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, 2012
-------------------------
Item 1. Reports to Stockholders
[PHOTO]
ANNUAL REPORT 2012
SUNAMERICA
Income Funds
[LOGO]
MARCH 31, 2012 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)
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........................................ 11
PORTFOLIO OF INVESTMENTS.................................... 15
NOTES TO FINANCIAL STATEMENTS............................... 61
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 77
TRUSTEE AND OFFICER INFORMATION............................. 78
SHAREHOLDER TAX INFORMATION................................. 82
COMPARISONS: PORTFOLIOS VS. INDICES......................... 83
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, 2012, a period wherein volatility dominated
as Europe's sovereign debt crisis and concerns over the economic outlook and
the U.S. debt ceiling drove investors into the perceived safe haven of U.S.
Treasuries.
Some spread, or non-Treasury, sectors outperformed U.S. Treasuries during the
annual period. These included the commercial mortgage-backed securities and
emerging markets debt sectors, which generally had limited exposure to European
sovereign debt. The corporate sector, however, which had more exposure to
European financial troubles, lagged U.S. Treasuries for the annual period
overall. The Barclays U.S. Aggregate Bond Index/*/, a broad measure of the U.S.
fixed income market, returned 7.71% for the 12 months ended March 31, 2012.
In the first three months of the annual period, disappointing U.S. economic
news, a deepening sovereign debt crisis in Europe, fears of contagion from
Europe's sovereign debt turmoil, and slowing economic growth in China caused
U.S. Treasuries to rally. Uncertainties over the end of QE2, the Federal
Reserve Board's (the "Fed's") quantitative easing program, as well as ongoing
negotiations in the U.S. Congress over the U.S. debt ceiling, further weighed
on investor sentiment. Meanwhile, Standard & Poor's lowered its outlook on U.S.
sovereign debt from stable to negative, citing disagreement among politicians
on how to address rising budget deficits and debt. All fixed income sectors
posted positive returns during the second quarter of 2011, helped by the
decline in global government bond yields.
Risk assets broadly sold off during the third quarter of 2011. Despite a second
bailout for Greece and efforts to expand the capabilities of the European
Financial Stability Facility, markets grew increasingly concerned about the
impact of a disorderly Greek default on the global financial system. In an
unprecedented move, the Fed pledged to keep benchmark interest rates at record
lows through the middle of 2013. Further, in a new stimulus measure dubbed
Operation Twist, the Fed announced plans to buy $400 billion of longer-term
debt to be funded by selling an equal amount of shorter maturities in an effort
to put downward pressure on long-term interest rates and boost the economy.
High yield corporate bonds and emerging markets debt generated negative returns
during the quarter. Commercial mortgage-backed securities also lost ground,
impacted by limited risk appetite. U.S. Treasuries was the best performing
sector for the quarter, though mortgage-backed securities, asset-backed
securities and investment grade corporate bonds also generated positive returns.
Most fixed income sectors generated positive returns during the last months of
the calendar year. In a reversal from the prior three months, the rally was led
by high yield corporate bonds and emerging markets debt. Commercial
mortgage-backed securities and investment grade corporate bonds also performed
well. U.S. Treasuries had a modestly positive return, as safe haven demand
continued to drive yields lower. However, U.S. Treasuries lagged most riskier
assets, as U.S. economic data released during the fourth quarter of 2011
largely pointed to an improving cycle. In Europe, extreme policy measures by
the European Central Bank, European Union and International Monetary Fund,
though widely regarded as positive moves, failed to restore confidence in
sovereign debt. In particular, the absence of a credible plan and vision for
fiscal union was a key point of vulnerability. In the U.S., the Fed maintained
its accommodative stance throughout the quarter, but the political stalemate in
the U.S. continued as lawmakers failed to reach an agreement on reducing the
nation's budget deficit.
As the new year began, the Fed maintained its accommodative stance and even
extended it by stating it would keep the Federal Funds Rate exceptionally low
until at least late 2014. By March 2012, Fed policy makers had upgraded their
assessment of the U.S. economy based on improving employment data and
diminishing strains in the global financial markets. U.S. Treasury yields rose
sharply in response to the Fed's statements, as market participants scaled back
expectations of a third round of quantitative easing. After protracted
negotiations, Eurozone officials finally approved a second rescue package for
Greece, and the European Central Bank injected another round of liquidity into
markets via its Long-Term Refinancing Operation, further reducing interbank
funding
2
pressures. Meanwhile, the Bank of Japan initiated aggressive policy easing. In
all, U.S. Treasuries was the weakest fixed income sector for the first quarter
of 2012, generating negative returns. High yield corporate bonds, emerging
markets debt, commercial mortgage-backed securities and investment grade
corporate bonds each generated positive returns for the quarter.
Against this backdrop, each of the SunAmerica Income Funds generated positive
returns during the annual period. 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 ongoing 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.safunds.com.
Sincerely,
THE SUNAMERICA INCOME FUNDS PORTFOLIO MANAGERS
Michael Cheah Robert Vanden Assem Christopher Jones
Anthony King Tim Lindvall John Dunlevy
Rajeev Mittal John Yovanovic
--------
Past performance is no guarantee of future results.
* The BARCLAYS 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, 2012 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the
SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
contingent deferred sales charges and (2) ongoing costs, including management
fees, distribution and service fees and other Fund expenses. The example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at October 1, 2011 and held until March 31, 2012.
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, 2012" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012" 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, 2012 -- (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 2011 2012 2012* 2011 2012 2012* 2012*
---- ------------- -------------- ------------- ------------- -------------- ------------- ---------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $ 997.91 $ 4.94 $1,000.00 $1,020.05 $ 5.00 0.99%
Class B#................. $1,000.00 $ 994.69 $ 8.18 $1,000.00 $1,016.80 $ 8.27 1.64%
Class C#................. $1,000.00 $ 993.69 $ 8.17 $1,000.00 $1,016.80 $ 8.27 1.64%
GNMA
Class A#................. $1,000.00 $1,011.06 $ 4.98 $1,000.00 $1,020.05 $ 5.00 0.99%
Class B#................. $1,000.00 $1,007.79 $ 8.23 $1,000.00 $1,016.80 $ 8.27 1.64%
Class C#................. $1,000.00 $1,008.63 $ 8.24 $1,000.00 $1,016.80 $ 8.27 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,073.67 $ 6.79 $1,000.00 $1,018.45 $ 6.61 1.31%
Class B.................. $1,000.00 $1,070.16 $10.20 $1,000.00 $1,015.15 $ 9.92 1.97%
Class C.................. $1,000.00 $1,073.24 $10.11 $1,000.00 $1,015.25 $ 9.82 1.95%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,106.59 $ 7.16 $1,000.00 $1,018.20 $ 6.86 1.36%
Class B#................. $1,000.00 $1,099.63 $10.55 $1,000.00 $1,014.95 $10.13 2.01%
Class C#................. $1,000.00 $1,102.62 $10.57 $1,000.00 $1,014.95 $10.13 2.01%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 366
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,
2012" and the "Expenses Ratios" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2012
U.S. GOVERNMENT
SECURITIES FUND GNMA FUND
--------------- ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $117,537,588 $294,279,498
Repurchase agreements (cost approximates value)............................................... 20,203,000 44,025,000
------------ ------------
Total investments........................................................................... 137,740,588 338,304,498
------------ ------------
Cash.......................................................................................... 398 227
Foreign cash*................................................................................. -- --
Receivable for:
Shares of beneficial interest sold.......................................................... 7,970 418,119
Dividends and interest...................................................................... 560,572 1,099,585
Investments sold............................................................................ -- --
Prepaid expenses and other assets............................................................. 164 725
Due from investment adviser for expense reimbursements/fee waivers............................ 42,545 50,954
------------ ------------
Total assets.................................................................................. 138,352,237 339,874,108
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 203,395 1,227,994
Investments purchased....................................................................... -- --
Investment advisory and management fees..................................................... 76,558 135,625
Distribution and service maintenance fees................................................... 52,062 147,796
Transfer agent fees and expenses............................................................ 33,161 79,856
Trustees' fees and expenses................................................................. 9,617 2,982
Other accrued expenses...................................................................... 86,113 98,226
Dividends payable........................................................................... 26,199 168,731
------------ ------------
Total liabilities............................................................................. 487,105 1,861,210
------------ ------------
NET ASSETS.................................................................................... $137,865,132 $338,012,898
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 137,023 $ 290,666
Paid-in capital............................................................................... 127,061,844 326,766,837
------------ ------------
127,198,867 327,057,503
Accumulated undistributed net investment income (loss)........................................ 472,266 (343,846)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... 1,354,540 (1,393,841)
Unrealized appreciation (depreciation) on investments......................................... 8,839,459 12,693,082
Unrealized appreciation (depreciation) foreign exchange transactions.......................... -- --
------------ ------------
NET ASSETS.................................................................................... $137,865,132 $338,012,898
============ ============
*Cost
Investments (unaffiliated).................................................................. $108,698,129 $281,586,416
============ ============
Foreign cash................................................................................ $ -- $ --
============ ============
STRATEGIC HIGH YIELD
BOND FUND BOND FUND
------------ ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $603,151,083 $124,548,624
Repurchase agreements (cost approximates value)............................................... 4,239,000 3,575,000
------------ ------------
Total investments........................................................................... 607,390,083 128,123,624
------------ ------------
Cash.......................................................................................... 22,425 49,398
Foreign cash*................................................................................. 2,009,182 --
Receivable for:
Shares of beneficial interest sold.......................................................... 1,543,628 402,058
Dividends and interest...................................................................... 8,004,002 2,495,643
Investments sold............................................................................ 9,012,054 87,038
Prepaid expenses and other assets............................................................. 1,430 56
Due from investment adviser for expense reimbursements/fee waivers............................ -- 23,389
------------ ------------
Total assets.................................................................................. 627,982,804 131,181,206
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 1,154,018 197,835
Investments purchased....................................................................... 22,498,797 738,023
Investment advisory and management fees..................................................... 319,783 83,190
Distribution and service maintenance fees................................................... 344,716 64,912
Transfer agent fees and expenses............................................................ 123,362 32,785
Trustees' fees and expenses................................................................. 1,438 3,600
Other accrued expenses...................................................................... 176,756 172,650
Dividends payable........................................................................... 613,252 176,045
------------ ------------
Total liabilities............................................................................. 25,232,122 1,469,040
------------ ------------
NET ASSETS.................................................................................... $602,750,682 $129,712,166
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 1,742,879 $ 380,951
Paid-in capital............................................................................... 666,219,310 193,624,310
------------ ------------
667,962,189 194,005,261
Accumulated undistributed net investment income (loss)........................................ (2,256,649) (911,835)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... (69,206,759) (54,159,273)
Unrealized appreciation (depreciation) on investments......................................... 6,278,061 (9,221,987)
Unrealized appreciation (depreciation) foreign exchange transactions.......................... (26,160) --
------------ ------------
NET ASSETS.................................................................................... $602,750,682 $129,712,166
============ ============
*Cost
Investments (unaffiliated).................................................................. $596,873,022 $133,770,611
============ ============
Foreign cash................................................................................ $ 2,039,809 $ --
============ ============
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- MARCH 31, 2012 -- (CONTINUED)
U.S. GOVERNMENT
SECURITIES FUND GNMA FUND
--------------- ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $118,434,483 $257,413,217
Shares of beneficial interest issued and outstanding............................................... 11,770,294 22,156,192
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 10.06 $ 11.62
Maximum sales charge (4.75% of offering price)..................................................... $ 0.50 $ 0.58
------------ ------------
Maximum offering price to public................................................................... $ 10.56 $ 12.20
============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 4,757,638 $ 15,594,974
Shares of beneficial interest issued and outstanding............................................... 472,671 1,338,562
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 10.07 $ 11.65
============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 14,673,011 $ 65,004,707
Shares of beneficial interest issued and outstanding............................................... 1,459,299 5,571,800
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 10.05 $ 11.67
============ ============
STRATEGIC HIGH YIELD
BOND FUND BOND FUND
------------ -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $299,325,375 $81,476,589
Shares of beneficial interest issued and outstanding............................................... 86,689,228 23,970,128
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 3.45 $ 3.40
Maximum sales charge (4.75% of offering price)..................................................... $ 0.17 $ 0.17
------------ -----------
Maximum offering price to public................................................................... $ 3.62 $ 3.57
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 52,000,081 $11,512,412
Shares of beneficial interest issued and outstanding............................................... 15,063,876 3,382,248
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.45 $ 3.40
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $251,425,226 $36,723,165
Shares of beneficial interest issued and outstanding............................................... 72,534,777 10,742,690
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.47 $ 3.42
============ ===========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENT OF OPERATIONS -- FOR THE YEAR ENDED MARCH 31, 2012
U.S. GOVERNMENT
SECURITIES FUND
---------------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................................... $ --
Interest (unaffiliated)............................................................................ 4,116,480
-----------
Total investment income*.......................................................................... 4,116,480
-----------
EXPENSES:
Investment advisory and management fees............................................................ 982,896
Distribution and service maintenance fees:
Class A........................................................................................... 461,690
Class B........................................................................................... 50,866
Class C........................................................................................... 142,167
Transfer agent fees and expenses:
Class A........................................................................................... 313,377
Class B........................................................................................... 14,097
Class C........................................................................................... 34,477
Registration fees:
Class A........................................................................................... 20,274
Class B........................................................................................... 9,213
Class C........................................................................................... 10,651
Custodian and accounting fees........................................................................ 77,245
Reports to shareholders.............................................................................. 27,716
Audit and tax fees................................................................................... 46,618
Legal fees........................................................................................... 12,223
Directors' fees and expenses......................................................................... 14,068
Interest expense..................................................................................... --
Other expenses....................................................................................... 16,563
-----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits........................................................................................... 2,234,141
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).................. (611,639)
Custody credits earned on cash balances............................................................ (5)
-----------
Net expenses....................................................................................... 1,622,497
-----------
Net investment income (loss)......................................................................... 2,493,983
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................................... 4,764,956
Net realized foreign exchange gain (loss) on other assets and liabilities............................ --
Net realized gain (loss) on disposal of investments in violation of investment restrictions (Note 3). 29,856
-----------
Net realized gain (loss) on investments and foreign currencies....................................... 4,794,812
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)....................... 5,367,042
Change in unrealized foreign exchange gain (loss) on other assets and liabilities.................... --
-----------
Net unrealized gain (loss) on investments and foreign currencies..................................... 5,367,042
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies........................ 10,161,854
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................................... $12,655,837
===========
--------
*Net of foreign withholding taxes on interest and dividends of....................................... $ --
===========
STRATEGIC
GNMA FUND BOND FUND
----------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................................... $ -- $ 467,615
Interest (unaffiliated)............................................................................ 9,263,247 34,165,091
----------- -----------
Total investment income*.......................................................................... 9,263,247 34,632,706
----------- -----------
EXPENSES:
Investment advisory and management fees............................................................ 1,550,361 3,614,973
Distribution and service maintenance fees:
Class A........................................................................................... 900,266 958,668
Class B........................................................................................... 164,031 513,959
Class C........................................................................................... 625,692 2,480,277
Transfer agent fees and expenses:
Class A........................................................................................... 591,699 627,922
Class B........................................................................................... 40,395 120,606
Class C........................................................................................... 145,151 561,057
Registration fees:
Class A........................................................................................... 21,387 32,199
Class B........................................................................................... 10,670 13,403
Class C........................................................................................... 14,595 26,185
Custodian and accounting fees........................................................................ 151,829 243,080
Reports to shareholders.............................................................................. 37,054 99,810
Audit and tax fees................................................................................... 46,216 52,993
Legal fees........................................................................................... 18,363 32,274
Directors' fees and expenses......................................................................... 29,110 49,989
Interest expense..................................................................................... 1,215 2,338
Other expenses....................................................................................... 20,989 28,041
----------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits........................................................................................... 4,369,023 9,457,774
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).................. (526,892) --
Custody credits earned on cash balances............................................................ (519) (153)
----------- -----------
Net expenses....................................................................................... 3,841,612 9,457,621
----------- -----------
Net investment income (loss)......................................................................... 5,421,635 25,175,085
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................................... 16,510,253 6,200,930
Net realized foreign exchange gain (loss) on other assets and liabilities............................ -- 57,654
Net realized gain (loss) on disposal of investments in violation of investment restrictions (Note 3). -- --
----------- -----------
Net realized gain (loss) on investments and foreign currencies....................................... 16,510,253 6,258,584
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)....................... (1,005,185) (3,851,873)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities.................... -- (74,817)
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies..................................... (1,005,185) (3,926,690)
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies........................ 15,505,068 2,331,894
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................................... $20,926,703 $27,506,979
=========== ===========
--------
*Net of foreign withholding taxes on interest and dividends of....................................... $ -- $ (772)
=========== ===========
HIGH YIELD
BOND FUND
-----------
INVESTMENT INCOME:
Dividends (unaffiliated)........................................................................... $ 227,837
Interest (unaffiliated)............................................................................ 10,049,559
-----------
Total investment income*.......................................................................... 10,277,396
-----------
EXPENSES:
Investment advisory and management fees............................................................ 951,292
Distribution and service maintenance fees:
Class A........................................................................................... 268,310
Class B........................................................................................... 133,290
Class C........................................................................................... 368,499
Transfer agent fees and expenses:
Class A........................................................................................... 183,348
Class B........................................................................................... 32,941
Class C........................................................................................... 86,308
Registration fees:
Class A........................................................................................... 24,129
Class B........................................................................................... 12,254
Class C........................................................................................... 16,352
Custodian and accounting fees........................................................................ 69,211
Reports to shareholders.............................................................................. 25,197
Audit and tax fees................................................................................... 58,710
Legal fees........................................................................................... 33,816
Directors' fees and expenses......................................................................... 11,378
Interest expense..................................................................................... 221
Other expenses....................................................................................... 16,150
-----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits........................................................................................... 2,291,406
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).................. (240,191)
Custody credits earned on cash balances............................................................ (43)
-----------
Net expenses....................................................................................... 2,051,172
-----------
Net investment income (loss)......................................................................... 8,226,224
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)............................................... 1,121,000
Net realized foreign exchange gain (loss) on other assets and liabilities............................ --
Net realized gain (loss) on disposal of investments in violation of investment restrictions (Note 3). --
-----------
Net realized gain (loss) on investments and foreign currencies....................................... 1,121,000
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)....................... (4,152,876)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities.................... --
-----------
Net unrealized gain (loss) on investments and foreign currencies..................................... (4,152,876)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies........................ (3,031,876)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS...................................... $ 5,194,348
===========
--------
*Net of foreign withholding taxes on interest and dividends of....................................... $ 2,693
===========
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,
2012 2011
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 2,493,983 $ 3,099,671
Net realized gain (loss) on investments and foreign currencies......................... 4,794,812 446,807
Net unrealized gain (loss) on investments and foreign currencies....................... 5,367,042 2,243,379
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 12,655,837 5,789,857
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,871,740) (2,888,602)
Net investment income (Class B)........................................................ (77,643) (85,980)
Net investment income (Class C)........................................................ (214,636) (168,004)
Net realized gain on securities (Class A).............................................. (275,963) (2,608,061)
Net realized gain on securities (Class B).............................................. (11,071) (124,871)
Net realized gain on securities (Class C).............................................. (33,009) (240,562)
------------ ------------
Total distributions to shareholders...................................................... (3,484,062) (6,116,080)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (34,156,481) (19,323,444)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (24,984,706) (19,649,667)
NET ASSETS:
Beginning of period...................................................................... 162,849,838 182,499,505
------------ ------------
End of period+........................................................................... $137,865,132 $162,849,838
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 472,266 $ 831,639
============ ============
GNMA FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2012 2011
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 5,421,635 $ 8,880,477
Net realized gain (loss) on investments and foreign currencies......................... 16,510,253 5,684,220
Net unrealized gain (loss) on investments and foreign currencies....................... (1,005,185) 1,843,772
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 20,926,703 16,408,469
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (7,212,565) (8,232,111)
Net investment income (Class B)........................................................ (356,993) (618,229)
Net investment income (Class C)........................................................ (1,345,266) (1,701,181)
Net realized gain on securities (Class A).............................................. (8,344,491) (7,942,239)
Net realized gain on securities (Class B).............................................. (492,879) (708,768)
Net realized gain on securities (Class C).............................................. (1,924,819) (2,088,904)
------------ ------------
Total distributions to shareholders...................................................... (19,677,013) (21,291,432)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 12,359,389 (66,140,497)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 13,609,079 (71,023,460)
NET ASSETS:
Beginning of period...................................................................... 324,403,819 395,427,279
------------ ------------
End of period+........................................................................... $338,012,898 $324,403,819
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (343,846) $ (70,930)
============ ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC BOND FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2012 2011
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 25,175,085 $ 29,300,334
Net realized gain (loss) on investments and foreign currencies......................... 6,258,584 26,385,155
Net unrealized gain (loss) on investments and foreign currencies....................... (3,926,690) 474,496
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 27,506,979 56,159,985
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (14,928,172) (15,979,693)
Net investment income (Class B)........................................................ (2,461,123) (2,838,945)
Net investment income (Class C)........................................................ (11,924,376) (14,059,880)
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...................................................... (29,313,671) (32,878,518)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 46,800,108 (59,848,061)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 44,993,416 (36,566,594)
NET ASSETS:
Beginning of period...................................................................... 557,757,266 594,323,860
------------ ------------
End of period+........................................................................... $602,750,682 $557,757,266
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,256,649) $ (510,976)
============ ============
HIGH YIELD BOND FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2012 2011
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 8,226,224 $ 9,759,703
Net realized gain (loss) on investments and foreign currencies......................... 1,121,000 5,130,608
Net unrealized gain (loss) on investments and foreign currencies....................... (4,152,876) 841,499
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 5,194,348 15,731,810
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (5,570,893) (6,153,999)
Net investment income (Class B)........................................................ (883,098) (1,260,941)
Net investment income (Class C)........................................................ (2,451,920) (3,016,895)
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...................................................... (8,905,911) (10,431,835)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). 2,148,997 (16,112,039)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (1,562,566) (10,812,064)
NET ASSETS:
Beginning of period...................................................................... 131,274,732 142,086,796
------------ ------------
End of period+........................................................................... $129,712,166 $131,274,732
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (911,835) $ (1,048,757)
============ ============
See Notes to Financial Statements
10
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
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
-------
03/31/08 $ 9.24 $0.35 $ 0.46 $ 0.81 $(0.37) $ -- $(0.37) $ 9.68 9.03% $191,057 0.99%
03/31/09 9.68 0.26 0.36 0.62 (0.28) -- (0.28) 10.02 6.52 178,963 0.99
03/31/10 10.02 0.21 (0.28) (0.07) (0.21) (0.19) (0.40) 9.55 (0.75)(4) 159,028 0.99
03/31/11 9.55 0.17 0.13 0.30 (0.18) (0.16) (0.34) 9.51 3.12 143,978 0.99
03/31/12 9.51 0.17 0.62 0.79 (0.22) (0.02) (0.24) 10.06 8.34(5) 118,434 0.99
CLASS B
-------
03/31/08 $ 9.24 $0.30 $ 0.45 $ 0.75 $(0.31) $ -- $(0.31) $ 9.68 8.33% $ 15,354 1.64%
03/31/09 9.68 0.20 0.35 0.55 (0.21) -- (0.21) 10.02 5.83 15,803 1.64
03/31/10 10.02 0.16 (0.29) (0.13) (0.14) (0.19) (0.33) 9.56 (1.29)(4) 8,578 1.64
03/31/11 9.56 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.51 2.35 5,710 1.64
03/31/12 9.51 0.11 0.62 0.73 (0.15) (0.02) (0.17) 10.07 7.74(5) 4,758 1.64
CLASS C
-------
03/31/08 $ 9.23 $0.29 $ 0.46 $ 0.75 $(0.31) $ -- $(0.31) $ 9.67 8.34% $ 16,997 1.64%
03/31/09 9.67 0.20 0.35 0.55 (0.21) -- (0.21) 10.01 5.83 20,094 1.64
03/31/10 10.01 0.15 (0.28) (0.13) (0.14) (0.19) (0.33) 9.55 (1.30)(4) 14,894 1.64
03/31/11 9.55 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.50 2.35 13,161 1.64
03/31/12 9.50 0.11 0.61 0.72 (0.15) (0.02) (0.17) 10.05 7.64(5) 14,673 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
3.83% 343%
2.73 84
2.17 472
1.77 254
1.73 152
3.20% 343%
2.08 84
1.59 472
1.10 254
1.09 152
3.14% 343%
2.05 84
1.55 472
1.12 254
1.08 152
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.39% 0.35% 0.38% 0.37% 0.39%
U.S. Government Securities Fund Class B. 0.48 0.40 0.50 0.53 0.60
U.S. Government Securities Fund Class C. 0.50 0.40 0.44 0.44 0.46
(4)The Fund's performance figure was increased by less than 0.01% from
reimbursements for losses realized from a violation of an investment
restriction.
(5)The Fund's performance figure was increased by less than 0.01% from gains on
the disposal of investments in violation of investment restrictions. (Note 3)
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
GNMA FUND
---------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
-------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
CLASS A
-------
03/31/08 $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
03/31/12 11.56 0.21 0.55 0.76 (0.33) (0.37) (0.70) 11.62 6.69 257,413 0.99
CLASS B
-------
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
03/31/12 11.59 0.14 0.55 0.69 (0.26) (0.37) (0.63) 11.65 5.99 15,595 1.64
CLASS C
-------
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
03/31/12 11.60 0.13 0.57 0.70 (0.26) (0.37) (0.63) 11.67 6.07 65,005 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
4.15% 354%
3.32 73
2.28 104
2.59 148
1.76 96
3.52% 354%
2.67 73
1.63 104
1.89 148
1.14 96
3.49% 354%
2.55 73
1.63 104
1.94 148
1.12 96
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12
-------- -------- -------- -------- --------
GNMA Fund Class A............. 0.15% 0.13% 0.15% 0.15% 0.15%
GNMA Fund Class B............. 0.19 0.15 0.19 0.21 0.22
GNMA Fund Class C............. 0.22 0.15 0.16 0.17 0.17
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
STRATEGIC BOND FUND
-------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD+ RETURN(2) (000'S) NET ASSETS
-------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ----------
CLASS A
-------
03/31/08 $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
03/31/12 3.46 0.16 0.02 0.18 (0.19) -- (0.19) 3.45 5.30 299,325 1.31
CLASS B
-------
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
03/31/12 3.46 0.14 0.01 0.15 (0.16) -- (0.16) 3.45 4.60 52,000 1.98
CLASS C
-------
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
03/31/12 3.48 0.14 0.02 0.16 (0.17) -- (0.17) 3.47 4.63 251,425 1.96
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
---------- ---------
5.30%(3) 162%(4)
6.54 112
6.13 157
5.50 152
4.72 144
4.63%(3) 162%(4)
6.00 112
5.44 157
4.83 152
4.07 144
4.65%(3) 162%(4)
6.03 112
5.48 157
4.85 152
4.09 144
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Gross of custody credits of:
03/31/08
--------
Strategic Bond Fund..................... 0.02%
(4)Portfolio turnover includes "to be announced" ("TBA") transactions.
Previously, portfolio turnover was calculated excluding TBA transactions and
was as follows:
03/31/08
--------
Strategic Bond Fund. 151%
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
PERIOD BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
-------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ----------- -------------
CLASS A
-------
03/31/08 $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
03/31/12 3.50 0.23 (0.08) 0.15 (0.25) -- (0.25) 3.40 4.52 81,477 1.36
CLASS B
-------
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
03/31/12 3.51 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.40 3.55 11,512 2.01
CLASS C
-------
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
03/31/12 3.53 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.42 3.56 36,723 2.01
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
7.49% 72%
10.74 77
9.34 110
7.47 48
6.72 52
6.80% 72%
10.18 77
8.77 110
6.84 48
6.19 52
6.75% 72%
10.16 77
8.70 110
6.83 48
6.11 52
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12
-------- -------- -------- -------- --------
High Yield Bond Fund Class A............ 0.17% 0.14% 0.18% 0.16% 0.18%
High Yield Bond Fund Class B............ 0.20 0.16 0.23 0.21 0.25
High Yield Bond Fund Class C............ 0.18 0.15 0.18 0.16 0.19
See Notes to Financial Statements
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- MARCH 31, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 43.9%
United States Treasury Notes.... 25.6
United States Treasury Bonds.... 15.0
Repurchase Agreements........... 14.7
Federal Farm Credit Bank........ 0.4
Small Business Administration... 0.3
----
99.9%
====
CREDIT QUALITY ALLOCATION+#
Aaa........ 99.7%
Not Rated@. 0.3
-----
100.0%
=====
--------
*Calculated as a percentage of net assets.
+Source: Moody'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.
