S. dollar sovereign and emerging market bonds, country exposure also
impacted results. Exposure to bonds in Turkey, Russia and Uruguay added
particular value. Yield curve positioning also bolstered the Fund's performance
during the annual period. We favored the long-term end of the yield curve given
its steepness, i.e. the higher yields available on longer-term maturities.
Only partially offsetting these contributors was the detracting effect of
sector allocation. An underweighted allocation to securitized products,
including asset-backed securities and mortgage-backed securities, impaired Fund
performance, as these sectors performed well during the annual period. From an
individual issue selection perspective, holding Texas Competitive in the Fund's
U.S. high yield corporate bond portion detracted from results as did holdings
in European government bonds, including Poland, the Netherlands, Italy and
Hungary. Exposure to Venezuela, Mexico and the Philippines hampered results
from a country selection standpoint. To a lesser degree, the Fund's duration
positioning also detracted from the Fund's results. The Fund had a somewhat
longer duration than the benchmark index for much of the annual period,
reflecting our view that interest rates would stay low for longer and that the
yield curve would stabilize in the fourth quarter of 2010 and into 2011.
However, instead, rates rose slightly and the yield curve steepened. In early
2011, we reduced the Fund's duration to a more neutral position relative to its
benchmark index.
Throughout the annual period, we adjusted the Fund's country, sector, currency
and duration exposures as market conditions shifted. Toward the end of the
annual period, our target allocations changed to reflect our view that U.S.
markets offered the best potential return in 2011. Overall, portfolio
weightings in U.S. high yield, securitized products and investment grade credit
increased, while exposure to emerging markets and non-U.S. dollar sovereign
bonds decreased.
As of March 31, 2011, the credit sector of the Fund was overweight financials,
energy, telecommunications and utilities. The Fund was also overweight relative
to its benchmark index in asset-backed securities and commercial
mortgage-backed securities. At the end of the annual period, the Fund was also
underweight U.S. Treasuries, agency securities and supranational bonds, the
latter of which represents the debt of international organizations, such as the
World Bank, the United Nations, the International Monetary Fund, the European
Union and regional multilateral development banks. In addition, the Fund had
neutral weightings relative to its benchmark index in mortgage-backed
securities and within the credit sector, in capital goods, metals and natural
gas.
--------
Past performance is no guarantee of future results.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates. High-yield bonds tend
to have lower interest rate risk than higher-quality bonds of similar maturity
but carry greater credit and default risk. Investing internationally involves
special risks, such as currency fluctuations, and economic and political
instability.
* The Barclays Capital U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
Securities listed may or may not be a part of current portfolio construction.
90
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares
would have increased to $20,318. The same amount invested in securities
mirroring the performance of the Barclays Capital U.S. Aggregate Bond Index
would be valued at $17,185.
[CHART]
Strategic Bond Fund Barclays Capital U.S.
Class A# Aggregate Bond Index**
------------------- ---------------------
3/31/2001 9,526 10,000.00
4/30/2001 9,407 9,958.00
5/31/2001 9,504 10,017.75
6/30/2001 9,493 10,055.82
7/31/2001 9,556 10,281.07
