UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4708
---------------------------------------------
SunAmerica Income Funds
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: September 30, 2012
-------------------------
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2012
SUNAMERICA
Income Funds
[PHOTO]
[LOGO]
SEPTEMBER 30, 2012 SEMI-ANNUAL REPORT
SUNAMERICA INCOME FUNDS
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND (SGTAX)
SUNAMERICA GNMA FUND (GNMAX)
SUNAMERICA STRATEGIC BOND FUND (SDIAX)
SUNAMERICA HIGH YIELD BOND FUND (SHNAX)
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............................... 62
APPROVAL OF ADVISORY AGREEMENTS............................. 80
SHAREHOLDER LETTER -- (UNAUDITED)
Dear Shareholders,
We are pleased to present this semi-annual update for the SunAmerica Income
Funds for the six months ended September 30, 2012. It was a period wherein
fixed income market performance was generally strong, but volatile, as
corporate bonds and other spread, or non-U.S. Treasury, sectors of the market
posted solid gains even as government bond yields fell to new lows. For the
semi-annual period overall, the Barclays U.S. Aggregate Bond Index*, a broad
measure of the U.S. fixed income market, returned 3.68%.
Non-U.S. Treasury sectors began the semi-annual period under pressure, as U.S.
economic data softened in April after a strong start to the year 2012. In
particular, payroll data released in April and May showed a significant slowing
in job gains. U.S. Treasury yields declined, and non-U.S. Treasury sectors
experienced a broad sell-off. As the second quarter of 2012 progressed, the
growing potential for a Greek exit from the euro and contagion in other
peripheral countries exacerbated market fears. Even a pro-bailout party win in
the Greek elections in mid-June failed to prop up markets as borrowing costs in
Spain soared to new highs. In addition, global manufacturing indicators
worsened significantly, with weakness spreading to Germany, Europe's key growth
engine. It was not until the end of June 2012, when significant progress was
made in stabilizing the European crisis, that sentiment began to improve. A
summit meeting of European Union leaders produced unexpectedly market-friendly
initiatives, including allowing bailout funds to recapitalize banks directly
and dropping the senior status of loans by these funds over private
bondholders. The U.S. Federal Reserve (the "Fed") extended through year-end
2012 its Operation Twist program, meant to lower long-term interest rates, and
the European Central Bank expanded its balance sheet considerably, while the
U.K. central bank continued to favor additional quantitative easing. Even as
non-U.S. Treasury sectors, including higher-yielding corporate and emerging
market bonds, gained ground, U.S. Treasury yields continued to decline as
weakness in U.S. and global economic data weighed on investor sentiment.
Virtually all non-U.S. Treasury sectors outperformed U.S. Treasuries during the
third quarter of 2012, driven in large part by investors searching for yield in
an environment of extremely low interest rates. Market expectations for more
quantitative easing by the Fed increased in August based on the Fed's August
meeting minutes and Fed Chairman Bernanke's comments at the Fed's annual
conference in Jackson Hole, Wyoming. September then proved to be a particularly
eventful month, starting with the European Central Bank's plan to buy
potentially unlimited amounts of short-term government bonds in order to reduce
borrowing costs in fiscally challenged countries. The German Constitutional
Court's eagerly anticipated ruling to ratify the European Stability Mechanism
with immediate effect further fanned market enthusiasm. The European Stability
Mechanism is a permanent bailout fund for the euro, meant to be a stronger
backstop for the currency than the smaller, temporary fund it is succeeding.
Finally, the Fed announced a third round of quantitative easing, dubbed QE3,
which exceeded most market expectations. The Fed agreed to purchase additional
mortgage-backed securities at a pace of $40 billion per month in an effort to
boost economic growth and reduce unemployment. The announcement marked a
meaningful policy shift in that it focused on growth and employment rather than
on inflation. Additionally, the Fed extended its guidance on near-zero
short-term interest rates from mid-2014 to at least mid-2015, stating it
expects to maintain a highly accommodative stance for a considerable period
after the economic recovery strengthens. With the Fed holding short-term
interest rates at low levels, demand for higher yielding sectors was strong.
Market jitters returned, however, by the end of September 2012, as challenges
in Spain, including a lack of clarity over a formal bailout request, quickly
shifted back into focus. Also, discord emerged among European policymakers over
measures to stem the banking and sovereign debt crisis, causing non-U.S.
Treasury sectors to pare back some of their earlier gains. Adding to market
pressures were growing signs of a global industrial decline, led by Europe and
Asia, and including countries such as Germany and China.
For the semi-annual period overall, U.S. Treasuries posted positive returns
that outpaced select fixed income sectors, including mortgage-backed securities
and asset-backed securities. By the end of September 2012, the yield on the
10-year U.S. Treasury had fallen 58 basis points+ from 2.23% at the start of
the semi-annual period to 1.65%. Emerging market bonds and corporate bonds,
both investment grade and high yield, were the best performing fixed income
sectors for the semi-annual period as a whole. Commercial mortgage-backed
securities also posted strong gains.
2
Against this backdrop, each of the SunAmerica Income Funds generated positive
returns during the semi-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 INVESTMENT PROFESSIONALS
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.
+A basis point is 1/100th of a percentage point.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 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 April 1, 2012 and held until September 30, 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 September 30, 2012" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
September 30, 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
September 30, 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 September 30, 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 September 30, 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
September 30, 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 September 30, 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 -- SEPTEMBER 30, 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 APRIL 1, SEPTEMBER 30, SEPTEMBER 30, AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
FUND 2012 2012 2012 2012 2012 2012 2012*
---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,029.10 $ 5.04 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,025.74 $ 8.33 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C# ................ $1,000.00 $1,026.78 $ 8.33 $1,000.00 $1,016.85 $ 8.29 1.64%
GNMA
Class A#................. $1,000.00 $1,007.93 $ 4.98 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,005.53 $ 8.25 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C# ................ $1,000.00 $1,004.67 $ 8.24 $1,000.00 $1,016.85 $ 8.29 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,060.97 $ 6.72 $1,000.00 $1,018.55 $ 6.58 1.30%
Class B.................. $1,000.00 $1,054.51 $10.15 $1,000.00 $1,015.19 $ 9.95 1.97%
Class C ................. $1,000.00 $1,054.41 $10.04 $1,000.00 $1,015.29 $ 9.85 1.95%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,056.17 $ 7.01 $1,000.00 $1,018.25 $ 6.88 1.36%
Class B#................. $1,000.00 $1,052.75 $10.34 $1,000.00 $1,014.99 $10.15 2.01%
Class C#................. $1,000.00 $1,049.59 $10.33 $1,000.00 $1,014.99 $10.15 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 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
Prospectus, your retirement plan documents and/or materials from your
financial advisor for more information.
# During the stated period, the investment advisor either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Funds.
As a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended September 30,
2012" and the "Expense Ratios" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2012 -- (UNAUDITED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $113,014,206 $241,974,116
Repurchase agreements (cost approximates value)............................................... 20,828,000 44,152,000
------------ ------------
Total investments........................................................................... 133,842,206 286,126,116
------------ ------------
Cash.......................................................................................... 715 306
Foreign cash*................................................................................. -- --
Receivable for:
Shares of beneficial interest sold.......................................................... 96,728 917,970
Dividends and interest...................................................................... 495,091 882,693
Investments sold............................................................................ 3,010,914 27,098,224
Prepaid expenses and other assets............................................................. 1,563 1,641
Due from investment adviser for expense reimbursements/fee waivers............................ 46,486 44,267
Unrealized appreciation on forward foreign currency contracts................................. -- --
------------ ------------
Total assets.................................................................................. 137,493,703 315,071,217
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 360,615 836,826
Investments purchased....................................................................... -- 16,912,813
Investment advisory and management fees..................................................... 73,575 113,228
Distribution and service maintenance fees................................................... 49,724 126,899
Transfer agent fees and expenses............................................................ 32,566 69,515
Trustees' fees and expenses................................................................. 8,581 4,816
Other accrued expenses...................................................................... 72,762 99,919
Dividends payable............................................................................. 24,517 126,450
Due to custodian.............................................................................. -- --
------------ ------------
Total liabilities............................................................................. 622,340 18,290,466
------------ ------------
Net assets.................................................................................... $136,871,363 $296,780,751
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 133,484 $ 255,946
Paid-in capital............................................................................... 123,439,958 286,554,516
------------ ------------
123,573,442 286,810,462
Accumulated undistributed net investment income (loss)........................................ 61,904 (2,814,238)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... 1,840,911 3,931,158
Unrealized appreciation (depreciation) on investments......................................... 11,395,106 8,853,369
Unrealized appreciation (depreciation) on foreign exchange transactions....................... -- --
------------ ------------
Net assets.................................................................................... $136,871,363 $296,780,751
============ ============
*Cost
Investments (unaffiliated).................................................................. $101,619,100 $233,120,747
============ ============
Foreign cash................................................................................ $ -- $ --
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $607,440,813 $125,196,614
Repurchase agreements (cost approximates value)............................................... 9,935,000 490,000
------------ ------------
Total investments........................................................................... 617,375,813 125,686,614
------------ ------------
Cash.......................................................................................... -- 1,251,347
Foreign cash*................................................................................. 930,920 --
Receivable for:
Shares of beneficial interest sold.......................................................... 1,983,480 288,948
Dividends and interest...................................................................... 7,811,354 2,449,682
Investments sold............................................................................ 10,081,231 975,298
Prepaid expenses and other assets............................................................. 1,683 1,564
Due from investment adviser for expense reimbursements/fee waivers............................ -- 20,163
Unrealized appreciation on forward foreign currency contracts................................. -- 1,924
------------ ------------
Total assets.................................................................................. 638,184,481 130,675,540
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 1,573,325 248,523
Investments purchased....................................................................... 16,815,584 1,372,510
Investment advisory and management fees..................................................... 315,740 79,547
Distribution and service maintenance fees................................................... 344,290 63,936
Transfer agent fees and expenses............................................................ 124,530 32,433
Trustees' fees and expenses................................................................. 4,636 3,674
Other accrued expenses...................................................................... 189,145 163,539
Dividends payable............................................................................. 502,289 144,580
Due to custodian.............................................................................. 457,959 --
------------ ------------
Total liabilities............................................................................. 20,327,498 2,108,742
------------ ------------
Net assets.................................................................................... $617,856,983 $128,566,798
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 1,720,552 $ 368,265
Paid-in capital............................................................................... 659,005,226 189,230,505
------------ ------------
660,725,778 189,598,770
Accumulated undistributed net investment income (loss)........................................ (2,898,568) (402,527)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... (56,538,079) (54,035,620)
Unrealized appreciation (depreciation) on investments......................................... 16,553,705 (6,595,765)
Unrealized appreciation (depreciation) on foreign exchange transactions....................... 14,147 1,940
------------ ------------
Net assets.................................................................................... $617,856,983 $128,566,798
============ ============
*Cost
Investments (unaffiliated).................................................................. $590,887,108 $131,792,379
============ ============
Foreign cash................................................................................ $ 917,755 $ --
============ ============
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2012 --
(UNAUDITED) (CONTINUED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $118,079,055 $219,549,363
Shares of beneficial interest issued and outstanding............................................... 11,514,896 18,953,284
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 10.25 $ 11.58
Maximum sales charge (4.75% of offering price)..................................................... $ 0.51 $ 0.58
------------ ------------
Maximum offering price to public................................................................... $ 10.76 $ 12.16
============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 4,786,101 $ 15,440,986
Shares of beneficial interest issued and outstanding............................................... 466,595 1,329,290
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 10.26 $ 11.62
============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 14,006,207 $ 61,790,402
Shares of beneficial interest issued and outstanding............................................... 1,366,937 5,312,040
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 10.25 $ 11.63
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $299,147,534 $78,956,239
Shares of beneficial interest issued and outstanding............................................... 83,437,013 22,654,700
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 3.59 $ 3.49