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 44.6%
FEDERAL FARM CREDIT BANK -- 0.4%
6.30% due 12/03/13..................... $ 500,000 $ 548,345
----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/23.................... 25,211 25,669
11.00% due 02/01/15................... 16 16
11.50% due 09/01/19................... 925 946
----------
26,631
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 43.9%
4.50% due 05/15/18.................... 332,066 361,738
4.50% due 08/15/18.................... 511,527 557,234
4.50% due 09/15/18.................... 1,424,375 1,552,285
4.50% due 10/15/18.................... 1,427,686 1,555,257
4.50% due 09/15/33.................... 1,382,855 1,514,402
4.50% due 02/15/39.................... 13,857 15,119
4.50% due 04/15/39.................... 913,405 996,584
4.50% due 05/15/39.................... 1,197,839 1,306,918
4.50% due 06/15/39.................... 301,987 329,488
4.50% due 07/15/39.................... 222,458 242,715
4.50% due 09/15/39.................... 881,719 962,011
4.50% due 10/15/39.................... 895,068 976,577
4.50% due 12/15/39.................... 1,801,425 1,965,469
4.50% due 01/15/40.................... 922,816 1,007,139
4.50% due 02/15/40.................... 1,783,972 1,946,985
4.50% due 03/15/40.................... 1,544,906 1,686,073
4.50% due 04/15/40.................... 796,185 869,343
4.50% due 05/15/40.................... 731,383 798,214
4.50% due 06/15/40.................... 1,572,408 1,716,074
4.50% due 07/15/40.................... 987,781 1,078,214
4.50% due 08/15/40.................... 447,261 488,130
4.50% due 09/15/40.................... 22,804 24,888
4.50% due 03/15/41.................... 2,607,087 2,845,079
4.50% due 04/15/41.................... 189,475 207,854
4.50% due 06/15/41.................... 1,345,885 1,472,930
4.50% due 07/15/41.................... 89,756 97,958
4.50% due 08/15/41.................... 1,486,755 1,622,610
5.00% due 04/15/18.................... 1,322,351 1,449,986
5.00% due 04/15/33.................... 15,191 16,824
5.00% due 08/15/33.................... 852,176 943,442
5.00% due 09/15/33.................... 391,604 434,649
5.00% due 10/15/33.................... 282,982 314,013
5.00% due 04/15/34.................... 12,172 13,481
5.00% due 11/15/34.................... 86,459 95,755
5.00% due 02/15/35.................... 8,459 9,363
5.00% due 03/15/35.................... 314,958 348,625
5.00% due 04/15/35.................... 26,808 29,674
5.00% due 05/15/35.................... 638,688 706,961
5.00% due 09/15/35.................... 358,676 397,551
5.00% due 10/15/35.................... 60,687 67,173
5.00% due 12/15/35.................... 35,100 38,852
5.00% due 03/15/36.................... 502,198 556,616
5.00% due 05/15/36.................... 558,842 617,880
5.00% due 06/15/36.................... 353,771 391,145
5.00% due 09/15/36.................... 858,107 949,439
5.00% due 10/15/36.................... 307,918 340,448
5.00% due 11/15/36.................... 23,432 25,907
5.00% due 12/15/36.................... 129,031 142,662
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 01/15/37....................... $1,477,526 $1,633,620
5.00% due 02/15/37....................... 625,579 692,018
5.00% due 03/15/37....................... 540,748 597,875
5.00% due 04/15/37....................... 515,267 569,702
5.00% due 08/15/38....................... 4,600,969 5,087,039
5.50% due 11/15/32....................... 4,676 5,259
5.50% due 03/15/33....................... 142,368 160,072
5.50% due 04/15/33....................... 285,790 321,277
5.50% due 05/15/33....................... 548,041 615,661
5.50% due 06/15/33....................... 2,282,203 2,565,385
5.50% due 07/15/33....................... 710,785 798,981
5.50% due 10/15/33....................... 669,172 752,205
5.50% due 12/15/33....................... 131,697 148,038
5.50% due 01/15/34....................... 1,648,199 1,849,622
5.50% due 02/15/34....................... 991,020 1,116,012
6.00% due 01/15/28....................... 1,248 1,418
6.00% due 04/15/28....................... 533,250 603,806
6.00% due 10/15/28....................... 3,153 3,583
6.00% due 04/15/29....................... 22,075 25,046
6.00% due 05/15/29....................... 44,683 50,921
6.00% due 06/15/29....................... 17,351 19,714
6.00% due 04/15/31....................... 10,455 11,898
6.00% due 05/15/31....................... 19,863 22,667
6.00% due 11/15/31....................... 129,062 146,878
6.00% due 12/15/31....................... 7,640 8,695
6.00% due 01/15/32....................... 64,498 73,281
6.00% due 02/15/32....................... 16,140 18,349
6.00% due 03/15/32....................... 3,542 4,030
6.00% due 08/15/32....................... 145,067 166,249
6.00% due 11/15/32....................... 14,131 16,126
6.00% due 12/15/32....................... 5,121 5,818
6.00% due 01/15/33....................... 11,370 12,918
6.00% due 02/15/33....................... 14,610 16,581
6.00% due 03/15/33....................... 44,015 49,954
6.00% due 04/15/33....................... 180,497 204,887
6.00% due 07/15/33....................... 110,295 125,176
6.00% due 08/15/33....................... 918,637 1,045,438
6.00% due 09/15/33....................... 155,637 176,635
6.00% due 10/15/33....................... 484,137 549,717
6.00% due 11/15/33....................... 52,597 59,758
6.00% due 12/15/33....................... 301,581 342,270
6.00% due 02/15/34....................... 92,453 105,216
6.00% due 05/15/34....................... 8,858 10,053
6.00% due 06/15/34....................... 20,758 23,468
6.00% due 07/15/34....................... 578,213 656,673
6.00% due 08/15/34....................... 75,070 85,198
6.00% due 09/15/34....................... 318,746 360,383
6.00% due 10/15/34....................... 993,739 1,123,465
6.00% due 12/15/34....................... 146,431 165,547
6.00% due 06/15/35....................... 46,116 52,221
6.00% due 08/15/35....................... 68,016 76,973
6.50% due 02/15/29....................... 5,137 5,994
6.50% due 06/15/31....................... 11,679 13,576
6.50% due 07/15/31....................... 20,276 23,570
6.50% due 08/15/31....................... 29,490 34,320
6.50% due 09/15/31....................... 98,783 115,067
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 10/15/31....................... $122,719 $ 142,657
6.50% due 11/15/31....................... 4,801 5,605
6.50% due 01/15/32....................... 8,018 9,321
6.50% due 02/15/32....................... 182,154 211,069
7.00% due 07/15/23....................... 11,409 13,101
7.00% due 10/15/23....................... 23,869 27,408
7.00% due 09/15/25....................... 102,669 119,055
7.00% due 03/20/29....................... 9,720 11,528
7.00% due 06/20/29....................... 1,411 1,670
7.00% due 11/20/30....................... 27,393 32,494
7.50% due 04/15/17....................... 5,776 5,893
7.50% due 08/15/23....................... 69,038 72,470
7.50% due 09/15/23....................... 250,890 270,096
9.00% due 12/15/16....................... 22,904 23,979
11.00% due 08/20/15...................... 37 37
11.00% due 09/20/15...................... 121 135
11.50% due 05/20/15...................... 657 660
12.50% due 09/15/14...................... 1,662 1,673
13.50% due 02/15/13...................... 1,076 1,087
-----------
60,563,975
-----------
SMALL BUSINESS ADMINISTRATION -- 0.3%
6.30% due 06/01/18....................... 369,698 403,247
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $56,667,341)....................... 61,542,198
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 40.6%
UNITED STATES TREASURY BONDS -- 15.0%
3.88% due 08/15/40.................. $ 1,000,000 $ 1,106,094
4.25% due 11/15/40.................. 8,000,000 9,421,248
4.75% due 02/15/41.................. 8,000,000 10,196,248
------------
20,723,590
------------
UNITED STATES TREASURY NOTES -- 25.6%
1.25% due 10/31/15.................. 2,000,000 2,039,844
1.50% due 07/31/16.................. 16,000,000 16,416,256
2.00% due 11/15/21.................. 6,000,000 5,906,718
2.00% due 02/15/22.................. 10,000,000 9,807,810
3.13% due 05/15/19.................. 1,000,000 1,101,172
------------
35,271,800
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $52,030,788).................. 55,995,390
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $108,698,129)................. 117,537,588
------------
REPURCHASE AGREEMENTS -- 14.7%
State Street Bank & Trust Co. Joint
Repurchase Agreement(1)............. 18,401,000 18,401,000
UBS Securities LLC Joint Repurchase
Agreement(1)........................ 1,802,000 1,802,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $20,203,000).................. 20,203,000
------------
TOTAL INVESTMENTS --
(cost $128,901,129)(2).............. 99.9% 137,740,588
Other assets less liabilities.......... 0.1 124,544
----------- ------------
NET ASSETS -- 100.0% $137,865,132
=========== ============
--------
(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, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Long-Term Investment Securities:
U.S. Government Agencies:
Federal Farm Credit Bank......... $-- $ 548,345 $-- 548,345
Federal National Mtg. Assoc...... -- 26,631 -- 26,631
Government National Mtg. Assoc... -- 60,563,975 -- 60,563,975
Small Business Administration.... -- 403,247 403,247
U.S. Government Treasuries........ -- 55,995,390 -- 55,995,390
Repurchase Agreement................ -- 20,203,000 -- 20,203,000
--- ------------ --- ------------
TOTAL $-- $137,740,588 $-- $137,740,588
=== ============ === ============
See Notes to Financial Statements
17
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- MARCH 31, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 82.4%
Repurchase Agreements........... 13.0
United States Treasury Notes.... 4.7
-----
100.1%
=====
CREDIT QUALITY ALLOCATION+#
Aaa........ 99.9%
Not Rated@. 0.1
-----
100.0%
=====
--------
*Calculated as a percentage of net assets.
+Source: Moody'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.
18
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 82.4%
GOVERNMENT NATIONAL MTG. ASSOC. -- 82.4%
4.00% due 04/15/39.................... $ 268,777 $ 288,968
4.00% due 05/15/39.................... 15,438 16,602
4.00% due 12/15/39.................... 149,726 161,013
4.00% due 08/15/40.................... 970,218 1,043,963
4.00% due 09/15/40.................... 2,968,220 3,193,828
4.00% due 11/15/40.................... 8,657,207 9,315,224
4.00% due 12/15/40.................... 2,923,951 3,146,195
4.00% due 03/15/41.................... 5,035,328 5,416,480
4.00% due 04/15/41.................... 233,904 251,609
4.00% due 07/15/41.................... 166,831 179,459
4.00% due 08/15/41.................... 1,751,111 1,883,663
4.00% due 09/15/41.................... 54,017 58,106
4.00% due 10/15/41.................... 1,382,493 1,487,070
4.00% due 11/15/41.................... 2,241,735 2,411,425
4.00% due 12/15/41.................... 1,150,344 1,237,421
4.00% due 01/15/42.................... 930,845 1,000,434
4.00% due 02/15/42.................... 3,784,921 4,069,553
4.00% due 03/15/42.................... 1,080,494 1,161,270
4.50% due 05/15/18.................... 525,416 572,365
4.50% due 08/15/18.................... 254,787 277,553
4.50% due 09/15/18.................... 861,721 939,259
4.50% due 10/15/18.................... 1,142,622 1,244,723
4.50% due 08/15/33.................... 80,202 87,831
4.50% due 09/15/33.................... 244,840 268,130
4.50% due 10/15/38.................... 228,082 249,090
4.50% due 12/15/38.................... 309,392 337,857
4.50% due 02/15/39.................... 150,666 164,386
4.50% due 03/15/39.................... 649,202 708,320
4.50% due 04/15/39.................... 215,355 235,003
4.50% due 05/15/39.................... 2,678,597 2,922,519
4.50% due 06/15/39.................... 8,500,647 9,274,747
4.50% due 07/15/39.................... 2,960,184 3,229,749
4.50% due 08/15/39.................... 186,431 203,408
4.50% due 09/15/39.................... 243,235 265,385
4.50% due 10/15/39.................... 136,305 148,718
4.50% due 11/15/39.................... 1,030,219 1,124,034
4.50% due 12/15/39.................... 1,075,226 1,173,140
4.50% due 01/15/40.................... 138,105 150,724
4.50% due 02/15/40.................... 4,407,685 4,810,441
4.50% due 03/15/40.................... 1,589,693 1,734,952
4.50% due 04/15/40.................... 3,044,171 3,322,283
4.50% due 05/15/40.................... 536,273 585,305
4.50% due 06/15/40.................... 1,026,802 1,120,588
4.50% due 07/15/40.................... 830,613 906,510
4.50% due 08/15/40.................... 65,927 71,951
4.50% due 09/15/40.................... 680,567 742,642
4.50% due 10/15/40.................... 63,053 68,815
4.50% due 11/15/40.................... 799,976 873,074
4.50% due 01/15/41.................... 826,556 902,083
4.50% due 02/15/41.................... 1,160,611 1,266,664
4.50% due 03/15/41.................... 4,200,504 4,583,897
4.50% due 04/15/41.................... 4,976,733 5,431,487
4.50% due 05/15/41.................... 1,621,764 1,769,955
4.50% due 06/15/41.................... 1,054,300 1,150,918
4.50% due 07/15/41.................... 712,642 777,760
4.50% due 08/15/41.................... 458,998 500,940
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 03/15/18....................... $ 218,101 $ 239,941
5.00% due 04/15/18....................... 2,029,971 2,228,331
5.00% due 05/15/18....................... 3,529,967 3,873,534
5.00% due 01/15/33....................... 5,388 5,967
5.00% due 05/15/33....................... 5,600 6,203
5.00% due 08/15/33....................... 1,127,511 1,248,740
5.00% due 09/15/33....................... 1,226,444 1,360,948
5.00% due 10/15/33....................... 2,845,450 3,152,303
5.00% due 04/15/34....................... 16,797 18,619
5.00% due 05/15/34....................... 69,968 77,490
5.00% due 11/15/34....................... 295,814 327,620
5.00% due 12/15/34....................... 303,031 335,613
5.00% due 09/15/35....................... 9,070 10,039
5.00% due 10/15/35....................... 59,540 65,905
5.00% due 11/15/35....................... 50,560 55,965
5.00% due 12/15/35....................... 27,186 30,092
5.00% due 02/15/36....................... 88,032 97,517
5.00% due 04/15/36....................... 250,077 276,497
5.00% due 06/15/36....................... 574,833 635,562
5.00% due 07/15/36....................... 272,917 301,749
5.00% due 08/15/36....................... 8,450 9,398
5.00% due 09/15/36....................... 382,044 422,843
5.00% due 10/15/36....................... 24,460 27,349
5.00% due 11/15/36....................... 150,242 166,114
5.00% due 12/15/36....................... 473,426 523,442
5.00% due 01/15/37....................... 228,434 252,567
5.00% due 02/15/37....................... 553,001 611,422
5.00% due 04/15/37....................... 2,716,086 3,004,314
5.00% due 12/15/37....................... 9,979 11,034
5.00% due 04/15/38....................... 4,873,668 5,388,547
5.00% due 05/15/38....................... 3,015,657 3,334,246
5.00% due 06/15/38....................... 155,262 171,664
5.00% due 08/15/38....................... 353,783 391,158
5.00% due 10/15/38....................... 463,080 512,002
5.00% due 01/15/39....................... 682,551 754,659
5.00% due 02/15/39....................... 1,333,254 1,474,107
5.00% due 03/15/39....................... 2,138,253 2,364,149
5.00% due 04/15/39....................... 1,375,821 1,521,170
5.00% due 08/15/39....................... 1,465,966 1,620,838
5.00% due 09/15/39....................... 66,835 73,895
5.00% due 10/15/39....................... 5,287,766 5,846,392
5.00% due 11/15/39....................... 3,214,850 3,554,484
5.00% due 12/15/39....................... 2,714,364 3,008,384
5.00% due 04/15/40....................... 2,953,961 3,273,418
5.00% due 05/15/40....................... 21,363,584 23,667,515
5.00% due 06/15/40....................... 293,146 324,238
5.50% due 06/15/29....................... 2,186 2,437
5.50% due 01/15/32....................... 19,209 21,605
5.50% due 02/15/33....................... 77,101 86,668
5.50% due 03/15/33....................... 280,422 315,203
5.50% due 04/15/33....................... 797,459 896,444
5.50% due 05/15/33....................... 1,284,426 1,441,148
5.50% due 06/15/33....................... 434,912 488,910
5.50% due 07/15/33....................... 3,311 3,721
5.50% due 08/15/33....................... 52,359 58,856
5.50% due 10/15/33....................... 486,626 547,008
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 12/15/33....................... $ 253,192 $ 284,764
5.50% due 01/15/34....................... 398,242 447,085
5.50% due 02/15/34....................... 148,944 167,295
5.50% due 07/15/35....................... 243,068 272,317
5.50% due 09/15/35....................... 11,520,934 12,907,278
5.50% due 10/15/35....................... 631,483 707,471
5.50% due 11/15/35....................... 899,450 1,007,683
5.50% due 12/15/35....................... 4,863,306 5,448,736
5.50% due 02/15/36....................... 216,355 243,201
5.50% due 03/15/36....................... 1,836,294 2,056,660
5.50% due 05/15/36....................... 92,589 103,658
5.50% due 09/15/36....................... 243,650 272,779
5.50% due 03/15/37....................... 230,060 257,420
5.50% due 04/15/37....................... 320,306 358,661
5.50% due 05/15/37....................... 79,421 88,866
5.50% due 12/15/37....................... 147,003 164,486
5.50% due 01/15/38....................... 191,830 214,614
5.50% due 02/15/38....................... 181,453 203,004
5.50% due 04/15/38....................... 360,718 403,561
5.50% due 05/15/38....................... 1,367,369 1,536,781
5.50% due 06/15/38....................... 1,306,241 1,461,386
5.50% due 07/15/38....................... 1,491,321 1,668,961
5.50% due 08/15/38....................... 1,040,341 1,165,419
5.50% due 10/15/38....................... 4,559,575 5,101,139
5.50% due 11/15/38....................... 394,020 440,818
5.50% due 12/15/38....................... 770,606 862,145
5.50% due 01/15/39....................... 6,162,530 6,900,234
5.50% due 02/15/39....................... 451,700 505,772
5.50% due 03/15/39....................... 225,629 252,857
5.50% due 05/15/39....................... 93,579 104,720
5.50% due 08/15/39....................... 1,282,058 1,435,530
5.50% due 09/15/39....................... 374,267 418,822
5.50% due 10/15/39....................... 1,950,923 2,185,557
5.50% due 11/15/39....................... 571,864 639,873
5.50% due 12/15/39....................... 1,693,868 1,896,637
5.50% due 01/15/40....................... 119,811 134,302
5.50% due 03/15/40....................... 539,053 604,255
5.50% due 04/15/40....................... 286,459 322,036
5.50% due 05/15/40....................... 182,344 204,399
5.50% due 06/15/40....................... 256,103 288,201
5.50% due 08/15/40....................... 7,527,882 8,427,064
5.50% due 09/15/40....................... 427,156 478,824
5.50% due 10/15/40....................... 635,582 712,461
5.50% due 11/15/40....................... 60,357 67,658
5.50% due 12/15/40....................... 231,359 260,067
5.50% due 02/15/41....................... 3,917,773 4,385,029
5.50% due 06/15/41....................... 311,801 348,834
6.00% due 11/15/23....................... 1,560 1,755
6.00% due 01/15/24....................... 4,481 5,053
6.00% due 07/15/28....................... 1,894 2,152
6.00% due 12/15/28....................... 129,111 146,732
6.00% due 01/15/29....................... 252,983 287,825
6.00% due 02/15/29....................... 240,461 273,523
6.00% due 03/15/29....................... 307,335 350,628
6.00% due 04/15/29....................... 527,849 600,629
6.00% due 05/15/29....................... 31,981 36,496
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 06/15/29....................... $ 75,045 $ 85,433
6.00% due 07/15/29....................... 88,152 100,648
6.00% due 08/15/29....................... 7,437 8,487
6.00% due 10/15/29....................... 92,921 106,039
6.00% due 04/15/31....................... 6,703 7,616
6.00% due 07/15/31....................... 13,789 15,692
6.00% due 10/15/31....................... 35,233 40,092
6.00% due 11/15/31....................... 351,659 400,249
6.00% due 12/15/31....................... 153,432 174,674
6.00% due 01/15/32....................... 281,737 320,144
6.00% due 02/15/32....................... 12,005 13,663
6.00% due 07/15/32....................... 40,761 46,311
6.00% due 09/15/32....................... 350,457 398,221
6.00% due 10/15/32....................... 82,178 93,368
6.00% due 11/15/32....................... 800 909
6.00% due 12/15/32....................... 27,242 30,952
6.00% due 01/15/33....................... 73,168 83,268
6.00% due 02/15/33....................... 638,373 725,726
6.00% due 03/15/33....................... 57,999 65,877
6.00% due 04/15/33....................... 523,741 594,622
6.00% due 05/15/33....................... 466,435 530,136
6.00% due 06/15/33....................... 401,863 456,492
6.00% due 08/15/33....................... 196,073 222,932
6.00% due 10/15/33....................... 27,059 30,710
6.00% due 11/15/33....................... 137,313 155,859
6.00% due 12/15/33....................... 239,681 272,632
6.00% due 01/15/34....................... 248,396 280,970
6.00% due 02/15/34....................... 211,811 240,980
6.00% due 03/15/34....................... 62,052 70,153
6.00% due 04/15/34....................... 162,439 183,644
6.00% due 05/15/34....................... 93,657 106,312
6.00% due 06/15/34....................... 93,206 105,719
6.00% due 07/15/34....................... 314,403 356,806
6.00% due 08/15/34....................... 293,568 332,120
6.00% due 09/15/34....................... 123,024 139,092
6.00% due 10/15/34....................... 282,609 319,501
6.00% due 11/15/34....................... 379,228 428,819
6.00% due 12/15/34....................... 53,550 60,775
6.00% due 01/15/35....................... 50,196 56,783
6.00% due 02/15/35....................... 231,635 263,040
6.00% due 04/15/35....................... 31,322 35,381
6.00% due 05/15/35....................... 6,302 7,165
6.00% due 06/15/35....................... 134,578 152,020
6.00% due 11/15/35....................... 4,479 5,068
6.00% due 12/15/35....................... 121,779 138,497
6.00% due 01/15/36....................... 407,439 460,027
6.00% due 02/15/36....................... 70,191 79,699
6.00% due 03/15/36....................... 229,803 259,674
6.00% due 04/15/36....................... 273,952 310,323
6.00% due 05/15/36....................... 778,964 881,137
6.00% due 06/15/36....................... 300,312 339,047
6.00% due 07/15/36....................... 242,804 274,121
6.00% due 08/15/36....................... 7,187 8,103
6.00% due 09/15/36....................... 44,639 50,456
6.00% due 10/15/36....................... 289,266 326,620
6.00% due 11/15/36....................... 491,358 554,735
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 07/15/37....................... $ 638,640 $ 721,012
6.00% due 09/15/37....................... 790,531 892,496
6.00% due 10/15/37....................... 319,338 360,527
6.00% due 11/15/37....................... 17,579 19,846
6.00% due 12/15/37....................... 19,242 21,724
6.00% due 01/15/38....................... 634,661 716,520
6.00% due 02/15/38....................... 478,171 539,847
6.00% due 06/15/38....................... 26,208 29,589
6.00% due 07/15/38....................... 1,201,831 1,356,844
6.00% due 08/15/38....................... 676,852 764,153
6.00% due 09/15/38....................... 4,846,891 5,472,059
6.00% due 10/15/38....................... 753,482 850,667
6.00% due 11/15/38....................... 2,188,837 2,471,029
6.00% due 12/15/38....................... 1,437,230 1,622,608
6.00% due 01/15/39....................... 2,081,218 2,349,655
6.00% due 08/15/39....................... 838,681 946,856
6.00% due 09/15/39....................... 32,674 36,888
6.00% due 10/15/39....................... 1,078,790 1,217,935
6.00% due 11/15/39....................... 828,145 934,961
6.00% due 01/15/40....................... 567,561 640,766
6.00% due 02/15/40....................... 10,422 11,766
6.00% due 03/15/40....................... 300,473 339,228
6.00% due 04/15/40....................... 748,325 844,846
6.00% due 05/15/40....................... 630,442 711,758
6.50% due 03/15/28....................... 10,342 11,984
6.50% due 08/15/28....................... 17,117 20,011
6.50% due 01/15/29....................... 1,657 1,934
6.50% due 02/15/29....................... 663 775
6.50% due 03/15/29....................... 66,289 77,377
6.50% due 04/15/29....................... 704 821
6.50% due 05/15/29....................... 5,465 6,348
6.50% due 06/15/29....................... 19,696 23,021
6.50% due 07/15/29....................... 1,499 1,750
6.50% due 10/15/29....................... 2,862 3,341
6.50% due 08/15/31....................... 70,163 81,563
6.50% due 09/15/31....................... 9,932 11,545
6.50% due 10/15/31....................... 122,719 142,657
6.50% due 11/15/31....................... 75,591 88,005
6.50% due 12/15/31....................... 81,119 94,705
6.50% due 02/15/32....................... 141,579 165,201
6.50% due 05/15/32....................... 356,402 414,343
6.50% due 06/15/32....................... 56,876 65,903
7.00% due 03/15/23....................... 11,947 13,718
7.00% due 01/20/24....................... 327 376
7.00% due 03/20/24....................... 278 320
7.00% due 07/20/25....................... 1,072 1,243
7.00% due 09/15/25....................... 44,587 51,703
7.00% due 01/20/29....................... 20,083 23,772
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 02/20/29....................... $ 3,274 $ 3,875
7.00% due 06/20/29....................... 6,996 8,281
7.00% due 07/20/29....................... 24,463 28,957
7.00% due 09/20/29....................... 2,467 2,920
7.00% due 10/20/29....................... 4,787 5,666
7.00% due 11/20/29....................... 1,631 1,931
7.00% due 03/20/30....................... 2,798 3,319
7.00% due 06/20/30....................... 2,524 2,994
7.00% due 08/20/30....................... 6,314 7,490
7.00% due 09/20/30....................... 10,074 11,950
7.00% due 10/20/30....................... 11,279 13,379
8.00% due 11/15/26....................... 52,884 63,428
8.00% due 12/15/29....................... 7,550 8,661
8.00% due 04/15/30....................... 13,028 15,225
8.00% due 05/15/30....................... 1,251 1,396
8.00% due 08/15/30....................... 25,545 30,850
8.50% due 03/15/17....................... 7,843 8,190
8.50% due 05/15/21....................... 2,257 2,264
8.50% due 12/15/22....................... 14,310 14,363
8.50% due 01/15/23....................... 41,940 42,904
8.50% due 09/15/24....................... 11,406 13,747
9.00% due 07/15/16....................... 10,561 10,823
9.00% due 10/15/16....................... 2,841 2,852
------------
278,452,586
------------
SMALL BUSINESS ADMINISTRATION -- 0.0%
6.30% due 06/01/18....................... 123,233 134,416
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $265,929,072)...................... 278,587,002
------------
U.S. GOVERNMENT TREASURIES -- 4.7%
UNITED STATES TREASURY NOTES -- 4.7%
2.00% due 02/15/22
(cost $15,657,344)....................... 16,000,000 15,692,496
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $281,586,416)...................... 294,279,498
------------
REPURCHASE AGREEMENT -- 13.0%
UBS Securities LLC Joint Repurchase
Agreement(1)
(cost $44,025,000)....................... 44,025,000 44,025,000
------------
TOTAL INVESTMENTS --
(cost $325,611,416)(2)................... 100.1% 338,304,498
Liabilities in excess of other assets....... (0.1) (291,600)
----------- ------------
NET ASSETS -- 100.0% $338,012,898
=========== ============
--------
(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, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Long-Term Investment Securities:
U.S. Government Agencies:
Government National Mtg. Assoc... $-- $278,452,586 $-- $278,452,586
Small Business Administration.... -- 134,416 -- 134,416
U.S. Government Treasuries........ -- 15,692,496 -- 15,692,496
Repurchase Agreements............... -- 44,025,000 -- 44,025,000
--- ------------ --- ------------
TOTAL............................... $-- $338,304,498 $-- $338,304,498
=== ============ === ============
See Notes to Financial Statements
21
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Foreign Government Agencies............ 16.8%
Federal National Mtg. Assoc............ 11.2
Time Deposits.......................... 5.2
Diversified Financial Services......... 4.3
Federal Home Loan Mtg. Corp............ 4.1
Oil Companies-Exploration & Production. 3.1
Diversified Banking Institutions....... 2.8
Banks-Commercial....................... 2.7
Cable/Satellite TV..................... 1.6
Cellular Telecom....................... 1.5
Telephone-Integrated................... 1.4
United States Treasury Notes........... 1.3
Pipelines.............................. 1.3
Oil Companies-Integrated............... 1.3
Electric-Integrated.................... 1.1
Steel-Producers........................ 1.1
Real Estate Investment Trusts.......... 1.0
Diversified Minerals................... 0.9
Medical-Hospitals...................... 0.9
Insurance-Multi-line................... 0.9
Casino Hotels.......................... 0.9
Telecom Services....................... 0.9
Finance-Investment Banker/Broker....... 0.8
Finance-Auto Loans..................... 0.8
Building-Residential/Commercial........ 0.8
Banks-Super Regional................... 0.8
Paper & Related Products............... 0.8
Independent Power Producers............ 0.7
Electric-Generation.................... 0.7
Repurchase Agreements.................. 0.7
Oil-Field Services..................... 0.6
Insurance-Mutual....................... 0.6
Coal................................... 0.6
Rental Auto/Equipment.................. 0.6
Consumer Products-Misc................. 0.6
Diversified Manufacturing Operations... 0.5
Building Products-Cement............... 0.5
Government National Mtg. Assoc......... 0.5
Retail-Restaurants..................... 0.5
Containers-Metal/Glass................. 0.5
Medical-Drugs.......................... 0.5
Transport-Rail......................... 0.5
Oil & Gas Drilling..................... 0.5
Finance-Leasing Companies.............. 0.5
Special Purpose Entities............... 0.5
Airlines............................... 0.5
Building & Construction Products-Misc.. 0.4
Banks-Special Purpose.................. 0.4
Computer Services...................... 0.4
Containers-Paper/Plastic............... 0.4
Pharmacy Services...................... 0.4
Therapeutics........................... 0.4
Finance-Other Services................. 0.4
Capacitors............................. 0.4
Medical Instruments.................... 0.4
Financial Guarantee Insurance.......... 0.4
United States Treasury Bonds........... 0.4
Retail-Drug Store...................... 0.4
Real Estate Management/Services........ 0.4
Real Estate Operations & Development... 0.4
MRI/Medical Diagnostic Imaging........ 0.3%
Auto-Cars/Light Trucks................ 0.3
Municipal Bonds....................... 0.3
Marine Services....................... 0.3
Music................................. 0.3
Funeral Services & Related Items...... 0.3
Satellite Telecom..................... 0.3
Medical-HMO........................... 0.3
Non-Hazardous Waste Disposal.......... 0.3
Multimedia............................ 0.3
Retail-Toy Stores..................... 0.3
Publishing-Newspapers................. 0.3
Data Processing/Management............ 0.3
Chemicals-Diversified................. 0.3
Casino Services....................... 0.3
Consulting Services................... 0.3
Oil Refining & Marketing.............. 0.3
Banks-Money Center.................... 0.3
Food-Meat Products.................... 0.3
Chemicals-Plastics.................... 0.2
Medical Products...................... 0.2
Aerospace/Defense..................... 0.2
Computer Graphics..................... 0.2
Brewery............................... 0.2
Auto-Heavy Duty Trucks................ 0.2
Firearms & Ammunition................. 0.2
Computers-Memory Devices.............. 0.2
Wire & Cable Products................. 0.2
Chemicals-Other....................... 0.2
Semiconductor Equipment............... 0.2
Web Hosting/Design.................... 0.2
Banks-Fiduciary....................... 0.2
Insurance-Life/Health................. 0.2
Schools............................... 0.2
Advertising Services.................. 0.2
Television............................ 0.2
Electronic Components-Semiconductors.. 0.2
Insurance-Reinsurance................. 0.2
Aerospace/Defense-Equipment........... 0.2
Printing-Commercial................... 0.2
Shipbuilding.......................... 0.2
Auto/Truck Parts & Equipment-Original. 0.2
Savings & Loans/Thrifts............... 0.2
Computers............................. 0.2
Distribution/Wholesale................ 0.2
Retail-Office Supplies................ 0.1
Retail-Apparel/Shoe................... 0.1
Diversified Operations................ 0.1
Home Furnishings...................... 0.1
Metal Processors & Fabrication........ 0.1
Gas-Transportation.................... 0.1
Seismic Data Collection............... 0.1
Gold Mining........................... 0.1
Commercial Services-Finance........... 0.1
Chemicals-Specialty................... 0.1
Retail-Sporting Goods................. 0.1
Sovereign Agency...................... 0.1
Broadcast Services/Program............ 0.1
Storage/Warehousing................... 0.1
Regional Authority.................... 0.1
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2012 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Electronics-Military......................... 0.1%
Advertising Agencies......................... 0.1
Engineering/R&D Services..................... 0.1
Gas-Distribution............................. 0.1
Transport-Marine............................. 0.1
Motion Pictures & Services................... 0.1
Building-Heavy Construction.................. 0.1
Electric-Distribution........................ 0.1
Retail-Propane Distribution.................. 0.1
Electronic Components-Misc................... 0.1
Gambling (Non-Hotel)......................... 0.1
Warehousing & Harbor Transportation Services. 0.1
Agricultural Operations...................... 0.1
Metal-Diversified............................ 0.1
Finance-Commercial........................... 0.1
Electric-Transmission........................ 0.1
Telecommunication Equipment.................. 0.1
Medical-Biomedical/Gene...................... 0.1
Retail-Consumer Electronics.................. 0.1
------
100.8%
======
CREDIT QUALITY ALLOCATION+#
Aaa.......................................... 24.9%
Aa........................................... 4.4
A............................................ 6.7
Baa.......................................... 18.5
Ba........................................... 14.6
B............................................ 19.2
Caa.......................................... 4.9
Ca........................................... 0.1
Not Rated@................................... 6.7
------
100.00%
======
--------
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
ASSET BACKED SECURITIES -- 3.5%
DIVERSIFIED FINANCIAL SERVICES -- 3.5%
Avis Budget Rental Car Funding AESOP LLC
Series 2012-2A, Class B
3.89% due 05/20/18*......................... $ 134,000 $ 134,911
Banc of America Alternative Loan Trust
Series 2004-10, Class 1CB1
6.00% due 11/25/34(1)....................... 217,554 212,147
Banc of America Merrill Lynch Commercial
Mtg., Inc.
Series 2006-5, Class AM
5.45% due 09/10/47(2)....................... 500,000 484,284
Banc of America Mtg. Securities, Inc.
Series 2006-2, Class A15
6.00% due 07/25/46(1)....................... 42,270 39,762
Bear Stearns Commercial Mtg. Securities VRS
Series 2006-PW11, Class AJ
5.45% due 03/11/39(2)....................... 771,125 747,055
Cajun Global LLC
Series 2011-1A, Class A2
5.96% due 02/20/41*......................... 135,545 144,441
Citibank Credit Card Issuance Trust,
Series 2008-A1, Class A1
5.35% due 02/07/20.......................... 1,500,000 1,780,155
Citibank Omni Master Trust
Series 2009-A17, Class A17
4.90% due 11/15/18*......................... 1,000,000 1,094,913
Citicorp Mtg. Securities, Inc.