8/31/2001 9,720 10,399.30
9/30/2001 9,484 10,519.93
10/31/2001 9,710 10,739.80
11/30/2001 9,858 10,591.59
12/31/2001 9,820 10,524.26
1/31/2002 9,894 10,609.46
2/28/2002 9,952 10,712.27
3/31/2002 9,948 10,534.10
4/30/2002 10,137 10,738.39
5/31/2002 10,092 10,829.61
6/30/2002 9,844 10,923.30
7/31/2002 9,657 11,055.05
8/31/2002 9,908 11,241.69
9/30/2002 9,884 11,423.79
10/31/2002 9,965 11,371.71
11/30/2002 10,183 11,368.71
12/31/2002 10,413 11,603.52
1/31/2003 10,575 11,613.44
2/28/2003 10,759 11,774.20
3/31/2003 10,851 11,765.10
4/30/2003 11,264 11,862.21
5/31/2003 11,613 12,083.38
6/30/2003 11,711 12,059.38
7/31/2003 11,416 11,653.95
8/31/2003 11,587 11,731.29
9/30/2003 11,976 12,041.81
10/31/2003 12,042 11,929.58
11/30/2003 12,217 11,958.10
12/31/2003 12,538 12,079.79
1/31/2004 12,751 12,176.99
2/29/2004 12,738 12,308.75
3/31/2004 12,808 12,401.02
4/30/2004 12,534 12,078.32
5/31/2004 12,371 12,029.97
6/30/2004 12,591 12,097.95
7/31/2004 12,739 12,217.88
8/31/2004 13,004 12,450.96
9/30/2004 13,199 12,484.71
10/31/2004 13,434 12,589.40
11/30/2004 13,707 12,488.98
12/31/2004 14,085 12,603.92
1/31/2005 14,116 12,683.01
2/28/2005 14,235 12,608.20
3/31/2005 13,967 12,543.38
4/30/2005 14,030 12,713.13
5/31/2005 14,174 12,850.68
6/30/2005 14,355 12,920.75
7/31/2005 14,415 12,803.23
8/31/2005 14,637 12,967.35
9/30/2005 14,617 12,833.67
10/31/2005 14,431 12,732.14
11/30/2005 14,534 12,788.48
12/31/2005 14,729 12,910.00
1/31/2006 14,929 12,910.79
2/28/2006 15,027 12,953.60
3/31/2006 14,923 12,826.51
4/30/2006 15,029 12,803.30
5/31/2006 14,840 12,789.58
6/30/2006 14,817 12,816.72
7/31/2006 15,140 12,989.99
8/31/2006 15,379 13,188.88
9/30/2006 15,443 13,304.73
10/31/2006 15,636 13,392.76
11/30/2006 15,872 13,548.15
12/31/2006 15,896 13,469.49
1/31/2007 15,872 13,463.94
2/28/2007 16,062 13,671.56
3/31/2007 16,127 13,672.00
4/30/2007 16,280 13,745.74
5/31/2007 16,257 13,641.50
6/30/2007 16,099 13,601.18
7/31/2007 15,896 13,714.64
8/31/2007 15,965 13,882.74
9/30/2007 16,344 13,988.03
10/31/2007 16,608 14,113.69
11/30/2007 16,449 14,367.49
12/31/2007 16,517 14,407.86
1/31/2008 16,497 14,649.94
2/29/2008 16,471 14,670.22
3/31/2008 16,497 14,720.26
4/30/2008 16,713 14,689.52
5/31/2008 16,696 14,581.79
6/30/2008 16,488 14,570.09
7/31/2008 16,379 14,558.19
8/31/2008 16,368 14,696.30
9/30/2008 15,483 14,498.93
10/31/2008 13,667 14,156.70
11/30/2008 13,404 14,617.49
12/31/2008 13,936 15,162.89
1/31/2009 14,071 15,029.06
2/28/2009 13,891 14,972.32
3/31/2009 14,076 15,180.46
4/30/2009 14,832 15,253.11
5/31/2009 15,494 15,363.71
6/30/2009 15,793 15,451.04
7/31/2009 16,461 15,700.31
8/31/2009 16,712 15,862.87
9/30/2009 17,331 16,029.54
10/31/2009 17,471 16,108.71
11/30/2009 17,714 16,317.23
12/31/2009 17,774 16,062.11
1/31/2010 17,913 16,307.51
2/28/2010 17,985 16,368.39
3/31/2010 18,343 16,348.32
4/30/2010 18,646 16,518.50
5/31/2010 18,121 16,657.44
6/30/2010 18,430 16,918.66
7/31/2010 19,028 17,099.25
8/31/2010 19,235 17,319.24
9/30/2010 19,609 17,337.72
10/31/2010 19,985 17,399.40
11/30/2010 19,618 17,299.39
12/31/2010 19,844 17,112.85
1/31/2011 20,045 17,132.72
2/28/2011 20,236 17,175.59
3/31/2011 20,318 17,185.08
STRATEGIC BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 5.08% 10.45% 6.04% 10.04% 9.04% 10.04%
--------------------------------------------------------------------------
5 Year Return 5.31% 36.15% 5.34% 31.68% 5.68% 31.82%
--------------------------------------------------------------------------
10 Year Return 7.35% 113.29% 7.28% 101.84% 7.19% 100.21%
--------------------------------------------------------------------------
Since Inception* 6.80% 230.09% 7.23% 227.61% 6.89% 210.37%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2011, the SunAmerica Strategic Bond
Fund Class A returned 5.08%, compared to 5.12% for the Barclays Capital U.S.