Maximum sales charge (4.75% of offering price)..................................................... $ 0.18 $ 0.17
------------ -----------
Maximum offering price to public................................................................... $ 3.77 $ 3.66
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 55,010,194 $13,644,531
Shares of beneficial interest issued and outstanding............................................... 15,347,944 3,910,094
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.58 $ 3.49
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $263,699,255 $35,966,028
Shares of beneficial interest issued and outstanding............................................... 73,270,251 10,261,710
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.60 $ 3.50
============ ===========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENT OF OPERATIONS -- FOR THE PERIOD ENDED SEPTEMBER 30, 2012 --
(UNAUDITED)
U.S. GOVERNMENT
SECURITIES FUND GNMA FUND
--------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)...................................................................... $ -- $ --
Interest (unaffiliated)....................................................................... 1,678,810 2,700,551
---------- -----------
Total investment income*..................................................................... 1,678,810 2,700,551
---------- -----------
EXPENSES:
Investment advisory and management fees....................................................... 454,971 731,610
Distribution and service maintenance fees:
Class A...................................................................................... 211,347 417,105
Class B...................................................................................... 24,183 77,334
Class C...................................................................................... 71,925 314,955
Transfer agent fees and expenses:
Class A...................................................................................... 143,564 275,602
Class B...................................................................................... 6,773 19,007
Class C...................................................................................... 18,043 73,529
Registration fees:
Class A...................................................................................... 11,664 13,255
Class B...................................................................................... 5,768 6,187
Class C...................................................................................... 6,832 8,584
Custodian and accounting fees................................................................. 35,844 89,709
Reports to shareholders....................................................................... 7,902 20,678
Audit and tax fees............................................................................ 21,188 21,121
Legal fees.................................................................................... 5,128 7,535
Directors' fees and expenses.................................................................. 6,981 17,366
Interest expense.............................................................................. -- --
Other expenses................................................................................ 9,256 10,627
---------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits..................................................................................... 1,041,369 2,104,204
Net (fees waived and expenses reimbursed)/ recouped by investment advisor (Note 3)........... (285,930) (280,511)
Custody credits earned on cash balances...................................................... (13) (527)
---------- -----------
Net expenses................................................................................. 755,426 1,823,166
---------- -----------
Net investment income (loss).................................................................... 923,384 877,385
---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................................... 486,371 5,324,999
Net realized foreign exchange gain (loss) on other assets and liabilities....................... -- --
---------- -----------
Net realized gain (loss) on investments and foreign currencies.................................. 486,371 5,324,999
---------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).................. 2,555,647 (3,839,713)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities............... -- --
---------- -----------
Net unrealized gain (loss) on investments and foreign currencies................................ 2,555,647 (3,839,713)
---------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies................... 3,042,018 1,485,286
---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $3,965,402 $ 2,362,671
========== ===========
--------
* Net of foreign withholding taxes on interest and dividends of................................. $ -- $ --
========== ===========
STRATEGIC HIGH YIELD
BOND FUND BOND FUND
----------- ----------
INVESTMENT INCOME:
Dividends (unaffiliated)...................................................................... $ 132,655 $ 104,477
Interest (unaffiliated)....................................................................... 14,727,466 4,951,878
----------- ----------
Total investment income*..................................................................... 14,860,121 5,056,355
----------- ----------
EXPENSES:
Investment advisory and management fees....................................................... 1,877,284 482,213
Distribution and service maintenance fees:
Class A...................................................................................... 504,412 139,016
Class B...................................................................................... 265,774 61,213
Class C...................................................................................... 1,275,623 184,549
Transfer agent fees and expenses:
Class A...................................................................................... 329,570 95,619
Class B...................................................................................... 62,136 14,643
Class C...................................................................................... 288,580 42,696
Registration fees:
Class A...................................................................................... 19,185 12,371
Class B...................................................................................... 7,175 6,771
Class C...................................................................................... 12,830 7,505
Custodian and accounting fees................................................................. 131,314 40,830
Reports to shareholders....................................................................... 37,726 10,521
Audit and tax fees............................................................................ 24,471 27,347
Legal fees.................................................................................... 9,996 1,594
Directors' fees and expenses.................................................................. 30,146 6,595
Interest expense.............................................................................. 91 59
Other expenses................................................................................ 14,242 9,168
----------- ----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits..................................................................................... 4,890,555 1,142,710
Net (fees waived and expenses reimbursed)/ recouped by investment advisor (Note 3)........... -- (108,506)
Custody credits earned on cash balances...................................................... (109) (46)
----------- ----------
Net expenses................................................................................. 4,890,446 1,034,158
----------- ----------
Net investment income (loss).................................................................... 9,969,675 4,022,197
----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................................... 12,834,616 133,489
Net realized foreign exchange gain (loss) on other assets and liabilities....................... (165,936) (9,836)
----------- ----------
Net realized gain (loss) on investments and foreign currencies.................................. 12,668,680 123,653
----------- ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).................. 10,275,644 2,626,222
Change in unrealized foreign exchange gain (loss) on other assets and liabilities............... 40,307 1,940
----------- ----------
Net unrealized gain (loss) on investments and foreign currencies................................ 10,315,951 2,628,162
----------- ----------
Net realized and unrealized gain (loss) on investments and foreign currencies................... 22,984,631 2,751,815
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $32,954,306 $6,774,012
=========== ==========
--------
* Net of foreign withholding taxes on interest and dividends of................................. $ (2,587) $ (314)
=========== ==========
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
----------------------------
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30, FOR THE YEAR
2012 ENDED MARCH 31,
(UNAUDITED) 2012
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 923,384 $ 2,493,983
Net realized gain (loss) on investments and foreign currencies......................... 486,371 4,794,812
Net unrealized gain (loss) on investments and foreign currencies....................... 2,555,647 5,367,042
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 3,965,402 12,655,837
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,204,300) (2,871,740)
Net investment income (Class B)........................................................ (32,541) (77,643)
Net investment income (Class C)........................................................ (96,905) (214,636)
Net realized gain on securities (Class A).............................................. -- (275,963)
Net realized gain on securities (Class B).............................................. -- (11,071)
Net realized gain on securities (Class C).............................................. -- (33,009)
------------ ------------
Total distributions to shareholders...................................................... (1,333,746) (3,484,062)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (3,625,425) (34,156,481)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (993,769) (24,984,706)
NET ASSETS:
Beginning of period...................................................................... 137,865,132 162,849,838
------------ ------------
End of period+........................................................................... $136,871,363 $137,865,132
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 61,904 $ 472,266
============ ============
GNMA FUND
----------------------------
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30, FOR THE YEAR
2012 ENDED MARCH 31,
(UNAUDITED) 2012
------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 877,385 $ 5,421,635
Net realized gain (loss) on investments and foreign currencies......................... 5,324,999 16,510,253
Net unrealized gain (loss) on investments and foreign currencies....................... (3,839,713) (1,005,185)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 2,362,671 20,926,703
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,713,059) (7,212,565)
Net investment income (Class B)........................................................ (124,981) (356,993)
Net investment income (Class C)........................................................ (509,737) (1,345,266)
Net realized gain on securities (Class A).............................................. -- (8,344,491)
Net realized gain on securities (Class B).............................................. -- (492,879)
Net realized gain on securities (Class C).............................................. -- (1,924,819)
------------ ------------
Total distributions to shareholders...................................................... (3,347,777) (19,677,013)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (40,247,041) 12,359,389
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (41,232,147) 13,609,079
NET ASSETS:
Beginning of period...................................................................... 338,012,898 324,403,819
------------ ------------
End of period+........................................................................... $296,780,751 $338,012,898
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,814,238) $ (343,846)
============ ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC
BOND FUND
--------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2012 MARCH 31,
(UNAUDITED) 2012
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 9,969,675 $ 25,175,085
Net realized gain (loss) on investments and foreign currencies......................... 12,668,680 6,258,584
Net unrealized gain (loss) on investments and foreign currencies....................... 10,315,951 (3,926,690)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 32,954,306 27,506,979
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (5,612,019) (14,928,172)
Net investment income (Class B)........................................................ (856,401) (2,461,123)
Net investment income (Class C)........................................................ (4,143,174) (11,924,376)
Net realized gain on securities (Class A).............................................. -- --
Net realized gain on securities (Class B).............................................. -- --
Net realized gain on securities (Class C).............................................. -- --
------------ ------------
Total distributions to shareholders...................................................... (10,611,594) (29,313,671)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (7,236,411) 46,800,108
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. 15,106,301 44,993,416
NET ASSETS:
Beginning of period...................................................................... 602,750,682 557,757,266
------------ ------------
End of period+........................................................................... $617,856,983 $602,750,682
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,898,568) $ (2,256,649)
============ ============
HIGH YIELD
BOND FUND
--------------------------
FOR THE SIX
MONTHS ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2012 MARCH 31,
(UNAUDITED) 2012
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 4,022,197 $ 8,226,224
Net realized gain (loss) on investments and foreign currencies......................... 123,653 1,121,000
Net unrealized gain (loss) on investments and foreign currencies....................... 2,628,162 (4,152,876)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 6,774,012 5,194,348
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,268,946) (5,570,893)
Net investment income (Class B)........................................................ (309,626) (883,098)
Net investment income (Class C)........................................................ (934,317) (2,451,920)
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...................................................... (3,512,889) (8,905,911)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (4,406,491) 2,148,997
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (1,145,368) (1,562,566)
NET ASSETS:
Beginning of period...................................................................... 129,712,166 131,274,732
------------ ------------
End of period+........................................................................... $128,566,798 $129,712,166
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (402,527) $ (911,835)
============ ============
See Notes to Financial Statements
10
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND
-------------------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS,
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- --------
CLASS A
-------
03/31/08 $ 9.24 $0.35 $ 0.46 $ 0.81 $(0.37) $ -- $(0.37) $ 9.68 9.03% $191,057
03/31/09 9.68 0.26 0.36 0.62 (0.28) -- (0.28) 10.02 6.52 178,963
03/31/10 10.02 0.21 (0.28) (0.07) (0.21) (0.19) (0.40) 9.55 (0.75)(4) 159,028
03/31/11 9.55 0.17 0.13 0.30 (0.18) (0.16) (0.34) 9.51 3.12 143,978
03/31/12 9.51 0.17 0.62 0.79 (0.22) (0.02) (0.24) 10.06 8.34(5) 118,434
09/30/12+ 10.06 0.07 0.22 0.29 (0.10) -- (0.10) 10.25 2.91 118,079
CLASS B
-------
03/31/08 $ 9.24 $0.30 $ 0.45 $ 0.75 $(0.31) $ -- $(0.31) $ 9.68 8.33% $ 15,354
03/31/09 9.68 0.20 0.35 0.55 (0.21) -- (0.21) 10.02 5.83 15,803
03/31/10 10.02 0.16 (0.29) (0.13) (0.14) (0.19) (0.33) 9.56 (1.29)(4) 8,578
03/31/11 9.56 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.51 2.35 5,710
03/31/12 9.51 0.11 0.62 0.73 (0.15) (0.02) (0.17) 10.07 7.74(5) 4,758
09/30/12+ 10.07 0.04 0.22 0.26 (0.07) -- (0.07) 10.26 2.57 4,786
CLASS C
-------
03/31/08 $ 9.23 $0.29 $ 0.46 $ 0.75 $(0.31) $ -- $(0.31) $ 9.67 8.34% $ 16,997
03/31/09 9.67 0.20 0.35 0.55 (0.21) -- (0.21) 10.01 5.83 20,094
03/31/10 10.01 0.15 (0.28) (0.13) (0.14) (0.19) (0.33) 9.55 (1.30)(4) 14,894