Series 2006-4, Class 1A2
6.00% due 08/25/36(1)....................... 257,380 247,604
Countrywide Asset-Backed Certs. FRS
Series 2004-BC2, Class M2
1.82% due 02/25/34.......................... 81,081 70,715
Discover Card Master Trust
Series 2007-A1, Class A1
5.65% due 03/16/20.......................... 330,000 393,665
Dominos Pizza Master Issuer LLC
Series 2012-1A, Class A2
5.22% due 01/25/42*......................... 600,000 614,492
Drug Royalty Corp., Inc.
Series 2012-1, Class A2
5.80% due 07/15/24*(9)...................... 300,000 299,526
Entergy Arkansas Restoration Funding LLC
Series 2010A, Class A1
2.30% due 08/01/21.......................... 229,235 236,000
GS Mtg. Securities Corp. II
Series 2006-GG8, Class AM
5.59% due 11/10/39(2)....................... 1,000,000 1,045,147
GS Mtg. Securities Corp. II VRS
Series 2007-GG10, Class A4
5.79% due 08/10/45(2)....................... 3,772,886 4,186,760
GSR Mtg. Loan Trust
Series 2007-1F, Class 3A14
5.75% due 01/25/37(1)....................... 289,734 270,809
GSR Mtg. Loan Trust
Series 2007-1F, Class 3A13
6.00% due 01/25/37(1)....................... 275,000 245,766
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
JP Morgan Chase Commercial Mtg. Securities
Corp. VRS
Series 2006-LDP7, Class AM
5.87% due 04/15/45(2)........................ $ 801,233 $ 864,297
Morgan Stanley Capital I VRS
Series 2007-HQ11, Class AM
5.48% due 02/12/44(2)........................ 1,218,744 1,266,602
Morgan Stanley Capital I VRS
Series 2007-T27, Class AJ
5.64% due 06/11/42(2)........................ 1,500,000 1,307,712
Morgan Stanley Capital I VRS
Series 2007-IQ15, Class AM
5.88% due 06/11/49(2)........................ 500,000 493,650
Morgan Stanley Reremic Trust VRS
Series 2010-GG10, Class A4B
5.79% due 08/15/45*(2)....................... 1,347,657 1,389,258
Sonic Capital LLC
Series 2011-1A, Class A2
5.44% due 05/20/41*.......................... 680,550 709,087
Textainer Marine Containers, Ltd.
Series 2011-1A, Class A
4.70% due 06/15/26*.......................... 185,000 188,700
Wachovia Bank Commercial Mtg. Trust VRS
Series 2003-C7, Class J
5.36% due 10/15/35*(2)....................... 2,750,000 1,924,516
Wells Fargo Mtg. Backed Securities Trust FRS
Series 2006-8, Class A2
0.64% due 07/25/36(1)........................ 301,947 299,116
Wells Fargo Mtg. Backed Securities Trust
Series 2006-6, Class 1A2
5.75% due 05/25/36(1)........................ 313,562 308,608
Wells Fargo Mtg. Backed Securities Trust
Series 2007-15, Class A1
6.00% due 11/25/37(1)........................ 337,046 320,509
-----------
TOTAL ASSET BACKED SECURITIES
(cost $21,688,718)........................... 21,320,207
-----------
U.S. CORPORATE BONDS & NOTES -- 43.6%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
4.00% due 03/15/22........................... 265,000 259,490
Interpublic Group of Cos., Inc.
Senior Notes
6.25% due 11/15/14........................... 341,000 371,690
-----------
631,180
-----------
ADVERTISING SERVICES -- 0.2%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/15*.................... 1,220,000 506,300
Visant Corp.
Company Guar. Notes
10.00% due 10/01/17.......................... 725,000 676,969
-----------
1,183,269
-----------
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
AEROSPACE/DEFENSE -- 0.2%
Lockheed Martin Corp.
Senior Notes
4.25% due 11/15/19......................... $ 302,000 $ 327,133
Lockheed Martin Corp.
Senior Notes
6.15% due 09/01/36......................... 584,000 700,126
Raytheon Co.
Senior Notes
4.70% due 12/15/41......................... 380,000 392,800
----------
1,420,059
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.2%
Sequa Corp.
Company Guar. Notes
11.75% due 12/01/15*....................... 1,025,000 1,089,063
----------
AGRICULTURAL OPERATIONS -- 0.1%
Archer-Daniels-Midland Co.
Senior Bonds
5.77% due 03/01/41......................... 342,000 412,006
----------
AIRLINES -- 0.5%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-2
6.88% due 04/02/14......................... 29,360 29,360
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/19......................... 1,075,471 1,075,471
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/15......................... 139,513 119,981
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/17......................... 427,042 409,960
Delta Air Lines, Inc.
Senior Sec. Notes
9.50% due 09/15/14*........................ 1,047,000 1,115,055
----------
2,749,827
----------
AUTO-CARS/LIGHT TRUCKS -- 0.3%
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.25% due 06/15/21......................... 1,990,000 2,009,900
----------
AUTO-HEAVY DUTY TRUCKS -- 0.2%
Navistar International Corp.
Company Guar. Notes
8.25% due 11/01/21......................... 1,251,000 1,363,590
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.2%
Cooper-Standard Automotive, Inc.
Company Guar. Notes
8.50% due 05/01/18......................... 940,000 1,010,500
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
BANKS-COMMERCIAL -- 1.1%
Associated Banc-Corp.
Senior Notes
5.13% due 03/28/16................ $ 784,000 $ 827,976
Branch Banking & Trust Co. FRS
Sub. Notes
0.79% due 05/23/17................ 426,000 396,843
CIT Group, Inc.*
Sec. Notes
5.50% due 02/15/19................ 1,225,000 1,249,500
HSBC USA, Inc.
Senior Notes
2.38% due 02/13/15................ 1,105,000 1,112,577
KeyBank NA
Sub. Notes
7.41% due 10/15/27................ 128,000 143,188
Regions Bank
Sub. Notes
7.50% due 05/15/18................ 224,000 253,680
Synovus Financial Corp.
Senior Notes
7.88% due 02/15/19................ 1,220,000 1,256,600
Wachovia Bank NA
Sub. Notes
5.60% due 03/15/16................ 407,000 452,970
Zions Bancorp.
Senior Notes
4.50% due 03/27/17................ 529,000 525,694
Zions Bancorp.
Senior Notes
7.75% due 09/23/14................ 416,000 455,520
----------
6,674,548
----------
BANKS-FIDUCIARY -- 0.2%
Bank of New York Mellon Corp.
Senior Notes
1.20% due 02/20/15................ 526,000 526,634
State Street Capital Trust IV FRS
Limited Guar. Notes
1.47% due 06/15/37................ 919,000 675,457
----------
1,202,091
----------
BANKS-MONEY CENTER -- 0.1%
Comerica Bank
Sub. Notes
5.20% due 08/22/17................ 386,000 425,049
----------
BANKS-SUPER REGIONAL -- 0.6%
Banc One Corp.
Sub. Debentures
8.00% due 04/29/27................ 213,000 262,873
Capital One Capital VI
Limited Guar. Notes
8.88% due 05/15/40................ 288,000 289,936
Capital One Financial Corp. FRS
Senior Notes
1.72% due 07/15/14................ 346,000 342,585
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BANKS-SUPER REGIONAL (CONTINUED)
Capital One Financial Corp.
Senior Notes
2.15% due 03/23/15.................................... $ 709,000 $ 710,095
Capital One Financial Corp.
Senior Notes
3.15% due 07/15/16.................................... 98,000 100,280
Huntington Bancshares, Inc.
Sub. Notes
7.00% due 12/15/20.................................... 328,000 370,126
JPMorgan Chase Bank NA
Sub. Notes
5.88% due 06/13/16.................................... 213,000 235,596
PNC Preferred Funding Trust II FRS
Jr. Sub. Bonds
1.70% due 05/21/12*(3)................................ 427,000 328,051
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/26.................................... 38,000 37,234
Wachovia Corp.
Senior Notes
5.75% due 02/01/18.................................... 451,000 524,348
Wells Fargo & Co. FRS
Jr. Sub. Bonds
7.98% due 03/15/18(3)................................. 235,000 255,856
Wells Fargo Bank NA FRS
Sub. Notes
0.71% due 05/16/16.................................... 350,000 333,449
----------
3,790,429
----------
BREWERY -- 0.1%
SABMiller Holdings, Inc.
Company Guar. Notes
4.95% due 01/15/42*................................... 552,000 571,886
----------
BROADCAST SERVICES/PROGRAM -- 0.1%
Nexstar Broadcasting, Inc./Mission Broadcasting, Inc.
Sec. Notes
8.88% due 04/15/17.................................... 650,000 697,125
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.3%
Building Materials Corp. of America
Senior Notes
6.75% due 05/01/21*................................... 1,250,000 1,326,562
Interline Brands, Inc.
Company Guar. Notes
7.00% due 11/15/18.................................... 510,000 538,050
----------
1,864,612
----------
BUILDING PRODUCTS-CEMENT -- 0.5%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/16.................................... 1,225,000 1,222,060
Headwaters, Inc.
Sec. Notes
7.63% due 04/01/19.................................... 2,100,000 2,042,250
----------
3,264,310
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
New Enterprise Stone & Lime Co.
Company Guar. Notes
11.00% due 09/01/18.............................. $ 628,000 $ 521,240
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.8%
Beazer Homes USA, Inc.
Company Guar. Notes
9.13% due 05/15/19............................... 800,000 688,000
KB Home
Company Guar. Notes
9.10% due 09/15/17............................... 1,225,000 1,280,125
Meritage Homes Corp.
Senior Notes
7.00% due 04/01/22*.............................. 625,000 626,563
Standard Pacific Corp.
Company Guar. Notes
8.38% due 05/15/18............................... 1,000,000 1,063,750
Standard Pacific Corp.
Company Guar. Notes
8.38% due 01/15/21............................... 615,000 645,750
Taylor Morrison Communities, Inc./Monarch
Communities, Inc.
Senior Notes
7.75% due 04/15/20*.............................. 487,000 494,312
----------
4,798,500
----------
CABLE/SATELLITE TV -- 1.4%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.50% due 04/30/21............................... 1,925,000 1,992,375
Comcast Corp.
Company Guar. Notes
5.65% due 06/15/35............................... 381,000 416,239
Comcast Corp.
Company Guar. Notes
5.90% due 03/15/16............................... 1,847,000 2,132,593
CSC Holdings LLC
Senior Notes
7.88% due 02/15/18............................... 1,090,000 1,218,075
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc.
Company Guar. Notes
2.40% due 03/15/17*.............................. 691,000 684,868
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc.
Company Guar. Notes
5.15% due 03/15/42*.............................. 279,000 271,797
Echostar DBS Corp.
Company Guar. Notes
7.75% due 05/31/15............................... 912,000 1,036,260
Mediacom LLC/Mediacom Capital Corp.
Senior Notes
7.25% due 02/15/22*.............................. 625,000 631,250
TCI Communications, Inc.
Senior Notes
7.13% due 02/15/28............................... 250,000 308,534
----------
8,691,991
----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CAPACITORS -- 0.4%
Kemet Corp.
Senior Notes
10.50% due 05/01/18*............................. $1,080,000 $1,166,400
Kemet Corp.
Senior Sec. Notes
10.50% due 05/01/18.............................. 1,100,000 1,188,000
----------
2,354,400
----------
CASINO HOTELS -- 0.9%
CityCenter Holdings LLC/CityCenter Finance Corp.
Sec. Notes
11.50% due 01/15/17(4)........................... 1,590,697 1,761,697
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/19*............................. 1,055,000 1,087,969
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17.............................. 1,425,000 1,553,250
Station Casinos LLC
Company Guar. Notes
3.65% due 06/18/18*(5)........................... 1,095,000 752,812
----------
5,155,728
----------
CASINO SERVICES -- 0.3%
Chukchansi Economic Development Authority
Senior Notes
8.00% due 11/15/13*.............................. 1,045,000 747,175
Greektown Superholdings, Inc.
Sec. Notes, Series A
13.00% due 07/01/15.............................. 293,000 321,568
Greektown Superholdings, Inc.
Sec. Notes, Series B
13.00% due 07/01/15.............................. 450,000 493,875
----------
1,562,618
----------
CELLULAR TELECOM -- 1.2%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16............................... 1,995,000 2,104,725
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/15............................... 3,200,000 3,088,000
Sprint Nextel Corp.
Senior Bonds
6.00% due 12/01/16............................... 1,564,000 1,395,870
Sprint Nextel Corp.
Senior Notes
9.13% due 03/01/17*.............................. 775,000 771,125
----------
7,359,720
----------
CHEMICALS-OTHER -- 0.2%
Taminco Global Chemical Corp.
Sec. Notes
9.75% due 03/31/20*.............................. 1,195,000 1,242,800
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CHEMICALS-SPECIALTY -- 0.1%
Eastman Chemical Co.
Senior Notes
7.25% due 01/15/24.................... $ 405,000 $ 489,459
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/34.................... 248,000 313,074
----------
802,533
----------
COAL -- 0.6%
Alpha Natural Resources, Inc.
Company Guar. Notes
6.00% due 06/01/19.................... 725,000 656,125
James River Coal Co.
Company Guar. Notes
7.88% due 04/01/19.................... 710,000 482,800
Patriot Coal Corp.
Company Guar. Notes
8.25% due 04/30/18.................... 795,000 606,187
Peabody Energy Corp.
Company Guar. Notes
6.00% due 11/15/18*................... 760,000 744,800
SunCoke Energy, Inc.
Company Guar. Notes
7.63% due 08/01/19.................... 900,000 924,750
----------
3,414,662
----------
COMMERCIAL SERVICES-FINANCE -- 0.1%
Alliance Data Systems Corp.
Senior Notes
6.38% due 04/01/20*................... 800,000 814,000
----------
COMPUTER GRAPHICS -- 0.2%
Epicor Software Corp.
Company Guar. Notes
8.63% due 05/01/19.................... 1,360,000 1,390,600
----------
COMPUTER SERVICES -- 0.4%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/15.................... 399,000 431,684
Compucom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/15*.................. 1,188,000 1,247,400
International Business Machines Corp.
Senior Notes
1.25% due 02/06/17.................... 460,000 456,311
International Business Machines Corp.
Senior Notes
6.22% due 08/01/27.................... 375,000 477,742
----------
2,613,137
----------
COMPUTERS -- 0.2%
Hewlett-Packard Co.
Senior Notes
2.60% due 09/15/17.................... 932,000 931,426
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CONSULTING SERVICES -- 0.3%
FTI Consulting, Inc.
Company Guar. Notes
6.75% due 10/01/20............................ $1,450,000 $1,553,313
----------
CONSUMER PRODUCTS-MISC. -- 0.6%
American Achievement Corp.
Sec. Notes
10.88% due 04/15/16*.......................... 970,000 703,250
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
7.88% due 08/15/19*........................... 1,485,000 1,596,375
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Notes
9.88% due 08/15/19*........................... 1,000,000 1,022,500
----------
3,322,125
----------
CONTAINERS-METAL/GLASS -- 0.5%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19............................ 684,000 755,820
Crown Americas LLC/Crown Americas Capital
Corp. III
Company Guar. Notes
6.25% due 02/01/21............................ 400,000 430,000
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/26............................ 1,285,000 1,362,100
Silgan Holdings, Inc.
Senior Notes
5.00% due 04/01/20*........................... 620,000 616,900
----------
3,164,820
----------
CONTAINERS-PAPER/PLASTIC -- 0.4%
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*........................... 1,665,000 1,748,250
----------
2,580,750
----------
DATA PROCESSING/MANAGEMENT -- 0.3%
Audatex North America, Inc.
Company Guar. Notes
6.75% due 06/15/18*........................... 1,120,000 1,176,000
Fidelity National Information Services, Inc.*
Company Guar. Notes
5.00% due 03/15/22............................ 425,000 418,625
----------
1,594,625
----------
DISTRIBUTION/WHOLESALE -- 0.2%
McJunkin Red Man Corp.
Senior Sec. Notes
9.50% due 12/15/16............................ 830,000 904,700
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS -- 1.6%
BAC Capital Trust XIII FRS
Limited Guar. Notes
4.00% due 05/07/12(3)................. $1,070,000 $ 762,959
BAC Capital Trust XV FRS
Limited Guar. Notes
1.29% due 06/01/56.................... 250,000 175,294
Bank of America Corp.
Sub. Notes
5.42% due 03/15/17.................... 360,000 368,094
Bank of America Corp.
Senior Notes
5.75% due 12/01/17.................... 337,000 361,430
Citigroup, Inc.
Sub. Notes
4.88% due 05/07/15.................... 526,000 545,346
Citigroup, Inc.
Sub. Notes
6.13% due 08/25/36.................... 422,000 405,572
GMAC LLC
Sub. Notes
8.00% due 12/31/18.................... 1,825,000 1,939,062
Goldman Sachs Group, Inc.
Senior Notes
6.15% due 04/01/18.................... 982,000 1,059,215
JPMorgan Chase & Co. FRS
Sub. Notes
1.53% due 09/01/15.................... 451,000 446,842
JPMorgan Chase & Co.
Notes
1.88% due 03/20/15.................... 600,000 601,532
JPMorgan Chase & Co.
Senior Notes
3.45% due 03/01/16.................... 349,000 363,888
JPMorgan Chase & Co.
Sub. Notes
6.13% due 06/27/17.................... 673,000 768,053
JPMorgan Chase & Co. FRS
Jr. Sub Notes
7.90% due 04/30/12(3)................. 304,000 333,038
JPMorgan Chase Capital XXIII FRS
Limited Guar. Bonds
1.50% due 05/15/77.................... 140,000 103,850
Morgan Stanley
Senior Notes
5.55% due 04/27/17.................... 561,000 574,079
Morgan Stanley
Senior Notes
6.63% due 04/01/18.................... 685,000 721,315
NationsBank Corp.
Sub. Notes
7.25% due 10/15/25.................... 117,000 122,684
----------
9,652,253
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.8%
Associates Corp. of North America
Senior Notes
6.95% due 11/01/18.................... 620,000 701,758
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/38............................. $1,205,000 $1,324,578
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/32............................. 2,512,000 3,001,202
----------
5,027,538
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
3M Co.
Senior Notes
1.38% due 09/29/16............................. 261,000 262,738
General Electric Co.
Senior Notes
5.25% due 12/06/17............................. 294,000 340,001
Harsco Corp.
Senior Notes
2.70% due 10/15/15............................. 649,000 664,432
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/22*............................ 548,000 563,755
Textron, Inc.
Senior Notes
4.63% due 09/21/16............................. 780,000 823,491
----------
2,654,417
----------
ELECTRIC-DISTRIBUTION -- 0.1%
Oglethorpe Power Corp.
1st. Mtg. Notes
5.38% due 11/01/40............................. 435,000 488,813
----------
ELECTRIC-GENERATION -- 0.5%
AES Corp.
Senior Notes
8.00% due 10/15/17............................. 1,020,000 1,148,775
Allegheny Energy Supply Co. LLC
Senior Notes
6.75% due 10/15/39*............................ 404,000 439,205
Edison Mission Energy
Senior Notes
7.63% due 05/15/27............................. 1,475,000 873,937
Midwest Generation LLC
Pass Through Certs., Series B
8.56% due 01/02/16............................. 285,238 271,689
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/17............................. 421,927 413,489
----------
3,147,095
----------
ELECTRIC-INTEGRATED -- 1.0%
Arizona Public Service Co.
Senior Notes
4.50% due 04/01/42............................. 404,000 395,891
Cleco Power LLC
Senior Notes
6.00% due 12/01/40............................. 224,000 245,447
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
ELECTRIC-INTEGRATED (CONTINUED)
CMS Energy Corp.
Senior Notes
2.75% due 05/15/14......................... $382,000 $ 382,166
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/33......................... 525,000 583,981
Entergy Corp.
Senior Notes
4.70% due 01/15/17......................... 776,000 808,223
Entergy Louisiana LLC
1st. Mtg. Notes
1.88% due 12/15/14......................... 424,000 431,504
Exelon Corp.
Senior Notes
5.63% due 06/15/35......................... 343,000 370,089
Georgia Power Co.
Senior Notes
3.00% due 04/15/16......................... 180,000 190,362
Great Plains Energy, Inc.
Senior Notes
5.29% due 06/15/22(5)...................... 620,000 661,512
John Sevier Combined Cycle Generation LLC
Sec. Notes
4.63% due 01/15/42......................... 274,000 282,357
Mirant Mid Atlantic LLC Pass-Through Trust
Pass Through Certs., Series B
9.13% due 06/30/17......................... 463,204 472,468
Pacific Gas & Electric Co.
Senior Notes
6.05% due 03/01/34......................... 471,000 572,535
Puget Sound Energy, Inc.
Senior Sec. Notes
4.43% due 11/15/41......................... 333,000 332,495
SCANA Corp.
Senior Notes
4.13% due 02/01/22......................... 333,000 333,168
Westar Energy, Inc.
1st. Mtg. Notes
4.13% due 03/01/42......................... 168,000 160,809
----------
6,223,007
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.2%
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*........................ 725,000 793,875
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/17......................... 262,000 323,212
----------
1,117,087
----------
ELECTRONICS-MILITARY -- 0.1%
L-3 Communications Corp.
Company Guar. Notes
4.75% due 07/15/20......................... 621,000 641,220
----------
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ENGINEERING/R&D SERVICES -- 0.1%
URS Corp.
Senior Notes
3.85% due 04/01/17*................... $ 584,000 $ 582,090
----------
FINANCE-AUTO LOANS -- 0.8%
Ford Motor Credit Co. LLC
Senior Notes
5.00% due 05/15/18.................... 950,000 984,063
Ford Motor Credit Co. LLC
Senior Notes
5.88% due 08/02/21.................... 1,968,000 2,122,665
General Motors Financial Co., Inc.
Company Guar. Notes
6.75% due 06/01/18.................... 1,100,000 1,174,867
Hyundai Capital America
Company Guar. Notes
4.00% due 06/08/17*................... 552,000 567,154
----------
4,848,749
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/13.................... 377,000 390,995
----------
FINANCE-CREDIT CARD -- 0.0%
Capital One Capital III Ltd.
Guar. Bonds
7.69% due 08/15/36.................... 196,000 197,225
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.7%
Bear Stearns Cos., Inc.
Sub. Notes
5.55% due 01/22/17.................... 636,000 702,221
Lehman Brothers Holdings Capital
Trust VII FRS
Limited Guar. Notes
5.86% due 05/31/12(3)(6)(7)+.......... 222,000 22
Lehman Brothers Holdings, Inc.
Sub. Notes
6.75% due 12/28/17(6)(7)+............. 280,000 28
Lehman Brothers Holdings, Inc.
Sub. Notes
7.50% due 05/11/38(6)(7)+............. 361,000 36
Merrill Lynch & Co., Inc.
Sub. Notes
6.05% due 05/16/16.................... 1,975,000 2,079,509
Merrill Lynch & Co., Inc.
Sub. Notes
7.75% due 05/14/38.................... 134,000 146,251
Oppenheimer Holdings, Inc.
Senior Sec. Notes
8.75% due 04/15/18.................... 1,075,000 1,096,500
Scottrade Financial Services, Inc.
Senior Notes
6.13% due 07/11/21*................... 423,000 414,390
----------
4,438,957
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
FINANCE-LEASING COMPANIES -- 0.4%
Air Lease Corp.*
Senior Notes
5.63% due 04/01/17................................. $1,350,000 $1,344,938
Aircastle Ltd.
Sr. Unsecured Notes
7.63% due 04/15/20*................................ 245,000 245,000
Boeing Capital Corp.
Senior Notes
2.13% due 08/15/16................................. 717,000 740,713
Boeing Capital Corp.
Senior Notes
2.90% due 08/15/18................................. 183,000 191,769
----------
2,522,420
----------
FINANCE-OTHER SERVICES -- 0.3%
National Rural Utilities Cooperative Finance Corp.
Bonds
1.00% due 02/02/15................................. 279,000 279,341
SquareTwo Financial Corp.
Sec. Notes
11.63% due 04/01/17................................ 1,509,000 1,493,910
----------
1,773,251
----------
FINANCIAL GUARANTEE INSURANCE -- 0.4%
Assured Guaranty Municipal Holdings, Inc. FRS
Company Guar. Notes
6.40% due 12/15/66*................................ 3,135,000 2,257,200
----------
FIREARMS & AMMUNITION -- 0.2%
FGI Operating Co, Inc.
Senior Sec. Notes
10.25% due 08/01/15................................ 1,192,000 1,281,519
----------
FOOD-MEAT PRODUCTS -- 0.2%
JBS USA LLC/JBS USA Finance, Inc.
Senior Notes
8.25% due 02/01/20*................................ 1,030,000 1,058,325
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.3%
Carriage Services, Inc.
Company Guar. Notes
7.88% due 01/15/15................................. 1,775,000 1,788,313
----------
GAMBLING (NON-HOTEL) -- 0.1%
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/14*(10)............................ 965,839 458,774
----------
GAS-DISTRIBUTION -- 0.1%
Boston Gas Co.
Senior Notes
4.49% due 02/15/42*................................ 280,000 281,090
Southern Union Co.
Senior Notes
7.60% due 02/01/24................................. 240,000 285,261
----------
566,351
----------
GAS-TRANSPORTATION -- 0.1%
Sabine Pass LNG LP
Senior Sec. Notes
7.25% due 11/30/13................................. 800,000 844,000
----------
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
GOLD MINING -- 0.0%
Newmont Mining Corp.
Company Guar. Notes
3.50% due 03/15/22.......................... $ 304,000 $ 292,877
----------
HOME FURNISHINGS -- 0.1%
Norcraft Cos. LP/Norcraft Finance Corp.
Sec. Notes
10.50% due 12/15/15......................... 968,000 849,420
----------
INDEPENDENT POWER PRODUCERS -- 0.6%
Calpine Corp.
Senior Sec. Notes
7.88% due 07/31/20*......................... 755,000 821,062
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/18.......................... 1,450,000 1,334,000
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/18.......................... 495,000 496,238
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/20.......................... 1,175,000 1,157,375
----------
3,808,675
----------
INSURANCE-LIFE/HEALTH -- 0.2%
Jefferson-Pilot Corp.
Senior Notes
4.75% due 01/30/14.......................... 227,000 236,746
Nationwide Financial Services, Inc.
Senior Notes
5.90% due 07/01/12.......................... 284,000 286,344
Prudential Financial, Inc.
Senior Notes
4.75% due 09/17/15.......................... 619,000 671,930
----------
1,195,020
----------
INSURANCE-MULTI-LINE -- 0.7%
Hartford Financial Services Group, Inc.
Senior Notes
6.30% due 03/15/18.......................... 955,000 1,050,483
Hartford Financial Services Group, Inc. FRS
Jr. Sub. Debentures
8.13% due 06/15/68.......................... 2,075,000 2,215,062
Metropolitan Life Global Funding I
Sec. Notes
2.00% due 01/09/15*......................... 856,000 865,074
----------
4,130,619
----------
INSURANCE-MUTUAL -- 0.6%
Liberty Mutual Group, Inc.
Senior Notes
5.75% due 03/15/14*......................... 195,000 205,528
Liberty Mutual Group, Inc. FRS
Company Guar. Notes
10.75% due 06/15/88*........................ 990,000 1,324,125
New York Life Global Funding
Sec. Notes
1.30% due 01/12/15*......................... 1,106,000 1,111,837
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
INSURANCE-MUTUAL (CONTINUED)
New York Life Global Funding
Sec. Notes
1.65% due 05/15/17*................... $ 829,000 $ 822,070
----------
3,463,560
----------
INSURANCE-REINSURANCE -- 0.1%
Berkshire Hathaway, Inc.
Senior Notes
1.90% due 01/31/17.................... 565,000 571,464
----------
MARINE SERVICES -- 0.3%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/19.................... 1,851,000 1,892,647
----------
MEDICAL INSTRUMENTS -- 0.4%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/17.................... 1,965,000 1,974,825
Medtronic, Inc.
Senior Notes
4.50% due 03/15/42.................... 281,000 285,470
----------
2,260,295
----------
MEDICAL PRODUCTS -- 0.2%
Baxter International, Inc.
Senior Bonds
1.85% due 01/15/17.................... 281,000 284,580
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/27.................... 295,000 372,386
Universal Hospital Services, Inc.
Sec. Notes
8.50% due 06/01/15(4)................. 775,000 793,406
----------
1,450,372
----------
MEDICAL-BIOMEDICAL/GENE -- 0.1%
Gilead Sciences, Inc.
Senior Notes
4.40% due 12/01/21.................... 308,000 323,300
----------
MEDICAL-DRUGS -- 0.4%
Axcan Intermediate Holdings, Inc.
Company Guar. Notes
12.75% due 03/01/16................... 556,000 593,530
Johnson & Johnson
Notes
5.55% due 08/15/17.................... 405,000 493,378
Valeant Pharmaceuticals International
Company Guar.Notes
6.50% due 07/15/16*................... 1,010,000 1,027,675
----------
2,114,583
----------
MEDICAL-HMO -- 0.3%
AMERIGROUP Corp.
Senior Notes
7.50% due 11/15/19.................... 1,025,000 1,122,375
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HMO (CONTINUED)
Cigna Corp.
Senior Notes
6.15% due 11/15/36....................... $ 145,000 $ 161,335
Coventry Health Care, Inc.
Senior Notes
5.45% due 06/15/21....................... 437,000 478,360
----------
1,762,070
----------
MEDICAL-HOSPITALS -- 0.9%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/17....................... 2,495,000 2,557,375
HCA, Inc.
Senior Notes
7.50% due 11/15/95....................... 1,975,000 1,570,125
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19....................... 500,000 555,625
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/19....................... 800,000 778,000
----------
5,461,125
----------
MOTION PICTURES & SERVICES -- 0.1%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/17*...................... 500,000 548,750
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.3%
Radnet Management, Inc.
Company Guar. Notes
10.38% due 04/01/18...................... 2,070,000 2,059,650
----------
MULTIMEDIA -- 0.3%
Haights Cross Operating Co. FRS
Limited Guar. Notes
16.00% due 03/15/14(6)(7)(9)(10)+........ 461,095 34,582
News America Holdings, Inc.
Company Guar. Notes
8.45% due 08/01/34....................... 406,000 500,590
News America, Inc.
Company Guar. Notes
6.55% due 03/15/33....................... 603,000 661,827
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/33....................... 385,000 514,306
----------
1,711,305
----------
MUSIC -- 0.3%
WMG Acquisition Corp.
Senior Sec. Notes
9.50% due 06/15/16....................... 1,650,000 1,798,500
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Company Guar. Notes
11.50% due 07/01/03(8)(9)(10)(18)+....... 500,000 0
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
NON-HAZARDOUS WASTE DISPOSAL -- 0.3%
Casella Waste Systems, Inc.
Senior Sec. Notes
11.00% due 07/15/14........................... $ 700,000 $ 749,000
Republic Services, Inc.
Company Guar. Notes
3.80% due 05/15/18............................ 715,000 767,717
Republic Services, Inc.
Company Guar. Notes
6.20% due 03/01/40............................ 169,000 201,546
----------
1,718,263
----------
OIL & GAS DRILLING -- 0.2%
Nabors Industries, Inc.
Company Guar. Notes
9.25% due 01/15/19............................ 976,000 1,252,920
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.2%
Alta Mesa Holdings LP/Alta Mesa Finance
Services Corp.
Company Guar. Notes
9.63% due 10/15/18............................ 1,010,000 1,017,575
Carrizo Oil & Gas, Inc.
Company Guar. Notes
8.63% due 10/15/18............................ 975,000 1,026,188
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/21............................ 775,000 825,375
Chesapeake Energy Corp.
Company Guar. Notes
6.63% due 08/15/20............................ 1,652,000 1,680,910
Denbury Resources, Inc.
Company Guar. Notes
6.38% due 08/15/21............................ 516,000 545,670
Encore Acquisition Co.
Company Guar. Notes
9.50% due 05/01/16............................ 720,000 792,000
EV Energy Partners LP/EV Energy Finance Corp.
Company Guar. Notes
8.00% due 04/15/19............................ 820,000 840,500
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
7.63% due 04/15/21*........................... 550,000 594,000
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
6.25% due 11/01/19*........................... 1,037,000 1,005,890
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
8.63% due 04/15/20............................ 635,000 684,213
Milagro Oil & Gas
Sec. Notes
10.50% due 05/15/16........................... 959,000 748,020
QEP Resources, Inc.
Senior Notes
6.88% due 03/01/21............................ 1,039,000 1,148,095
Samson Investment Co.