Aggregate Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.sunamericafunds.com.
** The Barclays Capital U.S. Aggregate Bond Index represents securities that
are SEC-registered, taxable and dollar denominated. The index covers the
U.S. investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index.
91
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
The SunAmerica High Yield Bond Fund Class A shares gained 12.76% (before
maximum sales charge) for the 12-month period ended March 31, 2011. The Fund
underperformed its benchmark, the Citigroup High Yield Market Index*, which
returned 14.29% during the same period.
The Fund's higher quality bias, implemented via an underweighted allocation to
lower quality securities, was the primary detractor from its results relative
to the Citigroup High Yield Market Index during the annual period. In
particular, the performance of the high yield bond market was largely driven
during the annual period by heightened investor demand for riskier assets,
improving economic fundamentals and low default rates. Also, companies took
advantage of low yields and higher investor risk appetites, issuing debt at a
robust pace. Given this backdrop as well as their lower sensitivity to
increases in U.S. Treasury yields, the lower quality segment of the high yield
bond market outperformed the higher quality segment. Bonds rated BB in the
Citigroup High Yield Market Index returned 13.0% over the 12-month period ended
March 31, 2011, versus 14.2% for bonds rated B and 18.2% for bonds rated CCC
during the same period. That said, strong security selection among higher
quality bonds helped to offset the detracting effect of the Fund's
underweighted exposure to lower quality names during the annual period.
Overall, sector allocation and security selection contributed positively to the
Fund's results. In sector allocation, having underweight exposures in the home
construction, utilities and retail industries helped the Fund's relative
results, as each of these market segments lagged the Citigroup High Yield
Market Index during the annual period. Similarly, overweight allocations to the
pharmaceuticals, financial services and auto industries, each of which outpaced
the Citigroup High Yield Market Index, helped the Fund's performance.
Detracting from relative results were overweight exposures to the health care
and entertainment industries. Underweight exposures to the wireline and
consumer cyclical services industries also detracted from relative results.
Security selection was especially helpful in autos, financial services, energy
and gaming. These positive contributors were only partially offset by security
selection in pharmaceuticals, technology and media non-cable, which detracted.
Among the greatest individual contributors to the Fund's relative returns
during the annual period were automobile manufacturer Ford Motor Company and
automobile parts manufacturer Lear. Detracting from relative results were
holdings in Triax Pharmaceuticals, a dermatology products company; Sorenson
Communications, a provider of communication products and services for the deaf
and hard of hearing; and CC Media Holdings, a broadcasting and outdoor
advertising company.
By the third quarter of 2010, we had shifted from a moderately aggressive to a
neutral risk posture in the Fund's portfolio. As of March 31, 2011, the Fund
was overweight relative to the Citigroup High Yield Market Index in autos,
financials, and technology, areas where we continued to have high conviction.
The Fund was underweight home construction and energy.
--------
Past performance is no guarantee of future results.
High-yield bonds tend to have lower interest-rate risk than higher-quality
bonds of similar maturity but carry greater credit and default risk. Interest
rates and bond prices typically move inversely to each other; therefore, as
with any bond fund, the value of an investment in this Fund may go up or down
in response to changes in interest rates.
* The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
Securities listed may or may not be a part of current portfolio construction.
92
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in High Yield Bond Fund Class A
shares would have increased to $17,157. The same amount invested in securities
mirroring the performance of the Citigroup High Yield Market Index would be
valued at $22,522.