03/31/11 9.55 0.11 0.11 0.22 (0.11) (0.16) (0.27) 9.50 2.35 13,161
03/31/12 9.50 0.11 0.61 0.72 (0.15) (0.02) (0.17) 10.05 7.64(5) 14,673
09/30/12+ 10.05 0.04 0.23 0.27 (0.07) -- (0.07) 10.25 2.68 14,006
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
0.99% 3.83% 343%
0.99 2.73 84
0.99 2.17 472
0.99 1.77 254
0.99 1.73 152
0.99(6) 1.41(6) 57
1.64% 3.20% 343%
1.64 2.08 84
1.64 1.59 472
1.64 1.10 254
1.64 1.09 152
1.64(6) 0.76(6) 57
1.64% 3.14% 343%
1.64 2.05 84
1.64 1.55 472
1.64 1.12 254
1.64 1.08 152
1.64(6) 0.76(6) 57
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12 09/30/12+(6)
-------- -------- -------- -------- -------- ------------
U.S. Government Securities Fund Class A. 0.39% 0.35% 0.38% 0.37% 0.39% 0.39%
U.S. Government Securities Fund Class B. 0.48 0.40 0.50 0.53 0.60 0.65
U.S. Government Securities Fund Class C. 0.50 0.40 0.44 0.44 0.46 0.48
(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.
(6)Annualized
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
GNMA FUND
---------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(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
09/30/12+ 11.62 0.04 0.05 0.09 (0.13) -- (0.13) 11.58 0.79 219,549 0.99(4)
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
09/30/12+ 11.65 0.00 0.06 0.06 (0.09) -- (0.09) 11.62 0.55 15,441 1.64(4)
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
09/30/12+ 11.67 0.00 0.05 0.05 (0.09) -- (0.09) 11.63 0.47 61,790 1.64(4)
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
0.72(4) 51
3.52% 354%
2.67 73
1.63 104
1.89 148
1.14 96
0.06(4) 51
3.49% 354%
2.55 73
1.63 104
1.94 148
1.12 96
0.06(4) 51
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12 09/30/12+(4)
-------- -------- -------- -------- -------- ------------
GNMA Fund Class A............. 0.15% 0.13% 0.15% 0.15% 0.15% 0.17%
GNMA Fund Class B............. 0.19 0.15 0.19 0.21 0.22 0.25
GNMA Fund Class C............. 0.22 0.15 0.16 0.17 0.17 0.19
(4)Annualized
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
STRATEGIC BOND FUND
-------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD+ RETURN(2) (000'S) NET ASSETS
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ----------
CLASS A
-------
03/31/08 $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
09/30/12+ 3.45 0.06 0.15 0.21 (0.07) -- (0.07) 3.59 6.10 299,148 1.30(5)
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
09/30/12+ 3.45 0.05 0.14 0.19 (0.06) -- (0.06) 3.58 5.45 55,010 1.97(5)
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
09/30/12+ 3.47 0.05 0.14 0.19 (0.06) -- (0.06) 3.60 5.44 263,699 1.95(5)
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
3.68(5) 100
4.63%(3) 162%(4)
6.00 112
5.44 157
4.83 152
4.07 144
3.00(5) 100
4.65%(3) 162%(4)
6.03 112
5.48 157
4.85 152
4.09 144
3.03(5) 100
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)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%
(5)Annualized
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
HIGH YIELD BOND FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS,
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -----------
CLASS A
-------
03/31/08 $4.77 $0.36 $(0.63) $(0.27) $(0.34) $-- $(0.34) $4.16 (5.92)% $109,219
03/31/09 4.16 0.38 (1.69) (1.31) (0.33) -- (0.33) 2.52 (32.66) 59,210
03/31/10 2.52 0.29 0.89 1.18 (0.34) -- (0.34) 3.36 48.44 79,245
03/31/11 3.36 0.25 0.16 0.41 (0.27) -- (0.27) 3.50 12.76 76,156
03/31/12 3.50 0.23 (0.08) 0.15 (0.25) -- (0.25) 3.40 4.52 81,477
09/30/12+ 3.40 0.11 0.08 0.19 (0.10) -- (0.10) 3.49 5.62 78,956
CLASS B
-------
03/31/08 $4.78 $0.31 $(0.60) $(0.29) $(0.32) $-- $(0.32) $4.17 (6.50)% $ 34,911
03/31/09 4.17 0.36 (1.69) (1.33) (0.31) -- (0.31) 2.53 (33.00) 17,018
03/31/10 2.53 0.27 0.89 1.16 (0.32) -- (0.32) 3.37 47.35 18,186
03/31/11 3.37 0.23 0.16 0.39 (0.25) -- (0.25) 3.51 12.02 15,818
03/31/12 3.51 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.40 3.55 11,512
09/30/12+ 3.40 0.10 0.08 0.18 (0.09) -- (0.09) 3.49 5.27 13,645
CLASS C
-------
03/31/08 $4.80 $0.31 $(0.61) $(0.30) $(0.32) $-- $(0.32) $4.18 (6.67)% $ 61,125
03/31/09 4.18 0.36 (1.69) (1.33) (0.31) -- (0.31) 2.54 (32.90) 33,394
03/31/10 2.54 0.27 0.89 1.16 (0.32) -- (0.32) 3.38 47.21 44,656
03/31/11 3.38 0.23 0.17 0.40 (0.25) -- (0.25) 3.53 12.33 39,301
03/31/12 3.53 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.42 3.56 36,723
09/30/12+ 3.42 0.10 0.07 0.17 (0.09) -- (0.09) 3.50 4.96 35,966
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSE INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
1.36% 7.49% 72%
1.36 10.74 77
1.36 9.34 110
1.36 7.47 48
1.36 6.72 52
1.36(4) 6.50(4) 26
2.01% 6.80% 72%
2.01 10.18 77
2.01 8.77 110
2.01 6.84 48
2.01 6.19 52
2.01(4) 5.85(4) 26
2.01% 6.75% 72%
2.01 10.16 77
2.01 8.70 110
2.01 6.83 48
2.01 6.11 52
2.01(4) 5.86(4) 26
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/08 03/31/09 03/31/10 03/31/11 03/31/12 09/30/12+(4)
-------- -------- -------- -------- -------- ------------
High Yield Bond Fund Class A............ 0.17% 0.14% 0.18% 0.16% 0.18% 0.16%
High Yield Bond Fund Class B............ 0.20 0.16 0.23 0.21 0.25 0.24
High Yield Bond Fund Class C............ 0.18 0.15 0.18 0.16 0.19 0.16
(4)Annualized
See Notes to Financial Statements
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 38.2%
United States Treasury Notes.... 27.0
United States Treasury Bonds.... 16.7
Repurchase Agreement............ 15.2
Federal Farm Credit Bank........ 0.4
Small Business Administration... 0.3
----
97.8%
====
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 -- SEPTEMBER 30, 2012 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------
U.S. GOVERNMENT AGENCIES -- 38.9%
FEDERAL FARM CREDIT BANK -- 0.4%
6.30% due 12/03/2013... $ 500,000 $ 535,457
----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/2023... 7,135 7,157
11.00% due 02/01/2015.. 13 14
11.50% due 09/01/2019.. 747 764
----------
7,935
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 38.2%
4.50% due 05/15/2018... 277,671 304,850
4.50% due 08/15/2018... 445,129 488,697
4.50% due 09/15/2018... 1,219,249 1,339,139
4.50% due 10/15/2018... 1,249,895 1,372,234
4.50% due 09/15/2033... 1,205,378 1,330,732
4.50% due 02/15/2039... 12,071 13,300
4.50% due 04/15/2039... 700,658 771,992
4.50% due 05/15/2039... 889,825 980,416
4.50% due 06/15/2039... 244,948 269,885
4.50% due 07/15/2039... 194,751 214,578
4.50% due 09/15/2039... 797,998 879,240
4.50% due 10/15/2039... 880,372 970,011
4.50% due 12/15/2039... 1,555,564 1,713,934
4.50% due 01/15/2040... 844,763 932,566
4.50% due 02/15/2040... 1,523,805 1,684,654
4.50% due 03/15/2040... 989,321 1,093,753
4.50% due 04/15/2040... 668,383 739,070
4.50% due 05/15/2040... 629,492 694,348
4.50% due 06/15/2040... 1,253,332 1,387,443
4.50% due 07/15/2040... 925,977 1,023,816
4.50% due 08/15/2040... 405,619 448,435
4.50% due 09/15/2040... 22,412 24,777
4.50% due 03/15/2041... 2,234,823 2,470,939
4.50% due 04/15/2041... 181,471 201,875
4.50% due 06/15/2041... 1,072,702 1,186,439
4.50% due 07/15/2041... 80,572 88,775
4.50% due 08/15/2041... 1,308,431 1,441,639
5.00% due 04/15/2018... 1,163,118 1,280,779
5.00% due 04/15/2033... 10,232 11,363
5.00% due 08/15/2033... 744,483 825,143
5.00% due 09/15/2033... 347,140 387,650
5.00% due 10/15/2033... 242,279 270,686
5.00% due 04/15/2034... 10,628 11,789
5.00% due 11/15/2034... 80,345 89,124
5.00% due 02/15/2035... 7,350 8,139
5.00% due 03/15/2035... 190,581 211,047
5.00% due 04/15/2035... 21,853 24,200
5.00% due 05/15/2035... 575,834 637,671
5.00% due 09/15/2035... 274,450 304,313
5.00% due 10/15/2035... 50,891 56,356
5.00% due 12/15/2035... 29,799 32,999
5.00% due 03/15/2036... 452,852 502,260
5.00% due 05/15/2036... 456,941 505,011
5.00% due 06/15/2036... 305,689 337,848
5.00% due 09/15/2036... 702,138 777,582
5.00% due 10/15/2036... 304,492 336,525
5.00% due 11/15/2036... 23,171 25,609
5.00% due 12/15/2036... 111,853 123,619
5.00% due 01/15/2037... 1,266,434 1,396,499
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 02/15/2037.. $ 507,203 $ 559,646
5.00% due 03/15/2037.. 478,178 527,288
5.00% due 04/15/2037.. 463,581 511,190
5.00% due 08/15/2038.. 3,892,132 4,291,857
5.50% due 11/15/2032.. 4,568 5,118
5.50% due 03/15/2033.. 130,322 146,030
5.50% due 04/15/2033.. 272,409 305,073
5.50% due 05/15/2033.. 476,075 532,568
5.50% due 06/15/2033.. 2,042,388 2,286,529
5.50% due 07/15/2033.. 605,917 678,346
5.50% due 10/15/2033.. 575,688 644,503
5.50% due 12/15/2033.. 115,080 128,837
5.50% due 01/15/2034.. 1,521,393 1,700,403
5.50% due 02/15/2034.. 891,902 999,387
6.00% due 01/15/2028.. 1,225 1,405
6.00% due 04/15/2028.. 446,015 505,149
6.00% due 10/15/2028.. 3,099 3,555
6.00% due 04/15/2029.. 21,557 24,491
6.00% due 05/15/2029.. 35,723 40,819
6.00% due 06/15/2029.. 13,704 15,590
6.00% due 04/15/2031.. 10,303 11,789
6.00% due 05/15/2031.. 17,466 20,006
6.00% due 11/15/2031.. 125,230 143,219
6.00% due 12/15/2031.. 7,540 8,623
6.00% due 01/15/2032.. 56,203 64,149
6.00% due 02/15/2032.. 12,236 13,959
6.00% due 03/15/2032.. 3,040 3,476
6.00% due 08/15/2032.. 132,011 151,480
6.00% due 11/15/2032.. 13,837 15,850
6.00% due 12/15/2032.. 5,028 5,739
6.00% due 01/15/2033.. 11,219 12,799
6.00% due 02/15/2033.. 13,342 15,195
6.00% due 03/15/2033.. 42,377 48,262
6.00% due 04/15/2033.. 177,927 202,713
6.00% due 07/15/2033.. 98,935 112,676
6.00% due 08/15/2033.. 814,030 931,137
6.00% due 09/15/2033.. 144,277 164,314
6.00% due 10/15/2033.. 446,597 508,976
6.00% due 11/15/2033.. 50,695 57,872
6.00% due 12/15/2033.. 277,382 318,768
6.00% due 02/15/2034.. 90,966 104,083
6.00% due 05/15/2034.. 8,753 9,969
6.00% due 06/15/2034.. 19,364 21,981
6.00% due 07/15/2034.. 513,753 584,086
6.00% due 08/15/2034.. 74,223 84,531
6.00% due 09/15/2034.. 247,679 284,829
6.00% due 10/15/2034.. 854,562 970,042
6.00% due 12/15/2034.. 144,726 164,283
6.00% due 06/15/2035.. 26,613 30,212
6.00% due 08/15/2035.. 67,332 76,278
6.50% due 02/15/2029.. 5,019 5,916
6.50% due 06/15/2031.. 7,097 8,449
6.50% due 07/15/2031.. 20,018 23,833
6.50% due 08/15/2031.. 28,477 33,898
6.50% due 09/15/2031.. 88,946 105,372
6.50% due 10/15/2031.. 113,385 134,991
6.50% due 11/15/2031.. 3,683 4,394
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 01/15/2032........ $ 7,919 $ 9,475
6.50% due 02/15/2032........ 111,566 133,142
7.00% due 07/15/2023........ 10,076 11,794
7.00% due 10/15/2023........ 23,175 27,125
7.00% due 09/15/2025........ 99,831 118,284
7.00% due 03/20/2029........ 8,848 10,582
7.00% due 06/20/2029........ 1,307 1,576
7.00% due 11/20/2030........ 24,384 29,486
7.50% due 04/15/2017........ 5,179 5,271
7.50% due 08/15/2023........ 55,494 58,430
7.50% due 09/15/2023........ 218,395 236,275
9.00% due 12/15/2016........ 20,900 21,805
11.00% due 08/20/2015....... 32 32
11.00% due 09/20/2015....... 100 111
11.50% due 05/20/2015....... 559 562
12.50% due 09/15/2014....... 1,154 1,161
13.50% due 02/15/2013....... 91 92
-----------
52,254,885
-----------
SMALL BUSINESS ADMINISTRATION -- 0.3%
6.30% due 06/01/2018........ 337,374 368,358
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $48,637,531).......... 53,166,635
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 43.7%
UNITED STATES TREASURY BONDS -- 16.7%
3.88% due 08/15/2040............... 1,000,000 1,221,719
4.25% due 11/15/2040............... 8,000,000 10,387,504
4.75% due 02/15/2041............... 8,000,000 11,211,248
------------
22,820,471
------------
UNITED STATES TREASURY NOTES -- 27.0%
1.25% due 10/31/2015............... 2,000,000 2,056,094
1.50% due 07/31/2016............... 16,000,000 16,643,744
1.63% due 08/15/2022............... 12,000,000 11,986,872
2.00% due 02/15/2022............... 5,000,000 5,200,390
3.13% due 05/15/2019............... 1,000,000 1,140,000
------------
37,027,100
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $52,981,569)................. 59,847,571
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $101,619,100)................ 113,014,206
------------
REPURCHASE AGREEMENT -- 15.2%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $20,828,000)................. 20,828,000 20,828,000
------------
TOTAL INVESTMENTS
(cost $122,447,100)(2)............. 97.8% 133,842,206
Other assets less liabilities......... 2.2 3,029,157
---------- ------------
NET ASSETS 100.0% $136,871,363
========== ============
--------
(1)See Note 2 for details of Joint Repurchase Agreement.
(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 September 30, 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......... $-- $ 535,457 $-- $ 535,457
Federal National Mtg. Assoc...... -- 7,935 -- 7,935
Government National Mtg. Assoc... -- 52,254,885 -- 52,254,885
Small Business Administration.... -- 368,358 368,358
U.S. Government Treasuries:
United States Treasury Bonds..... -- 22,820,471 -- 22,820,471
United States Treasury Notes..... -- 37,027,100 -- 37,027,100
Repurchase Agreement................ -- 20,828,000 -- 20,828,000
--- ------------ --- ------------
TOTAL............................... $-- $133,842,206 $-- $133,842,206
=== ============ === ============
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
See Notes to Financial Statements
17
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 81.5%
Repurchase Agreements........... 14.9
Small Business Administration... 0.0
----
96.4%
====
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 -- SEPTEMBER 30, 2012 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------
U.S. GOVERNMENT AGENCIES -- 81.5%
GOVERNMENT NATIONAL MTG. ASSOC. -- 81.5%
4.00% due 04/15/2039.. $ 809,598 $ 894,332
4.00% due 05/15/2039.. 52,458 57,970
4.00% due 06/15/2039.. 1,995,043 2,204,654
4.00% due 08/15/2039.. 179,764 198,651
4.00% due 11/15/2039.. 23,106 25,533
4.00% due 12/15/2039.. 958,671 1,058,628
4.00% due 08/15/2040.. 857,181 947,243
4.00% due 09/15/2040.. 870,485 961,945
4.00% due 11/15/2040.. 917,362 1,013,747
4.00% due 12/15/2040.. 2,451,632 2,709,218
4.00% due 01/15/2041.. 27,647 30,552
4.00% due 02/15/2041.. 1,041,998 1,151,478
4.00% due 03/15/2041.. 815,703 901,405
4.00% due 04/15/2041.. 223,736 247,244
4.00% due 07/15/2041.. 1,850,417 2,044,834
4.00% due 08/15/2041.. 2,512,732 2,776,738
4.00% due 09/15/2041.. 1,581,229 1,747,365
4.00% due 10/15/2041.. 1,575,348 1,740,865
4.00% due 11/15/2041.. 3,669,266 4,054,785
4.00% due 12/15/2041.. 1,223,910 1,352,502
4.00% due 01/15/2042.. 2,886,132 3,185,762
4.00% due 02/15/2042.. 2,179,969 2,407,673
4.00% due 03/15/2042.. 1,115,445 1,231,248
4.00% due 04/15/2042.. 89,242 98,507
4.00% due 05/15/2042.. 27,848 30,740
4.00% due 06/15/2042.. 1,080,683 1,192,877
4.50% due 05/15/2018.. 439,349 482,353
4.50% due 08/15/2018.. 220,101 241,644
4.50% due 09/15/2018.. 735,025 807,427
4.50% due 10/15/2018.. 1,000,941 1,098,913
4.50% due 08/15/2033.. 72,346 79,869
4.50% due 09/15/2033.. 203,193 224,325
4.50% due 10/15/2038.. 187,277 205,641
4.50% due 12/15/2038.. 269,537 295,967
4.50% due 02/15/2039.. 101,939 112,317
4.50% due 03/15/2039.. 529,098 582,965
4.50% due 04/15/2039.. 165,127 181,643
4.50% due 05/15/2039.. 2,064,669 2,274,868
4.50% due 06/15/2039.. 6,921,770 7,626,461
4.50% due 07/15/2039.. 2,647,674 2,917,230
4.50% due 08/15/2039.. 161,805 178,405
4.50% due 09/15/2039.. 231,141 254,673
4.50% due 10/15/2039.. 112,095 123,508
4.50% due 11/15/2039.. 903,579 995,572
4.50% due 12/15/2039.. 922,005 1,016,216
4.50% due 01/15/2040.. 121,040 133,731
4.50% due 02/15/2040.. 3,832,070 4,228,577
4.50% due 03/15/2040.. 1,432,597 1,581,965
4.50% due 04/15/2040.. 2,694,572 2,976,665
4.50% due 05/15/2040.. 409,892 452,797
4.50% due 06/15/2040.. 905,280 1,000,907
4.50% due 07/15/2040.. 622,328 688,018
4.50% due 08/15/2040.. 58,653 64,844
4.50% due 09/15/2040.. 606,196 670,380
4.50% due 10/15/2040.. 57,108 63,136
4.50% due 11/15/2040.. 630,872 697,465
4.50% due 01/15/2041.. 724,799 798,589
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 02/15/2041.. $ 939,280 $ 1,034,907
4.50% due 03/15/2041.. 3,590,246 3,971,623
4.50% due 04/15/2041.. 4,290,507 4,727,315
4.50% due 05/15/2041.. 1,293,421 1,425,101
4.50% due 06/15/2041.. 818,624 902,199
4.50% due 07/15/2041.. 546,588 602,235
4.50% due 08/15/2041.. 437,057 481,552
5.00% due 03/15/2018.. 202,071 223,244
5.00% due 04/15/2018.. 1,664,221 1,833,766
5.00% due 05/15/2018.. 3,063,618 3,371,131
5.00% due 01/15/2033.. 5,316 5,903
5.00% due 05/15/2033.. 4,891 5,431
5.00% due 08/15/2033.. 987,199 1,096,298
5.00% due 09/15/2033.. 1,144,964 1,274,452
5.00% due 10/15/2033.. 2,595,822 2,882,695
5.00% due 04/15/2034.. 14,138 15,700
5.00% due 05/15/2034.. 62,228 69,027
5.00% due 11/15/2034.. 274,895 304,931
5.00% due 12/15/2034.. 250,184 277,520
5.00% due 09/15/2035.. 6,128 6,797
5.00% due 10/15/2035.. 48,526 53,737
5.00% due 11/15/2035.. 44,642 49,436
5.00% due 12/15/2035.. 19,297 21,370
5.00% due 02/15/2036.. 83,392 92,369
5.00% due 04/15/2036.. 190,880 210,960
5.00% due 06/15/2036.. 397,286 439,082
5.00% due 07/15/2036.. 270,128 298,545
5.00% due 08/15/2036.. 8,364 9,278
5.00% due 09/15/2036.. 326,936 362,352
5.00% due 10/15/2036.. 24,221 27,011
5.00% due 11/15/2036.. 148,314 163,917
5.00% due 12/15/2036.. 445,107 491,933
5.00% due 01/15/2037.. 143,393 158,120
5.00% due 02/15/2037.. 470,962 519,330
5.00% due 04/15/2037.. 2,471,091 2,725,882
5.00% due 12/15/2037.. 7,918 8,732
5.00% due 04/15/2038.. 3,786,212 4,175,059
5.00% due 05/15/2038.. 2,339,248 2,579,490
5.00% due 06/15/2038.. 106,928 117,909