Senior Notes
9.75% due 02/15/20*........................... 1,025,000 1,037,812
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Southwestern Energy Co.
Company Guar. Notes
4.10% due 03/15/22*.................... $ 588,000 $ 582,857
Union Pacific Resources Group, Inc.
Senior Notes
7.15% due 05/15/28..................... 687,000 779,859
-----------
13,308,964
-----------
OIL COMPANIES-INTEGRATED -- 0.3%
Hess Corp.
Senior Notes
7.88% due 10/01/29..................... 757,000 1,007,397
Phillips 66
Company Guar. Notes
2.95% due 05/01/17*.................... 515,000 523,447
-----------
1,530,844
-----------
OIL REFINING & MARKETING -- 0.3%
Alon Refining Krotz Springs, Inc.
Senior Sec. Notes
13.50% due 10/15/14.................... 510,000 566,100
Reliance Holdings USA, Inc.
Company Guar. Notes
4.50% due 10/19/20..................... 290,000 279,662
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/17*................... 575,000 655,500
-----------
1,501,262
-----------
OIL-FIELD SERVICES -- 0.5%
Exterran Holdings, Inc.
Company Guar. Notes
7.25% due 12/01/18..................... 1,145,000 1,099,200
Green Field Energy Services, Inc.
Senior Sec. Notes
13.00% due 11/15/16*................... 1,065,000 1,043,700
Helix Energy Solutions Group, Inc.
Company Guar. Notes
9.50% due 01/15/16*.................... 350,000 366,625
Oil States International, Inc.
Company Guar. Notes
6.50% due 06/01/19..................... 700,000 735,000
-----------
3,244,525
-----------
PAPER & RELATED PRODUCTS -- 0.7%
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/20*.................... 396,000 442,047
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/16*.................... 612,000 675,004
International Paper Co.
Senior Notes
6.00% due 11/15/41..................... 334,000 362,548
Longview Fibre Paper & Packaging, Inc.
Senior Sec. Notes
8.00% due 06/01/16*.................... 991,000 1,009,581
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
Westvaco Corp.
Company Guar. Notes
8.20% due 01/15/30................................ $1,523,000 $1,686,668
----------
4,175,848
----------
PHARMACY SERVICES -- 0.4%
Aristotle Holding, Inc.
Company Guar. Notes
2.10% due 02/12/15*............................... 474,000 479,841
Aristotle Holding, Inc.
Company Guar. Notes
2.75% due 11/21/14*............................... 940,000 965,815
Aristotle Holding, Inc.
Company Guar. Notes
4.75% due 11/15/21*............................... 592,000 633,569
Aristotle Holding, Inc.
Company Guar. Notes
6.13% due 11/15/41*............................... 348,000 388,224
----------
2,467,449
----------
PIPELINES -- 1.2%
Chesapeake Midstream Partners LP/CHKM
Finance Corp.
Company Guar. Notes
6.13% due 07/15/22*............................... 380,000 382,850
Copano Energy LLC/Copano Energy Finance Corp.
Company Guar. Notes
7.13% due 04/01/21................................ 685,000 720,963
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
6.50% due 04/01/20................................ 772,000 862,709
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/20................................ 795,000 882,450
Energy Transfer Partners LP
Senior Notes
6.50% due 02/01/42................................ 408,000 429,922
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
7.88% due 12/15/18................................ 1,000,000 1,020,000
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
6.50% due 08/15/21................................ 945,000 1,004,062
Plains All American Pipeline LP/PAA Finance Corp.
Senior Notes
3.65% due 06/01/22................................ 554,000 543,878
Plains All American Pipeline LP/PAA Finance Corp.
Senior Notes
5.15% due 06/01/42................................ 280,000 273,533
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
6.88% due 12/01/18................................ 525,000 555,188
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/16........................ $ 650,000 $ 659,750
----------
7,335,305
----------
PRINTING-COMMERCIAL -- 0.2%
Valassis Communications, Inc.
Company Guar. Notes
6.63% due 02/01/21........................ 1,025,000 1,050,625
----------
PUBLISHING-NEWSPAPERS -- 0.3%
McClatchy Co.
Senior Sec. Notes
11.50% due 02/15/17....................... 1,520,000 1,615,000
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.0%
BioMed Realty LP
Company Guar. Notes
3.85% due 04/15/16........................ 281,000 290,304
Brandywine Operating Partnership LP
Company Guar. Notes
4.95% due 04/15/18........................ 281,000 286,539
Brandywine Operating Partnership LP
Company Guar. Notes
5.70% due 05/01/17........................ 669,000 708,709
DuPont Fabros Technology LP
Company Guar. Notes
8.50% due 12/15/17........................ 1,125,000 1,237,500
HCP, Inc.
Senior Notes
3.75% due 02/01/16........................ 200,000 206,239
Kilroy Realty LP
Company Guar. Notes
4.80% due 07/15/18........................ 266,000 276,383
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.88% due 03/15/24*....................... 1,250,000 1,225,000
Sabra Health Care LP/Sabra Capital Corp.
Company Guar. Notes
8.13% due 11/01/18........................ 1,425,000 1,510,500
Ventas Realty LP/Ventas Capital Corp.
Company Guar. Notes
4.75% due 06/01/21........................ 190,000 191,703
----------
5,932,877
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.4%
Kennedy-Wilson, Inc.
Company Guar. Notes
8.75% due 04/01/19........................ 2,050,000 2,137,125
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.3%
First Industrial LP
Senior Notes
5.75% due 01/15/16........................ 1,535,000 1,526,014
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/14(9)(10)................. 3,285,000 329
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
RENTAL AUTO/EQUIPMENT -- 0.6%
Avis Budget Car Rental LLC/Avis
Budget Finance, Inc.
Company Guar. Notes
9.63% due 03/15/18................. $1,055,000 $1,144,675
RSC Equipment Rental, Inc./RSC
Holdings III LLC
Senior Notes
8.25% due 02/01/21................. 1,150,000 1,224,750
United Rentals North America, Inc.
Company Guar. Notes
8.38% due 09/15/20................. 950,000 983,250
----------
3,352,675
----------
RETAIL-APPAREL/SHOE -- 0.1%
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/21................. 820,000 888,675
----------
RETAIL-DISCOUNT -- 0.0%
Wal-Mart Stores, Inc.
Senior Notes
5.25% due 09/01/35................. 253,000 287,711
----------
RETAIL-DRUG STORE -- 0.4%
CVS Caremark Corp.
Senior Notes
6.25% due 06/01/27................. 516,000 616,433
CVS Pass-Through Trust
Pass Through Certs.
5.77% due 01/31/33*................ 244,160 259,019
CVS Pass-Through Trust
Pass Through Certs.
5.93% due 01/10/34*................ 631,648 674,663
Rite Aid Corp.
Senior Sec. Notes
8.00% due 08/15/20................. 600,000 690,750
----------
2,240,865
----------
RETAIL-OFFICE SUPPLIES -- 0.1%
Office Depot, Inc.
Senior Sec. Notes
9.75% due 03/15/19*................ 870,000 897,188
----------
RETAIL-PROPANE DISTRIBUTION -- 0.1%
AmeriGas Finance LLC/AmeriGas
Finance Corp.
Company Guar. Notes
6.75% due 05/20/20................. 160,000 162,400
AmeriGas Finance LLC/AmeriGas
Finance Corp.
Company Guar. Notes
7.00% due 05/20/22................. 310,000 316,200
----------
478,600
----------
RETAIL-RESTAURANTS -- 0.5%
Dave & Buster's, Inc.
Company Guar. Notes
11.00% due 06/01/18................ 1,095,000 1,171,650
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-RESTAURANTS (CONTINUED)
Landry's Restaurants, Inc.
Sec. Notes
11.63% due 12/01/15................... $1,325,000 $1,475,719
McDonald's Corp.
Senior Notes
3.70% due 02/15/42.................... 562,000 519,538
----------
3,166,907
----------
RETAIL-SPORTING GOODS -- 0.1%
Academy Ltd./Academy Finance Corp.
Company Guar. Notes
9.25% due 08/01/19*................... 775,000 795,344
----------
RETAIL-TOY STORES -- 0.3%
Toys R Us Property Co. II LLC
Senior Sec. Notes
8.50% due 12/01/17.................... 1,625,000 1,696,094
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/07(8)(9)(10)(18)+.... 100,000 0
----------
SAVINGS & LOANS/THRIFTS -- 0.2%
First Niagara Financial Group
Sub. Notes
7.25% due 12/15/21.................... 915,000 979,433
----------
SCHOOLS -- 0.2%
Northwestern University
Bonds
4.20% due 12/01/47.................... 386,000 391,280
University of Pennsylvania
Senior Notes
4.67% due 09/01/12.................... 815,000 802,229
----------
1,193,509
----------
SEISMIC DATA COLLECTION -- 0.1%
Geokinetics Holdings USA, Inc.
Senior Sec. Notes
9.75% due 12/15/14.................... 1,115,000 839,038
----------
SHIPBUILDING -- 0.2%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/18.................... 975,000 1,033,500
----------
SPECIAL PURPOSE ENTITIES -- 0.4%
FUEL Trust
Sec. Notes
3.98% due 06/15/16*................... 377,000 382,496
FUEL Trust
Sec. Notes
4.21% due 04/15/16*................... 288,000 295,568
MassMutual Global Funding II
Senior Sec. Notes
2.00% due 04/05/17*................... 856,000 853,087
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
SPECIAL PURPOSE ENTITIES (CONTINUED)
Murray Street Investment Trust I
Company Guar. Notes
4.65% due 03/09/17(5)............... $ 649,000 $ 649,481
----------
2,180,632
----------
STEEL-PRODUCERS -- 0.9%
AK Steel Corp.
Company Guar. Notes
7.63% due 05/15/20.................. 2,050,000 1,978,250
Gerdau Holdings, Inc.
Company Guar. Notes
7.00% due 01/20/20.................. 315,000 362,943
JMC Steel Group
Senior Notes
8.25% due 03/15/18*................. 1,090,000 1,133,600
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/15................. 1,042,000 1,068,050
Steel Dynamics, Inc.
Company Guar. Notes
7.75% due 04/15/16.................. 1,035,000 1,073,812
----------
5,616,655
----------
STORAGE/WAREHOUSING -- 0.1%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/20.................. 651,000 693,315
----------
TELECOM EQUIPMENT-FIBER OPTICS -- 0.0%
Corning, Inc.
Senior Notes
4.70% due 03/15/37.................. 168,000 162,168
Corning, Inc.
Senior Notes
4.75% due 03/15/42.................. 112,000 108,459
----------
270,627
----------
TELECOM SERVICES -- 0.4%
BellSouth Telecommunications, Inc.
Senior Notes
6.38% due 06/01/28.................. 251,000 284,637
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/23.................. 50,000 39,187
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/23.................. 225,000 176,344
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.27% due 12/11/23.................. 375,000 293,906
PAETEC Holding Corp.
Senior Sec. Notes
8.88% due 06/30/17.................. 1,550,000 1,681,750
----------
2,475,824
----------
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELECOMMUNICATION EQUIPMENT -- 0.1%
Harris Corp.
Senior Notes
4.40% due 12/15/20.................... $ 363,000 $ 377,129
----------
TELEPHONE-INTEGRATED -- 1.1%
AT&T, Inc.
Senior Notes
0.88% due 02/13/15.................... 1,120,000 1,113,364
AT&T, Inc.
Senior Notes
3.00% due 02/15/22.................... 612,000 599,769
BellSouth Corp.
Senior Notes
6.55% due 06/15/34.................... 224,000 255,703
Century Telephone Enterprise
Senior Notes
6.88% due 01/15/28.................... 245,000 228,941
CenturyLink, Inc.
Senior Notes
5.80% due 03/15/22.................... 1,025,000 1,000,923
CenturyLink, Inc.
Senior Notes
7.60% due 09/15/39.................... 463,000 437,959
CenturyLink, Inc.
Senior Notes
7.65% due 03/15/42.................... 782,000 734,778
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/18.................... 1,625,000 1,718,437
SBC Communications
Senior Notes
6.45% due 06/15/34.................... 403,000 475,175
Verizon Communications, Inc.
Senior Notes
6.40% due 02/15/38.................... 231,000 279,814
----------
6,844,863
----------
TELEVISION -- 0.2%
CBS Corp.
Company Guar. Notes
3.38% due 03/01/22.................... 306,000 295,387
Local TV Finance LLC
Senior Notes
9.25% due 06/15/15*(4)................ 681,081 694,703
----------
990,090
----------
TRANSPORT-RAIL -- 0.2%
Burlington Northern Santa Fe LLC
Senior Notes
4.40% due 03/15/42.................... 852,000 805,473
Norfolk Southern Corp.
Senior Notes
6.00% due 05/23/11.................... 402,000 449,465
----------
1,254,938
----------
TRANSPORT-SERVICES -- 0.0%
Ryder System, Inc.
Senior Notes
2.50% due 03/01/17.................... 195,000 196,131
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
WEB HOSTING/DESIGN -- 0.2%
Equinix, Inc.
Senior Notes
8.13% due 03/01/18.............. $1,100,000 $ 1,210,000
------------
WIRE & CABLE PRODUCTS -- 0.2%
Coleman Cable, Inc.
Company Guar. Notes
9.00% due 02/15/18.............. 1,200,000 1,263,000
------------
WIRELESS EQUIPMENT -- 0.0%
Motorola, Inc.
Senior Notes
6.63% due 11/15/37.............. 11,445 12,151
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $261,661,116)............. 262,819,207
------------
FOREIGN CORPORATE BONDS & NOTES -- 11.7%
AGRICULTURAL CHEMICALS -- 0.0%
Syngenta Finance NV
Company Guar. Notes
4.38% due 03/28/42.............. 286,000 287,524
------------
BANKS-COMMERCIAL -- 1.5%
Banco ABC Brasil SA
Sub. Notes
7.88% due 04/08/20*............. 250,000 261,250
Banco Bradesco SA
Senior Notes
4.50% due 01/12/17*............. 325,000 341,900
Banco de Bogota SA
Senior Notes
5.00% due 01/15/17*............. 260,000 269,750
Banco do Brasil SA
Sub. Notes
5.88% due 01/26/22*............. 440,000 452,760
Bank of Nova Scotia
Senior Notes
2.55% due 01/12/17.............. 766,000 785,354
Barclays Bank PLC FRS
Jr. Sub. Bonds
5.93% due 12/15/16*(3).......... 549,000 507,825
Barclays Bank PLC
Sub. Notes
6.05% due 12/04/17*............. 544,000 559,361
Barclays Bank PLC FRS
Jr. Sub. Notes
6.86% due 06/15/32*(3).......... 205,000 191,675
DNB Bank ASA
Senior Notes
3.20% due 04/03/17*............. 1,180,000 1,184,650
Finansbank AS
Senior Notes
5.50% due 05/11/16*............. 425,000 401,625
Groupe BPCE SA FRS
Jr. Sub Notes
2.51% due 06/30/12(3)........... 141,000 68,561
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
HBOS PLC
Sub. Notes
6.75% due 05/21/18*................ $ 232,000 $ 217,750
LBG Capital No.1 PLC FRS
Bank Guar. Notes
8.00% due 06/15/20*(3)............. 1,420,000 1,220,773
National Australia Bank/New York
Senior Notes
2.75% due 03/09/17................. 554,000 551,159
Nordea Bank AB
Senior Notes
3.13% due 03/20/17*................ 586,000 586,610
Nordea Bank AB VRS
Jr. Sub. Bonds
8.38% due 03/25/15(3).............. 184,000 193,936
Rabobank Nederland NV
Company Guar. Notes
2.13% due 10/13/15................. 477,000 480,219
Westpac Banking Corp. FRS
Jr. Sub. Notes
0.89% due 09/28/12(3).............. 1,050,000 567,000
----------
8,842,158
----------
BANKS-MONEY CENTER -- 0.2%
ABN Amro Bank NV FRS
Senior Notes
2.32% due 01/30/14*................ 105,000 105,268
DBS Bank, Ltd. VRS
Senior Sub. Notes
3.63% due 09/21/22*................ 350,000 341,144
Mizuho Corporate Bank, Ltd.
Company Guar. Notes
2.55% due 03/17/17*................ 595,000 594,942
----------
1,041,354
----------
BANKS-SPECIAL PURPOSE -- 0.4%
Eksportfinans ASA
Senior Notes
2.38% due 05/25/16................. 815,000 718,380
Kreditanstalt fuer Wiederaufbau
Government Guar. Notes
3.75% due 09/25/15................. NOK 10,500,000 1,911,877
----------
2,630,257
----------
BREWERY -- 0.1%
Heineken NV
Senior Notes
3.40% due 04/01/22*................ 817,000 810,979
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Corp GEO SAB de CV
Company Guar. Notes
9.25% due 06/30/20*................ 470,000 497,025
Urbi Desarrollos Urbanos SAB de CV
Company Guar. Notes
9.75% due 02/03/22*................ 350,000 371,000
----------
868,025
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
CABLE/SATELLITE TV -- 0.2%
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/18*....................... $ 990,000 $ 940,500
----------
CELLULAR TELECOM -- 0.3%
Vimpel Communications Via VIP
Finance Ireland, Ltd. OJSC
Sec. Notes
7.75% due 02/02/21*....................... 1,425,000 1,407,187
VimpelCom Holdings BV
Company Guar. Notes
7.50% due 03/01/22........................ 460,000 446,200
----------
1,853,387
----------
CHEMICALS-DIVERSIFIED -- 0.3%
LyondellBasell Industries NV
Senior Notes
5.00% due 04/15/19*....................... 177,000 177,000
OXEA Finance/Cy SCA
Senior Sec. Notes
9.50% due 07/15/17*....................... 1,310,000 1,401,700
----------
1,578,700
----------
CHEMICALS-PLASTICS -- 0.2%
Montell Finance Co. BV
Company Guar. Notes
8.10% due 03/15/27*....................... 1,325,000 1,537,000
----------
COMPUTERS-MEMORY DEVICES -- 0.2%
Seagate HDD Cayman
Company Guar. Notes
7.75% due 12/15/18........................ 1,155,000 1,264,725
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.4%
HSBC Holdings PLC
Senior Notes
4.00% due 03/30/22........................ 445,000 441,093
Royal Bank of Scotland Group PLC
Sub. Notes
4.70% due 07/03/18........................ 660,000 574,917
Royal Bank of Scotland Group PLC FRS
Jr. Sub. Notes
7.65% due 09/30/31(3)..................... 1,565,000 1,326,337
----------
2,342,347
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.1%
Bombardier, Inc.
Senior Notes
5.75% due 03/15/22*....................... 385,000 374,412
Bombardier, Inc.
Senior Notes
7.50% due 03/15/18*....................... 425,000 467,500
----------
841,912
----------
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED MINERALS -- 0.9%
Anglo American Capital PLC
Company Guar. Notes
2.63% due 04/03/17*...................... $ 374,000 $ 374,400
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
1.63% due 02/24/17....................... 747,000 743,264
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
6.42% due 03/01/26....................... 263,000 325,342
FMG Resources August 2006 Pty, Ltd.
Senior Notes
6.00% due 04/01/17*...................... 825,000 816,750
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.38% due 02/01/16*...................... 600,000 598,500
FMG Resources August 2006 Pty, Ltd.
Senior Notes
6.88% due 04/01/22*...................... 1,250,000 1,218,750
Vale Overseas, Ltd.
Company Guar. Notes
4.38% due 01/11/22....................... 780,000 783,468
Volcan Cia Minera SAA
Senior Notes
5.38% due 02/02/22*...................... 118,000 122,130
Xstrata Canada Financial, Ltd.
Company Guar. Notes
4.95% due 11/15/21*...................... 597,000 625,444
----------
5,608,048
----------
DIVERSIFIED OPERATIONS -- 0.1%
Hutchison Whampoa International 11, Ltd.
Company Guar. Notes
3.50% due 01/13/17*...................... 553,000 559,734
Votorantim Cimentos SA
Company Guar. Notes
7.25% due 04/05/41*...................... 313,000 317,695
----------
877,429
----------
ELECTRIC-GENERATION -- 0.2%
Abu Dhabi National Energy Co.
Senior Notes
5.88% due 12/13/21*...................... 200,000 213,000
Abu Dhabi National Energy Co.
Senior Notes
6.17% due 10/25/17....................... 120,000 133,200
Emgesa SA ESP
Senior Notes
8.75% due 01/25/21*...................... COP 1,378,000,000 836,486
----------
1,182,686
----------
ELECTRIC-INTEGRATED -- 0.1%
Dubai Electricity & Water Authority
Senior Notes
7.38% due 10/21/20....................... 410,000 439,725
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
ELECTRIC-INTEGRATED (CONTINUED)
Israel Electric Corp., Ltd.
Senior Notes
6.70% due 02/10/17*.................. $350,000 $360,809
--------
800,534
--------
ELECTRIC-TRANSMISSION -- 0.1%
Empresa de Energia de Bogota SA
Senior Notes
6.13% due 11/10/21*.................. 360,000 381,600
--------
ELECTRONIC COMPONENTS-MISC. -- 0.1%
Koninklijke Philips Electronics NV
Senior Notes
3.75% due 03/15/22................... 243,000 244,440
Koninklijke Philips Electronics NV
Senior Notes
5.00% due 03/15/42................... 223,000 222,543
--------
466,983
--------
FINANCE-LEASING COMPANIES -- 0.1%
VEB-Leasing Via VEB Leasing
Investment Ltd
Senior Notes
5.13% due 05/27/16................... 330,000 332,888
--------
FINANCE-OTHER SERVICES -- 0.1%
Corp. Financiera de Desarrollo SA
Senior Notes
4.75% due 02/08/22*.................. 200,000 206,000
Metalloinvest Finance, Ltd.
Company Guar. Notes
6.50% due 07/21/16*.................. 400,000 393,828
--------
599,828
--------
FOOD-MEAT PRODUCTS -- 0.1%
Minerva Luxembourg SA
Company Guar. Notes
12.25% due 02/10/22*................. 350,000 382,375
--------
GOLD MINING -- 0.1%
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/20*.................. 550,000 527,170
--------
INDEPENDENT POWER PRODUCERS -- 0.1%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/10(9)(10)(11)(18)+.. 725,000 0
Perusahaan Listrik Negara PT
Senior Notes
5.50% due 11/22/21*.................. 500,000 523,750
--------
523,750
--------
INSURANCE-MULTI-LINE -- 0.2%
Aegon NV FRS
Jr. Sub. Notes
2.15% due 07/15/14(3)................ 111,000 56,610
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-MULTI-LINE (CONTINUED)
Catlin Insurance Co., Ltd. FRS
Jr. Sub. Notes
7.25% due 01/19/17*(3)...................... $997,000 $ 912,255
XL Group PLC
Senior Notes
6.38% due 11/15/24.......................... 318,000 351,669
----------
1,320,534
----------
INSURANCE-PROPERTY/CASUALTY -- 0.0%
Mitsui Sumitomo Insurance Co., Ltd.
FRS
Sub. Notes
7.00% due 03/15/72*......................... 178,000 179,453
----------
INSURANCE-REINSURANCE -- 0.1%
Validus Holdings, Ltd.
Senior Notes
8.88% due 01/26/40.......................... 474,000 523,946
----------
INVESTMENT COMPANIES -- 0.0%
Grupo Aval, Ltd.
Company Guar. Notes
5.25% due 02/01/17*......................... 200,000 207,500
----------
MEDICAL-DRUGS -- 0.0%
Hypermarcas SA
Senior Notes
6.50% due 04/20/21*......................... 310,000 300,700
----------
METAL PROCESSORS & FABRICATION -- 0.1%
Schaeffler Finance BV
Senior Sec. Notes
7.75% due 02/15/17*......................... 800,000 846,000
----------
METAL-DIVERSIFIED -- 0.1%
Vedanta Resources PLC
Senior Notes
8.25% due 06/07/21*......................... 425,000 394,188
----------
MUNICIPAL BONDS -- 0.1%
City of Kyiv Via Kyiv Finance PLC
Senior Notes
9.38% due 07/11/16*......................... 870,000 749,778
----------
OIL & GAS DRILLING -- 0.3%
Transocean, Inc.
Company Guar. Notes
6.38% due 12/15/21.......................... 641,000 721,233
Transocean, Inc.
Company Guar. Notes
6.80% due 03/15/38.......................... 572,000 639,681
Transocean, Inc.
Company Guar. Notes
7.50% due 04/15/31.......................... 280,000 317,853
----------
1,678,767
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.9%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/31.......................... 658,000 812,856
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Empresa Nacional del Petroleo
Senior Notes
4.75% due 12/06/21*................ $ 325,000 $ 336,768
Gazprom OAO Via Gaz Capital SA
Senior Notes
6.00% due 01/23/21*................ 260,000 274,040
KazMunayGas National Co.
Senior Notes
6.38% due 04/09/21*................ 270,000 298,229
Kodiak Oil & Gas Corp.
Company Guar. Notes
8.13% due 12/01/19*................ 1,125,000 1,189,688
MIE Holdings Corp.
Company Guar. Notes
9.75% due 05/12/16................. 342,000 338,580
Nexen, Inc.
Senior Notes
6.40% due 05/15/37................. 833,000 915,865
Nexen, Inc.
Senior Notes
7.50% due 07/30/39................. 485,000 595,508
QGOG Atlantic/Alaskan Rigs, Ltd.
Senior Sec. Notes
5.25% due 07/30/18*................ 406,895 408,929
----------
5,170,463
----------
OIL COMPANIES-INTEGRATED -- 1.0%
BG Energy Capital PLC
Company Guar. Notes
2.88% due 10/15/16*................ 1,385,000 1,432,852
BP Capital Markets PLC
Company Guar. Notes
2.25% due 11/01/16................. 1,479,000 1,517,021
BP Capital Markets PLC
Company Guar. Notes
3.13% due 10/01/15................. 451,000 476,692
BP Capital Markets PLC
Company Guar. Notes
4.50% due 10/01/20................. 931,000 1,022,695
Norsk Hydro A/S
Company Guar. Notes
7.15% due 11/15/25................. 290,000 384,511
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/27................. 350,000 215,250
Petroleos de Venezuela SA
Company Guar. Notes
8.50% due 11/02/17................. 950,000 844,550
Petroleos Mexicanos
Company Guar. Notes
4.88% due 01/24/22*................ 310,000 325,500
----------
6,219,071
----------
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL-FIELD SERVICES -- 0.1%
Weatherford International, Ltd.
Company Guar. Notes
4.50% due 04/15/22........................ $ 450,000 $ 449,348
Weatherford International, Ltd.
Company Guar. Notes
5.95% due 04/15/42........................ 397,000 394,185
----------
843,533
----------
PAPER & RELATED PRODUCTS -- 0.1%
PE Paper Escrow GmbH
Senior Sec. Notes
12.00% due 08/01/14*...................... 475,000 515,375
----------
PIPELINES -- 0.1%
TransCanada Pipelines, Ltd. FRS
Jr. Sub. Notes
6.35% due 05/15/67........................ 272,000 281,141
Transportadora de Gas Internacional
SA ESP
Senior Notes
5.70% due 03/20/22*....................... 200,000 204,000
----------
485,141
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.1%
Country Garden Holdings Co., Ltd.
Senior Notes
11.13% due 02/23/18*...................... 610,000 594,750
----------
RETAIL-CONSUMER ELECTRONICS -- 0.1%
Grupo Elektra SA de CV
Company Guar. Notes
7.25% due 08/06/18........................ 340,000 323,174
----------
SATELLITE TELECOM -- 0.3%
Intelsat Luxembourg SA
Company Guar. Notes
11.50% due 02/04/17(4).................... 1,200,000 1,248,000
Telesat Canada/Telesat LLC
Company Guar. Notes
11.00% due 11/01/15....................... 500,000 533,750
----------
1,781,750
----------
SEMICONDUCTOR EQUIPMENT -- 0.2%
MagnaChip Semiconductor
SA/MagnaChip Semiconductor
Finance Co.
Company Guar. Notes
10.50% due 04/15/18....................... 1,100,000 1,226,500
----------
SOVEREIGN -- 0.1%
Federal Republic of Nigeria
Senior Notes
6.75% due 01/28/21........................ 750,000 823,125
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications
Luxembourg II FRS
Sub. Notes
6.03% due 01/15/15*+(6)(9)(10)(11)........ 1,330,000 0
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
STEEL-PRODUCERS -- 0.2%
China Oriental Group Co., Ltd.
Senior Sec. Notes
8.00% due 08/18/15........................ $ 320,000 $ 293,600
Evraz Group SA
Senior Notes
6.75% due 04/27/18*....................... 400,000 382,520
Severstal JSC via Steel Capital SA
Notes
6.25% due 07/26/16*....................... 415,000 414,215
----------
1,090,335
----------
TELECOM SERVICES -- 0.4%
UPCB Finance III, Ltd.*
Senior Sec. Notes
6.63% due 07/01/20........................ 1,425,000 1,453,500
Wind Acquisition Holdings Finance SA
Senior Sec. Notes
12.25% due 07/15/17*(4)................... 900,000 796,500
----------
2,250,000
----------
TELEPHONE-INTEGRATED -- 0.3%
Deutsche Telekom International Finance BV
Company Guar. Notes
4.88% due 03/06/42*....................... 615,000 580,983
Oi SA
Senior Notes
9.75% due 09/15/16*....................... BRL 575,000 326,016
Virgin Media Finance PLC
Company Guar. Notes
5.25% due 02/15/22........................ 660,000 654,225
----------
1,561,224
----------
THERAPEUTICS -- 0.4%
Warner Chilcott Corp.
Company Guar. Notes
7.75% due 09/15/18........................ 2,280,000 2,376,900
----------
TRANSPORT-MARINE -- 0.1%
SCF Capital, Ltd.
Company Guar. Notes
5.38% due 10/27/17........................ 585,000 558,675
----------
TRANSPORT-RAIL -- 0.3%
Canadian Pacific Railway Co.
Senior Notes
6.50% due 05/15/18........................ 632,000 736,573
Canadian Pacific Railway, Ltd.
Senior Notes
4.50% due 01/15/22........................ 513,000 529,420
Canadian Pacific Railway, Ltd.
Senior Notes
5.75% due 01/15/42........................ 415,000 427,372
----------
1,693,365
----------
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
WAREHOUSING & HARBOR TRANSPORTATION SERVICES -- 0.1%
DP World, Ltd.
Notes
6.85% due 07/02/37................... $ 470,000 $ 453,550
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $70,842,492)................... 70,689,956
-----------
FOREIGN GOVERNMENT AGENCIES -- 16.9%
REGIONAL AUTHORITY -- 0.1%
Province of British Columbia, Canada
Senior Notes
2.85% due 06/15/15................... 612,000 651,111
-----------
SOVEREIGN -- 16.7%
Commonwealth of Australia
Senior Notes
4.50% due 10/21/14................... AUD 240,000 254,757
Commonwealth of Australia
Senior Notes
6.00% due 02/15/17................... AUD 1,115,000 1,279,848
Dominican Republic
Senior Notes
7.50% due 05/06/21................... 437,000 450,110
European Union
Senior Notes
3.25% due 04/04/18................... EUR 190,000 271,794
Federal Republic of Brazil
Senior Notes
4.88% due 01/22/21................... 1,620,000 1,833,840
Federal Republic of Brazil
Senior Notes
5.63% due 01/07/41................... 381,000 439,103
Federal Republic of Brazil
Senior Notes
7.13% due 01/20/37................... 430,000 590,175
Federal Republic of Brazil
Senior Notes
8.75% due 02/04/25................... 570,000 866,400
Federal Republic of Germany
Bonds
4.25% due 07/04/39................... EUR 292,000 525,004
Federative Republic of Brazil
Senior Notes
5.63% due 01/07/41................... 400,000 461,000
Government of Canada
Senior Notes
0.88% due 02/14/17................... 527,000 520,610
Government of Canada
Bonds
4.25% due 06/01/18................... CAD 2,500,000 2,873,653
Government of Canada
Bonds
5.75% due 06/01/29................... CAD 2,220,000 3,218,816
Government of Japan
Senior Bonds
2.10% due 03/20/27................... JPY 163,600,000 2,140,379
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
SOVEREIGN (CONTINUED)
Government of Norway
Bonds
3.75% due 05/25/21............. NOK 5,470,000 $1,061,582
Government of Switzerland
Bonds
3.00% due 05/12/19............. CHF 1,215,000 1,573,026
Government of Ukraine
Bonds
7.95% due 02/23/21............. 460,000 395,600
Kingdom of Sweden
Bonds
3.50% due 06/01/22............. SEK 26,630,000 4,577,069
Lebanese Republic
Notes
5.00% due 10/12/17............. 1,420,000 1,420,000
Lebanese Republic
Senior Notes
6.60% due 11/27/26............. 1,272,000 1,298,839
New South Wales Treasury Corp.