[CHART]
High Yield Bond Fund Citigroup High
Class A# Yield Market Index**
-------------------- --------------------
3/31/2001 9,529 10,000.00
4/30/2001 9,339 9,852.89
5/31/2001 9,471 10,011.02
6/30/2001 9,254 9,735.75
7/31/2001 9,292 9,919.04
8/31/2001 9,413 10,054.43
9/30/2001 9,016 9,330.60
10/31/2001 9,198 9,640.49
11/30/2001 9,409 10,006.89
12/31/2001 9,348 9,942.81
1/31/2002 9,338 9,985.19
2/28/2002 9,163 9,876.66
3/31/2002 9,351 10,139.53
4/30/2002 9,440 10,305.59
5/31/2002 9,282 10,177.77
6/30/2002 8,590 9,281.33
7/31/2002 8,221 8,861.71
8/31/2002 8,266 9,198.99
9/30/2002 8,166 9,018.12
10/31/2002 8,089 8,987.12
11/30/2002 8,538 9,673.05
12/31/2002 8,638 9,790.88
1/31/2003 8,883 10,155.38
2/28/2003 8,948 10,291.46
3/31/2003 9,121 10,638.05
4/30/2003 9,664 11,298.84
5/31/2003 9,836 11,373.94
6/30/2003 10,162 11,727.42
7/31/2003 10,110 11,554.12
8/31/2003 10,237 11,672.64
9/30/2003 10,597 12,018.54
10/31/2003 10,780 12,297.94
11/30/2003 10,964 12,468.82
12/31/2003 11,330 12,788.88
1/31/2004 11,715 13,010.06
2/29/2004 11,566 12,938.74
3/31/2004 11,497 13,020.05
4/30/2004 11,519 12,975.61
5/31/2004 11,324 12,750.98
6/30/2004 11,634 12,940.93
7/31/2004 11,718 13,107.21
8/31/2004 11,854 13,346.85
9/30/2004 12,018 13,528.22
10/31/2004 12,298 13,808.65
11/30/2004 12,737 13,967.65
12/31/2004 13,118 14,168.33
1/31/2005 13,194 14,149.04
2/28/2005 13,425 14,361.61
3/31/2005 13,023 13,958.18
4/30/2005 12,808 13,765.93
5/31/2005 13,062 14,049.13
6/30/2005 13,383 14,284.43
7/31/2005 13,735 14,491.15
8/31/2005 14,024 14,551.44
9/30/2005 13,923 14,406.05
10/31/2005 13,740 14,298.56
11/30/2005 13,894 14,335.42
12/31/2005 14,083 14,462.55
1/31/2006 14,390 14,689.59
2/28/2006 14,426 14,762.97
3/31/2006 14,534 14,869.43
4/30/2006 14,739 14,950.73
5/31/2006 14,725 14,940.74
6/30/2006 14,677 14,875.97
7/31/2006 14,857 15,036.86
8/31/2006 15,168 15,288.02
9/30/2006 15,348 15,499.55
10/31/2006 15,564 15,721.77
11/30/2006 15,681 15,983.26
12/31/2006 15,866 16,175.86
1/31/2007 15,947 16,327.78
2/28/2007 16,121 16,554.95
3/31/2007 16,135 16,579.22
4/30/2007 16,350 16,803.58
5/31/2007 16,400 16,930.15
6/30/2007 16,174 16,606.70
7/31/2007 15,603 16,063.30
8/31/2007 15,755 16,258.02
9/30/2007 16,143 16,687.27
10/31/2007 16,274 16,794.24
11/30/2007 15,971 16,423.17
12/31/2007 16,010 16,473.05
1/31/2008 15,411 16,265.40
2/29/2008 15,131 16,054.68
3/31/2008 15,179 15,985.91
4/30/2008 15,776 16,690.86
5/31/2008 15,901 16,779.69
6/30/2008 15,731 16,225.95
7/31/2008 15,341 15,982.94
8/31/2008 15,325 16,025.15
9/30/2008 14,098 14,741.65
10/31/2008 11,538 12,480.07
11/30/2008 10,133 11,263.48
12/31/2008 10,166 12,205.40
1/31/2009 10,493 12,865.36
2/28/2009 10,253 12,378.95
3/31/2009 10,222 12,808.17
4/30/2009 11,167 14,363.18
5/31/2009 11,925 15,228.57
6/30/2009 12,233 15,696.63
7/31/2009 12,964 16,658.31
8/31/2009 13,031 16,876.72
9/30/2009 13,644 17,849.44
10/31/2009 13,922 18,129.13
11/30/2009 14,068 18,324.11
12/31/2009 14,510 18,941.51
1/31/2010 14,658 19,152.07
2/28/2010 14,708 19,142.03
3/31/2010 15,173 19,706.48
4/30/2010 15,546 20,148.82
5/31/2010 14,876 19,485.60
6/30/2010 15,021 19,721.64
7/31/2010 15,543 20,396.55
8/31/2010 15,557 20,367.28
9/30/2010 16,034 20,971.31
10/31/2010 16,373 21,496.17
11/30/2010 16,185 21,252.29
12/31/2010 16,493 21,654.06
1/31/2011 16,830 22,144.29
2/28/2011 17,063 22,437.03
3/31/2011 17,157 22,522.20
HIGH YIELD BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 7.33% 12.76% 8.02% 12.02% 11.33% 12.33%
--------------------------------------------------------------------------
5 Year Return 2.37% 18.05% 2.44% 14.36% 2.73% 14.43%
--------------------------------------------------------------------------
10 Year Return 5.55% 80.05% 5.54% 71.44% 5.39% 69.03%
--------------------------------------------------------------------------
Since Inception* 4.75% 86.72% 4.70% 76.82% 4.85% 65.20%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2011, the SunAmerica High Yield Bond
Fund Class A returned 7.33%, compared to 14.29% for the Citigroup High Yield
Market Index. (The performance table and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.sunamericafunds.com.