5.00% due 08/15/2038.. 269,110 296,748
5.00% due 10/15/2038.. 381,600 421,131
5.00% due 01/15/2039.. 618,941 684,827
5.00% due 02/15/2039.. 996,120 1,102,158
5.00% due 03/15/2039.. 1,638,051 1,812,423
5.00% due 04/15/2039.. 1,058,472 1,171,148
5.00% due 08/15/2039.. 1,274,779 1,410,480
5.00% due 09/15/2039.. 57,644 63,780
5.00% due 10/15/2039.. 4,651,861 5,147,056
5.00% due 11/15/2039.. 2,683,951 2,969,660
5.00% due 12/15/2039.. 2,318,595 2,563,331
5.00% due 04/15/2040.. 2,688,400 2,981,303
5.00% due 05/15/2040.. 18,808,724 20,847,820
5.00% due 06/15/2040.. 249,771 276,047
5.50% due 06/15/2029.. 1,971 2,185
5.50% due 01/15/2032.. 17,166 19,234
5.50% due 09/15/2032.. 336,698 376,314
5.50% due 03/15/2033.. 257,007 287,773
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 04/15/2033.. $ 513,681 $ 575,148
5.50% due 05/15/2033.. 1,113,260 1,243,081
5.50% due 06/15/2033.. 664,354 743,844
5.50% due 07/15/2033.. 2,621 2,934
5.50% due 08/15/2033.. 43,900 49,203
5.50% due 12/15/2033.. 25,406 28,422
5.50% due 01/15/2034.. 129,924 145,408
5.50% due 02/15/2034.. 142,859 159,877
5.50% due 04/15/2034.. 448,516 502,445
5.50% due 06/15/2035.. 129,844 144,959
5.50% due 09/15/2035.. 1,080,389 1,234,394
5.50% due 10/15/2035.. 2,427,773 2,712,701
5.50% due 11/15/2035.. 17,193 19,197
5.50% due 12/15/2035.. 438,666 489,911
5.50% due 01/15/2036.. 1,289,254 1,435,713
5.50% due 02/15/2036.. 352,529 393,441
5.50% due 03/15/2036.. 260,857 290,609
5.50% due 05/15/2036.. 68,825 76,644
5.50% due 09/15/2036.. 240,047 267,317
5.50% due 12/15/2036.. 583,231 649,485
5.50% due 03/15/2037.. 74,705 83,145
5.50% due 05/15/2037.. 65,980 73,434
5.50% due 12/15/2037.. 223,887 249,180
5.50% due 01/15/2038.. 155,206 172,692
5.50% due 02/15/2038.. 2,242,324 2,494,972
5.50% due 04/15/2038.. 1,762,539 1,961,109
5.50% due 05/15/2038.. 1,295,287 1,449,559
5.50% due 06/15/2038.. 1,116,569 1,242,371
5.50% due 07/15/2038.. 791,660 881,506
5.50% due 08/15/2038.. 1,895,049 2,110,070
5.50% due 10/15/2038.. 1,580,952 1,759,211
5.50% due 11/15/2038.. 1,489,753 1,657,592
5.50% due 12/15/2038.. 1,319,209 1,475,198
5.50% due 01/15/2039.. 2,674,560 2,975,881
5.50% due 02/15/2039.. 2,120,887 2,366,770
5.50% due 03/15/2039.. 197,894 220,801
5.50% due 05/15/2039.. 68,986 76,772
5.50% due 08/15/2039.. 304,412 338,708
5.50% due 09/15/2039.. 409,715 455,875
5.50% due 10/15/2039.. 115,973 129,038
5.50% due 11/15/2039.. 4,602 5,121
5.50% due 12/15/2039.. 520,347 578,970
5.50% due 01/15/2040.. 142,703 158,781
5.50% due 02/15/2040.. 490,714 549,794
5.50% due 03/15/2040.. 10,519,876 11,711,353
5.50% due 04/15/2040.. 236,410 264,729
5.50% due 05/15/2040.. 145,282 161,649
5.50% due 08/15/2040.. 4,727,590 5,261,213
5.50% due 09/15/2040.. 399,067 444,027
5.50% due 10/15/2040.. 564,960 628,610
5.50% due 11/15/2040.. 328,124 365,091
5.50% due 02/15/2041.. 1,810,208 2,014,541
5.50% due 03/15/2041.. 346,778 385,801
5.50% due 04/15/2041.. 148,911 165,687
5.50% due 05/15/2041.. 1,131,232 1,258,596
5.50% due 06/15/2041.. 967,869 1,076,911
5.50% due 08/15/2041.. 619,402 689,185
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 09/15/2041.. $364,330 $405,376
6.00% due 11/15/2023.. 1,467 1,652
6.00% due 01/15/2024.. 3,038 3,431
6.00% due 07/15/2028.. 1,856 2,129
6.00% due 12/15/2028.. 117,977 135,357
6.00% due 01/15/2029.. 243,602 277,770
6.00% due 02/15/2029.. 225,978 257,585
6.00% due 03/15/2029.. 282,718 323,765
6.00% due 04/15/2029.. 490,410 559,615
6.00% due 05/15/2029.. 29,936 34,292
6.00% due 06/15/2029.. 70,575 80,561
6.00% due 07/15/2029.. 85,766 98,173
6.00% due 08/15/2029.. 7,264 8,321
6.00% due 10/15/2029.. 91,361 104,649
6.00% due 04/15/2031.. 6,569 7,473
6.00% due 07/15/2031.. 13,607 15,561
6.00% due 10/15/2031.. 34,772 39,601
6.00% due 11/15/2031.. 304,938 348,744
6.00% due 12/15/2031.. 145,631 166,576
6.00% due 01/15/2032.. 42,927 49,034
6.00% due 02/15/2032.. 11,848 13,549
6.00% due 07/15/2032.. 40,061 45,725
6.00% due 09/15/2032.. 77,083 88,186
6.00% due 10/15/2032.. 77,147 88,055
6.00% due 11/15/2032.. 791 902
6.00% due 12/15/2032.. 26,306 30,025
6.00% due 01/15/2033.. 69,746 79,760
6.00% due 02/15/2033.. 272,058 311,651
6.00% due 03/15/2033.. 54,619 62,280
6.00% due 04/15/2033.. 444,682 506,760
6.00% due 05/15/2033.. 450,926 514,842
6.00% due 06/15/2033.. 359,910 411,998
6.00% due 08/15/2033.. 180,459 207,879
6.00% due 10/15/2033.. 26,281 29,931
6.00% due 11/15/2033.. 133,414 152,005
6.00% due 12/15/2033.. 222,307 253,872
6.00% due 01/15/2034.. 236,033 268,058
6.00% due 02/15/2034.. 195,569 223,269
6.00% due 03/15/2034.. 61,362 69,654
6.00% due 04/15/2034.. 147,238 167,136
6.00% due 05/15/2034.. 89,313 101,747
6.00% due 06/15/2034.. 92,182 104,681
6.00% due 07/15/2034.. 298,055 339,506
6.00% due 08/15/2034.. 268,644 307,072
6.00% due 09/15/2034.. 118,744 134,841
6.00% due 10/15/2034.. 257,427 292,215
6.00% due 11/15/2034.. 70,340 79,741
6.00% due 12/15/2034.. 52,890 60,236
6.00% due 01/15/2035.. 22,698 25,808
6.00% due 02/15/2035.. 216,429 246,509
6.00% due 04/15/2035.. 29,474 33,401
6.00% due 05/15/2035.. 6,228 7,087
6.00% due 06/15/2035.. 129,639 146,915
6.00% due 11/15/2035.. 4,435 5,024
6.00% due 12/15/2035.. 62,529 71,068
6.00% due 01/15/2036.. 141,325 159,977
6.00% due 02/15/2036.. 60,791 69,266
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 03/15/2036... $ 187,997 $ 213,013
6.00% due 04/15/2036... 201,543 228,912
6.00% due 05/15/2036... 589,310 668,185
6.00% due 06/15/2036... 264,536 299,416
6.00% due 08/15/2036... 6,316 7,151
6.00% due 09/15/2036... 43,092 48,768
6.00% due 10/15/2036... 239,890 271,564
6.00% due 11/15/2036... 205,027 232,061
6.00% due 07/15/2037... 13,521 15,294
6.00% due 09/15/2037... 11,604 13,125
6.00% due 10/15/2037... 258,246 292,094
6.00% due 11/15/2037... 14,670 16,598
6.00% due 12/15/2037... 13,813 15,623
6.00% due 01/15/2038... 259,878 293,778
6.00% due 02/15/2038... 17,732 20,045
6.00% due 06/15/2038... 21,170 23,931
6.00% due 07/15/2038... 451,160 510,017
6.00% due 08/15/2038... 12,690 14,346
6.00% due 09/15/2038... 2,439,439 2,757,653
6.00% due 10/15/2038... 561,635 634,896
6.00% due 11/15/2038... 795,941 899,654
6.00% due 12/15/2038... 59,478 67,237
6.00% due 01/15/2039... 853,512 964,850
6.00% due 08/15/2039... 48,608 54,965
6.00% due 09/15/2039... 26,895 30,414
6.00% due 10/15/2039... 210,422 238,275
6.00% due 01/15/2040... 52,871 59,768
6.00% due 02/15/2040... 10,353 11,704
6.00% due 04/15/2040... 19,302 21,820
6.00% due 05/15/2040... 2,556 2,889
6.00% due October TBA.. 15,000,000 16,947,657
6.50% due 03/15/2028... 9,171 10,669
6.50% due 08/15/2028... 12,618 14,915
6.50% due 01/15/2029... 1,600 1,895
6.50% due 02/15/2029... 599 708
6.50% due 03/15/2029... 57,916 68,456
6.50% due 04/15/2029... 585 689
6.50% due 05/15/2029... 4,942 5,843
6.50% due 06/15/2029... 16,585 19,599
6.50% due 07/15/2029... 1,109 1,311
6.50% due 10/15/2029... 2,784 3,296
6.50% due 08/15/2031... 68,244 81,248
6.50% due 09/15/2031... 9,810 11,680
6.50% due 10/15/2031... 113,385 134,991
6.50% due 11/15/2031... 52,817 62,863
6.50% due 12/15/2031... 79,929 95,355
6.50% due 02/15/2032... 137,643 162,250
6.50% due 05/15/2032... 350,012 417,145
6.50% due 06/15/2032... 53,981 64,420
7.00% due 03/15/2023... 10,596 12,403
7.00% due 01/20/2024... 303 357
7.00% due 03/20/2024... 257 303
7.00% due 07/20/2025... 1,019 1,207
7.00% due 09/15/2025... 43,355 51,368
7.00% due 01/20/2029... 18,307 22,064
7.00% due 02/20/2029... 3,120 3,760
7.00% due 06/20/2029... 6,482 7,813
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 07/20/2029............... $ 21,907 $ 26,404
7.00% due 09/20/2029............... 2,259 2,722
7.00% due 10/20/2029............... 4,496 5,419
7.00% due 11/20/2029............... 1,463 1,764
7.00% due 03/20/2030............... 2,545 3,077
7.00% due 06/20/2030............... 2,483 3,003
7.00% due 08/20/2030............... 6,215 7,515
7.00% due 09/20/2030............... 9,280 11,222
7.00% due 10/20/2030............... 10,497 12,693
8.00% due 11/15/2026............... 51,640 63,076
8.00% due 12/15/2029............... 6,983 8,040
8.00% due 04/15/2030............... 12,853 15,103
8.00% due 05/15/2030............... 1,227 1,370
8.00% due 08/15/2030............... 21,881 27,089
8.50% due 03/15/2017............... 7,178 7,460
8.50% due 05/15/2021............... 751 753
8.50% due 12/15/2022............... 13,888 13,945
8.50% due 01/15/2023............... 19,830 20,302
8.50% due 09/15/2024............... 11,101 13,579
9.00% due 07/15/2016............... 9,493 9,700
9.00% due 10/15/2016............... 2,476 2,487
------------
241,851,330
------------
SMALL BUSINESS ADMINISTRATION -- 0.0%
6.30% due 06/01/2018............... 112,458 122,786
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $233,120,747)................ 241,974,116
------------
REPURCHASE AGREEMENTS -- 14.9%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)...... 32,309,000 32,309,000
UBS Securities LLC
Joint Repurchase Agreement(1)...... 11,843,000 11,843,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $44,152,000)................. 44,152,000
------------
TOTAL INVESTMENTS
(cost $277,272,747)(2)............. 96.4% 286,126,116
Other assets less liabilities......... 3.6 10,654,635
----------- ------------
NET ASSETS 100.0% $296,780,751
=========== ============
--------
(1) See Note 2 for details of Joint Repurchase Agreements.
(2) See Note 5 for cost of investments on a tax basis.
TBA --Security purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date.
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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... $-- $241,851,330 $-- $241,851,330
Small Business Administration.... -- 122,786 -- 122,786
Repurchase Agreements............... -- 44,152,000 -- 44,152,000
--- ------------ --- ------------
TOTAL............................... $-- $286,126,116 $-- $286,126,116
=== ============ === ============
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
See Notes to Financial Statements
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Sovereign.............................. 20.1%
Federal National Mtg. Assoc............ 10.5
Federal Home Loan Mtg. Corp............ 3.5
Time Deposits.......................... 3.3
Diversified Financial Services......... 3.2
Banks-Commercial....................... 3.0
Oil Companies-Exploration & Production. 2.8
United States Treasury Notes........... 2.8
Diversified Banking Institutions....... 2.4
Telephone-Integrated................... 1.6
Repurchase Agreement................... 1.6
Pipelines.............................. 1.5
Oil Companies-Integrated............... 1.4
Electric-Integrated.................... 1.3
Casino Hotels.......................... 1.1
Medical-Drugs.......................... 1.1
Cellular Telecom....................... 1.0
Banks-Super Regional................... 1.0
Telecom Services....................... 0.9
Medical-Hospitals...................... 0.9
United States Treasury Bonds........... 0.9
Cable/Satellite TV..................... 0.9
Electric-Generation.................... 0.8
Insurance-Multi-line................... 0.8
Diversified Minerals................... 0.7
Oil-Field Services..................... 0.7
Real Estate Investment Trusts.......... 0.7
Multimedia............................. 0.7
Building-Residential/Commercial........ 0.6
Finance-Leasing Companies.............. 0.6
Independent Power Producers............ 0.6
Medical-HMO............................ 0.6
Savings & Loans/Thrifts................ 0.6
Rental Auto/Equipment.................. 0.5
Steel-Producers........................ 0.5
Retail-Restaurants..................... 0.5
Diversified Manufacturing Operations... 0.5
Government National Mtg. Assoc......... 0.5
Containers-Paper/Plastic............... 0.5
Banks-Special Purpose.................. 0.5
Home Furnishings....................... 0.5
Finance-Auto Loans..................... 0.5
Building Products-Cement............... 0.5
Casino Services........................ 0.5
Transport-Services..................... 0.5
Municipal Bonds........................ 0.4
Building & Construction Products-Misc.. 0.4
Consumer Products-Misc................. 0.4
Trucking/Leasing....................... 0.4
Containers-Metal/Glass................. 0.4
Data Processing/Management............. 0.4
Oil & Gas Drilling..................... 0.4
Commercial Services.................... 0.4
Real Estate Operations & Development... 0.4
Computer Services...................... 0.4
Paper & Related Products............... 0.4
Medical Products....................... 0.4
Insurance-Life/Health.................. 0.4
Auto-Cars/Light Trucks................. 0.4
Transport-Rail......................... 0.4
Retail-Office Supplies................. 0.3
Sovereign Agency....................... 0.3
Chemicals-Specialty.................... 0.3
Chemicals-Diversified.................. 0.3
Marine Services........................ 0.3
Therapeutics........................... 0.3
MRI/Medical Diagnostic Imaging......... 0.3
Travel Services........................ 0.3
Satellite Telecom...................... 0.3
Oil Refining & Marketing............... 0.3
Retail-Toy Stores.................... 0.3%
Steel Pipe & Tube.................... 0.3
Medical Instruments.................. 0.3
Retail-Drug Store.................... 0.3
Finance-Other Services............... 0.3
Real Estate Management/Services...... 0.3
Non-Hazardous Waste Disposal......... 0.2
Coal................................. 0.2
Airlines............................. 0.2
Publishing-Newspapers................ 0.2
Advertising Services................. 0.2
Enterprise Software/Service.......... 0.2
Beverages-Non-alcoholic.............. 0.2
Special Purpose Entities............. 0.2
Finance-Investment Banker/Broker..... 0.2
Gas-Distribution..................... 0.2
Electronic Components-Semiconductors. 0.2
Television........................... 0.2
Storage/Warehousing.................. 0.2
Semiconductor Equipment.............. 0.2
Regional Authority................... 0.2
Capacitors........................... 0.2
Gas-Transportation................... 0.2
Pharmacy Services.................... 0.2
Petrochemicals....................... 0.2
Aerospace/Defense-Equipment.......... 0.2
Insurance-Mutual..................... 0.2
Banks-Money Center................... 0.2
Printing-Commercial.................. 0.2
Computers-Memory Devices............. 0.2
Financial Guarantee Insurance........ 0.2
Shipbuilding......................... 0.2
Finance-Consumer Loans............... 0.2
Chemicals-Other...................... 0.2
Retail-Apparel/Shoe.................. 0.2
Radio................................ 0.1
Music................................ 0.1
Metal-Iron........................... 0.1
Retail-Propane Distribution.......... 0.1
Broadcast Services/Program........... 0.1
Alternative Waste Technology......... 0.1
Medical-Generic Drugs................ 0.1
Investment Companies................. 0.1
Retail-Regional Department Stores.... 0.1
Aerospace/Defense.................... 0.1
Wire & Cable Products................ 0.1
Schools.............................. 0.1
Theaters............................. 0.1
Machinery-Construction & Mining...... 0.1
Metal-Diversified.................... 0.1
Firearms & Ammunition................ 0.1
Food-Misc./Diversified............... 0.1
Advertising Agencies................. 0.1
Communications Software.............. 0.1
Transport-Marine..................... 0.1
Direct Marketing..................... 0.1
Banks-Fiduciary...................... 0.1
Motion Pictures & Services........... 0.1
Seismic Data Collection.............. 0.1
Auction Houses/Art Dealers........... 0.1
Building-Heavy Construction.......... 0.1
Gambling (Non-Hotel)................. 0.1
Electric-Transmission................ 0.1
Finance-Commercial................... 0.1
Retail-Major Department Stores....... 0.1
Medical-Biomedical/Gene.............. 0.1
----
99.9%
====
--------
*Calculated as a percentage of net assets.
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED) (CONTINUED)
CREDIT QUALITY ALLOCATION+#
Aaa........ 25.7%
Aa......... 2.6
A.......... 6.6
Baa........ 21.3
Ba......... 11.5
B.......... 20.0
Caa........ 6.4
Ca......... 0.3
Not Rated@. 5.6
-----
100.0%
=====
--------
+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.
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
ASSET BACKED SECURITIES -- 2.8%
DIVERSIFIED FINANCIAL SERVICES -- 2.8%
AmeriCredit Automobile Receivables Trust
Series 2012-4, Class B
1.31% due 11/08/2017..................... $ 300,000 $ 300,017
AmeriCredit Automobile Receivables Trust
Series 2012-3, Class B
1.59% due 07/10/2017..................... 263,000 265,495
Avis Budget Rental Car Funding AESOP LLC
Series 2010-3A, Class B
6.74% due 05/20/2016*.................... 800,000 887,217
Banc of America Alternative Loan Trust
Series 2005-6, Class 5A2
5.50% due 07/25/2035(1).................. 421,269 405,369
Banc of America Alternative Loan Trust
Series 2004-10, Class 1CB1
6.00% due 11/25/2034(1).................. 204,668 200,620
Banc of America Funding Corp. FRS
Series 2006-A, Class 1A1
2.63% due 02/20/2036(1).................. 478,542 474,750
Banc of America Funding Corp.
Series 2006-3, Class 5A5
5.50% due 03/25/2036(1).................. 201,263 204,229
Banc of America Funding Corp.
Series 2005-8, Class 2A4
6.00% due 01/25/2036(1).................. 23,542 23,374
Banc of America Funding Corp.