Government Guar. Bonds
6.00% due 05/01/12............. AUD 1,228,000 1,273,577
Perusahaan Penerbit SBSN
Senior Notes
8.80% due 04/23/14............. 750,000 844,987
Republic of Argentina
Senior Notes
2.50% due 12/31/38(5).......... 1,144,761 409,252
Republic of Argentina
Senior Bonds
7.00% due 10/03/15............. 460,000 431,825
Republic of Argentina
Bonds
7.00% due 04/17/17............. 1,000,000 883,500
Republic of Argentina
Senior Notes
8.28% due 12/31/33............. 2,642,278 1,946,038
Republic of Argentina
Senior Notes
8.75% due 06/02/17............. 440,000 425,700
Republic of Belarus
Bonds
8.75% due 08/03/15............. 530,000 492,900
Republic of Belarus
Senior Notes
8.95% due 01/26/18............. 235,000 211,735
Republic of Colombia
Bonds
4.38% due 07/12/21............. 820,000 891,750
Republic of Colombia
Senior Bonds
6.13% due 01/18/41............. 765,000 937,125
Republic of Colombia
Senior Notes
7.38% due 03/18/19............. 650,000 833,950
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Colombia
Senior Notes
7.38% due 09/18/37....... $ 300,000 $ 420,750
Republic of Colombia
Senior Notes
8.13% due 05/21/24....... 360,000 510,300
Republic of Croatia
Senior Notes
6.38% due 03/24/21....... 1,270,000 1,219,200
Republic of Croatia
Senior Notes
6.63% due 07/14/20....... 2,040,000 2,019,600
Republic of Croatia
Senior Notes
6.75% due 11/05/19....... 640,000 642,400
Republic of El Salvador
Senior Bonds
7.38% due 12/01/19....... 770,000 831,600
Republic of El Salvador
Senior Bonds
8.25% due 04/10/32....... 750,000 816,750
Republic of Hungary
Sec. Notes
4.75% due 02/03/15....... 400,000 376,000
Republic of Hungary
Senior Notes
6.25% due 01/29/20....... 580,000 529,128
Republic of Hungary
Senior Notes
6.38% due 03/29/21....... 780,000 713,700
Republic of Hungary
Senior Notes
7.63% due 03/29/41....... 422,000 381,910
Republic of Indonesia
Senior Notes
4.88% due 05/05/21....... 810,000 877,837
Republic of Indonesia
Senior Notes
8.50% due 10/12/35....... 890,000 1,321,650
Republic of Indonesia
Senior Notes
11.63% due 03/04/19...... 850,000 1,266,500
Republic of Ivory Coast
Senior Notes
2.50% due 12/31/32(6)+... 1,140,000 715,350
Republic of Peru
Senior Bonds
5.63% due 11/18/50....... 330,000 369,600
Republic of Peru
Senior Bonds
6.55% due 03/14/37....... 211,000 268,814
Republic of Peru
Senior Bonds
7.35% due 07/21/25....... 357,000 487,662
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Peru
Senior Bonds
8.75% due 11/21/33.......... $ 720,000 $1,116,720
Republic of Poland
Senior Notes
5.00% due 03/23/22.......... 850,000 895,917
Republic of Poland
Bonds
5.13% due 04/21/21.......... 540,000 576,720
Republic of Poland
Senior Bonds
6.38% due 07/15/19.......... 750,000 871,875
Republic of Romania
Senior Notes
6.75% due 02/07/22*......... 2,560,000 2,675,200
Republic of Singapore
Senior Bonds
2.38% due 04/01/17.......... SGD 1,980,000 1,709,644
Republic of South Africa
Senior Notes
4.67% due 01/17/24.......... 1,030,000 1,053,175
Republic of South Africa
Bonds
5.88% due 05/30/22.......... 712,000 811,680
Republic of South Africa
Senior Bonds
6.88% due 05/27/19.......... 710,000 854,662
Republic of Sri Lanka
Senior Notes
6.25% due 10/04/20.......... 693,000 689,535
Republic of Sri Lanka
Senior Notes
6.25% due 07/27/21.......... 770,000 766,359
Republic of Sri Lanka
Senior Sec. Notes
7.40% due 01/22/15.......... 887,000 938,003
Republic of the Philippines
Senior Bonds
6.38% due 10/23/34.......... 510,000 627,938
Republic of the Philippines
Senior Notes
7.75% due 01/14/31.......... 650,000 897,000
Republic of the Philippines
Bonds
9.88% due 01/15/19.......... 300,000 420,000
Republic of the Philippines
Senior Bonds
10.63% due 03/16/25......... 265,000 427,975
Republic of Turkey
Bonds
zero coupon due 02/20/13.... TRY 700,000 361,559
Republic of Turkey
Bonds
5.63% due 03/30/21.......... 320,000 333,920
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Turkey
Senior Notes
6.25% due 09/26/22...... $2,090,000 $2,246,750
Republic of Turkey
Notes
6.75% due 04/03/18...... 520,000 583,050
Republic of Turkey
Senior Notes
6.88% due 03/17/36...... 755,000 838,050
Republic of Turkey
Senior Notes
7.00% due 06/05/20...... 350,000 399,000
Republic of Turkey
Senior Notes
7.50% due 07/14/17...... 760,000 875,900
Republic of Turkey
Senior Notes
7.50% due 11/07/19...... 390,000 457,275
Republic of Turkey
Senior Notes
8.00% due 02/14/34...... 611,000 763,750
Republic of Turkey
Bonds
11.88% due 01/15/30..... 770,000 1,300,337
Republic of Venezuela
Senior Bonds
8.50% due 10/08/14...... 530,000 531,325
Republic of Venezuela
Bonds
9.00% due 05/07/23...... 550,000 468,875
Republic of Venezuela
Senior Bonds
9.38% due 01/13/34...... 620,000 516,150
Republic of Venezuela
Senior Notes
11.75% due 10/21/26..... 900,000 886,500
Republic of Venezuela
Senior Notes
11.95% due 08/05/31..... 530,000 522,050
Republic of Venezuela
Bonds
12.75% due 08/23/22..... 850,000 892,500
Russian Federation
Notes
3.25% due 04/04/17*..... 400,000 400,200
Russian Federation
Bonds
4.50% due 04/04/22*..... 1,000,000 997,000
Russian Federation
Bonds
5.63% due 04/04/42*..... 1,600,000 1,587,200
Russian Federation
Senior Notes
7.50% due 03/31/30(5)... 2,084,995 2,494,175
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------
SOVEREIGN (CONTINUED)
Russian Federation
Bonds
7.85% due 03/10/18*......................... RUB 15,000,000 $ 533,481
Russian Federation
Bonds
7.85% due 03/10/18.......................... RUB 35,000,000 1,244,789
Russian Federation
Notes
12.75% due 06/24/28......................... 1,100,000 1,981,375
State of Qatar
Senior Notes
4.50% due 01/20/22*......................... 1,160,000 1,210,808
State of Qatar
Senior Notes
5.75% due 01/20/42*......................... 810,000 875,772
United Kingdom Gilt Treasury
Bonds
4.75% due 03/07/20.......................... GBP 2,330,000 4,548,605
United Mexican States
Senior Notes
3.63% due 03/15/22.......................... 2,570,000 2,627,825
United Mexican States
Senior Notes
6.05% due 01/11/40.......................... 620,000 747,100
United Mexican States
Bonds
7.25% due 12/15/16.......................... MXN 33,510,000 2,830,010
United Mexican States
Senior Notes
7.50% due 04/08/33.......................... 840,000 1,167,600
United Mexican States
Bonds
10.00% due 12/05/24......................... MXN 4,300,000 439,298
------------
100,397,327
------------
SOVEREIGN AGENCY -- 0.1%
Financing of Infrastructural Projects State
Enterprise
Government Guar. Bonds
7.40% due 04/20/18.......................... 930,000 762,900
------------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $98,663,065).......................... 101,811,338
------------
U.S. GOVERNMENT AGENCIES -- 15.8%
FEDERAL HOME LOAN MTG. CORP. -- 4.1%
3.50% due 02/01/42.......................... 1,497,696 1,536,097
4.00% due 09/01/40.......................... 835,601 874,934
4.00% due 02/01/41.......................... 1,984,420 2,077,829
4.50% due 02/01/20.......................... 65,777 70,524
4.50% due 08/01/20.......................... 146,242 156,796
4.50% due 01/01/39.......................... 211,825 224,770
5.00% due 09/01/18.......................... 151,814 163,862
5.00% due 07/01/20.......................... 243,647 263,211
5.00% due 01/01/24.......................... 322,310 346,477
5.00% due 02/01/34.......................... 147,752 159,509
5.00% due 03/01/34.......................... 1,317,694 1,422,553
5.00% due 05/01/34.......................... 139,505 153,833
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL HOME LOAN MTG. CORP. (CONTINUED)
5.00% due 02/01/35..................... $ 209,271 $ 225,924
5.00% due 07/01/35..................... 332,045 358,157
5.00% due 08/01/35..................... 379,052 408,860
5.00% due 04/01/36..................... 210,183 226,712
5.00% due 05/01/36..................... 119,951 129,385
5.00% due 08/01/36..................... 169,555 182,889
5.00% due 03/01/39..................... 885,746 958,795
5.00% due 07/01/40..................... 831,178 895,373
5.50% due 05/01/37..................... 485,683 531,365
5.50% due 06/01/37..................... 164,039 178,545
5.50% due 09/01/37..................... 465,235 506,377
5.50% due 10/01/37..................... 1,770,008 1,926,535
5.50% due 11/01/37..................... 604,122 667,363
5.50% due 12/01/37..................... 450,699 490,555
5.50% due 01/01/38..................... 1,101,550 1,200,684
5.50% due 02/01/38..................... 322,588 351,115
5.50% due 07/01/38..................... 276,414 300,857
6.00% due 10/01/37..................... 507,697 560,549
6.00% due 12/01/37..................... 957,786 1,057,495
6.00% due 10/01/39..................... 1,464,587 1,615,224
6.50% due 05/01/29..................... 3,755 4,293
6.50% due 02/01/35..................... 74,685 84,661
6.50% due 11/01/37..................... 2,072,501 2,325,359
7.00% due 06/01/29..................... 7,705 9,012
Federal Home Loan Mtg. Corp. REMIC
Series 3841, Class PA
5.00% due 12/15/40(1).................. 882,272 976,576
Series 41, Class F
10.00% due 05/15/20(1)................. 5,568 6,152
Series 1103, Class N IO
11.57% due 06/15/21(1)................. 3,048 739
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
IO 6.56% due 09/15/39(1)............... 5,866,792 985,026
-----------
24,614,972
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 11.2%
3.50% due 12/01/41..................... 1,796,090 1,846,351
3.50% due 01/01/42..................... 996,545 1,024,433
4.00% due 06/01/39..................... 770,660 820,458
4.00% due 09/01/40..................... 2,370,508 2,487,014
4.00% due 10/01/40..................... 1,314,352 1,378,950
4.00% due 12/01/40..................... 2,659,267 2,804,937
4.00% due 03/01/41..................... 1,443,390 1,514,330
4.00% due 08/01/41..................... 1,974,266 2,072,223
4.50% due 06/01/19..................... 149,223 160,366
4.50% due 11/01/22..................... 287,958 309,279
4.50% due 06/01/23..................... 184,058 197,226
4.50% due 10/01/24..................... 557,900 597,465
4.50% due 03/01/25..................... 699,356 748,953
4.50% due 05/01/25..................... 618,859 662,747
4.50% due 07/01/25..................... 932,168 998,276
4.50% due 01/01/39..................... 1,948,933 2,073,522
4.50% due 07/01/40..................... 1,754,306 1,869,741
4.50% due 08/01/40..................... 2,457,445 2,617,612
4.50% due 07/01/41..................... 2,716,302 2,898,434
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 10/01/41.................... $8,290,606 $ 8,846,503
5.00% due 06/01/19.................... 83,448 90,592
5.00% due 01/01/23.................... 52,709 57,016
5.00% due 03/01/34.................... 113,606 122,953
5.00% due 04/01/35.................... 2,276,211 2,463,482
5.00% due 05/01/35.................... 69,562 75,220
5.00% due 02/01/37.................... 115,026 124,346
5.00% due 04/01/37.................... 501,645 542,291
5.00% due 05/01/37.................... 158,205 171,023
5.00% due 06/01/37.................... 13,064 14,122
5.00% due 07/01/37.................... 111,704 120,755
5.00% due 05/01/40.................... 309,243 334,202
5.00% due 07/01/40.................... 3,292,717 3,558,474
5.00% due 08/01/40.................... 1,285,471 1,389,222
5.50% due 11/01/19.................... 443,832 485,500
5.50% due 08/01/20.................... 133,789 146,141
5.50% due 11/01/22.................... 216,356 235,811
5.50% due 08/01/23.................... 145,450 158,529
5.50% due 01/01/29.................... 1,287 1,409
5.50% due 08/01/34.................... 1,542,869 1,692,879
5.50% due 02/01/35.................... 204,478 223,816
5.50% due 03/01/35.................... 1,289,216 1,414,563
5.50% due 12/01/35.................... 277,842 304,118
5.50% due 12/01/36.................... 204,514 223,344
5.50% due 04/01/37.................... 87,145 95,033
5.50% due 08/01/37.................... 4,173,500 4,562,888
5.50% due 03/01/38.................... 15,577 16,987
6.00% due 02/01/32.................... 31,378 35,054
6.00% due 05/01/34.................... 8,012 8,911
6.00% due 10/01/34.................... 204,903 228,414
6.00% due 06/01/35.................... 51,883 57,443
6.00% due 07/01/37.................... 1,620,690 1,787,276
6.00% due 08/01/37.................... 77,054 84,974
6.00% due 10/01/37.................... 124,752 137,984
6.00% due 11/01/37.................... 892,959 984,744
6.00% due 11/01/38.................... 1,920,635 2,118,052
6.00% due 12/01/38.................... 2,474,529 2,728,879
6.00% due 04/01/40.................... 725,546 801,293
6.50% due 02/01/35.................... 40,989 46,262
6.50% due 09/01/37.................... 313,002 353,077
6.50% due 10/01/37.................... 249,328 281,250
6.50% due 10/01/38.................... 1,541,777 1,737,733
6.50% due 02/01/39.................... 175,486 197,790
7.50% due 01/01/30.................... 4,377 4,847
7.50% due 09/01/30.................... 2,454 2,823
8.00% due 11/01/28.................... 10,693 12,743
13.00% due 11/15/15................... 252 276
Federal National Mtg. Assoc. REMIC
Series 2011-38, Class D
4.50% due 05/25/41(1)................. 936,456 1,023,088
Series 1989-2, Class D
8.80% due 01/25/19(1)................. 17,200 19,585
Series 1989-17, Class E
10.40% due 04/25/19(1)................ 881 970
-----------
67,207,004
-----------
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.5%
5.00% due 04/15/40....................... $2,873,117 $ 3,193,708
7.50% due 07/15/27....................... 8,712 9,244
7.50% due 10/15/27....................... 26,440 27,865
-----------
3,230,817
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $91,899,899)....................... 95,052,793
-----------
U.S. GOVERNMENT TREASURIES -- 1.7%
UNITED STATES TREASURY BONDS -- 0.4%
0.75% due 02/15/42 TIPS(12).............. 152,453 145,318
2.13% due 02/15/40 TIPS(12).............. 352,313 463,264
2.13% due 02/15/41 TIPS(12).............. 469,845 619,571
3.13% due 11/15/41....................... 414,000 397,117
3.75% due 08/15/41....................... 503,000 543,790
5.25% due 11/15/28....................... 56,000 73,176
-----------
2,242,236
-----------
UNITED STATES TREASURY NOTES -- 1.3%
1.38% due 02/15/13....................... 450,000 454,518
1.38% due 11/30/15....................... 105,000 107,526
1.75% due 05/31/16....................... 1,160,000 1,203,500
2.00% due 02/15/22....................... 2,756,000 2,703,032
2.38% due 10/31/14....................... 49,000 51,385
2.63% due 02/29/16....................... 32,000 34,273
2.75% due 05/31/17....................... 265,000 286,904
3.13% due 05/15/21....................... 3,139,000 3,416,607
-----------
8,257,745
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $10,269,549)....................... 10,499,981
-----------
LOANS(13)(14) -- 0.1%
MEDICAL-DRUGS -- 0.1%
Triax Pharmaceuticals LLC
BTL
16.50% due 08/30/11+(9)(10)(15)(18)
(cost $1,647,919)........................ 1,708,132 537,122
-----------
MUNICIPAL BONDS & NOTES -- 0.2%
Ohio State University Revenue Bonds
4.80% due 06/01/2111..................... 616,000 632,318
Port Authority of New York & New Jersey
Revenue Bonds
4.93% due 10/01/51....................... 554,000 590,752
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,163,824)........................ 1,223,070
-----------
COMMON STOCK -- 0.1%
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
Lloyds Banking Group PLC+................. 600,576 322,817
-----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(9)(10)(15)(19). 128,418 0
-----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International,
Inc.+(9)(10)(15)......................... 4,107 0
-----------
TOTAL COMMON STOCK
(cost $421,853).......................... 322,817
-----------
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES** (NOTE 2)
---------------------------------------------------------------
PREFERRED STOCK -- 1.3%
BANKS-COMMERCIAL -- 0.1%
CoBank ACB
11.00%*................................. 12,063 $ 653,288
----------
BANKS-MONEY CENTER -- 0.0%
UBS Preferred Funding Trust IV Series D
0.94%................................... 1,410 22,461
----------
BANKS-SUPER REGIONAL -- 0.2%
US Bancorp FRS
3.50%................................... 759 599,610
Wachovia Capital Trust IX
6.38%................................... 12,800 323,072
----------
922,682
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.7%
Ally Financial, Inc.
7.00%*.................................. 2,512 2,092,732
Goldman Sachs Group, Inc.
6.13%................................... 48,000 1,214,400
Goldman Sachs Group, Inc.
6.50%................................... 18,643 477,820
HSBC Holdings PLC
8.00%................................... 9,360 255,621
----------
4,040,573
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.0%
General Electric Capital Corp.
5.50%(5)................................ 8,582 221,244
----------
ELECTRIC-INTEGRATED -- 0.0%
Southern California Edison Co. FRS
4.52%................................... 2,250 223,088
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
JP Morgan Chase Capital XXIX
6.70%................................... 19,440 496,692
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Federal Home Loan Mtg. Corp. FRS
8.38%................................... 11,300 15,707
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC,
Class C+(9)(10)(15)(19)................. 39,177 0
----------
SPECIAL PURPOSE ENTITY -- 0.1%
Structured Repackaged Asset-Backed
Trust Securities FRS
3.00%................................... 29,200 654,372
----------
TELECOM SERVICES -- 0.1%
Qwest Corp.
7.00%................................... 16,900 429,260
----------
TOTAL PREFERRED STOCK
(cost $7,611,609)....................... 7,679,367
----------
WARRANTS+ -- 0.0%
OIL-FIELD SERVICES -- 0.0%
Green Field Energy Services, Inc.
Expires 11/15/21........................ 1,065 69,225
----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
WARRANTS+ (CONTINUED)
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Assoc., Inc.
Expires 02/19/14(9)(10).................... 6,739 $ 0
------------
TELEVISION -- 0.0%
ION Media Networks, Inc.
Expires 12/18/16
(strike price $687.00)(9)(10)(15).......... 325 48,750
ION Media Networks, Inc.
Expires 12/18/16
(strike price $500.00)(9)(10)(15).......... 325 81,250
------------
130,000
------------
TOTAL WARRANTS
(cost $6,978).............................. 199,225
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $565,877,022)........................ 572,155,083
------------
SHORT-TERM INVESTMENT SECURITIES -- 5.2%
TIME DEPOSITS -- 5.2%
Euro Time Deposit with State Street Bank &
Trust Co.
0.01% due 04/02/12
(cost $30,996,000)......................... $30,996,000 30,996,000
------------
REPURCHASE AGREEMENT -- 0.7%
State Street Bank & Trust Co. Joint
Repurchase Agreement(16)
(cost $4,239,000).......................... 4,239,000 4,239,000
------------
TOTAL INVESTMENTS --
(cost $601,112,022)(17).................... 100.8% 607,390,083
Liabilities in excess of other assets......... (0.8) (4,639,401)
----------- ------------
NET ASSETS -- 100.0% $602,750,682
=========== ============
--------
* 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, 2012, the
aggregate value of these securities was $112,810,206 representing 18.6% of
net assets. Unless otherwise indicated these securities are not considered
to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1) Collateralized Mortgage Obligation
(2) Commercial Mortgage Backed Security
(3) Perpetual maturity -- maturity date reflects the next call date.
(4) Income may be received in cash or additional bonds at the discretion of
the issuer.
(5) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(6) Bond in default
(7) Company has filed for Chapter 11 bankruptcy protection.
(8) Company has filed for Chapter 7 bankruptcy.
(9) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(10) Illiquid security. At March 31, 2012, the aggregate value of these
securities was $1,160,807 representing 0.2% of net assets.
(11) Company has filed for bankruptcy in country of issuance.
(12) Principal amount of security is adjusted for inflation.
(13) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major 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.
(14) 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.
(15) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
March 31, 2012, 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......... 07/20/2006 4,107 $-- $ 0 $ 0.00 0.00%
Ion Media Networks,
Inc.
Expires 12/18/16
(strike price
$500.00)
Warrant.............. 03/15/2011 325 -- 81,250 250.00 0.01
Ion Media Networks,
Inc.
Expires 12/18/16
(strike price
$687.00)
Warrant.............. 03/15/2011 325 -- 48,750 150.00 0.01
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ---------- ----------- -------- ------ ------
Triax
Pharmaceuticals
LLC
16.50% due
08/30/11 Loan
Agreement............ 08/31/2007 $1,500,000 $1,477,719
10/31/2007 3,875 3,524
01/10/2008 11,404 10,373
04/04/2008 11,239 10,222
07/03/2008 11,449 10,413
10/01/2008 11,535 10,491
01/05/2009 11,751 10,687
04/01/2009 11,579 10,532
07/01/2009 23,460 21,338
10/01/2009 11,885 10,810
01/01/2010 12,373 11,254
07/01/2010 12,155 11,055
10/01/2010 12,245 11,138
01/01/2011 12,611 11,470
04/01/2011 12,155 11,056
07/01/2011 12,523 5,944
10/01/2011 12,617 4,772
01/03/2012 13,276 5,121
---------- ----------
1,708,132 1,647,919 $537,122 $31.44 0.09%
Triax Pharmaceuticals
LLC
Common Stock......... 08/31/2007 128,418 53,936 0 0.00 0.00
Triax
Pharmaceuticals
LLC
Preferred
Stock................ 08/31/2007 39,177 78,353 0 0.00 0.00%
-------- ----
$667,122 0.11%
======== ====
(16) See Note 2 for details of Joint Repurchase Agreement.
(17) See Note 5 for cost of investments on a tax basis.
(18) Security is in default of interest and did not pay principal at maturity.
(19) Consists of more than one type of securities traded together as a unit.
BTL --Bank Term Loan
IO --Interest Only
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at March 31, 2012 and
unless noted otherwise, the dates shown are the original maturity dates.
REMIC --Real Estate Mortgage Investment Conduit
TIPS --Treasury Inflation Protected Security
AUD --Australian Dollar
BRL --Brazilian Real
CAD --Canadian Dollar
CHF --Swiss Franc
COP --Columbian Peso
EUR --Euro
GBP --British Pound
JPY --Japanese Yen
MXN --Mexican Peso
NOK --Norwegian Krone
RUB --Russian Ruble
SEK --Swedish Krona
SGD --Singapore Dollar
TRY --New Turkish Lira
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2012 (see Note 2):
LEVEL 1 --UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 --SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
-------------------- ----------------- --------------------- ------------
Long-Term Investment Securities:
Asset Backed Securities......... $ -- $ 21,020,681 $ 299,526 $ 21,320,207
U.S. Corporate Bonds & Notes.... -- 259,533,104 3,286,103 262,819,207
Foreign Corporate Bonds & Notes. -- 70,689,956 0 70,689,956
Foreign Government Agencies..... -- 101,811,338 -- 101,811,338
U.S. Government Agencies........ -- 95,052,793 -- 95,052,793
U.S. Government Treasuries...... -- 10,499,981 -- 10,499,981
Loans........................... -- -- 537,122 537,122
Municipal Bond & Notes.......... -- 1,223,070 -- 1,223,070
Common Stock.................... 322,817 -- 0 322,817
Prerferred Stock................ 4,933,347 2,746,020 0 7,679,367
Warrants........................ -- 69,225 130,000 199,225
Short Term Investment Securities:
Time Deposit.................... -- 30,996,000 -- 30,996,000
Repurchase Agreement.............. -- 4,239,000 -- 4,239,000
---------- ------------ ---------- ------------
TOTAL $5,256,164 $597,881,168 $4,252,751 $607,390,083
========== ============ ========== ============
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
The following is a reconciliation of Level 3 assets which significant
unobeservable inputs were used to determine fair value:
CONVERTIBLE ASSET BACKED U.S. CORPORATE FOREIGN CORPORATE COMMON PREFERRED
BONDS & NOTES SECURITIES BONDS & NOTES BONDS & NOTES LOANS STOCK STOCK
------------- ------------ -------------- ----------------- --------- --------- ---------
Balance as of 3/31/2011.............. $ 359,370 $ -- $ 6,550,154 $ 0 $ 709,436 $ 373,969 $ 196
Accrued discounts.................... -- -- 96,884 -- -- -- --
Accrued premiums..................... -- -- -- -- 5,682 -- --
Realized gain........................ -- -- 202,184 -- -- -- --
Realized loss........................ (15,925) -- (88,429) -- -- (784,521) --
Change in unrealized appreciation(1). -- -- 100,163 -- -- 652,266 --
Change in unrealized depreciation(1). (46,445) (421) (545,987) -- (183,707) (745) (196)
Net purchases........................ -- 299,947 202,410 -- 5,711 -- --
Net sales............................ (297,000) -- (3,690,050) -- -- (240,969) --
Transfers into Level 3(2)............ -- -- 458,774 0 -- -- --
Transfers out of Level 3(2).......... -- -- -- -- -- -- --
--------- -------- ----------- --- --------- --------- -----
Balance as of 03/31/2012............. $ -- $299,526 $ 3,286,103 $ 0 $ 537,122 $ 0 $ 0
========= ======== =========== === ========= ========= =====
WARRANTS
--------
Balance as of 3/31/2011.............. $100,750
Accrued discounts.................... --
Accrued premiums..................... --
Realized gain........................ --
Realized loss........................ --
Change in unrealized appreciation(1). 29,250
Change in unrealized depreciation(1). --
Net purchases........................ --
Net sales............................ --
Transfers into Level 3(2)............ --
Transfers out of Level 3(2).......... --
--------
Balance as of 03/31/2012............. $130,000
========
--------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
March 31, 2012 includes:
CONVERTIBLE ASSET BACKED U.S. CORPORATE FOREIGN CORPORATE COMMON PREFERRED
BONDS & NOTES SECURITIES BONDS & NOTES BONDS & NOTES LOANS STOCK STOCK WARRANTS
------------- ------------ -------------- ----------------- ---------- -------- --------- --------
$-- $ (421) $(455,344) $-- $(183,707) $651,521 $(196) $ 29,250
=== ====== ========== === ========== ======== ====== ========
(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
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Oil Companies-Exploration & Production.. 6.5%
Cable/Satellite TV...................... 4.8
Cellular Telecom........................ 4.0
Medical-Hospitals....................... 3.7
Diversified Banking Institutions........ 3.4
Pipelines............................... 3.4
Banks-Commercial........................ 3.3
Finance-Auto Loans...................... 3.3
Telephone-Integrated.................... 3.2
Repurchase Agreements................... 2.8
Casino Hotels........................... 2.6
Paper & Related Products................ 2.4
Casino Services......................... 1.9
Data Processing/Management.............. 1.7
Satellite Telecom....................... 1.6
Electric-Integrated..................... 1.5
Aerospace/Defense-Equipment............. 1.5
Machinery-Farming....................... 1.5
Auto/Truck Parts & Equipment-Original... 1.4
Finance-Consumer Loans.................. 1.4
Independent Power Producers............. 1.4
Coal.................................... 1.3
Auto-Cars/Light Trucks.................. 1.3
Theaters................................ 1.3
Diversified Financial Services.......... 1.3
Transport-Marine........................ 1.2
Computer Services....................... 1.2
Chemicals-Diversified................... 1.1
Containers-Metal/Glass.................. 1.1
Commercial Services..................... 1.0
Electric-Generation..................... 1.0
Multimedia.............................. 1.0
Diversified Minerals.................... 1.0
Office Automation & Equipment........... 1.0
Medical-Drugs........................... 1.0
Electronic Components-Semiconductors.... 1.0
Television.............................. 1.0
Consumer Products-Misc.................. 0.9
Building Products-Wood.................. 0.9
Medical Products........................ 0.8
Building-Residential/Commercial......... 0.8
Retail-Propane Distribution............. 0.8
Medical Information Systems............. 0.8
Retail-Arts & Crafts.................... 0.7
Physical Therapy/Rehabilitation Centers. 0.7
Banks-Mortgage.......................... 0.7
Funeral Services & Related Items........ 0.7
Food-Misc............................... 0.7
Shipbuilding............................ 0.7
Computers-Memory Devices................ 0.6
Telecommunication Equipment............. 0.6
Telecom Services........................ 0.6
Diagnostic Kits......................... 0.6
Athletic Equipment...................... 0.6
Diversified Manufacturing Operations.... 0.5
Medical Labs & Testing Services......... 0.5
Oil-Field Services...................... 0.5
Medical-Outpatient/Home Medical......... 0.5
Rental Auto/Equipment................... 0.5
Cosmetics & Toiletries.................. 0.5
Real Estate Investment Trusts... 0.5%
Machinery-General Industrial.... 0.5
Retail-Discount................. 0.5
Applications Software........... 0.5
Insurance-Multi-line............ 0.5
Agricultural Operations......... 0.5
Food-Meat Products.............. 0.4
Pharmacy Services............... 0.4
Finance-Leasing Companies....... 0.4
Investment Companies............ 0.3
Real Estate Management/Services. 0.3
Finance-Other Services.......... 0.3
Advertising Services............ 0.3
Web Hosting/Design.............. 0.3
Alternative Waste Technology.... 0.3
Chemicals-Plastics.............. 0.3
Broadcast Services/Program...... 0.2
Retail-Perfume & Cosmetics...... 0.2
Chemicals-Specialty............. 0.2
Printing-Commercial............. 0.2
Dialysis Centers................ 0.2
Advertising Sales............... 0.2
Agricultural Chemicals.......... 0.2
Motion Pictures & Services...... 0.2
Enterprise Software/Service..... 0.1
Retail-Drug Store............... 0.1
Medical-Biomedical/Gene......... 0.1
Publishing-Periodicals.......... 0.1
Aerospace/Defense............... 0.1
Beverages-Non-alcoholic......... 0.1
----
98.8%
====
CREDIT QUALITY ALLOCATION+#
Baa........ 0.8%
Ba......... 44.8
B.......... 42.4
Caa........ 9.1
Not Rated@. 2.9
-----
100.0%
=====
--------
*Calculated as a percentage of net assets.
+Source: Moody's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 1.4%
CELLULAR TELECOM -- 0.7%
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/14.......................... $ 938,000 $ 894,618
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.7%
Chesapeake Energy Corp.
Company Guar. Notes
2.50% due 05/15/37.......................... 1,070,000 969,687
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $1,851,481)........................... 1,864,305
----------
U.S. CORPORATE BONDS & NOTES -- 80.7%
ADVERTISING SALES -- 0.2%
Lamar Media Corp.
Company Guar. Notes
5.88% due 02/01/22*......................... 240,000 244,200
----------
ADVERTISING SERVICES -- 0.3%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/15*................... 995,000 412,925
----------
AEROSPACE/DEFENSE -- 0.1%
Esterline Technologies Corp.