** The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
93
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA TAX EXEMPT INSURED FUND
The SunAmerica Tax Exempt Insured Fund Class A shares rose 0.03% (before
maximum sales charge) for the 12-month period ended March 31, 2011. The Fund
underperformed its benchmark, the Barclays Capital Municipal Bond Index*, which
returned 1.63% during the same period.
The greatest impact on the Fund's performance was the lack of insured municipal
bonds being newly issued during the annual period. For example, the first
quarter of 2011 saw approximately 6% of tax-exempt new issue supply backed by
insurance, compared to between 40% and 50% of tax-exempt new issue supply being
insured prior to the 2008 challenges that impacted the monoline guarantors.
Also, the Build America Bond subsidy program cannibalized much of the new issue
tax-exempt supply during the annual period, incentivizing issuers to structure
longer maturity borrowing in taxable form instead. Further, seasoned supply
from the secondary market backed by insurance put in place prior to the
monoline guarantor meltdown generally featured a shorter call. In other words,
for bonds valued at a premium that price to a shorter call date, the value of a
movement in interest rates is reduced compared to a bond with a longer maturity
carrying a current call structure. (A callable municipal security gives the
issuer of the bond the right to redeem it at predetermined prices at specified
times prior to maturity.) Together, these factors made finding bonds suitable
for Fund investment more difficult and significantly limited the scope of
opportunities available to the Fund in satisfying its mandate that a minimum of
80% of its total net assets be invested in insured tax-exempt bonds.
Also impacting the Fund's results were sector allocation and security
selection. The three top performing sectors in the Barclays Capital Municipal
Bond Index during the annual period were housing, general obligation and
resource recovery bonds. Also, higher quality bonds generally outperformed
lower quality bonds, with AAA-rated bonds returning nearly 90 basis points more
than AA-rated bonds during the annual period. (A basis point is 1/100th of a
percent.) Though sector exposure in the Fund was indeed tilted toward higher
quality sectors such as general obligation and essential service revenue bonds,
there was a difference in how the market valued insured bonds versus unenhanced
general obligation and revenue bonds. Also, as not one monoline insurance
company carried a AAA rating during the annual period, the Fund had only two
bonds in its portfolio that carried AAA ratings from Standard & Poor's. Such
differences detracted from the Fund's results relative to the Barclays Capital
Municipal Bond Index.
Generally, from an individual security perspective, the lesser-coupon bonds in
the Fund's portfolio, i.e. those with an approximately 4.00% coupon,
underperformed. When prices fell and yields rose in the municipal bond market,
investors' preference for deep discounts faded and shifted to favor bonds with
higher coupons, i.e. those with a 5.00% or higher coupon. The Fund's positions
in the Regional Transportation District Colorado Sales Tax Revenue, University
of California Revenues and Port Authority New York & New Jersey Revenue bonds
fared worst during the annual period.
The combination of duration and yield curve positioning also detracted from the
Fund's results during the annual period. The Fund was underweighted relative to
the Barclays Capital Municipal Bond Index in the best three performing maturity
"buckets," or segments of the yield curve, i.e. those with maturities ranging
from four to 12 years, and was overweighted the longer effective maturity
buckets, which lagged in comparison.