Series 2006-2, Class 2A22
6.00% due 03/25/2036(1).................. 220,000 218,736
Citibank Credit Card Issuance Trust
Series 2008-A1, Class A1
5.35% due 02/07/2020..................... 1,500,000 1,828,651
Citibank Omni Master Trust
Series 2009-A17, Class A17
4.90% due 11/15/2018*.................... 1,000,000 1,090,009
Citicorp Mtg. Securities, Inc.
Series 2006-2, Class 1A8
5.75% due 04/25/2036(1).................. 139,114 139,330
Citicorp Mtg. Securities, Inc.
Series 2006-4, Class 1A2
6.00% due 08/25/2036(1).................. 233,136 238,016
Countrywide Alternative Loan Trust
Series 2004-24CB, Class 1A1
6.00% due 11/25/2034(1).................. 560,961 557,592
Countrywide Asset-Backed Certs. FRS
Series 2004-BC2, Class M2
1.79% due 02/25/2034..................... 75,047 69,885
Countrywide Home Loan Mtg.
Pass Through Trust
Series 2005-6, Class 1A11
5.25% due 02/25/2026(1).................. 300,000 300,005
Countrywide Home Loan Mtg.
Pass Through Trust
Series 2005-12, Class 2A4
5.50% due 05/25/2035(1).................. 281,278 283,715
Countrywide Home Loan Mtg.
Pass Through Trust
Series 2007-14, Class A19
6.00% due 09/25/2037(1).................. 432,668 409,907
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Discover Card Master Trust
Series 2007-A1, Class A1
5.65% due 03/16/2020..................... $ 330,000 $ 403,918
Entergy Arkansas Restoration Funding LLC
Series 2010A, Class A1
2.30% due 08/01/2021..................... 217,188 226,994
Enterprise Fleet Financing LLC
Series 2012-2, Class A3
0.93% due 04/20/2018*.................... 450,000 443,116
GSAMP Trust FRS
Series 2002-WF, Class A2B
1.32% due 10/20/2032..................... 132,552 124,496
Hertz Vehicle Financing LLC
Series 2010-1A, Class A2
3.74% due 02/25/2017*.................... 132,000 142,907
Hertz Vehicle Financing LLC
Series 2011-1A, Class B1
4.17% due 03/25/2016*.................... 75,000 78,273
Morgan Stanley Bank of America Merrill
Lynch Trust
Series 2012-C5, Class A2
1.97% due 08/15/2045(2).................. 245,843 254,183
New Century Home Equity Loan Trust VRS
Series 2004-A, Class AII9
5.01% due 08/25/2034..................... 204,394 199,991
RFMSI Trust
Series 2006-S1, Class 1A3
5.75% due 01/25/2036(1).................. 426,509 426,285
Triton Container Finance LLC
Series 2012-1A, Class A
4.21% due 05/14/2027*.................... 120,833 127,422
UBS-Barclays Commercial Mtg. Trust
Series 2012-C2, Class A2
2.11% due 05/10/2063(2).................. 653,239 681,910
Wachovia Bank Commercial Mtg. Trust VRS
Series 2003-C7, Class J
5.36% due 10/15/2035*(2)................. 2,750,000 1,640,268
Wachovia Bank Commercial Mtg. Trust VRS
Series 2006-C23, Class AM
5.47% due 01/15/2045(2).................. 1,324,000 1,455,301
Wachovia Bank Commercial Mtg. Trust VRS
Series 2006-C26, Class AM
6.17% due 06/15/2045(2).................. 2,000,000 2,233,574
Wells Fargo Mtg. Backed Securities Trust
Series 2006-6, Class 1A2
5.75% due 05/25/2036(1).................. 241,312 238,898
Wells Fargo Mtg. Backed Securities Trust
Series 2007-7, Class A36
6.00% due 06/25/2037(1).................. 104,046 104,684
Wells Fargo Mtg. Backed Securities Trust
Series 2007-14, Class 1A1
6.00% due 10/25/2037(1).................. 359,912 359,666
Wells Fargo Mtg. Backed Securities Trust
Series 2007-15, Class A1
6.00% due 11/25/2037(1).................. 298,239 293,785
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
ASSET BACKED SECURITIES (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
WF-RBS Commercial Mtg. Trust
Series 2012-C8, Class A2
1.88% due 08/15/2045(2)................. $ 165,030 $ 169,925
-----------
TOTAL ASSET BACKED SECURITIES
(cost $17,937,482)...................... 17,502,513
-----------
U.S. CORPORATE BONDS & NOTES -- 42.1%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
4.00% due 03/15/2022.................... 265,000 277,602
Interpublic Group of Cos., Inc.
Senior Notes
6.25% due 11/15/2014.................... 341,000 368,280
-----------
645,882
-----------
ADVERTISING SERVICES -- 0.2%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/2015*............. 1,220,000 719,800
Visant Corp.
Company Guar. Notes
10.00% due 10/01/2017................... 725,000 717,750
-----------
1,437,550
-----------
AEROSPACE/DEFENSE -- 0.1%
Lockheed Martin Corp.
Senior Notes
6.15% due 09/01/2036.................... 584,000 757,274
-----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.2%
Sequa Corp.
Company Guar. Notes
11.75% due 12/01/2015*.................. 1,025,000 1,076,250
-----------
AIRLINES -- 0.2%
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class A-1
7.20% due 01/02/2019.................... 1,008,863 1,018,951
Atlas Air, Inc.
Pass Through Certs.
Series 1991-1, Class B
7.63% due 01/02/2015.................... 134,824 116,623
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/2017.................... 351,620 348,104
-----------
1,483,678
-----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.1%
ADS Waste Holdings, Inc.
Senior Notes
8.25% due 10/01/2020*................... 800,000 816,000
-----------
AUCTION HOUSE/ART DEALERS -- 0.1%
Sotheby's
Company Guar. Notes
5.25% due 10/01/2022*................... 475,000 483,313
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS -- 0.4%
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.25% due 06/15/2021.................. $1,740,000 $1,853,100
Ford Motor Co.
Senior Notes
7.40% due 11/01/2046.................. 335,000 402,000
----------
2,255,100
----------
BANKS-COMMERCIAL -- 1.2%
Associated Banc-Corp.
Senior Notes
5.13% due 03/28/2016.................. 784,000 860,751
CIT Group, Inc.
Senior Notes
5.00% due 08/15/2022.................. 550,000 572,223
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*................. 1,870,000 2,024,275
HSBC USA, Inc.
Senior Notes
2.38% due 02/13/2015.................. 735,000 756,639
KeyBank NA
Sub. Notes
7.41% due 10/15/2027.................. 128,000 141,970
Regions Bank
Sub. Notes
7.50% due 05/15/2018.................. 224,000 264,320
Synovus Financial Corp.
Senior Notes
7.88% due 02/15/2019.................. 970,000 1,071,850
Union Bank NA
Senior Notes
2.13% due 06/16/2017.................. 815,000 833,854
Zions Bancorp.
Senior Notes
4.50% due 03/27/2017.................. 859,000 886,715
----------
7,412,597
----------
BANKS-FIDUCIARY -- 0.1%
Bank of New York Mellon Corp.
Senior Notes
1.20% due 02/20/2015.................. 526,000 533,093
----------
BANKS-MONEY CENTER -- 0.1%
Comerica Bank
Sub. Notes
5.20% due 08/22/2017.................. 386,000 439,321
----------
BANKS-SUPER REGIONAL -- 0.9%
Capital One Capital VI
Limited Guar. Notes
8.88% due 05/15/2040.................. 288,000 292,828
Capital One Financial Corp. FRS
Senior Notes
1.61% due 07/15/2014.................. 346,000 348,423
Huntington Bancshares, Inc.
Sub. Notes
7.00% due 12/15/2020.................. 328,000 398,570
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BANKS-SUPER REGIONAL (CONTINUED)
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 07/05/2017........................ $1,126,000 $1,320,263
JPMorgan Chase Bank NA
Sub. Notes
6.00% due 10/01/2017........................ 786,000 930,133
PNC Preferred Funding Trust I FRS
Jr. Sub Bonds
2.04% due 03/15/2017*(3).................... 400,000 328,000
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/2026........................ 38,000 39,643
US Bancorp
Senior Notes
1.65% due 05/15/2017........................ 515,000 527,215
Wachovia Corp.
Senior Notes
5.75% due 02/01/2018........................ 451,000 544,620
Wells Fargo & Co. FRS
Jr. Sub. Bonds
7.98% due 03/15/2018(3)..................... 235,000 269,956
Wells Fargo Bank NA FRS
Sub. Notes
0.65% due 05/16/2016........................ 350,000 340,295
----------
5,339,946
----------
BEVERAGES-NON-ALCOHOLIC -- 0.2%
Innovation Ventures LLC/Innovation Ventures
Finance Corp.
Senior Sec. Notes
9.50% due 08/15/2019*....................... 1,450,000 1,399,250
----------
BROADCAST SERVICES/PROGRAM -- 0.1%
Nexstar Broadcasting, Inc./Mission Broadcasting, Inc.
Sec. Notes
8.88% due 04/15/2017........................ 770,000 837,375
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.3%
Building Materials Corp. of America
Senior Notes
6.75% due 05/01/2021*....................... 850,000 930,750
Interline Brands, Inc.
Company Guar. Notes
7.50% due 11/15/2018........................ 1,035,000 1,120,388
----------
2,051,138
----------
BUILDING PRODUCTS-CEMENT -- 0.5%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/2016........................ 1,225,000 1,264,812
Headwaters, Inc.
Sec. Notes
7.63% due 04/01/2019........................ 1,550,000 1,573,250
----------
2,838,062
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
New Enterprise Stone & Lime Co., Inc.
Company Guar. Notes
11.00% due 09/01/2018............................ $ 628,000 $ 452,160
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.6%
Beazer Homes USA, Inc.
Company Guar. Notes
9.13% due 05/15/2019............................. 795,000 798,975
K Hovnanian Enterprises, Inc.
Senior Sec. Notes
7.25% due 10/15/2020*............................ 650,000 666,250
Meritage Homes Corp.
Company Guar. Notes
7.00% due 04/01/2022............................. 625,000 668,750
Standard Pacific Corp.
Company Guar. Notes
8.38% due 05/15/2018............................. 800,000 923,000
Taylor Morrison Communities, Inc./Monarch
Communities, Inc.
Company Guar. Notes
7.75% due 04/15/2020*............................ 787,000 838,155
----------
3,895,130
----------
CABLE/SATELLITE TV -- 0.9%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022............................. 750,000 753,750
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.50% due 04/30/2021............................. 1,725,000 1,845,750
Comcast Corp.
Company Guar. Notes
5.65% due 06/15/2035............................. 381,000 446,123
Dish DBS Corp.
Company Guar. Notes
7.75% due 05/31/2015............................. 912,000 1,026,000
TCI Communications, Inc.
Senior Notes
7.13% due 02/15/2028............................. 250,000 328,271
Time Warner Cable, Inc.
Company Guar. Notes
4.50% due 09/15/2042............................. 519,000 517,587
WideOpenWest Finance LLC/WideOpenWest
Capital Corp.
Company Guar. Notes
10.25% due 07/15/2019*........................... 550,000 580,250
----------
5,497,731
----------
CAPACITORS -- 0.2%
Kemet Corp.
Senior Sec. Notes
10.50% due 05/01/2018............................ 1,150,000 1,167,250
----------
CASINO HOTELS -- 1.0%
CityCenter Holdings LLC/CityCenter Finance Corp.
Sec. Notes
10.75% due 01/15/2017(4)......................... 2,407,162 2,569,645
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CASINO HOTELS (CONTINUED)
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*.................... $ 755,000 $ 813,513
Harrah's Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/2017..................... 1,800,000 1,935,000
Station Casinos LLC
Company Guar. Notes
3.66% due 06/18/2018*(5).................. 1,095,000 944,437
----------
6,262,595
----------
CASINO SERVICES -- 0.5%
Chukchansi Economic Development Authority
Sec. Notes
9.75% due 05/30/2020*..................... 993,000 645,450
Graton Economic Development Authority
Senior Sec. Notes
9.63% due 09/01/2019*..................... 950,000 988,000
Greektown Superholdings, Inc.
Sec. Notes, Series A
13.00% due 07/01/2015..................... 293,000 317,172
Greektown Superholdings, Inc.
Sec. Notes, Series B
13.00% due 07/01/2015..................... 450,000 487,125
Scientific Games International, Inc.
Company Guar. Notes
6.25% due 09/01/2020*..................... 360,000 361,800
----------
2,799,547
----------
CELLULAR TELECOM -- 0.9%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/2016...................... 1,620,000 1,709,100
Cricket Communications, Inc.
Company Guar. Notes
7.75% due 10/15/2020...................... 590,000 575,250
Nextel Communications, Inc.
Company Guar. Notes
7.38% due 08/01/2015...................... 332,000 333,245
Sprint Nextel Corp.
Senior Notes
7.00% due 08/15/2020...................... 2,925,000 3,042,000
----------
5,659,595
----------
CHEMICALS-OTHER -- 0.2%
Taminco Global Chemical Corp.
Sec. Notes
9.75% due 03/31/2020*..................... 870,000 939,600
----------
CHEMICALS-SPECIALTY -- 0.3%
Eastman Chemical Co.
Senior Notes
7.25% due 01/15/2024...................... 335,000 449,873
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034...................... 248,000 344,182
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
CHEMICALS-SPECIALTY (CONTINUED)
Tronox Finance LLC
Company Guar. Notes
6.38% due 08/15/2020*............................ $1,150,000 $1,161,500
----------
1,955,555
----------
COAL -- 0.2%
Alpha Natural Resources, Inc.
Company Guar. Notes
6.00% due 06/01/2019............................. 725,000 605,375
Penn Virginia Resource Partners LP/Penn Virginia
Resource Finance Corp. II
Company Guar. Notes
8.38% due 06/01/2020*............................ 885,000 913,763
----------
1,519,138
----------
COMMERCIAL SERVICES -- 0.4%
Ceridian Corp.
Senior Sec. Notes
8.88% due 07/15/2019*............................ 1,350,000 1,458,000
Live Nation Entertainment, Inc.
Company Guar. Notes
7.00% due 09/01/2020*............................ 950,000 988,000
----------
2,446,000
----------
COMMUNICATIONS SOFTWARE -- 0.1%
Aspect Software, Inc.
Sec. Notes
10.63% due 05/15/2017............................ 615,000 631,913
----------
COMPUTER SERVICES -- 0.4%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/2015............................. 399,000 428,819
CompuCom Systems, Inc.
Senior Sub. Notes
12.50% due 10/01/2015*........................... 1,188,000 1,232,550
International Business Machines Corp.
Senior Notes
1.25% due 02/06/2017............................. 230,000 233,794
International Business Machines Corp.
Senior Notes
6.22% due 08/01/2027............................. 375,000 515,003
----------
2,410,166
----------
CONSULTING SERVICES -- 0.0%
Verisk Analytics, Inc.
Company Guar. Notes
4.13% due 09/12/2022............................. 191,000 194,084
----------
CONSUMER PRODUCTS-MISC. -- 0.4%
American Achievement Corp.
Sec. Notes
10.88% due 04/15/2016*........................... 667,000 578,622
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
5.75% due 10/15/2020*............................ 1,100,000 1,100,000
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CONSUMER PRODUCTS-MISC. (CONTINUED)
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Company Guar. Notes
9.88% due 08/15/2019........................ $1,000,000 $1,063,750
----------
2,742,372
----------
CONTAINERS-METAL/GLASS -- 0.4%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/2019........................ 684,000 762,660
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/2026........................ 1,770,000 1,942,575
----------
2,705,235
----------
CONTAINERS-PAPER/PLASTIC -- 0.5%
Consolidated Container Co. LLC/Consolidated
Container Capital, Inc.
Company Guar. Notes
10.13% due 07/15/2020*...................... 650,000 692,250
Graphic Packaging International, Inc.
Company Guar. Notes
9.50% due 06/15/2017........................ 460,000 503,700
Packaging Dynamics Corp.
Senior Sec. Notes
8.75% due 02/01/2016*....................... 790,000 833,450
Tekni-Plex, Inc.
Senior Sec. Notes
9.75% due 06/01/2019*....................... 847,000 906,290
----------
2,935,690
----------
DATA PROCESSING/MANAGEMENT -- 0.4%
First Data Corp.