Company Guar. Notes
7.00% due 08/01/20.......................... 85,000 93,925
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 1.5%
BE Aerospace, Inc.
Senior Notes
6.88% due 10/01/20.......................... 815,000 892,425
TransDigm, Inc.
Company Guar. Notes
7.75% due 12/15/18.......................... 1,025,000 1,109,562
----------
2,001,987
----------
AGRICULTURAL CHEMICALS -- 0.2%
CF Industries, Inc.
Company Guar. Notes
6.88% due 05/01/18.......................... 165,000 190,369
----------
AGRICULTURAL OPERATIONS -- 0.5%
Southern States Cooperative, Inc.
Senior Notes
11.25% due 05/15/15*........................ 555,000 592,463
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.3%
Darling International, Inc.
Company Guar. Notes
8.50% due 12/15/18.......................... 331,000 369,065
----------
APPLICATIONS SOFTWARE -- 0.5%
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/19*........................ 550,000 621,500
----------
ATHLETIC EQUIPMENT -- 0.6%
Easton-Bell Sports, Inc.
Senior Sec. Notes
9.75% due 12/01/16.......................... 700,000 774,375
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS -- 1.3%
Ford Motor Co.
Senior Notes
7.45% due 07/16/31......................... $1,370,000 $1,674,825
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.4%
Affinia Group, Inc.
Senior Sec. Notes
10.75% due 08/15/16*....................... 417,000 456,615
Tenneco, Inc.
Company Guar. Notes
7.75% due 08/15/18......................... 145,000 156,600
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/17*........................ 1,105,000 1,232,075
----------
1,845,290
----------
BANKS-COMMERCIAL -- 2.7%
CIT Group, Inc.
Senior Notes
5.25% due 03/15/18......................... 406,000 414,120
CIT Group, Inc.
Senior Notes
5.50% due 02/15/19*........................ 430,000 438,600
CIT Group, Inc.
Company Guar. Notes
7.00% due 05/02/17*........................ 2,638,000 2,644,595
----------
3,497,315
----------
BANKS-MORTGAGE -- 0.7%
Provident Funding Associates LP/PFG
Finance Corp.
Senior Sec. Notes
10.25% due 04/15/17*....................... 970,000 943,325
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes, Series A
9.25% due 12/15/17......................... 55,000 60,019
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes, Series B
9.25% due 12/15/17......................... 230,000 252,137
----------
312,156
----------
BUILDING PRODUCTS-WOOD -- 0.9%
Masco Corp.
Senior Notes
6.13% due 10/03/16......................... 265,000 280,126
Masco Corp.
Senior Notes
7.13% due 03/15/20......................... 710,000 759,039
Masco Corp.
Senior Notes
7.75% due 08/01/29......................... 110,000 113,458
----------
1,152,623
----------
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.7%
KB Home
Company Guar. Notes
8.00% due 03/15/20............................... $ 681,000 $ 674,190
Lennar Corp.
Company Guar. Notes
5.60% due 05/31/15............................... 255,000 266,475
----------
940,665
----------
CABLE/SATELLITE TV -- 4.5%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.63% due 01/31/22............................... 580,000 601,750
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.25% due 10/30/17............................... 780,000 836,550
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.38% due 06/01/20............................... 570,000 618,450
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.88% due 04/30/18............................... 635,000 685,800
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
8.13% due 04/30/20............................... 170,000 188,700
CSC Holdings LLC
Senior Notes
6.75% due 11/15/21*.............................. 645,000 671,606
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/21............................... 1,135,000 1,222,963
Harron Communications LP/Harron Finance Corp.
Senior Notes
9.13% due 04/01/20*.............................. 330,000 342,375
Mediacom LLC/Mediacom Capital Corp.
Senior Notes
9.13% due 08/15/19............................... 645,000 700,631
----------
5,868,825
----------
CASINO HOTELS -- 2.6%
Caesars Operating Escrow LLC/Caesars Escrow
Corp.
Senior Sec. Notes
8.50% due 02/15/20*.............................. 500,000 508,750
CityCenter Holdings LLC/CityCenter Finance Corp.
Senior Sec. Notes
7.63% due 01/15/16............................... 180,000 189,900
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/17.............................. 1,075,000 1,171,750
MGM Mirage, Inc.
Senior Sec. Notes
9.00% due 03/15/20............................... 155,000 172,437
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/17.............................. 675,000 763,594
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
CASINO HOTELS (CONTINUED)
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.
1st. Mtg. Notes
5.38% due 03/15/22*............................. $570,000 $ 555,750
----------
3,362,181
----------
CASINO SERVICES -- 0.6%
Greektown Superholdings, Inc.
Sec. Notes
13.00% due 07/01/15............................. 150,000 164,625
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.............................. 600,000 633,000
----------
797,625
----------
CELLULAR TELECOM -- 3.3%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/16.............................. 935,000 986,425
Cricket Communications, Inc.
Company Guar. Notes
7.75% due 10/15/20.............................. 345,000 338,963
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 11/15/20.............................. 645,000 640,969
MetroPCS Wireless, Inc.
Company Guar. Notes
7.88% due 09/01/18.............................. 485,000 510,462
Sprint Nextel Corp.
Company Guar. Notes
7.00% due 03/01/20*............................. 395,000 400,925
Sprint Nextel Corp.
Company Guar. Notes
9.00% due 11/15/18*............................. 910,000 998,725
Syniverse Holdings, Inc.
Company Guar. Notes
9.13% due 01/15/19.............................. 405,000 446,512
----------
4,322,981
----------
CHEMICALS-DIVERSIFIED -- 0.9%
Celanese US Holdings LLC
Company Guar. Notes
6.63% due 10/15/18.............................. 395,000 420,675
Momentive Performance Materials, Inc.
Sec. Notes
9.00% due 01/15/21.............................. 471,000 412,125
Momentive Performance Materials, Inc.
Company Guar. Notes
12.50% due 06/15/14............................. 297,000 317,047
----------
1,149,847
----------
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-PLASTICS -- 0.3%
Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC
Sec. Notes
9.00% due 11/15/20................................ $355,000 $ 330,150
----------
CHEMICALS-SPECIALTY -- 0.2%
Ferro Corp.
Senior Notes
7.88% due 08/15/18................................ 285,000 290,700
----------
COAL -- 1.3%
Alpha Natural Resources, Inc.
Company Guar. Notes
6.00% due 06/01/19................................ 230,000 208,150
Alpha Natural Resources, Inc.
Company Guar. Notes
6.25% due 06/01/21................................ 155,000 139,888
Arch Coal, Inc.
Company Guar. Notes
7.25% due 10/01/20................................ 225,000 208,687
Peabody Energy Corp.
Company Guar. Notes
6.00% due 11/15/18*............................... 520,000 509,600
Peabody Energy Corp.
Company Guar. Notes
6.50% due 09/15/20................................ 641,000 641,000
----------
1,707,325
----------
COMMERCIAL SERVICES -- 1.0%
ARAMARK Holdings Corp.
Senior Notes
8.63% due 05/01/16*(3)............................ 765,000 784,125
Iron Mountain, Inc.
Company Guar. Notes
7.75% due 10/01/19................................ 500,000 546,250
----------
1,330,375
----------
COMPUTER SERVICES -- 1.2%
SunGard Data Systems, Inc.
Company Guar. Notes
7.38% due 11/15/18................................ 556,000 590,750
SunGard Data Systems, Inc.
Company Guar. Notes
7.63% due 11/15/20................................ 275,000 293,563
SunGard Data Systems, Inc.
Company Guar. Notes
10.25% due 08/15/15............................... 80,000 83,100
SunGard Data Systems, Inc.
Company Guar. Notes
10.63% due 05/15/15............................... 550,000 579,221
----------
1,546,634
----------
CONSUMER PRODUCTS-MISC. -- 0.9%
Reynolds Group Issuer, Inc./Reynolds Group Issuer
LLC
Senior Sec. Notes
6.88% due 02/15/21*............................... 335,000 346,725
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
CONSUMER PRODUCTS-MISC. (CONTINUED)
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
7.88% due 08/15/19*.......................... $ 210,000 $ 225,750
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
8.75% due 10/15/16*.......................... 565,000 597,487
----------
1,169,962
----------
CONTAINERS-METAL/GLASS -- 1.1%
Ball Corp.
Company Guar. Notes
5.75% due 05/15/21........................... 655,000 695,937
Ball Corp.
Company Guar. Notes
7.38% due 09/01/19........................... 145,000 160,225
Crown Americas LLC/Crown Americas Capital
Corp. II
Company Guar. Notes
7.63% due 05/15/17........................... 255,000 274,444
Crown Americas LLC/Crown Americas Capital
Corp. III
Company Guar. Notes
6.25% due 02/01/21........................... 265,000 284,875
----------
1,415,481
----------
COSMETICS & TOILETRIES -- 0.5%
Revlon Consumer Products Corp.
Sec. Notes
9.75% due 11/15/15........................... 610,000 655,750
----------
DATA PROCESSING/MANAGEMENT -- 1.7%
Fidelity National Information Services, Inc.
Company Guar. Notes
5.00% due 03/15/22*.......................... 345,000 339,825
Fidelity National Information Services, Inc.
Company Guar. Notes
7.63% due 07/15/17*.......................... 205,000 223,450
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/19*.......................... 1,115,000 1,135,906
First Data Corp.
Sec. Notes
8.25% due 01/15/21*.......................... 284,000 277,610
First Data Corp.
Sec. Notes
8.75% due 01/15/22*(3)....................... 285,000 275,025
----------
2,251,816
----------
DIAGNOSTIC KITS -- 0.6%
Alere, Inc.
Senior Notes
7.88% due 02/01/16........................... 745,000 776,663
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIALYSIS CENTERS -- 0.2%
Fresenius Medical Care U.S. Finance II, Inc.
Company Guar. Notes
5.63% due 07/31/19*............................ $ 200,000 $ 206,000
Fresenius Medical Care U.S. Finance, Inc.
Company Guar. Notes
6.50% due 09/15/18*............................ 65,000 70,850
----------
276,850
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.3%
Ally Financial, Inc.
Company Guar. Notes
8.00% due 03/15/20............................. 600,000 667,500
BankAmerica Capital II
Limited Guar. Notes
8.00% due 12/15/26............................. 76,000 76,760
GMAC LLC
Sub. Notes
8.00% due 12/31/18............................. 1,100,000 1,168,750
NB Capital Trust IV
Limited Guar. Notes
8.25% due 04/15/27............................. 1,100,000 1,122,000
----------
3,035,010
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.6%
Community Choice Financial, Inc.
Senior Sec. Notes
10.75% due 05/01/19*........................... 725,000 707,781
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.5%
JM Huber Corp.
Senior Notes
9.88% due 11/01/19*............................ 675,000 702,000
----------
ELECTRIC-GENERATION -- 0.9%
AES Corp.
Senior Notes
8.00% due 10/15/17............................. 805,000 906,631
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/17............................. 301,094 295,072
----------
1,201,703
----------
ELECTRIC-INTEGRATED -- 0.6%
DPL, Inc.
Senior Notes
7.25% due 10/15/21*............................ 300,000 333,000
Mirant Mid Atlantic LLC Pass-Through Trust
Pass Through Certs., Series B
9.13% due 06/30/17............................. 289,726 295,521
Texas Competitive Electric Holdings Co. LLC/
TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/20*........................... 295,000 192,487
----------
821,008
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.0%
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/18*............................ 1,015,000 1,111,425
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------------
ELECTRONIC COMPONENTS-SEMICONDUCTORS (CONTINUED)
Freescale Semiconductor, Inc.
Company Guar. Notes
10.75% due 08/01/20........................... $111,000 $ 124,597
----------
1,236,022
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.1%
Lawson Software, Inc.
Senior Notes
9.38% due 04/01/19*........................... 135,000 139,725
----------
FINANCE-AUTO LOANS -- 3.3%
Credit Acceptance Corp.
Senior Sec. Notes
9.13% due 02/01/17............................ 685,000 739,800
Ford Motor Credit Co. LLC
Senior Notes
5.00% due 05/15/18............................ 660,000 683,665
Ford Motor Credit Co. LLC
Senior Notes
5.88% due 08/02/21............................ 450,000 485,365
Ford Motor Credit Co. LLC
Senior Notes
6.63% due 08/15/17............................ 495,000 548,526
Ford Motor Credit Co. LLC
Senior Notes
8.13% due 01/15/20............................ 750,000 906,559
Ford Motor Credit Co. LLC
Senior Notes
8.70% due 10/01/14............................ 765,000 865,231
----------
4,229,146
----------
FINANCE-CONSUMER LOANS -- 1.4%
SLM Corp.
Senior Notes
6.25% due 01/25/16............................ 335,000 348,400
SLM Corp.
Senior Notes
8.00% due 03/25/20............................ 211,000 227,880
SLM Corp.
Senior Notes
8.45% due 06/15/18............................ 484,000 539,660
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
13.25% due 07/15/15........................... 580,000 640,900
----------
1,756,840
----------
FINANCE-LEASING COMPANIES -- 0.4%
Air Lease Corp.
Senior Notes
5.63% due 04/01/17*........................... 475,000 473,219
----------
FINANCE-OTHER SERVICES -- 0.3%
CNH Capital LLC
Company Guar. Notes
6.25% due 11/01/16*........................... 185,000 198,413
Hexion US Finance Corp.
Senior Sec. Notes
6.63% due 04/15/20*........................... 230,000 235,175
----------
433,588
----------
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FOOD-MEAT PRODUCTS -- 0.4%
Smithfield Foods, Inc.
Senior Sec. Notes
10.00% due 07/15/14......................... $475,000 $ 555,750
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.7%
Service Corp. International
Senior Notes
7.63% due 10/01/18.......................... 802,000 922,300
----------
INDEPENDENT POWER PRODUCERS -- 1.4%
Calpine Corp.
Senior Sec. Notes
7.50% due 02/15/21*......................... 910,000 971,425
NRG Energy, Inc.
Company Guar. Notes
7.38% due 01/15/17.......................... 750,000 780,000
----------
1,751,425
----------
INSURANCE-MULTI-LINE -- 0.5%
Hartford Financial Services Group, Inc. FRS
Jr. Sub. Debentures
8.13% due 06/15/68.......................... 560,000 597,800
----------
MACHINERY-FARMING -- 1.5%
Case New Holland, Inc.
Company Guar. Notes
7.75% due 09/01/13.......................... 925,000 985,125
Case New Holland, Inc.
Company Guar. Notes
7.88% due 12/01/17.......................... 870,000 1,011,375
----------
1,996,500
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.5%
CPM Holdings, Inc.
Senior Sec. Notes
10.63% due 09/01/14......................... 595,000 633,675
----------
MEDICAL INFORMATION SYSTEMS -- 0.8%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/18*........................ 840,000 993,300
----------
MEDICAL LABS & TESTING SERVICES -- 0.5%
American Renal Holdings Co., Inc.
Senior Sec. Notes
8.38% due 05/15/18.......................... 650,000 691,438
----------
MEDICAL PRODUCTS -- 0.8%
LVB Acquisition Holding LLC
Company Guar. Notes
10.00% due 10/15/17......................... 473,000 509,066
LVB Acquisition Holding LLC
Company Guar. Notes
10.38% due 10/15/17(3)...................... 481,000 518,278
----------
1,027,344
----------
MEDICAL-BIOMEDICAL/GENE -- 0.1%
STHI Holding Corp.
Sec. Notes
8.00% due 03/15/18*......................... 125,000 132,500
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------
MEDICAL-DRUGS -- 0.6%
Valeant Pharmaceuticals International
Company Guar. Notes
6.75% due 08/15/21*................... $ 745,000 $ 724,513
----------
MEDICAL-HOSPITALS -- 3.7%
Community Health Systems, Inc.
Company Guar. Notes
8.88% due 07/15/15.................... 187,000 193,779
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/20.................... 1,235,000 1,296,750
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/20.................... 1,030,000 1,131,712
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/19.................... 550,000 611,188
Health Management Associates, Inc.
Senior Notes
7.38% due 01/15/20*................... 210,000 214,200
Tenet Healthcare Corp.
Senior Sec. Notes
6.25% due 11/01/18*................... 770,000 795,025
Tenet Healthcare Corp.
Senior Sec. Notes
10.00% due 05/01/18................... 505,000 578,225
----------
4,820,879
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.5%
Radiation Therapy Services, Inc.
Company Guar. Notes
9.88% due 04/15/17.................... 836,000 670,890
----------
MOTION PICTURES & SERVICES -- 0.2%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/17*................... 170,000 186,575
----------
MULTIMEDIA -- 0.0%
Haights Cross Operating Co. FRS
Limited Guar. Notes
16.00% due 03/15/14+(1)(2)(7)(8)...... 187,319 14,049
----------
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 -- 1.0%
CDW LLC/CDW Finance Corp.
Senior Sec. Notes
8.00% due 12/15/18.................... 545,000 589,963
CDW LLC/CDW Finance Corp.
Company Guar. Notes
8.50% due 04/01/19.................... 641,000 681,062
----------
1,271,025
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION -- 5.1%
Antero Resources Finance Corp.
Company Guar. Notes
7.25% due 08/01/19*......................... $ 310,000 $ 319,300
Antero Resources Finance Corp.
Company Guar. Notes
9.38% due 12/01/17.......................... 535,000 579,138
Chesapeake Energy Corp.
Company Guar. Notes
6.88% due 11/15/20.......................... 585,000 604,012
Continental Resources, Inc.
Company Guar. Notes
5.00% due 09/15/22*......................... 330,000 331,650
Endeavour International Corp.
Senior Sec. Notes
12.00% due 03/01/18*........................ 565,000 570,650
Newfield Exploration Co.
Senior Notes
5.75% due 01/30/22.......................... 320,000 335,200
Newfield Exploration Co.
Senior Sub. Notes
7.13% due 05/15/18.......................... 260,000 273,650
Petroleum Development Corp.
Senior Notes
12.00% due 02/15/18......................... 90,000 97,650
Pioneer Natural Resources Co.
Senior Notes
6.65% due 03/15/17.......................... 1,195,000 1,366,240
Plains Exploration & Production Co.
Company Guar. Notes
6.63% due 05/01/21.......................... 112,000 118,720
Plains Exploration & Production Co.
Company Guar. Notes
6.75% due 02/01/22.......................... 441,000 460,845
Range Resources Corp.
Company Guar. Notes
5.75% due 06/01/21.......................... 545,000 572,250
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/20.......................... 355,000 385,175
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/18.......................... 505,000 555,500
----------
6,569,980
----------
OIL-FIELD SERVICES -- 0.5%
Hornbeck Offshore Services, Inc.
Company Guar. Notes
8.00% due 09/01/17.......................... 655,000 687,750
----------
PAPER & RELATED PRODUCTS -- 0.7%
Clearwater Paper Corp.
Company Guar. Notes
7.13% due 11/01/18.......................... 160,000 169,600
Neenah Paper, Inc.
Company Guar. Notes
7.38% due 11/15/14.......................... 691,000 691,000
----------
860,600
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
PHARMACY SERVICES -- 0.4%
BioScrip, Inc.
Company Guar. Notes
10.25% due 10/01/15......................... $ 440,000 $ 476,300
----------
PHYSICAL THERAPY/REHABILITATION CENTERS -- 0.7%
HealthSouth Corp.
Company Guar. Notes
7.25% due 10/01/18.......................... 900,000 960,750
----------
PIPELINES -- 3.4%
El Paso Corp.
Senior Notes
6.50% due 09/15/20.......................... 545,000 600,038
El Paso Corp.
Senior Notes
6.88% due 06/15/14.......................... 700,000 755,234
El Paso Corp.
Senior Notes
7.00% due 06/15/17.......................... 830,000 924,241
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/20.......................... 681,000 755,910
Kinder Morgan Finance Co. LLC
Senior Sec. Notes
6.00% due 01/15/18*......................... 535,000 567,769
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
6.25% due 06/15/22.......................... 436,000 457,800
NGPL PipeCo LLC
Senior Notes
7.12% due 12/15/17*......................... 380,000 346,264
----------
4,407,256
----------
PRINTING-COMMERCIAL -- 0.2%
Cenveo Corp.
Company Guar. Notes
7.88% due 12/01/13.......................... 303,000 289,365
----------
PUBLISHING-PERIODICALS -- 0.1%
Nielsen Finance LLC/Nielsen Finance Co.
Company Guar. Notes
11.50% due 05/01/16......................... 114,000 131,385
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.5%
Felcor Lodging LP
Senior Sec. Notes
6.75% due 06/01/19.......................... 630,000 636,300
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.3%
Realogy Corp.
Senior Sec. Notes
7.63% due 01/15/20*......................... 418,000 436,810
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/14+(1)(2)................... 2,145,000 215
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RENTAL AUTO/EQUIPMENT -- 0.5%
UR Financing Escrow Corp.
Sec. Notes
5.75% due 07/15/18*......................... $100,000 $ 102,375
UR Financing Escrow Corp.
Senior Notes
7.38% due 05/15/20*......................... 325,000 332,312
UR Financing Escrow Corp.
Senior Notes
7.63% due 04/15/22*......................... 225,000 231,188
----------
665,875
----------
RETAIL-ARTS & CRAFTS -- 0.7%
Michaels Stores, Inc.
Company Guar. Notes
7.75% due 11/01/18.......................... 905,000 963,825
----------
RETAIL-DISCOUNT -- 0.5%
99 Cents Only Stores
Company Guar. Notes
11.00% due 12/15/19*........................ 590,000 631,300
----------
RETAIL-DRUG STORE -- 0.1%
Rite Aid Corp.
Senior Sec. Notes
9.75% due 06/12/16.......................... 125,000 138,438
----------
RETAIL-PERFUME & COSMETICS -- 0.2%
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
6.88% due 11/15/19*......................... 286,000 304,590
----------
RETAIL-PROPANE DISTRIBUTION -- 0.8%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/20.......................... 240,000 243,600
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/22.......................... 425,000 433,500
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/21.......................... 371,000 334,827
----------
1,011,927
----------
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
----------
SATELLITE TELECOM -- 0.6%
Hughes Satellite Systems Corp.
Senior Sec. Notes
6.50% due 06/15/19.......................... 750,000 783,750
----------
SHIPBUILDING -- 0.7%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/18.......................... 455,000 482,300
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
SHIPBUILDING (CONTINUED)
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/21....................... $ 361,000 $ 386,721
----------
869,021
----------
TELECOM SERVICES -- 0.2%
GCI, Inc.
Senior Notes
6.75% due 06/01/21....................... 280,000 281,750
----------
TELECOMMUNICATION EQUIPMENT -- 0.6%
Sorenson Communications, Inc.
Senior Sec. Notes
10.50% due 02/01/15*..................... 980,000 808,500
----------
TELEPHONE-INTEGRATED -- 3.0%
CenturyLink, Inc.
Senior Notes
6.00% due 04/01/17....................... 275,000 292,349
Frontier Communications Corp.
Senior Notes
7.13% due 03/15/19....................... 185,000 185,462
Frontier Communications Corp.
Senior Notes
8.25% due 04/15/17....................... 470,000 505,250
Level 3 Financing, Inc.
Company Guar. Notes
8.63% due 07/15/20*...................... 600,000 630,000
Qwest Communications International, Inc.
Company Guar. Notes
8.00% due 10/01/15....................... 570,000 608,475
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/20....................... 1,330,000 1,423,100
Windstream Corp.
Company Guar. Notes
8.13% due 09/01/18....................... 275,000 294,250
----------
3,938,886
----------
TELEVISION -- 0.5%
Sinclair Television Group, Inc.
Sec. Notes
9.25% due 11/01/17*...................... 540,000 600,750
----------
THEATERS -- 1.3%
AMC Entertainment, Inc.
Company Guar. Notes
8.75% due 06/01/19....................... 995,000 1,042,262
Regal Cinemas Corp.
Company Guar. Notes
8.63% due 07/15/19....................... 325,000 355,063
Regal Entertainment Group
Company Guar. Notes
9.13% due 08/15/18....................... 215,000 235,425
----------
1,632,750
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORT-MARINE -- 1.2%
ACL I Corp.
Senior Notes
10.63% due 02/15/16*(3)................ $ 748,379 $ 750,250
Marquette Transportation Co./Marquette
Transportation Finance Corp.
Sec. Notes
10.88% due 01/15/17.................... 785,000 827,194
------------
1,577,444
------------
WEB HOSTING/DESIGN -- 0.3%
Equinix, Inc.
Senior Notes
7.00% due 07/15/21..................... 350,000 384,125
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $103,174,242).................... 104,695,820
------------
FOREIGN CORPORATE BONDS & NOTES -- 7.4%
BANKS-COMMERCIAL -- 0.6%
LBG Capital No.1 PLC
Bank Guar. Notes
7.88% due 11/01/20*.................... 920,000 828,000
------------
CHEMICALS-DIVERSIFIED -- 0.2%
LyondellBasell Industries NV
Company Guar. Notes
6.00% due 11/15/21*.................... 285,000 299,250
------------
COMPUTERS-MEMORY DEVICES -- 0.6%
Seagate Technology HDD Holdings
Company Guar. Notes
6.80% due 10/01/16..................... 745,000 821,362
------------
DIVERSIFIED MINERALS -- 1.0%
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
7.00% due 11/01/15*.................... 955,000 974,100
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
8.25% due 11/01/19*.................... 290,000 304,500
------------
1,278,600
------------
ELECTRIC-GENERATION -- 0.1%
Intergen NV
Senior Sec. Notes
9.00% due 06/30/17*.................... 125,000 131,563
------------
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
------------
INVESTMENT COMPANIES -- 0.3%
Offshore Group Investments, Ltd.
Senior Sec. Notes
11.50% due 08/01/15.................... 410,000 451,000
------------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Escrow Notes
10.75% due 02/01/08+(1)(2)............. 2,150,000 0
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
MULTIMEDIA -- 1.0%
Quebecor Media, Inc.
Senior Notes
7.75% due 03/15/16.......................... $1,280,000 $1,313,600
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.7%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/17*......................... 640,000 678,400
Lone Pine Resources Canada, Ltd.
Company Guar. Notes
10.38% due 02/15/17*........................ 210,000 219,712
----------
898,112
----------
PAPER & RELATED PRODUCTS -- 0.9%
Cascades, Inc.
Company Guar. Notes
7.88% due 01/15/20.......................... 305,000 301,187
Fibria Overseas Finance, Ltd.
Company Guar. Notes
7.50% due 05/04/20*......................... 802,000 847,153
----------
1,148,340
----------
SATELLITE TELECOM -- 1.0%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/19.......................... 1,175,000 1,235,219
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 01/15/15+*(1)(2)(7)(9)............ 1,025,000 0
----------
TELECOM SERVICES -- 0.4%
Wind Acquisition Finance SA
Sec. Notes
11.75% due 07/15/17*........................ 510,000 502,350
----------
TELEPHONE-INTEGRATED -- 0.2%
Virgin Media Finance PLC
Company Guar. Notes
5.25% due 02/15/22.......................... 215,000 213,119
----------
TELEVISION -- 0.4%
Videotron, Ltd.
Senior Notes
5.00% due 07/15/22*......................... 460,000 455,400
----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $14,816,666).......................... 9,575,915
----------
LOANS(10)(11) -- 2.9%
BEVERAGES-NON-ALCOHOLIC -- 0.1%
Le-Natures, Inc.
BTL
9.39% due 03/01/11+(2)(5)(8)................ 1,200,000 60,000
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.1%
TOUSA, Inc.
BTL
12.25% due 08/15/13+(2)(4)(7)(8)............ 1,755,071 78,978
----------
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-------------------------------------------------------------------------
LOANS(10)(11) (CONTINUED)
CABLE/SATELLITE TV -- 0.3%
Kabel Deutschland V&S GMBH
BTL
3.25% due 02/01/19(2)........................... $ 370,000 $ 369,846
----------
CASINO SERVICES -- 1.1%
Herbst Gaming, Inc.
BTL
10.00% due 12/31/15(2).......................... 400,897 409,918
Holding Gaming Borrower LP
BTL-B
12.00% due 02/19/13(2).......................... 990,025 1,027,151
----------
1,437,069
----------
COMMERCIAL SERVICES -- 0.0%
Vertrue, Inc.
2nd Lien
13.25% due 08/14/15+(2)(7)...................... 1,010,000 3,788
----------
ELECTRIC-INTEGRATED -- 0.9%
Texas Competitive Electric Holdings Co. LLC
BTL
4.74% due 10/10/14(2)........................... 1,977,835 1,215,543
----------
MEDICAL-DRUGS -- 0.4%
Triax Pharmaceuticals LLC
BTL
16.50% due 08/30/11+(1)(2)(5)................... 1,708,132 537,122
----------
TOTAL LOANS
(cost $8,434,464)................................ 3,702,346
----------
COMMON STOCK -- 1.5%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings, Inc.+(15)........... 692 19,722
----------
CASINO SERVICES -- 0.0%
Greektown, Inc.+(1)(2)........................... 370 0
----------
FOOD-MISC. -- 0.7%
Wornick Co.+(1)(2)............................... 7,270 914,130
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(1)(2)(12)............. 128,418 0
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.0%
Critical Care Systems International, Inc.+(1)(2). 69,700 0
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(1)(2)......... 19,388 0
----------
PAPER & RELATED PRODUCTS -- 0.8%
Caraustar Industries, Inc.+(1)(2)................ 73 974,717
----------
TOTAL COMMON STOCK
(cost $2,640,677)............................... 1,908,569
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.2%
CASINO SERVICES -- 0.2%
Herbst Gaming, Inc.+(2)(16)
(cost $232,720)................................. 23,439 251,969
----------
PREFERRED STOCK -- 1.8%
DIVERSIFIED BANKING INSTITUTIONS -- 1.1%
GMAC Capital Trust I FRS
8.13%........................................... 64,000 1,479,040
----------
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 2)
-----------------------------------------------------------------
PREFERRED STOCK (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES -- 0.7%
Citigroup Capital XIII FRS
7.88%................................... 34,000 $ 924,800
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC,
Class C+(1)(2)(12)...................... 39,177 0
------------
TOTAL PREFERRED STOCK
(cost $2,616,996)....................... 2,403,840
------------
WARRANTS+ -- 0.1%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings, Inc.
Expires 05/20/14
(strike price $55.31)(1)(2)............. 3,355 4,680
Masonite Worldwide Holdings, Inc.
Expires 05/20/16
(strike price $55.31)(1)(2)............. 2,517 8,980
------------
13,660
------------
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Assoc., Inc.
Expires 02/19/14(1)(2).................. 3,250 0
------------
TELEVISION -- 0.1%
ION Media Networks, Inc.
Expires 12/18/16
(strike price $500.00)(1)(2)(16)........ 332 83,000
ION Media Networks, Inc.
Expires 12/18/16
(strike price $687.00)(1)(2)(16)........ 328 49,200
------------
132,200
------------
TOTAL WARRANTS
(cost $3,365)........................... 145,860
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $133,770,611)..................... 124,548,624
------------
REPURCHASE AGREEMENTS -- 2.8%
Bank of America Securities LLC Joint
Repurchase Agreement(13)................ $725,000 725,000
BNP Paribas SA Joint Repurchase
Agreement(13)........................... 930,000 930,000
Deutsche Bank AG Joint Repurchase
Agreement(13)........................... 165,000 165,000
Royal Bank of Scotland Joint Repurchase
Agreement(13)........................... 930,000 930,000
UBS Securities LLC Joint Repurchase
Agreement(13)........................... 825,000 825,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $3,575,000)....................... 3,575,000
------------
TOTAL INVESTMENTS --
(cost $137,345,611)(14)................. 98.8% 128,123,624
Other assets less liabilities.............. 1.2 1,588,542
-------- ------------
NET ASSETS -- 100.0% $129,712,166
======== ============
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
--------
+ 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, 2012, the
aggregate value of these securities was $36,371,681 representing 28.0% 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, 2012, the aggregate value of these
securities was $6,003,286 representing 4.6% 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 protection 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's portfolio are generally subject to mandatory
and/or optional prepayment. Because of these mandatory prepayment
conditions and because there may be significant economic incentives for a
borrower to prepay, prepayments may occur. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown.
(12) Consist of more than one class of securities traded together as a unit.
(13) See Note 2 for details of Joint Repurchase Agreements.