On the positive side, the Fund did benefit from holdings in the prerefunded
structures of New Mexico Finance Authority Transportation, University of
Massachusetts Building Authority Project Revenue and Olentangy Local School
District Ohio bonds, each of which had coupons above 5.00%. Also, the shorter
durations on these securities helped offset the detracting performance of
longer duration bonds held. (Pre-refunding, also known as advance refunding, is
a procedure in which a municipality issues a second bond at a lower interest
rate, and uses the proceeds from the sale of the second bond to invest in
"escrow collateral" for the first bond. The escrow collateral is typically in
Treasury securities. Pre-refunded municipal bonds no longer represent the
credit risk profile of the original borrower, and given the high credit quality
of the escrow collateral, they often increase in value--sometimes
significantly.)
94
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
During the annual period, we adjusted the Fund's duration positioning as market
conditions shifted. For example, we selectively shortened the Fund's duration
during the first half of the annual period when rates were declining, and then
extended it somewhat with the purchase of the Regional Transportation District
Colorado Sales Tax Revenue bonds in October, just before the impact of the
Fed's second round of quantitative easing translated into rising rates. We
subsequently trimmed select longer duration positions during the balance of the
annual period as commensurate with a reduction in longer effective maturities.
As of March 31, 2011, the Fund had a modestly shorter duration than the
Barclays Capital Municipal Bond Index. Relative to the Index, the Fund was
overweight water/sewer bonds and AA-rated credits and had a substantially
underweighted allocation to unenhanced general obligation state and local
credits.
--------
Past performance is no guarantee of future results.
The Fund is not insured by any independent parties or government entities.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates.
* The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index.
Securities listed may or may not be a part of current portfolio construction.
95
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Tax Exempt Insured Fund Class A
shares would have increased to $13,517. The same amount invested in securities
mirroring the performance of the Barclays Capital Municipal Bond Index would be
valued at $15,766.
[CHART]
Tax Exempt Insured Barclays Capital
Fund Class A# Municipal Bond Index**
------------------ ----------------------
3/31/2001 9,525 10,000.00
4/30/2001 9,352 9,892.00
5/31/2001 9,467 9,998.83
6/30/2001 9,553 10,065.83
7/31/2001 9,698 10,214.80
8/31/2001 9,851 10,383.34
9/30/2001 9,810 10,348.04
10/31/2001 9,925 10,471.18
11/30/2001 9,790 10,383.22
12/31/2001 9,667 10,284.95
1/31/2002 9,807 10,463.31
2/28/2002 9,949 10,589.48
3/31/2002 9,703 10,381.88
4/30/2002 9,900 10,584.80
5/31/2002 9,957 10,649.16
6/30/2002 10,052 10,761.72
7/31/2002 10,211 10,900.06
8/31/2002 10,347 11,031.08
9/30/2002 10,615 11,272.79
10/31/2002 10,326 11,085.85
11/30/2002 10,243 11,039.80
12/31/2002 10,478 11,272.67
1/31/2003 10,413 11,244.16
2/28/2003 10,588 11,401.37
3/31/2003 10,584 11,408.18
4/30/2003 10,671 11,483.65
5/31/2003 10,911 11,752.54
6/30/2003 10,839 11,702.52
7/31/2003 10,440 11,292.97
8/31/2003 10,560 11,377.29
9/30/2003 10,866 11,711.67
10/31/2003 10,786 11,652.76
11/30/2003 10,883 11,774.30
12/31/2003 10,976 11,871.74
1/31/2004 11,019 11,939.72
2/29/2004 11,196 12,119.48
3/31/2004 11,106 12,077.16