Senior Sec. Notes
6.75% due 11/01/2020*....................... 1,741,000 1,730,119
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*....................... 850,000 876,562
----------
2,606,681
----------
DIRECT MARKETING -- 0.1%
Catalina Marketing Corp.
Company Guar. Notes
11.63% due 10/01/2017*(5)................... 600,000 579,000
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.3%
Ally Financial, Inc.
Company Guar. Notes
5.50% due 02/15/2017........................ 1,045,000 1,092,321
BAC Capital Trust XIII FRS
Limited Guar. Notes
4.00% due 11/08/2012(3)..................... 1,070,000 824,486
Bank of America Corp.
Sub. Notes
5.42% due 03/15/2017........................ 360,000 389,141
Bank of America Corp.
Senior Notes
5.75% due 12/01/2017........................ 927,000 1,066,565
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Bank of America Corp.
Sub. Notes
7.25% due 10/15/2025.............. $ 117,000 $ 132,858
Citigroup, Inc.
Sub. Notes
5.50% due 02/15/2017.............. 592,000 655,655
Citigroup, Inc.
Sub. Notes
5.88% due 02/22/2033.............. 754,000 796,352
Citigroup, Inc.
Sub. Notes
6.13% due 08/25/2036.............. 372,000 403,937
GMAC LLC
Sub. Notes
8.00% due 12/31/2018.............. 2,555,000 2,874,375
Goldman Sachs Group, Inc.
Senior Notes
6.15% due 04/01/2018.............. 828,000 966,424
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037.............. 1,151,000 1,233,046
JPMorgan Chase & Co.
Sub. Notes
6.13% due 06/27/2017.............. 673,000 792,359
JPMorgan Chase & Co. FRS
Jr. Sub Notes
7.90% due 04/30/2018(3)........... 304,000 345,262
JPMorgan Chase Capital XXIII FRS
Limited Guar. Bonds
1.43% due 05/15/2077.............. 140,000 99,441
Morgan Stanley
Senior Notes
5.50% due 07/28/2021.............. 953,000 1,042,951
Morgan Stanley
Senior Notes
6.38% due 07/24/2042.............. 782,000 861,267
Morgan Stanley
Senior Notes
6.63% due 04/01/2018.............. 428,000 491,746
-----------
14,068,186
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.4%
Associates Corp. of North America
Senior Notes
6.95% due 11/01/2018.............. 620,000 745,498
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/2038.............. 620,000 738,830
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/2032.............. 785,000 1,005,604
-----------
2,489,932
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
General Electric Co.
Senior Notes
5.25% due 12/06/2017.............. 294,000 347,856
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED MANUFACTURING OPERATIONS (CONTINUED)
JB Poindexter & Co., Inc.
Notes
9.00% due 04/01/2022*.......................... $1,325,000 $1,325,000
Textron, Inc.
Senior Notes
4.63% due 09/21/2016........................... 780,000 845,533
----------
2,518,389
----------
ELECTRIC-GENERATION -- 0.7%
AES Corp.
Senior Notes
8.00% due 10/15/2017........................... 1,020,000 1,178,100
Allegheny Energy Supply Co. LLC
Senior Notes
6.75% due 10/15/2039*.......................... 1,806,000 1,906,934
Edison Mission Energy
Senior Notes
7.63% due 05/15/2027........................... 1,475,000 755,937
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/2017........................... 372,826 395,196
----------
4,236,167
----------
ELECTRIC-INTEGRATED -- 1.1%
CMS Energy Corp.
Senior Notes
2.75% due 05/15/2014........................... 207,000 209,984
Commonwealth Edison Co.
1st Mtg. Notes
3.80% due 10/01/2042........................... 227,000 229,607
Dominion Resources, Inc.
Senior Notes
4.90% due 08/01/2041........................... 388,000 449,164
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033........................... 525,000 607,700
Duke Energy Carolinas LLC
1st Mtg. Notes
4.00% due 09/30/2042........................... 378,000 385,585
Duke Energy Indiana, Inc.
1st Mtg. Notes
4.20% due 03/15/2042........................... 370,000 378,460
Exelon Generation Co. LLC
Senior Notes
4.25% due 06/15/2022*.......................... 1,269,000 1,342,695
Exelon Generation Co. LLC
Senior Notes
5.60% due 06/15/2042*.......................... 886,000 951,053
Exelon Generation Co. LLC
Senior Notes
5.75% due 10/01/2041........................... 457,000 500,541
Georgia Power Co.
Senior Notes
3.00% due 04/15/2016........................... 180,000 193,038
Georgia Power Co.
Senior Notes
4.30% due 03/15/2042........................... 218,000 232,551
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
ELECTRIC-INTEGRATED (CONTINUED)
Great Plains Energy, Inc.
Senior Notes
5.29% due 06/15/2022................... $ 310,000 $ 347,562
Mirant Mid Atlantic Pass-Through Trust
Pass Through Certs., Series B
9.13% due 06/30/2017................... 435,409 476,773
Northern States Power Co.
1st Mtg. Notes
3.40% due 08/15/2042................... 372,000 357,386
----------
6,662,099
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.2%
Amkor Technology, Inc.
Company Guar. Notes
6.38% due 10/01/2022*.................. 1,000,000 985,000
National Semiconductor Corp.
Senior Notes
6.60% due 06/15/2017................... 262,000 327,797
----------
1,312,797
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.2%
Epicor Software Corp.
Company Guar. Notes
8.63% due 05/01/2019................... 1,360,000 1,434,800
----------
FINANCE-AUTO LOANS -- 0.5%
American Honda Finance Corp.
Notes
1.00% due 08/11/2015*.................. 488,000 488,988
Ford Motor Credit Co., LLC
Senior Notes
5.75% due 02/01/2021................... 394,000 441,307
General Motors Financial Co., Inc.
Company Guar. Notes
4.75% due 08/15/2017*.................. 450,000 461,390
General Motors Financial Co., Inc.
Company Guar. Notes
6.75% due 06/01/2018................... 675,000 751,187
Hyundai Capital America
Company Guar. Notes
2.13% due 10/02/2017*.................. 713,000 713,101
----------
2,855,973
----------
FINANCE-COMMERCIAL -- 0.1%
Textron Financial Corp.
Senior Notes
5.40% due 04/28/2013................... 377,000 386,743
----------
FINANCE-CONSUMER LOANS -- 0.2%
SLM Corp.
Notes
4.63% due 09/25/2017................... 928,000 941,365
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.2%
Bear Stearns Cos. LLC
Sub. Notes
5.55% due 01/22/2017................... 636,000 723,215
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+.................. 280,000 28
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-INVESTMENT BANKER/BROKER (CONTINUED)
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+.............................. $ 361,000 $ 36
Merrill Lynch & Co., Inc.
Sub. Notes
6.05% due 05/16/2016............................... 400,000 437,050
Merrill Lynch & Co., Inc.
Sub. Notes
7.75% due 05/14/2038............................... 134,000 168,285
----------
1,328,614
----------
FINANCE-LEASING COMPANIES -- 0.4%
Air Lease Corp.
Senior Notes
5.63% due 04/01/2017*.............................. 1,918,000 1,956,360
Boeing Capital Corp.
Senior Notes
2.13% due 08/15/2016............................... 542,000 569,245
Boeing Capital Corp.
Senior Notes
2.90% due 08/15/2018............................... 183,000 200,740
----------
2,726,345
----------
FINANCE-OTHER SERVICES -- 0.3%
National Rural Utilities Cooperative Finance Corp.
Bonds
1.00% due 02/02/2015............................... 279,000 282,241
SquareTwo Financial Corp.
Sec. Notes
11.63% due 04/01/2017.............................. 1,509,000 1,335,465
----------
1,617,706
----------
FINANCIAL GUARANTEE INSURANCE -- 0.2%
Assured Guaranty Municipal Holdings, Inc. FRS
Company Guar. Notes
6.40% due 12/15/2066*.............................. 1,360,000 1,006,400
----------
FIREARMS & AMMUNITION -- 0.1%
FGI Operating Co., LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020*.............................. 625,000 678,125
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
Unilever Capital Corp.
Company Guar. Notes
0.85% due 08/02/2017............................... 675,000 668,909
----------
GAMBLING (NON-HOTEL) -- 0.1%
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/2014*(8)(9)........................ 880,853 418,405
----------
GAS-DISTRIBUTION -- 0.2%
Sempra Energy
Senior Notes
2.88% due 10/01/2022............................... 1,000,000 1,011,987
Southern Union Co.
Senior Notes
7.60% due 02/01/2024............................... 240,000 304,532
----------
1,316,519
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
GAS-TRANSPORTATION -- 0.2%
Northern Natural Gas Co.
Senior Notes
4.10% due 09/15/2042*................... $ 262,000 $ 263,520
Sabine Pass LNG LP
Senior Sec. Notes
7.25% due 11/30/2013.................... 800,000 852,000
----------
1,115,520
----------
HOME FURNISHINGS -- 0.5%
Norcraft Cos. LP/Norcraft Finance Corp.
Sec. Notes
10.50% due 12/15/2015................... 1,168,000 1,173,840
Sealy Mattress Co.
Company Guar. Notes
8.25% due 06/15/2014.................... 1,700,000 1,723,375
----------
2,897,215
----------
INDEPENDENT POWER PRODUCERS -- 0.5%
Calpine Corp.
Senior Sec. Notes
7.88% due 07/31/2020*................... 860,000 939,550
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/2018.................... 695,000 788,825
NRG Energy, Inc.
Company Guar. Notes
6.63% due 03/15/2023*................... 575,000 587,937
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/2018.................... 190,000 205,675
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2020.................... 430,000 468,700
----------
2,990,687
----------
INSURANCE-LIFE/HEALTH -- 0.4%
Lincoln National Corp.
Senior Notes
4.85% due 06/24/2021.................... 370,000 401,836
Primerica, Inc.
Senior Notes
4.75% due 07/15/2022.................... 534,000 566,389
Prudential Financial, Inc.
Senior Notes
4.75% due 09/17/2015.................... 619,000 681,706
Torchmark Corp.
Senior Notes
3.80% due 09/15/2022.................... 219,000 223,980
Unum Group
Senior Notes
5.75% due 08/15/2042.................... 376,000 395,619
----------
2,269,530
----------
INSURANCE-MULTI-LINE -- 0.6%
Genworth Financial, Inc.
Senior Notes
7.63% due 09/24/2021.................... 1,025,000 1,046,150
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-MULTI-LINE (CONTINUED)
Hartford Financial Services Group, Inc.
Senior Notes
6.30% due 03/15/2018.................... $ 955,000 $1,106,519
MetLife, Inc.
Senior Notes
3.05% due 12/15/2022.................... 370,000 374,677
MetLife, Inc.
Senior Notes
4.13% due 08/13/2042.................... 373,000 367,249
Metropolitan Life Global Funding I
Senior Sec. Notes
2.50% due 09/29/2015*................... 727,000 756,670
----------
3,651,265
----------
INSURANCE-MUTUAL -- 0.2%
Liberty Mutual Group, Inc.
Senior Notes
5.75% due 03/15/2014*................... 195,000 204,852
New York Life Global Funding
Sec. Notes
1.65% due 05/15/2017*................... 829,000 845,252
----------
1,050,104
----------
INSURANCE-PROPERTY/CASUALTY -- 0.0%
Markel Corp.
Senior Notes
4.90% due 07/01/2022.................... 280,000 295,823
----------
MACHINERY-CONSTRUCTION & MINING -- 0.1%
Caterpillar, Inc.
Senior Notes
1.50% due 06/26/2017.................... 689,000 703,526
----------
MARINE SERVICES -- 0.3%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/2019.................... 1,826,000 1,926,430
----------
MEDICAL INSTRUMENTS -- 0.3%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/2017.................... 1,655,000 1,700,513
----------
MEDICAL PRODUCTS -- 0.4%
Baxter International, Inc.
Senior Notes
1.85% due 01/15/2017.................... 281,000 290,845
Baxter International, Inc.
Senior Notes
3.65% due 08/15/2042.................... 224,000 223,345
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/2027.................... 295,000 405,848
Biomet, Inc.
Company Guar. Notes
6.50% due 08/01/2020*................... 475,000 492,219
Universal Hospital Services, Inc.
Sec. Notes
7.63% due 08/15/2020*................... 929,000 968,482
----------
2,380,739
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
MEDICAL-BIOMEDICAL/GENE -- 0.1%
Gilead Sciences, Inc.
Senior Notes
4.40% due 12/01/2021.................. $ 308,000 $ 350,086
----------
MEDICAL-DRUGS -- 0.7%
Bristol-Myers Squibb Co.
Senior Notes
2.00% due 08/01/2022.................. 715,000 695,172
Endo Health Solutions, Inc.
Company Guar. Notes
7.25% due 01/15/2022.................. 620,000 669,600
Johnson & Johnson
Notes
5.55% due 08/15/2017.................. 405,000 493,996
Merck & Co., Inc.
Senior Notes
1.10% due 01/31/2018.................. 707,000 708,755
Merck & Co., Inc.
Senior Notes
2.40% due 09/15/2022.................. 509,000 513,096
Novartis Capital Corp.
Company Guar. Notes
3.70% due 09/21/2042.................. 303,000 313,274
Valeant Pharmaceuticals International
Company Guar. Notes
6.88% due 12/01/2018*................. 1,075,000 1,131,438
----------
4,525,331
----------
MEDICAL-GENERIC DRUGS -- 0.1%
Watson Pharmaceuticals, Inc.
Senior Notes
1.88% due 10/01/2017.................. 278,000 281,094
Watson Pharmaceuticals, Inc.
Senior Notes
3.25% due 10/01/2022.................. 277,000 280,548
Watson Pharmaceuticals, Inc.
Senior Notes
4.63% due 10/01/2042.................. 229,000 234,763
----------
796,405
----------
MEDICAL-HMO -- 0.6%
AMERIGROUP Corp.
Senior Notes
7.50% due 11/15/2019.................. 1,025,000 1,197,328
Cigna Corp.
Senior Notes
5.38% due 02/15/2042.................. 336,000 376,430
Cigna Corp.
Senior Notes
6.15% due 11/15/2036.................. 145,000 173,810
WellPoint, Inc.
Senior Notes
1.25% due 09/10/2015.................. 708,000 712,943
WellPoint, Inc.
Senior Notes
3.30% due 01/15/2023.................. 507,000 512,796
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HMO (CONTINUED)
WellPoint, Inc.
Senior Notes
4.65% due 01/15/2043..................... $ 523,000 $ 533,463
----------
3,506,770
----------
MEDICAL-HOSPITALS -- 0.9%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/2017..................... 1,330,000 1,418,112
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020..................... 365,000 406,063
HCA, Inc.
Senior Notes
7.50% due 11/15/2095..................... 2,325,000 1,976,250
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019..................... 1,975,000 1,886,125
----------
5,686,550
----------
METAL-IRON -- 0.1%
Cliffs Natural Resources, Inc.
Senior Notes
4.88% due 04/01/2021..................... 612,000 599,013
----------
MOTION PICTURES & SERVICES -- 0.1%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/2017*.................... 450,000 501,750
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.3%
Radnet Management, Inc.
Company Guar. Notes
10.38% due 04/01/2018.................... 1,840,000 1,858,400
----------
MULTIMEDIA -- 0.7%
NBCUniversal Media LLC
Senior Notes
2.88% due 01/15/2023..................... 1,025,000 1,025,016
NBCUniversal Media LLC
Senior Notes
4.45% due 01/15/2043..................... 535,000 535,284
News America, Inc.
Notes
3.00% due 09/15/2022*.................... 746,000 752,593
News America, Inc.
Company Guar. Notes
6.55% due 03/15/2033..................... 603,000 707,598
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/2033..................... 385,000 559,717
Time Warner, Inc.
Company Guar. Notes
4.90% due 06/15/2042..................... 536,000 588,087
----------
4,168,295
----------
MUSIC -- 0.1%
WMG Acquisition Corp.
Senior Sec. Notes
9.50% due 06/15/2016..................... 825,000 900,281
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Company Guar. Notes
11.50% due 07/01/2003+(6)(7)(8)(9).............. $ 500,000 $ 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.2%
Casella Waste Systems, Inc.
Company Guar. Notes
7.75% due 02/15/2019*........................... 800,000 784,000
Casella Waste Systems, Inc.
Sec. Notes
11.00% due 07/15/2014........................... 700,000 742,000
----------
1,526,000
----------
OIL & GAS DRILLING -- 0.1%
Rowan Cos., Inc.