(14) See Note 5 for cost of investments on a tax basis.
(15) Fair valued security. Securities are classified as Level 2 based on the
securities valuation inputs; see Note 2.
(16) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
March 31, 2012, the SunAmerica High Yield Bond Fund held the following
restricted securities:
VALUE % OF
ACQUISITION ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- ------ ----------- -------- ------- ------
Herbst Gaming, Inc.
Membership
Interest
Certificate...... 03/26/2008 23,439 $232,720 $251,969 $ 10.75 0.19%
Ion Media Networks,
Inc.
Expires 12/18/16
(strike price
$500.00)
Warrant.......... 03/01/2011 332 -- 83,000 250.00 0.06
Ion Media Networks,
Inc.
Expires 12/18/16
(strike price
$687.00)
Warrant.......... 11/11/2010 327 --
03/01/2011 1 --
------ --------
328 -- 49,200 150.00 0.04
-------- ----
$384,169 0.29%
======== ====
BTL --Bank Term Loan
FRS --Floating Rate Securities
The rates shown on FRS are the current interest rates at March 31, 2012 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, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
--------------------- ----------------- ---------------------- ------------
Long-Term Investment Securities:
Convertible Bonds & Notes........ $ -- $ 1,864,305 $ -- $ 1,864,305
U.S. Corporate Bonds & Notes..... -- 104,090,963 604,857 104,695,820
Foreign Corporate Bonds & Notes.. -- 9,575,915 0 9,575,915
Loans............................ -- 1,995,307 1,707,039 3,702,346
Common Stock..................... -- 19,722 1,888,847 1,908,569
Membership Interest Certificates. -- -- 251,969 251,969
Preferred Stock.................. 2,403,840 -- 0 2,403,840
Warrants......................... -- -- 145,860 145,860
Repurchase Agreements.............. -- 3,575,000 -- 3,575,000
---------- ------------ ---------- ------------
TOTAL.............................. $2,403,840 $121,121,212 $4,598,572 $128,123,624
========== ============ ========== ============
59
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2012 -- (CONTINUED)
The following is a reconciliation of Level 3 assets which significant
unobeservable inputs were used to determine fair value:
MEMBERSHIP
U.S. CORPORATE FOREIGN CORPORATE COMMON INTEREST PREFERRED
BONDS & NOTES BONDS & NOTES LOANS STOCK CERTIFICATES STOCK WARRANTS
-------------- ----------------- ----------- ---------- ------------ --------- --------
Balance as of 3/31/2011.............. $ 4,260,968 $ 0 $ 3,861,973 $1,426,624 $ -- $ 196 $101,370
Accrued discounts.................... 53,586 -- 153,983 -- -- -- --
Accrued premiums..................... (28,553) -- -- -- -- -- --
Realized gain........................ 6,766 -- 1,546 618,329 -- -- --
Realized loss........................ (1,639,130) -- (1,587) (255,474) -- -- --
Change in unrealized appreciation(1). 1,548,070 -- 416,627 1,119,403 -- -- 30,830
Change in unrealized depreciation(1). (253,749) -- (1,480,074) (201,025) -- (196) --
Net purchases........................ 16,334 -- 1,394,040 -- -- -- --
Net sales............................ (3,359,435) -- (2,639,469) (819,010) -- -- --
Transfers into Level 3(2)............ -- 0 -- -- 251,969 -- 13,660
Transfers out of Level 3(2).......... -- -- -- -- -- -- --
----------- --- ----------- ---------- -------- ----- --------
Balance as of 03/31/2012............. $ 604,857 $ 0 $ 1,707,039 $1,888,847 $251,969 $ 0 $145,860
=========== === =========== ========== ======== ===== ========
--------
(1)The total change in unrealized appreciation (depreciation) included in the
statement of operations attributable to level 3 investments still held at
March 31, 2012 includes:
MEMBERSHIP
U.S. CORPORATE FOREIGN CORPORATE COMMON INTEREST PREFERRED
BONDS & NOTES BONDS & NOTES LOANS STOCK CERTIFICATES STOCK WARRANTS
-------------- ----------------- ----------- -------- ------------ --------- --------
$(212,142) $-- $(1,062,983) $833,464 $-- $(196) $30,830
========= === =========== ======== === ===== =======
(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 INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012
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 four 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, and SunAmerica High Yield Bond Fund. On September 23,
2011, the SunAmerica Tax Exempt Insured Fund was liquidated. 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. 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.
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.
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.
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
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
significant accounting policies consistently followed by the Fund's in the
preparation of its financial statements:
SECURITY VALUATION: 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,
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
Fund uses the exchange that is the primary market for the security. However,
depending on the foreign market, closing prices may be up to 15 hours old
when they are used to price the 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 the 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 ("the Board") to reflect what it
believes to be the fair value of the securities as of the close of regular
trading on the New York Stock Exchange. The Fund may also fair value
securities in other situations, for example, when a particular foreign
market is closed but the Fund is open. For foreign equity securities and
foreign equity futures contracts, the Fund uses an outside pricing service
to provide it with closing market prices and information used for adjusting
those prices.
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 the mean of the last
available bid and ask prices in the market for such Loans, as provided by a
third party pricing service.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
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 the 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, and
securities for which a development/significant event occurs that may
significantly impact the value of the security, are 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 value of the Funds'
investments are summarized into three broad levels listed below:
Level 1 -- Unadjusted quoted prices in active markets for identical
securities
Level 2 -- Other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk,
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, 2012 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 located in the Statement of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates.
MORTGAGE-BACKED DOLLAR ROLLS: During the year ended March 31, 2012, the U.S.
Government Securities Fund and the GNMA Fund entered into dollar rolls using
"to be announced" ("TBA") mortgage-backed securities ("TBA Rolls"). Roll
transactions involve the sale of mortgage or other asset backed securities
with the commitment to purchase substantially similar securities on a
specified future date. 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.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
None of the Funds had TBA Rolls outstanding at period end. Dollar roll
transactions involve the risk that the market value of the securities held
by the Fund may decline below the price of the securities that the Fund has
sold but is obligated to repurchase under the agreement. In the event that
the buyer of securities in a dollar roll transaction files bankruptcy or
becomes insolvent, the Fund's use of the proceeds from the sale of the
securities may be restricted pending a determination by the other party, or
its trustee or receiver, whether to enforce the Fund's obligation to
repurchase the securities. The return earned by the Fund with the proceeds
of the dollar roll transaction may not exceed the transaction costs. For the
year ended March 31, 2012, the U.S. Government Securities Fund and the GMNA
Fund had realized gains (losses) from mortgage-backed dollar rolls of
$341,953 and $1,419,551 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") 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. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. 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, 2012, the following Fund held an undivided interest in the
joint repurchase agreement with Bank of America:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.62% $725,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America, dated March 30, 2012, bearing interest at a rate of
0.02% per annum, with a principal amount of $117,360,000, a repurchase price
of $117,360,196, and a maturity date of April 2, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes. 4.13% 05/15/15 $108,019,000 $121,612,111
As of March 31, 2012, the following Fund held an undivided interest in the
joint repurchase agreement with BNP Paribas:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.62% $930,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
BNP Paribas, dated March 30, 2012, bearing interest at a rate of 0.04% per
annum, with a principal amount of $150,150,000, a repurchase price of
$150,150,501, and a maturity date of April 2, 2012. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Bonds. 5.38% 02/15/31 $112,190,700 $153,096,551
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
As of March 31, 2012, the following Fund held an undivided interest in the
joint repurchase agreement with Deutsche Bank:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.61% $165,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Deutsche Bank, dated March 30, 2012, bearing interest at a rate of 0.04% per
annum, with a principal amount of $26,995,000, a repurchase price of
$26,995,090, and a maturity date of April 2, 2012. The repurchase agreement
is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ----------- -----------
U.S. Treasury Notes. 4.25% 08/15/13 $26,196,000 $27,762,259
As of March 31, 2012, the following Fund held an undivided interest in the
joint repurchase agreement with Royal Bank of Scotland:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.62% $930,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Royal Bank of Scotland, dated March 30, 2012, bearing interest at a rate of
0.05% per annum, with a principal amount of $150,150,000, a repurchase price
of $150,150,626, and a maturity date of April 2, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes. 4.38% 08/15/12 $149,877,000 $153,087,365
As of March 31, 2012, the following Funds held an undivided interest in the
joint repurchase agreement with State Street Bank & Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
U.S. Government Securities. 5.88% $18,401,000
Strategic Bond............. 1.35 4,239,000
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 30, 2012, bearing interest at a
rate of 0.01% per annum, with a principal amount of $313,004,000, a
repurchase price of $313,004,261, and a maturity date of April 2, 2012. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes. 1.50% 06/30/16 $ 1,800,000 $ 1,856,250
U.S. Treasury Notes. 2.63% 04/30/18 263,590,000 286,888,457
U.S. Treasury Notes. 2.63% 08/15/20 28,735,000 30,523,351
As of March 31, 2012, the following Funds held an undivided interest in the
joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
U.S. Government Securities. 0.72% $ 1,802,000
GNMA....................... 17.61 44,025,000
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated March 30, 2012, bearing interest at a rate of
0.03% per annum, with a principal amount of $250,000,000, a repurchase price
of $250,000,625, and a maturity date of April 2, 2012. The repurchase
agreement is collateralized by the following:
INTEREST PRINCIPAL
TYPE OF COLLATERAL RATE MATURITY DATE AMOUNT VALUE
------------------ -------- ------------- ----------- -----------
U.S. Treasury Inflation Indexed Notes. 2.00% 04/15/2012 $75,000,000 $84,656,250
U.S. Treasury Inflation Indexed Bonds. 1.88 07/15/2013 75,000,000 97,687,500
U.S. Treasury Inflation Indexed Bonds. 1.88 07/15/2019 57,266,400 72,656,745
As of March 31, 2012, the following Fund held an undivided interest in the
joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.63% $825,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated March 30, 2012, bearing interest at a rate of
0.05% per annum, with a principal amount of $130,820,000, a repurchase price
of $130,820,545, and a maturity date of April 2, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- -------- ------------ ------------
U.S. Treasury Notes. 1.88% 02/28/14 $129,753,300 $133,744,512
SECURITIES TRANSACTIONS, INVESTMENT INCOME, EXPENSES, DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS: Security transactions are recorded on a trade
date 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.
Paydown gains/losses on mortgage and asset backed securities are recorded as
components of interest income on the Statement of Operations. For financial
statement purposes, the Funds amortize all premiums and accrete all
discounts on fixed income securities.
Realized gains and losses on the sale of investments are calculated on the
identified cost basis. Funds which earn foreign income and capital gains may
be subject to foreign withholding taxes and capital gains taxes at various
rates. Under applicable foreign law, a withholding of tax may be imposed on
interest, dividends, and capital gains at various rates.
Net investment income, expenses 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 of
each class of shares at the beginning of the day (after adjusting for
current capital shares activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds are
allocated among the Funds based upon relative net assets or other
appropriate allocation methods. In all other respects, expenses are charged
to each Fund as incurred on a specific identification basis.
Interest earned on cash balances held at the custodian are shown as custody
credits on the Statement of Operations.
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The funds record
dividends and distributions to their shareholders on the ex-dividend date.
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
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 capital gains are
determined and presented in accordance with federal income tax regulations,
which may differ from U.S. generally accepted accounting principles. These
"book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts at fiscal year end
based on their federal tax-basis treatment; temporary differences do not
require reclassification. Net investment income (loss), net realized gain
(loss), and net assets are not affected by these reclassifications.
Each Fund intends to comply with the requirements of the Internal Revenue
Code, as amended, applicable to regulated investment companies and
distribute all of its taxable income, including any capital gains on
investments, to its shareholders. Therefore, no federal tax provision is
required. Each Fund is considered a separate entity for tax purposes. The
Funds file U.S. federal and certain state income tax returns. With few
exceptions, the Funds are no longer subject to U.S. federal and state tax
examinations by tax authorities for tax returns ending before 2008.
In April 2011, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2011-03, "Reconsideration of
Effective Control for Repurchase Agreements." ASU 2011-03 changes the
assessment of effective control for repurchase agreements including dollar
roll transactions. The new and revised disclosures are effective for interim
and annual reporting periods beginning after December 15, 2011. At this
time, management is evaluating the implications of ASU No. 2011-03 and its
impact on the financial statements.
In May 2011, the FASB issued ASU No. 2011-04, "Amendments to Achieve Common
Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs."
ASU 2011-04 requires common fair value measurement and disclosure
requirements between U.S. GAAP and International Financial Reporting
Standards. The new and revised disclosures are effective for interim and
annual reporting periods beginning after December 15, 2011. At this time,
management is evaluating the implications of ASU No. 2011-04 and its impact
on the financial statements.
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
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
The Strategic Bond Fund is subadvised by PineBridge Investments, LLC
("PineBridge). The High Yield Bond Fund is subadvised by Wellington
Management Company, LLP ("Wellington Management"). Under the Subadvisory
Agreements, PineBridge and Wellington Management manage the investment and
reinvestment of the assets of the Strategic Bond Fund and the High Yield
Bond Fund, respectively.
SunAmerica pays PineBridge 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 and Wellington with respect to the Strategic Bond Fund and High
Yield Bond Fund are as follows:
SUBADVISORY
ASSETS FEES
---------------------------- -----------
Strategic Bond Fund.. $0 - $200 million 0.350%
(greater than) $200 million 0.250
(greater than) $500 million 0.200
High Yield Bond Fund. $0 - $150 million 0.400
(greater than) $150 million 0.350
(greater than) $500 million 0.300
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 Class A....................... 0.99
GNMA Class B....................... 1.64
GNMA 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
For the U.S. Government Fund and GNMA Fund, any contractual waivers and/or
reimbursements made by SunAmerica are subject to recoupment from the Funds
within the following two years of making such waivers or reimbursements,
provided that the Funds are able to effect such payment to SunAmerica and
remain in compliance with the foregoing expense limitations.
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
For the year ended March 31, 2012, pursuant to the contractual expense
limitations in the above tables SunAmerica has waived and/or reimbursed
expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities......... $228,626
CLASS SPECIFIC
EXPENSES
- --------------
U.S. Government Securities Class A. $315,150
U.S. Government Securities Class B. 22,735
U.S. Government Securities Class C. 45,128
GNMA Class A....................... 385,747
GNMA Class B....................... 36,628
GNMA Class C....................... 104,517
High Yield Bond Class A............ 137,828
High Yield Bond Class B............ 33,089
High Yield Bond Class C............ 69,274
At March 31, 2012, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment are as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities......... $449,969
CLASS SPECIFIC
EXPENSES
REIMBURSED
- --------------
U.S. Government Securities Class A. $710,773
U.S. Government Securities Class B. 53,912
U.S. Government Securities Class C. 92,543
GNMA Class A....................... 790,702
GNMA Class B....................... 92,596
GNMA Class C....................... 225,653
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,
2012, SACS received fees (see the Statement of Operations) based upon the
aforementioned rates.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that For the year
ended March 31, 2012, 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 DEFERRED DEFERRED
FUND CHARGES BROKER-DEALERS BROKER-DEALERS SALES CHARGES SALES CHARGES SALES CHARGES
---- -------- -------------- -------------- ------------- ------------- -------------
U.S. Government Securities. $ 32,072 $ 6,639 $ 19,780 $21,242 $16,812 $ 931
GNMA....................... 247,339 63,866 143,968 5,159 26,870 5,874
Strategic Bond............. 272,811 35,388 192,587 2,152 71,734 20,216
High Yield Bond............ 108,162 7,451 84,654 181 22,131 4,561
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, 2012, 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, 2012
---- -------- --------------
US Government Securities Class A. $289,410 $22,242
US Government Securities Class B. 11,155 902
US Government Securities Class C. 31,259 2,768
GNMA Class A..................... 564,849 49,596
GNMA Class B..................... 35,949 2,909
GNMA Class C..................... 137,457 12,248
Strategic Bond Class A........... 602,040 55,357
Strategic Bond Class B........... 113,057 9,730
Strategic Bond Class C........... 545,572 46,733
High Yield Bond Class A.......... 168,341 15,572
High Yield Bond Class B.......... 29,223 2,205
High Yield Bond Class C.......... 80,983 6,626
As of March 31, 2012, 6.9% of the GNMA Fund's total outstanding shares were
held through Pershing LLC in a brokerage account sweep vehicle for customers
of the broker-dealers within Advisor Group, Inc., an affiliate of the
Adviser. The following affiliates also owned a percentage of the total
outstanding shares of the following funds; Focused Balanced Strategy
Portfolio and Focused Multi-Asset Strategy Portfolio, each a series of
SunAmerica Series, Inc., owned 7.0% and 16.8% of the U.S. Government
Securities Fund, respectively; Focused Balanced Strategy Portfolio and
Focused Multi-Asset Strategy Portfolio owned 9.3% and 6.9% of the GNMA Fund,
respectively; and Focused Multi-Asset Strategy Portfolio owned 7.7% of
Strategic Bond Fund.
On August 10 and August 11, 2011, the U.S. Government Securities Fund
purchased $10,000,000 par value and $4,000,000 par value, respectively, of
the foreign security Temasek Financial I, Ltd., 4.50%, due 09/21/2015. The
Fund is prohibited from investing in foreign securities. On August 19, 2011,
the Fund sold its holdings in this foreign security for a gain to the Fund
of $29,856.
As of the date of this report, the United States Department of the Treasury
("Department of the Treasury") owned a majority of outstanding shares of
common stock of American International Group, Inc. ("AIG"), the ultimate
parent of SunAmerica, SACS and SAFS. AIG has stated that it understands
that, subject to market conditions, the Department of the Treasury intends
to dispose of its ownership interest in AIG over time, and that AIG has
granted certain registration rights to the Department of the Treasury to
facilitate such sales.
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales and maturities of long-term
investments during the year ended March 31, 2012 were as follows:
U.S.
GOVERNMENT
SECURITIES GNMA STRATEGIC HIGH YIELD
FUND FUND BOND FUND BOND FUND
------------ ------------ ------------ -----------
Purchases (excluding U.S. government securities). $ 15,699,424 $ -- $711,404,365 $69,183,844
Sales (excluding U.S. government securities)..... 15,729,280 -- 701,506,861 63,747,583
Purchases of U.S. government securities.......... 165,503,121 297,364,687 120,944,564 --
Sales of U.S. government securities.............. 203,601,300 316,061,302 101,120,969 --
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, post October capital losses, distributions payable,
deferred compensation plans, amortization of premium/discount, and treatment
of defaulted securities.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2012 FOR THE YEAR ENDED MARCH 31, 2012
--------------------------------------- ---------------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
INCOME LOSS CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS
---------- -------------- -------------- ----------- -------------
U.S. Government Securities Fund. $2,245,412 $ -- $ 8,513,265 $ 3,484,062 $ --
GNMA Fund....................... 291,878 3,556 12,070,792 12,404,286 7,272,727
Strategic Bond Fund............. -- (68,706,115) 4,683,936 29,313,671 --
High Yield Bond Fund............ -- (54,084,740) (9,886,333) 8,905,911 --
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2011
---------------------------------
ORDINARY LONG-TERM
INCOME CAPITAL GAINS
----------- -------------
U.S. Government Securities Fund. $ 5,676,490 $439,590
GNMA Fund....................... 21,291,432 --
Strategic Bond Fund............. 32,878,518 --
High Yield Bond Fund............ 10,431,835 --
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
SECURITIES GNMA STRATEGIC HIGH YIELD
FUND FUND BOND FUND BOND FUND
------------ ------------ ------------ ------------
Cost.......................................... $129,227,323 $326,233,706 $602,679,987 $138,009,957
============ ============ ============ ============
Appreciation.................................. 8,898,493 12,236,308 19,345,374 7,155,706
Depreciation.................................. (385,228) (165,516) (14,635,278) (17,042,039)
------------ ------------ ------------ ------------
Unrealized appreciation (depreciation) -- net. $ 8,513,265 $ 12,070,792 $ 4,710,096 $ (9,886,333)
============ ============ ============ ============
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
As of March 31, 2012, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwads, which expire in the year indicated,
which are available to offset future capital gains, if any:
CAPITAL LOSS CARRYFORWARD UNLIMITED
------------------------------------------------------ ---------
FUND 2013 2014 2015 2016 2017 2018 2019 ST LT
---- ---- ---- ---- ---------- ----------- ----------- ---- --- ---
U.S. Government Securities. $-- $-- $-- $ -- $ -- $ -- $-- $-- $--
GNMA....................... -- -- -- -- -- -- -- -- --
Strategic Bond............. -- -- -- -- 13,580,985 55,125,130 -- -- --
High Yield Bond............ -- -- -- 3,377,192 9,384,737 41,322,811 -- -- --
On December 22, 2010, the Regulated Investment Company Modernization Act of
2010 (the "Act") was enacted, which changes various technical rules
governing the tax treatment of regulated investment companies. The changes
are generally effective for taxable years beginning after the date of
enactment. Under the Act, the fund will be permitted to carry forward
capital losses incurred in taxable years beginning after the date of
enactment for an unlimited period. However, any losses incurred during those
future taxable years will be required to be utilized prior to the losses
incurred in pre-enactment taxable years, which carry an expiration date. As
a result of this ordering rule, pre-enactment capital loss carryforwards may
be more likely to expire unused. Additionally, post-enactment capital losses
that are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
The Fund's indicated below, utilized capital loss carryforwards, which
offset net realized taxable gains and had expired capital loss carryforwards
in the year ended March 31, 2012:
CAPITAL LOSS CAPITAL LOSS
CARRYFORWARD CARRYFORWARD
FUND UTILIZED EXPIRED
---- ------------ ------------
U.S. Government Securities. $ -- $--
GNMA....................... -- --
Strategic Bond............. 2,052,494 --
High Yield Bond............ 674,231 --
Under the current law, capital losses realized after October 31 and late
year ordinary losses may be deferred and treated as occurring on the first
day of the following year. For the fiscal year ended March 31, 2012, the
Portfolios elected to defer late year ordinary losses and post October
capital losses as follows:
DEFERRED POST-OCTOBER DEFERRED POST-OCTOBER
DEFERRED LATE YEAR SHORT-TERM LONG-TERM
FUND ORDINARY LOSS CAPITAL LOSS CAPITAL LOSS
---- ------------------ --------------------- ---------------------
U.S. Government Securities. $-- $ -- $ 56,656
GNMA....................... -- 653,865 596,282
Strategic Bond............. -- 343,440 --
High Yield Bond............ -- 21,141 --
For the period March 31, 2012, the reclassifications arising from book/tax
differences resulted in increases (decreases) that were primarily due to net
paydown adjustments, amortization of discount/premium, tax character of
distributions, treatment of defaulted securities and treatment of foreign
currency to the components of net assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
FUND INCOME (LOSS) GAIN (LOSS) PAID-IN
---- -------------- ------------- ---------
U.S. Government Securities. $ 310,663 $ (309,803) $ (860)
GNMA....................... 3,220,273 (3,206,659) (13,614)
Strategic Bond............. 2,392,913 (1,951,729) (441,184)
High Yield Bond............ 816,609 (386,393) (430,216)
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
NOTE 6. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares of each class of each Fund 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, 2012 MARCH 31, 2011 MARCH 31, 2012 MARCH 31, 2011
-------------------------- -------------------------- --------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- -------- ----------- ---------- ------------
Shares
sold(1)(2).... 1,405,257 $ 14,128,533 3,046,784 $ 29,548,060 163,944 $ 1,641,064 180,013 $ 1,766,350
Reinvested
dividends..... 265,168 2,644,161 497,819 4,807,911 6,063 60,550 14,515 139,900
Shares
redeemed(1)(2) (5,046,881) (50,447,645) (5,044,057) (49,165,213) (297,805) (2,949,533) (491,629) (4,766,732)
----------- ------------- ----------- ------------- -------- ----------- ---------- ------------
Net
increase
(decrease).... (3,376,456) $ (33,674,951) (1,499,454) $ (14,809,242) (127,798) $(1,247,919) (297,101) $ (2,860,482)
=========== ============= =========== ============= ======== =========== ========== ============
U.S. GOVERNMENT SECURITIES FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2012 MARCH 31, 2011
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares
sold.......... 463,474 $ 4,664,490 383,411 $ 3,767,034
Reinvested
dividends..... 16,984 169,767 29,503 283,865
Shares
redeemed...... (406,740) (4,067,868) (587,418) (5,704,619)
----------- ------------- ----------- -------------
Net
increase
(decrease).... 73,718 $ 766,389 (174,504) $ (1,653,720)
=========== ============= =========== =============
GNMA FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ -----------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2012 MARCH 31, 2011 MARCH 31, 2012 MARCH 31, 2011
-------------------------- -------------------------- --------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- -------- ----------- ---------- ------------
Shares
sold(3)(4).... 10,752,999 $ 127,166,757 5,379,295 $ 64,344,170 303,238 $ 3,588,788 263,241 $ 3,143,580
Reinvested
dividends..... 950,324 11,157,553 1,038,883 12,183,827 50,306 591,739 84,817 996,311
Shares
redeemed(3)(4) (10,644,733) (125,557,144) (10,123,858) (119,724,529) (679,990) (8,029,528) (1,381,943) (16,447,756)
----------- ------------- ----------- ------------- -------- ----------- ---------- ------------
Net
increase
(decrease).... 1,058,590 $ 12,767,166 (3,705,680) $ (43,196,532) (326,446) $(3,849,001) (1,033,885) $(12,307,865)
=========== ============= =========== ============= ======== =========== ========== ============
GNMA FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2012 MARCH 31, 2011
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares
sold.......... 1,561,756 $ 18,543,947 1,530,789 $ 18,436,539
Reinvested
dividends..... 180,002 2,120,243 205,407 2,412,799
Shares
redeemed...... (1,454,595) (17,222,966) (2,654,445) (31,485,438)
----------- ------------- ----------- -------------
Net
increase
(decrease).... 287,163 $ 3,441,224 (918,249) $ (10,636,100)
=========== ============= =========== =============
--------
(1)For the year ended March 31, 2012, includes automatic conversion of 124,754
shares of Class B shares in the amount of $1,237,798, to 124,831 shares of
Class A shares in the amount of $1,237,798.
(2)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.
(3)For the year ended March 31, 2012, includes automatic conversion of 408,762
shares of Class B shares in the amount of $4,825,027 to shares 409,970 of
Class A shares in the amount of $4,825,027.
(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.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (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, 2012 MARCH 31, 2011 MARCH 31, 2012 MARCH 31, 2011
------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(1)(2).... 36,753,274 $125,996,809 22,628,092 $ 77,319,848 2,571,494 $ 8,806,180 2,765,629 $ 9,415,936
Reinvested
dividends..... 3,129,147 10,710,874 3,180,495 10,853,981 372,194 1,273,594 458,590 1,564,244
Shares
redeemed(1)(2) (26,954,012) (92,309,285) (38,630,452) (131,255,393) (2,941,428) (10,102,470) (3,238,059) (11,037,855)
----------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net
increase
(decrease).... 12,928,409 $ 44,398,398 (12,821,865) $ (43,081,564) 2,260 $ (22,696) (13,840) $ (57,675)
=========== ============ =========== ============= ========== ============ ========== ============
STRATEGIC BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2012 MARCH 31, 2011
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares
sold.......... 13,236,961 $ 45,773,697 12,447,478 $ 42,527,651
Reinvested
dividends..... 1,758,235 6,038,058 2,079,522 7,121,755
Shares
redeemed...... (14,347,592) (49,387,349) (19,380,988) (66,358,228)
----------- ------------ ----------- -------------
Net
increase
(decrease).... 647,604 $ 2,424,406 (4,853,988) $ (16,708,822)
=========== ============ =========== =============
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, 2012 MARCH 31, 2011 MARCH 31, 2012 MARCH 31, 2011
------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares
sold(3)(4).... 19,270,829 $ 64,460,601 8,240,345 $ 27,927,583 386,434 $ 1,305,757 644,061 $ 2,176,466
Reinvested
dividends..... 933,291 3,152,130 1,013,613 3,444,144 144,270 487,870 204,366 694,841
Shares
redeemed(3)(4) (17,965,878) (60,320,917) (11,093,022) (37,411,064) (1,654,246) (5,614,909) (1,742,702) (5,929,013)
----------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net
increase
(decrease).... 2,238,242 $ 7,291,814 (1,839,064) $ (6,039,337) (1,123,542) $ (3,821,282) (894,275) $ (3,057,706)
=========== ============ =========== ============= ========== ============ ========== ============
HIGH YIELD BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2012 MARCH 31, 2011
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares
sold.......... 2,588,354 $ 8,822,795 2,177,154 $ 7,443,311
Reinvested
dividends..... 374,739 1,272,132 463,761 1,583,986
Shares
redeemed...... (3,367,694) (11,416,462) (4,700,769) (16,042,293)
----------- ------------ ----------- -------------
Net
increase
(decrease).... (404,601) $ (1,321,535) (2,059,854) $ (7,014,996)
=========== ============ =========== =============
--------
(1)For the year ended March 31, 2012, includes automatic conversion of 712,012
shares of Class B shares in the amount of $2,437,443 to 711,863 shares of
Class A shares in the amount of $2,437,443.
(2)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.
(3)For the year ended March 31, 2012, includes automatic conversion of 591,269
shares of Class B shares in the amount of $2,015,970 to 592,730 shares of
Class A shares in the amount of $2,015,970.
(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.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
NOTE 7. LINE OF CREDIT
The SunAmerica family of mutual funds has established a $75 million
committed and $50 million uncommitted line of credit with State Street Bank
and Trust Company, the Funds' custodian. Interest is currently payable at
the higher of the Federal Funds Rate plus 125 basis points or the 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 10 basis points per annum
on the daily unused portion of the committed line of credit which is
included in other expenses on the Statement of Operations. Prior to
September 16, 2011, the commitment fee was 12.5 basis points per annum on
the daily unused portion of the committed line of credit. Borrowings under
the line of credit will commence when the respective Fund's cash shortfall
exceeds $100,000. For the year ended March 31, 2012, the following Funds had
borrowings:
DAYS INTEREST AVERAGE DEBT WEIGHTED AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ------------ ----------------
GNMA............ 14 $1,215 $2,221,415 1.41%
Strategic Bond.. 17 2,338 3,588,933 1.38
High Yield Bond. 3 221 1,905,123 1.39
At March 31, 2012, there were no borrowings outstanding.
NOTE 8. INTERFUND LENDING AGREEMENT
Pursuant to the 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 lend 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, 2012, none of the Funds participated in this
program.
NOTE 9. TRUSTEES' RETIREMENT PLAN
The Board has adopted the SunAmerica Disinterested Trustees' and Directors'
Retirement Plan (the "Retirement Plan") effective January 1, 1993, as
amended, for the Disinterested Trustees. The Retirement Plan provides
generally that a Disinterested 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/Director"). 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 Trustees
from first becoming participants in the Retirement Plan after December 31,
2008 and (3) permit active Participants to elect to receive a distribution
of their entire Retirement Plan account balance in 2009. The freeze on
future accruals does not apply to Participants that have commenced receiving
benefits under the Retirement Plan on or before December 31, 2008.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2012 -- (CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
RETIREMENT RETIREMENT RETIREMENT
PLAN PLAN PLAN
LIABILITY EXPENSE PAYMENTS
---------- ---------- ----------
FUND AS OF MARCH 31, 2012
---- --------------------------------
U.S. Government Securities. $10,416 $ 344 $2,517
GNMA....................... 5,568 690 1,175
Strategic Bond............. 6,005 1,048 1,167
High Yield Bond............ 4,496 254 1,050
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 U.S. Government Securities Fund and the GNMA Fund 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 not be able to recover its investment from the U.S.
Government. As a result of the U.S. Government Securities Fund's and the
GNMA Fund's concentration in such investments, it may be subject to risks
associated with the U.S. Government agencies or instrumentalities. At
March 31, 2012, the Funds had 44.6% and 82.4%, respectively, of their total
net assets invested in such securities.
NOTE 11. SECURITY TRANSACTIONS WITH AFFILIATED PORTFOLIOS
The Funds are permitted to transfer securities by purchasing from and/or
selling to other affiliated funds under certain conditions approved by the
Board of Trustees. The affiliated funds involved in such transactions must
have a common investment adviser or investment advisers which are affiliated
persons of each other, common Trustees, and/or common officers in compliance
with Rule 17a-7 of the 1940 Act. Pursuant to the Act, such a transaction
must be either a purchase or a sale, for no consideration other than cash
payment against prompt delivery of the security at the current market price.