4/30/2004 10,846 11,791.13
5/31/2004 10,789 11,748.49
6/30/2004 10,816 11,791.29
7/31/2004 10,940 11,946.31
8/31/2004 11,150 12,185.73
9/30/2004 11,196 12,250.51
10/31/2004 11,287 12,355.84
11/30/2004 11,179 12,254.06
12/31/2004 11,325 12,403.55
1/31/2005 11,444 12,519.61
2/28/2005 11,403 12,477.86
3/31/2005 11,301 12,399.27
4/30/2005 11,471 12,594.76
5/31/2005 11,563 12,683.73
6/30/2005 11,618 12,762.56
7/31/2005 11,532 12,704.75
8/31/2005 11,650 12,833.00
9/30/2005 11,553 12,746.54
10/31/2005 11,464 12,669.17
11/30/2005 11,494 12,729.97
12/31/2005 11,590 12,839.48
1/31/2006 11,597 12,874.14
2/28/2006 11,679 12,960.65
3/31/2006 11,575 12,871.16
4/30/2006 11,561 12,866.80
5/31/2006 11,594 12,924.17
6/30/2006 11,542 12,875.39
7/31/2006 11,667 13,028.65
8/31/2006 11,840 13,221.94
9/30/2006 11,918 13,313.86
10/31/2006 11,999 13,397.26
11/30/2006 12,107 13,509.07
12/31/2006 12,048 13,461.20
1/31/2007 12,007 13,426.82
2/28/2007 12,152 13,603.79
3/31/2007 12,110 13,570.23
4/30/2007 12,125 13,610.38
5/31/2007 12,054 13,550.10
6/30/2007 11,991 13,479.98
7/31/2007 12,075 13,584.44
8/31/2007 12,051 13,525.74
9/30/2007 12,179 13,725.88
10/31/2007 12,209 13,787.05
11/30/2007 12,300 13,875.03
12/31/2007 12,340 13,913.50
1/31/2008 12,394 14,088.98
2/29/2008 11,899 13,443.93
3/31/2008 12,221 13,828.31
4/30/2008 12,374 13,990.00
5/31/2008 12,458 14,074.74
6/30/2008 12,330 13,915.76
7/31/2008 12,363 13,968.71
8/31/2008 12,512 14,132.20
9/30/2008 11,950 13,469.42
10/31/2008 11,957 13,331.90
11/30/2008 12,047 13,374.32
12/31/2008 12,271 13,569.23
1/31/2009 12,666 14,066.02
2/28/2009 12,665 14,139.86
3/31/2009 12,678 14,142.51
4/30/2009 12,889 14,425.05
5/31/2009 12,945 14,577.65
6/30/2009 12,866 14,441.07
7/31/2009 13,028 14,682.64
8/31/2009 13,169 14,933.67
9/30/2009 13,594 15,469.53
10/31/2009 13,234 15,144.92
11/30/2009 13,324 15,269.99
12/31/2009 13,406 15,321.57
1/31/2010 13,425 15,401.44
2/28/2010 13,547 15,550.74
3/31/2010 13,512 15,513.50
4/30/2010 13,638 15,701.91
5/31/2010 13,734 15,819.70
6/30/2010 13,720 15,829.12
7/31/2010 13,887 16,026.46
8/31/2010 14,154 16,393.43
9/30/2010 14,148 16,367.86
10/31/2010 14,056 16,322.55
11/30/2010 13,747 15,996.20
12/31/2010 13,473 15,686.06
1/31/2011 13,393 15,570.61
2/28/2011 13,565 15,818.39
3/31/2011 13,517 15,765.81
TAX EXEMPT INSURED FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -4.72% 0.03% -4.93% -1.07% -1.63% -0.67%
--------------------------------------------------------------------------
5 Year Return 2.15% 16.77% 1.77% 11.13% 2.46% 12.93%
--------------------------------------------------------------------------
10 Year Return 3.06% 41.91% 2.93% 33.45% 2.87% 32.73%
--------------------------------------------------------------------------
Since Inception* 5.07% 267.57% 3.81% 92.27% 3.13% 43.98%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, return would be lower.
* Inception Date - Class A: 11/22/85; Class B: 10/4/93; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund.
For the 12-month period ending March 31, 2011, SunAmerica Tax Exempt Insured
Fund Class A returned -4.72%, compared to 1.63% for the Barclays Capital
Municipal Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.sunamericafunds.com.
** The Barclays Capital Municipal Bond Index is a market value-weighted index
for the tax-exempt bond market. Indices are not managed and an investor
cannot invest directly into an index.
96
[LOGO] SunAmerica
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
DIRECTORS/TRUSTEES VOTING PROXIES ON TRUST DISCLOSURE OF QUARTERLY
Richard W. Grant 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.