Company Guar. Notes
4.88% due 06/01/2022............................ 446,000 478,628
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.3%
Alta Mesa Holdings LP/Alta Mesa Finance Services Corp.
Company Guar. Notes
9.63% due 10/15/2018............................ 920,000 920,000
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2021............................ 635,000 685,800
Chesapeake Energy Corp.
Company Guar. Notes
9.50% due 02/15/2015............................ 880,000 969,100
Devon Energy Corp.
Senior Notes
4.75% due 05/15/2042............................ 454,000 486,464
Encore Acquisition Co.
Company Guar. Notes
9.50% due 05/01/2016............................ 720,000 781,200
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
7.75% due 09/01/2022*........................... 225,000 229,500
EV Energy Partners LP/EV Energy Finance Corp.
Company Guar. Notes
8.00% due 04/15/2019............................ 1,060,000 1,099,750
Everest Acquisition LLC/Everest Acquisition
Finance, Inc.
Senior Notes
9.38% due 05/01/2020*........................... 405,000 441,450
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
6.25% due 11/01/2019*........................... 827,000 822,865
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
8.63% due 04/15/2020............................ 635,000 695,325
Milagro Oil & Gas, Inc.
Sec. Notes
10.50% due 05/15/2016........................... 959,000 680,890
Newfield Exploration Co.
Senior Notes
5.63% due 07/01/2024............................ 585,000 649,350
Pioneer Natural Resources Co.
Senior Notes
3.95% due 07/15/2022............................ 296,000 314,434
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Plains Exploration & Production Co.
Company Guar. Notes
6.13% due 06/15/2019.................. $ 565,000 $ 569,238
Plains Exploration & Production Co.
Company Guar. Notes
6.75% due 02/01/2022.................. 655,000 664,825
QEP Resources, Inc.
Senior Notes
6.88% due 03/01/2021.................. 754,000 852,020
Samson Investment Co.
Senior Notes
9.75% due 02/15/2020*................. 1,115,000 1,148,450
SandRidge Energy, Inc.
Company Guar. Notes
7.50% due 02/15/2023*................. 1,150,000 1,184,500
Union Pacific Resources Group, Inc.
Senior Notes
7.15% due 05/15/2028.................. 687,000 828,510
-----------
14,023,671
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
Hess Corp.
Senior Notes
7.88% due 10/01/2029.................. 757,000 1,047,567
Marathon Petroleum Corp.
Senior Notes
6.50% due 03/01/2041.................. 179,000 219,283
-----------
1,266,850
-----------
OIL REFINING & MARKETING -- 0.3%
Alon Refining Krotz Springs, Inc.
Senior Sec. Notes
13.50% due 10/15/2014................. 735,000 784,612
Reliance Holdings USA, Inc.
Company Guar. Notes
5.40% due 02/14/2022.................. 550,000 585,852
Western Refining, Inc.
Senior Sec. Notes
11.25% due 06/15/2017*................ 365,000 406,063
-----------
1,776,527
-----------
OIL-FIELD SERVICES -- 0.5%
Exterran Holdings, Inc.
Company Guar. Notes
7.25% due 12/01/2018.................. 935,000 984,087
Green Field Energy Services, Inc.
Senior Sec. Notes
13.00% due 11/15/2016*................ 1,065,000 1,043,700
Hiland Partners LP/Hiland Partners Finance Corp.
Company Guar. Notes
7.25% due 10/01/2020*................. 500,000 520,000
Oil States International, Inc.
Company Guar. Notes
6.50% due 06/01/2019.................. 700,000 743,750
-----------
3,291,537
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
PAPER & RELATED PRODUCTS -- 0.4%
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*........................... $ 639,000 $ 748,924
Georgia-Pacific LLC
Company Guar. Notes
8.25% due 05/01/2016*........................... 612,000 658,571
Longview Fibre Paper & Packaging, Inc.
Senior Sec. Notes
8.00% due 06/01/2016*........................... 941,000 980,992
----------
2,388,487
----------
PIPELINES -- 1.5%
Access Midstream Partners LP/ACMP Finance Corp.
Company Guar. Notes
6.13% due 07/15/2022............................ 1,020,000 1,078,650
Atlas Pipeline Partners LP/Atlas Pipeline Finance Corp.
Company Guar. Notes
6.63% due 10/01/2020*........................... 775,000 788,562
Copano Energy LLC/Copano Energy Finance Corp.
Company Guar. Notes
7.13% due 04/01/2021............................ 710,000 741,950
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020............................ 1,100,000 1,248,500
Energy Transfer Partners LP
Senior Notes
6.50% due 02/01/2042............................ 640,000 738,515
Enterprise Products Operating LLC
Company Guar. Notes
4.45% due 02/15/2043............................ 771,000 762,595
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
7.88% due 12/15/2018............................ 805,000 853,300
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
5.50% due 02/15/2023............................ 275,000 288,063
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
6.50% due 08/15/2021............................ 945,000 1,013,512
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
5.50% due 04/15/2023............................ 300,000 303,375
Regency Energy Partners LP/Regency Energy
Finance Corp.
Company Guar. Notes
6.88% due 12/01/2018............................ 525,000 560,438
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/2016............................ 650,000 662,187
----------
9,039,647
----------
PRINTING-COMMERCIAL -- 0.2%
Valassis Communications, Inc.
Company Guar. Notes
6.63% due 02/01/2021............................ 990,000 1,022,175
----------
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PRIVATE CORRECTIONS -- 0.0%
Geo Group, Inc.
Company Guar. Notes
6.63% due 02/15/2021..................... $ 47,000 $ 50,290
----------
PUBLISHING-NEWSPAPERS -- 0.2%
McClatchy Co.
Senior Sec. Notes
11.50% due 02/15/2017.................... 1,355,000 1,456,625
----------
RADIO -- 0.1%
Entercom Radio LLC
Company Guar. Notes
10.50% due 12/01/2019.................... 850,000 926,500
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.7%
Brandywine Operating Partnership LP
Company Guar. Notes
4.95% due 04/15/2018..................... 281,000 301,888
Duke Realty LP
Senior Notes
3.88% due 10/15/2022..................... 283,000 287,800
HCP, Inc.
Senior Notes
3.75% due 02/01/2016..................... 200,000 212,259
Host Hotels & Resorts LP
Company Guar. Notes
4.75% due 03/01/2023..................... 92,000 95,335
Host Hotels & Resorts LP
Senior Notes
5.25% due 03/15/2022*.................... 554,000 598,320
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.88% due 03/15/2024..................... 957,000 1,028,775
Sabra Health Care LP/Sabra Capital Corp.
Company Guar. Notes
8.13% due 11/01/2018*.................... 325,000 355,062
Sabra Health Care LP/Sabra Capital Corp.
Company Guar. Notes
8.13% due 11/01/2018..................... 1,200,000 1,314,000
----------
4,193,439
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.3%
Kennedy-Wilson, Inc.
Company Guar. Notes
8.75% due 04/01/2019..................... 1,515,000 1,613,475
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.3%
First Industrial LP
Senior Notes
5.75% due 01/15/2016..................... 1,535,000 1,613,790
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(8)(9).............. 3,285,000 124
----------
RENTAL AUTO/EQUIPMENT -- 0.5%
Ashtead Capital, Inc.
Sec. Notes
6.50% due 07/15/2022*.................... 425,000 446,250
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022*.................... 1,140,000 1,185,600
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
RENTAL AUTO/EQUIPMENT (CONTINUED)
United Rentals North America, Inc.
Company Guar. Notes
8.38% due 09/15/2020........................ $1,625,000 $1,738,750
----------
3,370,600
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/2021........................ 820,000 930,700
----------
RETAIL-DRUG STORE -- 0.3%
CVS Pass-Through Trust
Pass Through Certs.
5.77% due 01/31/2033*....................... 241,085 275,514
CVS Pass-Through Trust
Pass Through Certs.
5.93% due 01/10/2034*....................... 624,451 735,984
Rite Aid Corp.
Senior Sec. Notes
8.00% due 08/15/2020........................ 600,000 681,000
----------
1,692,498
----------
RETAIL-OFFICE SUPPLIES -- 0.3%
Office Depot, Inc.
Senior Sec. Notes
9.75% due 03/15/2019*....................... 2,100,000 2,094,750
----------
RETAIL-PROPANE DISTRIBUTION -- 0.1%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020........................ 160,000 170,800
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022........................ 640,000 689,600
----------
860,400
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.1%
Kohl's Corp.
Senior Notes
3.25% due 02/01/2023........................ 752,000 764,539
----------
RETAIL-RESTAURANTS -- 0.5%
Dave & Buster's, Inc.
Company Guar. Notes
11.00% due 06/01/2018....................... 1,095,000 1,237,350
Landry's, Inc.
Senior Notes
9.38% due 05/01/2020*....................... 641,000 676,255
Wok Acquisition Corp.
Company Guar. Notes
10.25% due 06/30/2020*...................... 1,308,000 1,383,210
----------
3,296,815
----------
RETAIL-TOY STORES -- 0.3%
Toys R Us Property Co. II LLC
Senior Sec. Notes
8.50% due 12/01/2017........................ 1,625,000 1,750,938
----------
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(6)(7)(8)(9)......... $ 100,000 $ 0
----------
SAVINGS & LOANS/THRIFTS -- 0.4%
Astoria Financial Corp.
Senior Notes
5.00% due 06/19/2017....................... 839,000 871,513
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021....................... 915,000 1,051,621
Santander Holdings USA, Inc.
Senior Notes
3.00% due 09/24/2015....................... 300,000 303,516
----------
2,226,650
----------
SCHOOLS -- 0.1%
Northwestern University
Bonds
4.20% due 12/01/2047....................... 386,000 421,361
University of Pennsylvania
Senior Notes
4.67% due 09/01/2112....................... 292,000 332,953
----------
754,314
----------
SEISMIC DATA COLLECTION -- 0.1%
Geokinetics Holdings USA, Inc.
Senior Sec. Notes
9.75% due 12/15/2014....................... 1,115,000 485,025
----------
SHIPBUILDING -- 0.2%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/2018....................... 920,000 997,050
----------
SPECIAL PURPOSE ENTITY -- 0.1%
MassMutual Global Funding II
Senior Sec. Notes
2.00% due 04/05/2017*...................... 856,000 879,031
----------
STEEL PIPE & TUBE -- 0.3%
JMC Steel Group
Senior Notes
8.25% due 03/15/2018*...................... 1,690,000 1,723,800
----------
STEEL-PRODUCERS -- 0.5%
AK Steel Corp.
Company Guar. Notes
7.63% due 05/15/2020....................... 1,060,000 927,500
Gerdau Holdings, Inc.
Company Guar. Notes
7.00% due 01/20/2020....................... 425,000 490,875
Ryerson, Inc.
Senior Sec. Notes
12.00% due 11/01/2015...................... 1,042,000 1,075,865
Ryerson, Inc./Joseph T Ryerson & Son, Inc.
Senior Sec. Notes
9.00% due 10/15/2017*...................... 800,000 818,000
----------
3,312,240
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
STORAGE/WAREHOUSING -- 0.2%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/2020.................... $1,165,000 $1,264,025
----------
TELECOM SERVICES -- 0.6%
BellSouth Telecommunications, Inc.
Senior Notes
6.38% due 06/01/2028.................... 251,000 299,824
BellSouth Telecommunications, Inc.
Senior Notes
7.00% due 12/01/2095.................... 378,000 474,333
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.18% due 12/15/2023.................... 50,000 47,750
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.20% due 11/29/2023.................... 225,000 214,875
Cincinnati Bell Telephone Co. LLC
Company Guar. Notes
7.27% due 12/11/2023.................... 375,000 358,125
Consolidated Communications Finance Co.
Company Guar. Notes
10.88% due 06/01/2020*.................. 825,000 870,375
PAETEC Holding Corp.
Senior Sec. Notes
8.88% due 06/30/2017.................... 1,550,000 1,681,750
----------
3,947,032
----------
TELEPHONE-INTEGRATED -- 1.2%
AT&T, Inc.
Senior Notes
0.88% due 02/13/2015.................... 861,000 868,365
AT&T, Inc.
Senior Notes
6.45% due 06/15/2034.................... 403,000 525,372
BellSouth Corp.
Senior Notes
6.55% due 06/15/2034.................... 430,000 519,808
Century Telephone Enterprise, Inc.
Senior Notes
6.88% due 01/15/2028.................... 245,000 263,265
CenturyLink, Inc.
Senior Notes
5.80% due 03/15/2022.................... 1,025,000 1,115,350
CenturyLink, Inc.
Senior Notes
7.60% due 09/15/2039.................... 324,000 342,670
CenturyLink, Inc.
Senior Notes
7.65% due 03/15/2042.................... 276,000 294,053
Cincinnati Bell, Inc.
Company Guar. Notes
8.75% due 03/15/2018.................... 475,000 482,125
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/2018.................... 800,000 900,000
Frontier Communications Corp.
Senior Notes
9.25% due 07/01/2021.................... 99,000 114,593
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/2032.......................... $1,850,000 $1,914,750
Verizon Communications, Inc.
Senior Notes
6.40% due 02/15/2038.......................... 231,000 311,333
----------
7,651,684
----------
TELEVISION -- 0.1%
Local TV Finance LLC
Senior Notes
9.25% due 06/15/2015*(4)...................... 681,081 694,703
----------
THEATERS -- 0.1%
National CineMedia LLC
Senior Sec. Notes
6.00% due 04/15/2022*......................... 680,000 717,400
----------
TRANSPORT-RAIL -- 0.1%
Norfolk Southern Corp.
Senior Notes
6.00% due 05/23/2111.......................... 402,000 484,048
----------
TRANSPORT-SERVICES -- 0.4%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.......................... 675,000 684,000
Ryder System, Inc.
Senior Notes
2.50% due 03/01/2018.......................... 751,000 759,918
United Parcel Service, Inc.
Senior Notes
2.45% due 10/01/2022.......................... 713,000 719,506
----------
2,163,424
----------
TRAVEL SERVICES -- 0.3%
Sabre, Inc.
Senior Sec. Notes
8.50% due 05/15/2019*......................... 1,800,000 1,849,500
----------
TRUCKING/LEASING -- 0.4%
Penske Truck Leasing Co. LP/PTL Finance Corp.
Notes
3.13% due 05/11/2015*......................... 437,000 447,086
Penske Truck Leasing Co. LP/PTL Finance Corp.
Senior Notes
3.38% due 03/15/2018*......................... 1,500,000 1,500,970
Penske Truck Leasing Co. LP/PTL Finance Corp.
Senior Notes
4.88% due 07/11/2022*......................... 784,000 782,619
----------
2,730,675
----------
WIRE & CABLE PRODUCTS -- 0.1%
Coleman Cable, Inc.
Company Guar. Notes
9.00% due 02/15/2018.......................... 250,000 266,250
International Wire Group Holdings, Inc.
Senior Sec. Notes
8.50% due 10/15/2017*......................... 490,000 490,000
----------
756,250
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
WIRELESS EQUIPMENT -- 0.0%
Motorola, Inc.
Senior Notes
6.63% due 11/15/2037.................... $ 11,445 $ 12,264
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $253,474,830)..................... 259,825,098
------------
FOREIGN CORPORATE BONDS & NOTES -- 10.6%
BANKS-COMMERCIAL -- 1.8%
Axis Bank, Ltd.
Senior Notes
5.13% due 09/05/2017.................... 500,000 517,838
Banco Bradesco SA
Senior Notes
4.50% due 01/12/2017*................... 325,000 346,125
Banco de Bogota SA
Senior Notes
5.00% due 01/15/2017*................... 260,000 274,950
Banco do Brasil SA
Sub. Notes
5.88% due 01/26/2022*................... 440,000 470,800
Bank of Ceylon
Senior Notes
6.88% due 05/03/2017*................... 450,000 479,250
Bank of Montreal
Senior Notes
1.40% due 09/11/2017.................... 992,000 997,108
Bank of Nova Scotia
Senior Notes
2.55% due 01/12/2017.................... 516,000 546,002
Barclays Bank PLC
Sub. Notes
6.05% due 12/04/2017*................... 314,000 337,885
ING Bank NV
Notes
2.00% due 09/25/2015*................... 1,499,000 1,501,241
LBG Capital No.1 PLC FRS
Bank Guar. Notes
8.00% due 06/15/2020*(3)................ 862,000 824,843
National Australia Bank, Ltd.