No brokerage commission or fee (except for customary transfer fees), or
other remuneration is paid in connection with such transactions. For the
year ended March 31, 2012, the following Funds engaged in security
transactions with affiliated Funds:
COST OF PROCEEDS REALIZED
PORTFOLIO PURCHASES FROM SALES GAIN/(LOSS)
--------- --------- ----------- -----------
U.S. Government Securities Fund. $-- $15,729,280 $29,856
76
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 four
funds constituting SunAmerica Income Funds (the "Funds'') at March 31, 2012,
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, 2012 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 29, 2012
77
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2012 -- (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-present Retired. 82 Director, Belo Corporation
Age: 66 (1992-present); Director,
Sysco Corporation (1996-
present); Director, Luby's
Inc. (1998-present).
William F. Devin Trustee 2001-present Retired. 82 Director, Boston Options
Age: 73 Exchange (2001-present).
Richard W. Grant Trustee; 2011-present Retired. Prior to that, 34 None
Age: 66 Chairman Attorney and Partner at
of the Morgan Lewis and Bockius
Board (1989 to 2011).
Stephen J. Gutman Trustee 1985-present Vice President and 34 None
Age: 68 Associate Broker, Corcoran
Group (real estate) (2003-
present); President and
Managing Member, Beau-
Brummell Soho LLC
(licensing of menswear
specialty retailing and other
activities) (1995-2009); SJG
Marketing, Inc. (2009-
present).
William J. Shea Trustee 2004-present Executive Chairman, Lucid, 34 Chairman of the Board,
Age: 64 Inc., (medical technology Royal and SunAlliance Co.
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); Director,
NASDAQ OMXBX (2008-
present).
78
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2012 -- (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-present President, CEO and 82 None
Age: 50 Director, SunAmerica,
(1995-present); Director,
SunAmerica Capital
Services, Inc. ("SACS")
(1993-present); Chairman,
Advisor Group, Inc. (2004-
present).
OFFICERS
John T. Genoy President 2007-present Chief Financial Officer, N/A N/A
Age: 43 SunAmerica (2002-present);
Senior Vice President,
SunAmerica (2003-present);
Chief Operating Officer,
SunAmerica (2006-present).
Donna M. Handel Treasurer 2002-present Senior Vice President, N/A N/A
Age: 45 SunAmerica (2004-present).
Gregory N. Bressler Chief 2005-present Senior Vice President and N/A N/A
Age: 46 Legal General Counsel,
Officer SunAmerica (2005-present);
and Vice President and Director
Secretary of U.S. Asset Management
Compliance, Goldman
Sachs Asset Management,
L.P. (2004-2005).
79
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2012 -- (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-present Chief Investment Officer, N/A N/A
Age: 53 President SunAmerica (2003-
present).
Michael Cheah Vice 2000-present Senior Vice President, N/A N/A
Age: 52 President SunAmerica (1999-present).
James Nichols Vice 2006-present Director, President and N/A N/A
Age: 45 President CEO, SACS (2006-
present); Senior Vice
President, SACS (2002-
2006); Senior Vice
President, SunAmerica
(2002-present).
Katherine Stoner Chief June 2011- Vice President, SunAmerica N/A N/A
Age: 55 Compliance present Asset Management Corp.
Officer (May 2011-present); Vice
("CCO") President, The Variable
Annuity Life Insurance
Company ("VALIC") and
Western National Life
Insurance Company
("WNL") (2006-present);
Deputy General Counsel
and Secretary, VALIC and
WNL (2007-present); Vice
President, VALIC Financial
Advisors, Inc. and VALIC
Retirement Services
Company (2010-present).
Gregory R. Kingston Vice 2002-present Vice President, SunAmerica N/A N/A
Age: 46 President (2001-present).
and
Assistant
Treasurer
Nori L. Gabert Vice 2002-present Vice President and Deputy N/A N/A
Age: 58 President General Counsel,
and SunAmerica (2005-
Assistant present).
Secretary
80
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2012 -- (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
Age: 40 Money present SunAmerica (2006-present);
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 (4 funds), SunAmerica Equity Funds (3 funds),
SunAmerica Series, Inc. (11 portfolios), SunAmerica Money Market Funds, Inc.
(1 fund); Anchor Series Trust (8 portfolios), SunAmerica Senior Floating
Rate Fund, Inc. (1 fund), SunAmerica Series Trust (36 portfolios), VALIC
Company I (33 portfolios), VALIC Company II (15 portfolios), Seasons Series
Trust (21 portfolios) and SunAmerica Specialty Series (6 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.
81
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- MARCH 31, 2012 -- (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, 2012. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calendar year ending December 31, 2012. 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 2013.
For the year ended March 31, 2012, 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. $ -- -- %
U.S. Government Securities Fund Class B. -- --
U.S. Government Securities Fund Class C. -- --
GNMA Fund Class A....................... 0.25 --
GNMA Fund Class B....................... 0.25 --
GNMA Fund Class C....................... 0.25 --
Strategic Bond Fund Class A............. -- 1.62
Strategic Bond Fund Class B............. -- 1.62
Strategic Bond Fund Class C............. -- 1.62
High Yield Bond Fund Class A............ -- 2.67
High Yield Bond Fund Class B............ -- 2.67
High Yield Bond Fund Class C............ -- 2.67
For the year ended March 31, 2012, 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:
AMOUNT
--------
Strategic Bond Fund.. $467,615
High Yield Bond Fund. 227,837
82
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.
83
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 returned 8.34%
(before maximum sales charge) for the 12-month period ended March 31, 2012. The
Fund closely tracked its benchmark, the Bank of America Merrill Lynch ("BofA
ML") U.S. Treasury Master Index/*/, which returned 8.51% during the same period.
The U.S. Treasury market enjoyed a strong return during the annual period, as
the yield on the 10-year U.S. Treasury note began the annual period on April 1,
2011 at 3.45%, fell to a record low of 1.67% in September and then rose only
modestly to end the calendar year at 1.89%. The 10-year U.S. Treasury yield
then rose to 2.22% by the end of March 2012. Most of the sector's rally can be
attributed to the third quarter of 2011 when the 10-year U.S. Treasury note
produced a total return of more than 12%, as measured by the BofA ML 10-Year
Treasury Index./*/ This was its highest quarterly total return since the fourth
quarter of 2008, which were the months immediately following the announced
bankruptcy of Lehman Brothers. During the third quarter of 2011, geopolitical
events, most notably the sovereign debt crisis in Europe, dominated the
headlines. Thus, even after U.S. government debt lost its AAA credit rating in
an unprecedented downgrade by Standard & Poor's following the gridlock in the
U.S. Congress regarding the U.S. debt ceiling, investors continued to demand
U.S. Treasuries. Indeed, U.S. debt auctions were quite successful during the
autumn months.
During the first quarter of 2012, investors recognized that the European
sovereign debt crisis seemed to be contained, and U.S. economic data, including
that in the key labor, manufacturing and consumer spending areas, strengthened,
albeit modestly. Corporate earnings remained attractive. In turn, investor risk
aversion abated, such that equities and non-Treasury fixed income sectors
rallied. The U.S. Treasury market, as measured by the BofA ML U.S. Treasury
Master Index, posted a return of -1.29% for the quarter.
For the annual period overall, U.S. Treasury yields fell across the spectrum of
maturities, but yields declined more among longer-term maturities. In turn, the
U.S. Treasury yield curve flattened during the annual period as a whole,
meaning the difference in yields between 2-year and 30-year U.S. Treasuries
narrowed.
Not surprisingly, the Fund's performance was impacted significantly during the
annual period by fluctuations in underlying U.S. Treasury security performance.
During the first three quarters of the annual period, when U.S. Treasury yields
declined with intensifying investor concern, the Fund delivered positive
returns. During the first quarter of 2012, when U.S. Treasury yields rose as
improving economic data and reduced fears regarding Europe encouraged investors
to take on more risk, the Fund lost ground.
During the annual period, the Fund pursued a strategy of increasing its
allocation to mortgage-backed securities, including Government National
Mortgage Association (GNMA) securities. This contributed positively to the
Fund's absolute results, as mortgage-backed securities generated positive
returns during the annual period. The BofA ML Mortgages GNMA Master Index/*/
returned 7.66% for the 12 months ended March 31, 2012, supported by the U.S.
Treasury Department's orderly selling of its holdings of mortgage-backed
securities. Also buoying the sector was the Federal Reserve Board's decision
during the third quarter of 2011 to reinvest paydowns from its mortgage-backed
securities and agency debt holdings back into the mortgage-backed securities
market. Global money managers and banks continued to like U.S. agency
mortgage-backed securities for the higher yields they offered compared to U.S.
Treasuries.
Also contributing positively to the Fund's annual results was its duration
positioning. The Fund held a longer duration position than the BofA ML U.S.
Treasury Master Index through much of the annual period. While this positioning
hurt during the first quarter of 2012 when interest rates rose, this detracting
effect was more than offset by the positive contribution of declining interest
rates overall during the first three quarters of the annual period.
The primary detractor from the Fund's results was its sizable position in cash
and cash equivalents, as fixed income assets overall generated a higher return
than cash. We had increased the Fund's allocation to cash during the annual
period as we felt market conditions warranted a more defensive and conservative
portfolio stance. The Fund had an average weighting of 16.82% of its total net
assets in cash and cash equivalents during the annual period.
84
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
At the end of the annual period, the Fund had approximately 40.7% of its total
net assets invested in U.S. Treasuries, 44.3% in GNMAs, 0.4% in
government-related agency securities and 14.6% in cash and cash equivalents.
The cash position was held primarily in repurchase agreements. 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 this Fund may go up or down in response to changes
in interest rates.
*The BANK OF AMERICA MERRILL LYNCH (BOFA ML) U.S. TREASURY MASTER INDEX tracks
the performance of U.S. dollar denominated sovereign debt publicly issued by
the U.S. government in its domestic market. The BANK OF AMERICA MERRILL LYNCH
(BOFA ML) 10-YEAR TREASURY INDEX is a sub-index of the BofA ML U.S. Treasury
Master Index that measures the total return performance of U.S. Treasury bonds
with maturities of 10 years or longer. The BANK OF AMERICA MERRILL LYNCH (BOFA
ML) MORTGAGES GNMA MASTER INDEX is a subset of the Bank of America Merrill
Lynch U.S. Mortgage Backed Securities Index (which tracks the performance of
U.S. dollar denominated fixed rate and hybrid residential mortgage
pass-through securities publicly issued by U.S. agencies in the U.S. domestic
market) including all securities issued by Ginnie Mae except for interest-only
fixed rate mortgage pools and hybrids. Indices are not managed and an investor
cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
85
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 $15,568. The same amount invested in
securities mirroring the performance of the (i) BofA Merrill Lynch U.S.
Treasury Master Index would be valued at $17,335 and (ii) the Barclays U.S.
Government Index would be valued at $17,150.
[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 3.23% 8.34% 3.74% 7.74% 6.64% 7.64%
--------------------------------------------------------------------------
5 Year Return 4.17% 28.78% 4.19% 24.80% 4.51% 24.69%
--------------------------------------------------------------------------
10 Year Return 4.53% 63.46% 4.50% 55.35% 4.36% 53.22%
--------------------------------------------------------------------------
Since Inception* 5.05% 160.86% 5.77% 331.76% 4.62% 78.48%
--------------------------------------------------------------------------
+ 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. The average annual returns in the table also reflect
the impact of the maximum sales charge with respect to the Class A shares
and the CDSC with respect to the Class C shares, as applicable.
For the 12-month period ending March 31, 2012, the SunAmerica U.S. Government
Securities Fund Class A returned 3.23%, compared to 8.51% for the BofA Merrill
Lynch U.S. Treasury Master Index and compared to 7.89% for the Barclays 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.safunds.com.
* The Fund changed its benchmark from the Barclays U.S. Government Index to
BofA Merrill Lynch U.S. Treasury Master Index, which management believes is
a comparable index. Management further believes that the change will enhance
the operations and administration of the Fund. The BofA Merrill Lynch U.S.
Treasury Master Index tracks the performance of U.S. dollar denominated
sovereign debt publicly issued by the U.S. government in domestic market.
Indices are not managed and an investor cannot invest directly into an index.
** The Barclays 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.
86
[THIS PAGE INTENTIONALLY LEFT BLANK]
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA GNMA FUND
The SunAmerica GNMA Fund Class A shares returned 6.69% (before maximum sales
charge) for the 12-month period ended March 31, 2012. The Fund underperformed
its benchmark, the Bank of America Merrill Lynch ("BofA ML") Mortgages GNMA
Master Index/*/, which returned 7.66% during the same period.
U.S. agency mortgage-backed securities turned in solid performance during the
annual period overall, however volatility was high. U.S. mortgage-backed
securities lagged the rally in U.S. Treasury securities during the first half
of the annual period amid increased market volatility and concern that falling
interest rates would lead to faster prepayments. Adding to prepayment risk was
that lower interest rates spurred economic incentives for eligible borrowers to
refinance. However, following the Federal Reserve Board's decision to reinvest
paydowns from its mortgage-backed securities and agency debt holdings back into
the mortgage-backed securities market, agency mortgage-backed securities
rallied. Indeed, during the second half of the annual period overall,
mortgage-backed securities generally outperformed comparable duration U.S.
Treasury securities, although it wasn't quite enough to offset the
underperformance during the first half. During the second half of the annual
period, markets continued to anticipate a pickup in refinancing given
historically low mortgage rates and government efforts to help more homeowners;
however, the U.S. economy had improved, leading market participants to scale
back their expectations for additional quantitative easing. In turn, reduced
investor risk aversion along with robust demand, both from individual investors
and from commercial banks and real estate investment trusts, supported the
strong performance of U.S. agency mortgage-backed securities. Global money
managers and banks continued to like U.S. agency mortgage-backed securities for
the higher yields they offered compared to U.S. Treasuries. A support to the
sector throughout the annual period was the U.S. Treasury Department's orderly
selling of its holdings of U.S. agency mortgage-backed securities beginning in
March 2011, a program initiated to help protect the process of repair of the
housing finance market.
The Fund's allocation to U.S. Treasuries also contributed positively to its
results relative to its benchmark. U.S. Treasuries, which are not a component
of the BofA ML Mortgages GNMA Master Index, outperformed mortgage-backed
securities during the annual period.
Also contributing positively to the Fund's results was its duration
positioning. The Fund held a longer duration position than the BofA ML
Mortgages GNMA Master Index through much of the annual period. While this
positioning hurt during the first quarter of 2012 when interest rates rose,
this detracting effect was more than offset by the positive contribution of
declining interest rates overall during the first three quarters of the annual
period.
Conversely, individual issue selection within the GNMA sector detracted from
the Fund's results during the annual period, particularly our emphasis on
higher coupon securities. The Fund was significantly overweight relative to its
benchmark index in 5.5% coupon securities. Similarly, the Fund was underweight
securities with 4% to 4.5% coupons relative to the benchmark. Lower coupon
securities outperformed higher coupon mortgages during the annual period as a
whole, given the greater prepayment risk of higher coupon mortgage securities.
Thus, such positioning hurt the Fund's relative results.
Another detractor from the Fund's results was its sizable position in cash and
cash equivalents, as fixed income assets overall generated a higher return than
cash. We had increased the Fund's allocation to cash during the annual period
as we felt market conditions warranted a more defensive and conservative
portfolio stance. The Fund had an average weighting of 14.3% of its total net
assets in cash and cash equivalents during the annual period.
At the end of the annual period, the Fund had approximately 82.4% of its total
net assets invested in GNMAs, 4.6% in U.S. Treasuries and 13.0% in cash and
cash equivalents. The Fund 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 this Fund may go up or down in response to changes
in interest rates.
*The BANK OF AMERICA MERRILL LYNCH (BOFA ML) MORTGAGES GNMA MASTER INDEX is a
subset of the Bank of America Merrill Lynch U.S. Mortgage Backed Securities
Index including all securities issued by Ginnie Mae except for interest-only
fixed rate mortgage pools and hybrids. The Bank of America Merrill Lynch U.S.
Mortgage Backed Securities Index tracks the performance of U.S. dollar
denominated fixed rate and hybrid residential mortgage pass-through securities
publicly issued by U.S. agencies in the U.S. domestic market. Indices are not
managed and an investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
88
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in GNMA Fund Class A shares would
have increased to $16,173. The same amount invested in securities mirroring the
performance of the (i) BofA Merrill Lynch Mortgages GNMA Master Index would be
valued at $17,613 and the (ii) Citigroup Mortgage GNMA Index would be valued at
$17,581.
[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 1.59% 6.69% 1.99% 5.99% 5.07% 6.07%
--------------------------------------------------------------------------
5 Year Return 5.10% 34.60% 5.11% 30.27% 5.43% 30.24%
--------------------------------------------------------------------------
10 Year Return 4.93% 69.84% 4.75% 59.11% 4.76% 59.21%
--------------------------------------------------------------------------
Since Inception* 5.76% 195.63% 7.13% 634.12% 5.17% 90.98%
--------------------------------------------------------------------------
+ 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. The average annual returns in the table also reflect
the impact of the maximum sales charge with respect to the Class A shares
and the CDSC with respect to the Class C shares, as applicable.
For the 12-month period ending March 31, 2012, the SunAmerica GNMA Fund Class A
returned 1.59%, compared to 7.66% for the BofA Merrill Lynch Mortgages GNMA
Master Index and compared to 7.71% 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.safunds.com.
* The Fund changed its benchmark from the Citigroup Mortgage GNMA Index to BofA
Merrill Lynch Mortgages GNMA Master Index, which management believes is a
comparable index. Management further believes that the change will enhance
the operations and administration of the Fund. The BofA Merrill Lynch
Mortgages GNMA Master Index is a subset of the BofA Merrill Lynch U.S.
Mortgage Backed Securities Index including all securities issued by Ginnie
Mae except for interest-only only fixed mortgage pools and hybrids. The BofA
Merrill Lynch U.S. Mortgage Backed Securities Index tracks the performance of
U.S. dollar denominated fixed rate and hybrid residential mortgage
pass-through securities publicly issued by U.S. agencies in the U.S. domestic
market. Indices are not managed and an investor cannot invest directly into
an index.
**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 returned 5.30% (before
maximum sales charge) for the 12-month period ended March 31, 2012. The Fund
underperformed its benchmark, the Barclays U.S. Aggregate Bond Index/*/, which
returned 7.71% during the same annual period. The Fund's relative
underperformance can be attributed primarily to sector selection during the
annual period. Performance of the Fund was challenged as non-Treasury sectors
underperformed through the spring, summer and autumn of 2011. Nevertheless, in
the first quarter of 2012, the Fund recaptured some of its performance relative
to its benchmark when non-Treasury sectors rallied as investors became more
comfortable with both the sovereign debt situation in Europe and the global
economic outlook.
More specifically, the Fund's results were negatively impacted by allocations
to commercial mortgage-backed securities ("CMBS"), emerging markets and high
yield corporate bonds. The Fund's allocation to CMBS particularly detracted
from performance when the sector sold off in mid-2011. Similarly, the Fund's
exposure to emerging markets and high yield corporate bonds especially
detracted from relative performance when risk assets broadly sold off during
the second half of 2011. Conversely, an allocation to agency mortgage-backed
securities benefited the Fund's results following the Federal Reserve Board's
quantitative easing program and a general flight to quality.
A prevalent theme in the Fund during the annual period was to be more
U.S.-centric in our investing. Specifically, the Fund was biased toward holding
more U.S. investment grade and high yield corporate bonds. We took this stance
given widespread concern regarding the sovereign debt crisis in Europe and the
potential for a policy error by one of the central banks in the emerging
markets countries. Within the investment grade corporate bond sector, we
favored credits in the Industrial and Energy sectors, which generally performed
well versus the benchmark. An overweight exposure in the Financial sector hurt
the Fund's relative performance, although positioning within the Financial
sector to regional banks contributed positively from a security selection
standpoint. Unlike larger commercial banks in the U.S., regional banks
generally did not have exposure to Europe, a major driver of underperformance
within the group. In the High Yield sector, we moved the Fund's exposure to
bonds rated CCC to underweight in favor of securities rated BB and B as the
annual period progressed. In general, the Fund actively participated in the
primary market. In the Investment Grade Credit sector, the Fund invested in
several deals that were attractively priced given the market volatility at the
time. In the High Yield asset class, the first quarter of 2012 marked the
largest on record for primary issuance.
While the Fund was increasingly U.S-centric, portions of the Fund were
allocated to non-U.S. dollar denominated sovereign and emerging markets bonds,
which meant country exposure also had an impact on results during the annual
period. Exposure to bonds in the Kingdom of Norway and the U.K. added
particular value, while certain bond positions in South Korea and Brazil
detracted from relative results.
Security selection overall was the greatest positive contributor to the Fund's
performance during the annual period. Top performing securities in the
portfolio included sovereign debt positions in Venezuela and Indonesia. High
yield and investment grade corporate positions overall benefited the Fund as
well. Such positive contributors more than offset the detracting effect of
positions in select CMBS and in the sovereign debt of Hungary and Brazil.
Also contributing positively to the Fund's results during the annual period was
its duration positioning. The Fund had a longer duration position than its
benchmark index, which benefited the portfolio overall, as interest rates
declined through the first three quarters of the annual period.
As of March 31, 2012, the Fund was overweight, within the credit sector, to
utilities. The Fund was also overweight relative to its benchmark index in
asset-backed securities and commercial mortgage-backed securities. On the same
date, the Fund was underweight relative to its benchmark in U.S. Treasuries,
agency securities, supranationals and, within the credit sector, to financials.
Within the credit sector, the Fund had a neutral weighting relative to its
benchmark index in industrials at the end of the annual period.
--------
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 U.S. AGGREGATE BOND INDEX represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
Securities listed may or may not be a part of current Fund construction.
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 $20,423. The same amount invested in securities
mirroring the performance of the Barclays U.S. Aggregate Bond Index would be
valued at $17,572.
[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 0.37% 5.30% 0.61% 4.60% 3.63% 4.63%
--------------------------------------------------------------------------
5 Year Return 4.74% 32.28% 4.73% 27.92% 5.14% 28.46%
--------------------------------------------------------------------------
10 Year Return 7.40% 114.45% 7.33% 102.80% 7.28% 102.01%
--------------------------------------------------------------------------
Since Inception* 6.70% 246.58% 7.11% 243.97% 6.76% 224.73%
--------------------------------------------------------------------------
+ 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. The average annual returns in the table also reflect
the impact of the maximum sales charge with respect to the Class A shares
and the CDSC with respect to the Class C shares, as applicable.
For the 12-month period ending March 31, 2012, the SunAmerica Strategic Bond
Fund Class A returned 0.37%, compared to 7.71% for the Barclays 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.safunds.com.
** The Barclays 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 4.52% (before maximum
sales charge) for the 12-month period ended March 31, 2012. The Fund
underperformed its benchmark, the Citigroup High Yield Market Index/*/, which
returned 6.70% during the same annual period.
Security selection was the primary driver of the Fund's underperformance during
the annual period; and it detracted most in the consumer cyclical services,
utilities and media non-cable industries. Only partially offsetting these
detractors was effective security selection in the paper, supermarkets,
aerospace and defense, and retail stores industries. Among the greatest
individual detractors from the Fund's relative returns during the annual period
were holdings in Vertrue, an Internet direct marketer of membership programs
for various industries; TXU, an energy utility; Aquilex Holdings, a provider of
maintenance, repair, overhaul and industrial cleaning solutions to the energy
industry; and Le-Nature's, a beverage company. Contributing positively to
relative results were positions in MXEnergy Holdings, a retail energy supplier
delivering natural gas and utilities; Caraustar Industries, a recycled
paperboard and packaging solutions company; Wornick, a leading supplier of
convenience foods and military rations to institutional customers; and Sprint
Nextel, a wireless and wireline communications operator.
Sector allocation also detracted from the Fund's results relative to its
benchmark index during the annual period, albeit more modestly. Overweight
allocations to the comparatively weak paper and financial services industries
weighed on the Fund's relative performance. Having underweight exposure to the
building materials and restaurant industries, which were stronger, further
detracted from the Fund's relative results during the annual period. Only
partially offsetting these detractors was the positive impact of the Fund
having underweight allocations to the lagging wireless and media non-cable
industries. The Fund's overweight position in the information technology sector
also aided results.
From a credit quality perspective, higher-quality segments of the high yield
bond market generally outperformed lower-quality segments during the annual
period. After starting the annual period on relatively stable ground due to
strong corporate earnings out of the U.S., fears crept back into the markets
during the third quarter of 2011. Volatility spiked due both to solvency
concerns in the Eurozone, with Greece as the focal point, and to the uncertain
outcome of the U.S. debt ceiling debate. In addition, slowing economic
expansion in China and the U.S. caused investors to worry that the world
economy could slip back into recession. Fears of weakening economic growth,
lower corporate profits and extreme investor risk aversion conspired against
the high yield corporate bond asset class. Indeed, the high yield corporate
bond market was the worst performing credit sector during the third quarter of
2011.
In spite of these concerns, the high yield bond market rallied strongly during
the second half of the annual period given better than expected global economic
data and a strong policy response toward the Eurozone sovereign debt crisis by
the European Central Bank. Also, the U.S. Federal Reserve Board's target to
keep interest rates "exceptionally low" until at least late 2014 buoyed
investors' appetites for risk assets during the second half of the annual
period. As risk aversion abated, high yield bond mutual funds saw net inflows
of $11.9 billion during the fourth quarter of 2011 and $20.8 billion during the
first quarter of 2012. New issuance totaled $98.1 billion during the first
quarter of 2012, the highest single quarter sum in the history of the high
yield market.+ Amidst these market conditions, the Fund's underweight
allocation to B-rated securities hurt its relative results. Conversely, an
overweight allocation to securities rated BB and an underweight exposure to
securities rated CCC contributed positively to the Fund's relative results.
During the annual period, the BB-rated securities in the Citigroup High Yield
Market Index returned 7.5%, and securities rated B returned 7.2%. CCC-rated
securities in the Citigroup High Yield Market Index posted a return of 3.3% for
the annual period. Security selection among B-rated names and securities rated
CCC and below further detracted from the Fund's results.
As of March 31, 2012, the Fund was overweight relative to its benchmark index
in the media cable, financial institutions and health care industries where we
had high conviction. The Fund was underweight its benchmark in the home
construction, building materials and media non-cable industries at the end of
the annual period.
--------
Past performance is no guarantee of future results.
High-yield bonds tend to have lower interest-rate risk than higher-quality
bonds of similar maturity but carry greater credit and default risk. Interest
rates and bond prices typically move inversely to each other; therefore, as
with any bond fund, the value of an investment in this Fund may go up or down
in response to changes in interest rates.
*The CITIGROUP HIGH YIELD MARKET INDEX is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
+Barclays Capital High Yield Corporate Update, April 2, 2012.
Securities listed may or may not be a part of current Fund construction.
92
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in High Yield Bond Fund Class A
shares would have increased to $18,198. The same amount invested in securities
mirroring the performance of the Citigroup High Yield Market Index would be
valued at $23,700.
[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 -0.32% 4.52% -0.33% 3.55% 2.59% 3.56%
--------------------------------------------------------------------------
5 Year Return 1.08% 10.83% 1.16% 7.38% 1.41% 7.24%
--------------------------------------------------------------------------
10 Year Return 6.17% 91.23% 6.15% 81.70% 6.02% 79.51%
--------------------------------------------------------------------------
Since Inception* 4.71% 94.60% 4.66% 84.28% 4.73% 71.09%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. The average annual returns in the table also reflect
the impact of the maximum sales charge with respect to the Class A shares
and the CDSC with respect to the Class C shares, as applicable.
For the 12-month period ending March 31, 2012, the SunAmerica High Yield Bond
Fund Class A returned -0.32%, compared to 6.70% 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.safunds.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
[LOGO] SunAmerica
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
DIRECTORS/TRUSTEES VOTING PROXIES ON DISCLOSURE OF
Richard W. Grant TRUST PORTFOLIO QUARTERLY PORTFOLIO
Peter A. Harbeck SECURITIES HOLDINGS
Dr. Judith L. Craven A description of the The Trust is required
William F. Devin policies and to file its com-plete
Stephen J. Gutman proce-dures that the schedule of portfolio
William J. Shea Trust uses to holdings with the U.S.
determine how to vote Securities and
OFFICERS proxies relating to Exchange Commission
John T. Genoy, President secu-rities held in a for its first and
Donna M. Handel, Fund's portfolio, third fiscal quarters
Treasurer which is available in on Form N-Q. The
James Nichols, Vice the Trust's Statement Trust's Forms N-Q are
President of Additional available on the
Timothy Pettee, Vice Information, may be U.S. Securities and
President ob-tained without Exchange Commis-sion
Michael Cheah, Vice charge upon request, website at
President by calling (800) www.sec.gov. You can
Katherine Stoner, Vice 858-8850. The also review and obtain
President and Chief in-formation is also copies of the Forms
Compliance Officer available from the N-Q at the U.S.
Gregory N. Bressler, EDGAR database on the Securities and
Chief Legal Officer U.S. Secu-rities and Exchange Commission
and Secretary Exchange Commission's Public Refer-ence Room
Nori L. Gabert, Vice website at in Washington DC
President and http://www.sec.gov. (information on the
Assistant Secretary operation of the
Kathleen Fuentes, DELIVERY OF Public Reference Room
Assistant Secretary SHAREHOLDER DOCUMENTS may be ob-tained by
John E. McLean, The Funds have adopted calling
Assistant Secretary a policy that allows 1-800-SEC-0330).
Gregory R. Kingston, them to send only one
Vice President and copy of a Fund's PROXY VOTING RECORD ON
Assistant Treasurer prospectus, proxy SUNAMERICA INCOME FUNDS
Christopher A. Okeke, material, annual Information regarding
Assistant Treasurer report and semi-annual how the Funds voted
Matthew J. Hackethal, report (the proxies relating to
Anti-Money Laundering "shareholder securities held in the
Compliance Officer documents") to Funds during the most
shareholders with recent twelve month
INVESTMENT ADVISER multiple accounts period ended June 30
SunAmerica Asset residing at the same is available, once
Management Corp. "household." This filed with the U.S.
Harborside Financial practice is called Securities and
Center householding and Exchange Commission,
3200 Plaza 5 reduces Fund expenses, without charge, upon
Jersey City, NJ which benefits you and request, by calling
07311-4992 other shareholders. (800) 858-8850 or on
Unless the Funds the U.S. Securities
DISTRIBUTOR receive instructions and Exchange
SunAmerica Capital to the con-trary, you Commission's website
Services, Inc. will only receive one at http://www.sec.gov.
Harborside Financial copy of the
Center shareholder documents. This report is
3200 Plaza 5 The Funds will submitted solely for
Jersey City, NJ continue to household the general
07311-4992 the share-holder information of
documents shareholders of the
SHAREHOLDER SERVICING indefinitely, until we Funds. Distribution of
AGENT are instructed this report to persons
SunAmerica Fund otherwise. If you do other than
Services, Inc. not wish to shareholders of the
Harborside Financial participate in Funds is authorized
Center householding please only in con-nection
3200 Plaza 5 contact Shareholder with a currently
Jersey City, NJ Services at (800) effective pro-spectus,
07311-4992 858-8850 ext. 6010 or setting forth details
send a written request of the Funds, which
CUSTODIAN AND TRANSFER with your name, the must precede or
AGENT name of your fund(s) accom-pany this report.
State Street Bank and and your account
Trust Company number(s) to
P.O. Box 419572 SunAmerica Mutual
Kansas City, MO Funds c/o BFDS, P.O.
64141-6572 Box 219186, Kansas
City MO, 64121-9186.
We will resume
individual mailings
for your account
within thirty (30)
days of receipt of
your request.
[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.SAFUNDS.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.safunds.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.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
INANN - 3/12
[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 2012, 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 professional services rendered by the registrant's
principal accountant were as follows:
2011 2012
(a) Audit Fees ....................$ 170,797 $146,507
(b) Audit-Related Fees ............$ 0 $0
(c) Tax Fees ......................$ 59,698 $78,121
(d) All Other Fees ................$ 0 $0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2011 2012
(b) Audit-Related Fees ............$ 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 2012 were $220,668 and $139,982, 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 7, 2012
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 7, 2012
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: June 7, 2012