William J. Shea proxies relating to Securities and Exchange
secu-rities held in a Commission for its first
OFFICERS Fund's portfolio, which and third fiscal quarters
John T. Genoy, President is available in the on Form N-Q. The Trust's
Donna M. Handel, Trust's Statement of Forms N-Q are available
Treasurer Additional Information, on the U.S. Securities
James Nichols, Vice may be ob-tained without and Exchange Commis-sion
President charge upon request, by website at www.sec.gov.
Timothy Pettee, Vice calling (800) 858-8850. You can also review and
President The in-formation is also obtain copies of the
Michael Cheah, Vice available from the EDGAR Forms N-Q at the U.S.
President database on the U.S. Securities and Exchange
Cynthia A. Gibbons Secu-rities and Exchange Commission Public
Skrehot, Vice Commission's website at Refer-ence Room in
President and Chief http://www.sec.gov. Washington DC
Compliance Officer (information on the
Gregory N. Bressler, DELIVERY OF SHAREHOLDER operation of the Public
Chief Legal Officer DOCUMENTS Reference Room may be
and Secretary The Funds have adopted a ob-tained by calling
Nori L. Gabert, Vice policy that allows them 1-800-SEC-0330).
President and to send only one copy of
Assistant Secretary a Fund's prospectus, PROXY VOTING RECORD ON
Kathleen Fuentes, proxy material, annual SUNAMERICA INCOME FUNDS
Assistant Secretary report and semi-annual Information regarding how
John E. McLean, report (the "shareholder the Funds voted proxies
Assistant Secretary documents") to relating to securities
Gregory R. Kingston, shareholders with held in the Funds during
Vice President and multiple accounts the most recent twelve
Assistant Treasurer residing at the same month period ended June
Christopher A. Okeke, "household." This 30 is available, once
Assistant Treasurer practice is called filed with the U.S.
Matthew J. Hackethal, householding and reduces Securities and Exchange
Anti-Money Laundering Fund expenses, which Commission, without
Compliance Officer benefits you and other charge, upon request, by
shareholders. Unless the calling (800) 858-8850 or
INVESTMENT ADVISER Funds receive on the U.S. Securities
SunAmerica Asset instructions to the and Exchange Commission's
Management Corp. con-trary, you will only website at
Harborside Financial receive one copy of the http://www.sec.gov.
Center shareholder documents.
3200 Plaza 5 The Funds will continue This report is submitted
Jersey City, NJ to household the solely for the general
07311-4992 share-holder documents information of
indefinitely, until we shareholders of the
DISTRIBUTOR are instructed otherwise. Funds. Distribution of
SunAmerica Capital If you do not wish to this report to persons
Services, Inc. participate in other than shareholders
Harborside Financial householding please of the Funds is
Center contact Shareholder authorized only in
3200 Plaza 5 Services at (800) con-nection with a
Jersey City, NJ 858-8850 ext. 6010 or currently effective
07311-4992 send a written request pro-spectus, setting
with your name, the name forth details of the
SHAREHOLDER SERVICING of your fund(s) and your Funds, which must precede
AGENT account number(s) to or accom-pany this report.
SunAmerica Fund SunAmerica Mutual Funds
Services, Inc. c/o BFDS, P.O. Box
Harborside Financial 219186, Kansas City MO,
Center 64121-9186. We will
3200 Plaza 5 resume individual
Jersey City, NJ mailings for your account
07311-4992 within thirty (30) days
of receipt of your
CUSTODIAN AND TRANSFER request.
AGENT
State Street Bank and
Trust Company
P.O. Box 419572
Kansas City, MO
64141-6572
[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.
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at
www.sunamericafunds.com. Read the prospectus carefully before investing.
WWW.SUNAMERICAFUNDS.COM
INANN - 3/11
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
The SunAmerica Income Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2011, there were no reportable amendments,
waivers, or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(b) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for services rendered by the registrant's principal
accountant were as follows:
2011 2010
(a) Audit Fees ....................$ 170,797 $ 161,077
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 59,698 $ 60,655
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2011 2010
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not Applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2011 and 2010 were $220,668 and $538,789, respectively.
(h) 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) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 8, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: June 8, 2011
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: June 8, 2011