Senior Notes
1.60% due 08/07/2015.................... 969,000 978,748
National Bank of Canada
Bank Guar. Notes
1.50% due 06/26/2015.................... 448,000 454,527
Nordea Bank AB
Sub. Notes
4.25% due 09/21/2022*................... 347,000 344,850
PKO Finance AB
Senior Notes
4.63% due 09/26/2022*................... 470,000 471,410
Russian Agricultural Bank OJSC Via RSHB
Capital SA
Senior Notes
5.30% due 12/27/2017*................... 440,000 465,392
Sberbank of Russia Via SB Capital SA
Senior Notes
6.13% due 02/07/2022.................... 500,000 552,500
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
Turkiye Garanti Bankasi AS
Senior Notes
5.25% due 09/13/2022*.............. $ 575,000 $ 579,313
Westpac Banking Corp. FRS
Jr. Sub. Notes
1.00% due 03/29/2013(3)............ 1,050,000 546,000
Yapi ve Kredi Bankasi AS
Senior Notes
6.75% due 02/08/2017............... 455,000 489,125
-----------
11,177,907
-----------
BANKS-MONEY CENTER -- 0.1%
Royal Bank of Scotland NV FRS
Sub. Notes
1.11% due 03/09/2015............... 670,000 609,700
-----------
BANKS-SPECIAL PURPOSE -- 0.5%
Burgan Finance No. 1, Ltd.
Bank Guar. Notes
7.88% due 09/29/2020............... 555,000 612,443
Development Bank of Kazakhstan
Senior Notes
5.50% due 12/20/2015............... 340,000 368,900
Kreditanstalt fuer Wiederaufbau
Government Guar. Notes
3.75% due 09/25/2015............... NOK10,500,000 1,931,491
-----------
2,912,834
-----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Corp GEO SAB de CV
Company Guar. Notes
9.25% due 06/30/2020*.............. 470,000 484,100
Urbi Desarrollos Urbanos SAB de CV
Company Guar. Notes
9.75% due 02/03/2022*.............. 350,000 308,000
-----------
792,100
-----------
CELLULAR TELECOM -- 0.1%
America Movil SAB de CV
Senior Notes
3.13% due 07/16/2022............... 301,000 310,175
Vodafone Group PLC
Senior Notes
2.50% due 09/26/2022............... 567,000 566,152
-----------
876,327
-----------
CHEMICALS-DIVERSIFIED -- 0.3%
Ineos Finance PLC
Senior Sec. Notes
8.38% due 02/15/2019*.............. 468,000 492,570
LyondellBasell Industries NV
Senior Notes
5.75% due 04/15/2024............... 548,000 623,350
OXEA Finance/Cy SCA
Senior Sec. Notes
9.50% due 07/15/2017*.............. 753,000 822,652
-----------
1,938,572
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
COMPUTERS-MEMORY DEVICES -- 0.2%
Seagate HDD Cayman
Company Guar. Notes
7.75% due 12/15/2018................ $ 925,000 $1,022,125
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
Royal Bank of Scotland Group PLC
Senior Notes
2.55% due 09/18/2015................ 424,000 429,102
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.1%
Bombardier, Inc.
Senior Notes
7.50% due 03/15/2018*............... 425,000 481,313
----------
DIVERSIFIED MINERALS -- 0.7%
Anglo American Capital PLC
Company Guar. Notes
2.63% due 09/27/2017*............... 955,000 958,247
FMG Resources August 2006 Pty, Ltd.
Senior Notes
6.00% due 04/01/2017*............... 825,000 767,250
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.38% due 02/01/2016*............... 600,000 583,500
FMG Resources August 2006 Pty, Ltd.
Senior Notes
6.88% due 04/01/2022*............... 1,250,000 1,143,750
Teck Resources, Ltd.
Company Guar. Notes
5.40% due 02/01/2043................ 1,127,000 1,099,675
Volcan Cia Minera SAA
Company Guar. Notes
5.38% due 02/02/2022*............... 118,000 127,735
----------
4,680,157
----------
ELECTRIC-GENERATION -- 0.1%
Abu Dhabi National Energy Co.
Senior Notes
5.88% due 12/13/2021*............... 200,000 231,250
Abu Dhabi National Energy Co.
Senior Notes
6.17% due 10/25/2017................ 120,000 138,900
Comision Federal de Electricidad
Senior Notes
4.88% due 05/26/2021*............... 500,000 558,750
----------
928,900
----------
ELECTRIC-INTEGRATED -- 0.2%
Centrais Eletricas Brasileiras SA
Senior Notes
5.75% due 10/27/2021................ 500,000 556,250
Dubai Electricity & Water Authority
Senior Notes
7.38% due 10/21/2020................ 410,000 479,290
----------
1,035,540
----------
ELECTRIC-TRANSMISSION -- 0.1%
Empresa de Energia de Bogota SA
Senior Notes
6.13% due 11/10/2021*............... 360,000 396,000
----------
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-LEASING COMPANIES -- 0.2%
AerCap Aviation Solutions BV
Company Guar. Notes
6.38% due 05/30/2017*.......................... $ 732,000 $ 768,600
VEB-Leasing Via VEB Leasing Investment, Ltd.
Senior Notes
5.13% due 05/27/2016........................... 330,000 342,804
----------
1,111,404
----------
INDEPENDENT POWER PRODUCERS -- 0.1%
AES Drax Energy, Ltd.
Sec. Notes
11.50% due 08/30/2010+(7)(8)(9)(14)............ 725,000 0
PT Perusahaan Listrik Negara
Senior Notes
5.50% due 11/22/2021*.......................... 500,000 559,375
----------
559,375
----------
INSURANCE-MULTI-LINE -- 0.2%
Catlin Insurance Co., Ltd. FRS
Jr. Sub. Notes
7.25% due 01/19/2017*(3)....................... 997,000 973,321
----------
INVESTMENT COMPANIES -- 0.1%
Temasek Financial I, Ltd.
Company Guar. Notes
2.38% due 01/23/2023*.......................... 789,000 788,127
----------
MEDICAL-DRUGS -- 0.4%
Elan Finance PLC/Elan Finance Corp.
Company Guar. Notes
6.25% due 10/15/2019*.......................... 675,000 680,062
Hypermarcas SA
Senior Notes
6.50% due 04/20/2021*.......................... 310,000 324,973
Takeda Pharmaceutical Co., Ltd.
Senior Notes
1.63% due 03/17/2017*.......................... 1,630,000 1,648,468
----------
2,653,503
----------
METAL-DIVERSIFIED -- 0.1%
Rio Tinto Finance USA PLC
Company Guar. Notes
2.88% due 08/21/2022........................... 184,000 183,181
Rio Tinto Finance USA, Ltd.
Company Guar. Notes
9.00% due 05/01/2019........................... 363,000 496,367
----------
679,548
----------
METAL-IRON -- 0.0%
OJSC Novolipetsk Steel via Steel Funding, Ltd.
Notes
4.95% due 09/26/2019*.......................... 265,000 262,760
----------
MUNICIPAL BONDS -- 0.1%
City of Kyiv Via Kyiv Finance PLC
Senior Notes
9.38% due 07/11/2016*.......................... 870,000 801,793
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
OIL & GAS DRILLING -- 0.3%
Transocean, Inc.
Company Guar. Notes
2.50% due 10/15/2017............. $452,000 $ 454,506
Transocean, Inc.
Company Guar. Notes
3.80% due 10/15/2022............. 509,000 511,635
Transocean, Inc.
Company Guar. Notes
6.80% due 03/15/2038............. 572,000 687,828
Transocean, Inc.
Company Guar. Notes
7.50% due 04/15/2031............. 280,000 345,832
----------
1,999,801
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.5%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031............. 658,000 881,029
Gazprom OAO Via Gaz Capital SA
Senior Notes
6.00% due 01/23/2021*............ 260,000 295,149
KazMunayGas National Co.
Senior Notes
6.38% due 04/09/2021*............ 600,000 720,366
KazMunayGas National Co.
Senior Notes
7.00% due 05/05/2020............. 500,000 613,750
PT Pertamina Persero
Senior Notes
4.88% due 05/03/2022*............ 720,000 774,900
----------
3,285,194
----------
OIL COMPANIES-INTEGRATED -- 1.2%
BG Energy Capital PLC
Company Guar. Notes
2.88% due 10/15/2016*............ 970,000 1,028,975
BP Capital Markets PLC
Company Guar. Notes
1.85% due 05/05/2017............. 514,000 525,028
BP Capital Markets PLC
Company Guar. Notes
2.25% due 11/01/2016............. 966,000 1,011,204
BP Capital Markets PLC
Company Guar. Notes
3.25% due 05/06/2022............. 237,000 250,788
BP Capital Markets PLC
Company Guar. Notes
4.50% due 10/01/2020............. 931,000 1,080,749
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/2027............. 350,000 216,125
Petroleos de Venezuela SA
Company Guar. Notes
8.50% due 11/02/2017............. 950,000 859,750
Petroleos Mexicanos
Company Guar. Notes
4.88% due 01/24/2022............. 800,000 904,000
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-INTEGRATED (CONTINUED)
Shell International Finance BV
Company Guar. Notes
2.38% due 08/21/2022....................... $ 360,000 $ 363,421
Total Capital International SA
Company Guar. Notes
1.55% due 06/28/2017....................... 755,000 769,158
Total Capital International SA
Company Guar. Notes
2.70% due 01/25/2023....................... 366,000 373,058
----------
7,382,256
----------
OIL-FIELD SERVICES -- 0.2%
Schlumberger Investment SA
Company Guar. Notes
2.40% due 08/01/2022*...................... 369,000 365,256
Schlumberger Norge AS
Company Guar. Notes
1.25% due 08/01/2017*...................... 720,000 717,955
----------
1,083,211
----------
PETROCHEMICALS -- 0.2%
Mexichem SAB de CV
Senior Notes
4.88% due 09/19/2022*...................... 837,000 849,555
Mexichem SAB de CV
Senior Notes
6.75% due 09/19/2042*...................... 224,000 232,445
----------
1,082,000
----------
PIPELINES -- 0.0%
Transportadora de Gas Internacional SA ESP
Senior Notes
5.70% due 03/20/2022*...................... 200,000 215,000
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.1%
Agile Property Holdings, Ltd.
Senior Sec. Notes
9.88% due 03/20/2017....................... 350,000 364,000
Country Garden Holdings Co., Ltd.
Senior Notes
11.13% due 02/23/2018...................... 410,000 445,875
----------
809,875
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
LS Finance 2017, Ltd.
Company Guar. Notes
5.25% due 01/26/2017....................... 350,000 376,575
----------
SATELLITE TELECOM -- 0.3%
Intelsat Luxembourg SA
Company Guar. Notes
11.50% due 02/04/2017(4)................... 1,725,000 1,828,500
----------
SAVINGS & LOANS/THRIFTS -- 0.2%
RBS Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*...................... 1,025,000 1,026,908
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT -- 0.2%
MagnaChip Semiconductor SA/MagnaChip
Semiconductor Finance Co.
Company Guar. Notes
10.50% due 04/15/2018....................... $1,100,000 $1,237,500
----------
SPECIAL PURPOSE ENTITIES -- 0.1%
China Overseas Finance Cayman IV, Ltd.
Company Guar. Notes
4.88% due 02/15/2017........................ 440,000 472,882
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 01/15/2015*+(8)(9)(10)(14)........ 1,330,000 0
----------
472,882
----------
TELECOM SERVICES -- 0.3%
Colombia Telecomunicaciones SA ESP
Senior Notes
5.38% due 09/27/2022*....................... 355,000 360,325
UPCB Finance III, Ltd.
Senior Sec. Notes
6.63% due 07/01/2020*....................... 900,000 942,750
Wind Acquisition Holdings Finance SA
Senior Sec. Notes
12.25% due 07/15/2017*(4)(20)............... 955,125 754,549
----------
2,057,624
----------
TELEPHONE-INTEGRATED -- 0.4%
Nippon Telegraph & Telephone Corp.
Senior Notes
1.40% due 07/18/2017........................ 684,000 693,485
Oi SA
Senior Notes
5.75% due 02/10/2022........................ 600,000 628,500
Oi SA
Senior Notes
9.75% due 09/15/2016*....................... BRL 575,000 297,817
Virgin Media Finance PLC
Company Guar. Notes
5.25% due 02/15/2022........................ 660,000 693,000
----------
2,312,802
----------
TELEVISION -- 0.1%
Myriad International Holding BV
Company Guar. Notes
6.38% due 07/28/2017........................ 400,000 453,000
----------
THERAPEUTICS -- 0.3%
Warner Chilcott Co. LLC
Company Guar. Notes
7.75% due 09/15/2018........................ 1,780,000 1,900,150
----------
TRANSPORT-MARINE -- 0.1%
SCF Capital, Ltd.
Company Guar. Notes
5.38% due 10/27/2017........................ 585,000 588,685
----------
TRANSPORT-RAIL -- 0.3%
Canadian Pacific Railway, Ltd.
Senior Notes
4.50% due 01/15/2022........................ 513,000 566,305
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORT-RAIL (CONTINUED)
Kazakhstan Temir Zholy Finance BV
Company Guar. Notes
6.38% due 10/06/2020................. $ 625,000 $ 749,131
RZD Capital, Ltd.
Senior Notes
5.70% due 04/05/2022................. 400,000 445,260
-----------
1,760,696
-----------
TRANSPORT-SERVICES -- 0.1%
Transnet SOC, Ltd.
Senior Notes
4.00% due 07/26/2022*................ 600,000 609,900
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $65,448,009)................... 65,592,967
-----------
FOREIGN GOVERNMENT AGENCIES -- 19.8%
REGIONAL AUTHORITY -- 0.2%
Hydro-Quebec
Government Guar. Notes
1.38% due 06/19/2017................. 577,000 585,482
Province of British Columbia, Canada
Senior Notes
2.85% due 06/15/2015................. 612,000 651,841
-----------
1,237,323
-----------
SOVEREIGN -- 19.3%
Arab Republic of Egypt
Senior Notes
6.88% due 04/30/2040................. 530,000 522,050
Bolivarian Republic of Venezuela
Senior Notes
9.25% due 09/15/2027................. 1,020,000 919,530
Commonwealth of Australia
Senior Notes
4.50% due 10/21/2014................. AUD 240,000 259,025
Commonwealth of Jamaica
Senior Notes
8.00% due 06/24/2019................. 260,000 261,625
Commonwealth of Jamaica
Senior Notes
8.00% due 03/15/2039................. 250,000 225,000
Dominican Republic
Senior Notes
7.50% due 05/06/2021................. 437,000 492,717
Dominican Republic
Senior Notes
9.04% due 01/23/2018................. 404,401 451,919
European Union
Senior Notes
3.25% due 04/04/2018................. EUR 190,000 273,224
Export Credit Bank of Turkey
Bonds
5.38% due 11/04/2016................. 350,000 375,375
Federative Republic of Brazil
Senior Notes
4.88% due 01/22/2021................. 1,920,000 2,294,400
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
SOVEREIGN (CONTINUED)
Federative Republic of Brazil
Senior Notes
5.63% due 01/07/2041.......... $ 881,000 $1,127,680
Federative Republic of Brazil
Senior Notes
8.75% due 02/04/2025.......... 570,000 921,975
Federative Republic of Brazil
Bonds
10.13% due 05/15/2027......... 500,000 904,250
Government of Australia
Senior Notes
5.75% due 05/15/2021.......... AUD 1,880,000 2,383,150
Government of Australia
Senior Notes
6.00% due 02/15/2017.......... AUD 1,115,000 1,325,776
Government of Canada
Senior Notes
0.88% due 02/14/2017.......... 527,000 533,113
Government of Canada
Bonds
4.25% due 06/01/2018.......... CAD 1,825,000 2,148,380
Government of Canada
Bonds
5.75% due 06/01/2029.......... CAD 2,435,000 3,710,607
Government of Romania
Senior Notes
6.75% due 02/07/2022*......... 1,120,000 1,260,000
Government of Ukraine
Senior Notes
7.95% due 02/23/2021.......... 460,000 458,238
Hungarian Government
Bonds
7.50% due 10/24/2013.......... HUF 210,000,000 955,820
Kingdom of Denmark
Bonds
4.50% due 11/15/2039.......... DKK 2,000,000 515,936
Kingdom of Norway
Bonds
3.75% due 05/25/2021.......... NOK 14,470,000 2,882,432
Kingdom of Sweden
Bonds
3.50% due 06/01/2022.......... SEK 17,530,000 3,153,441
Lebanese Republic
Senior Notes
5.00% due 10/12/2017.......... 1,420,000 1,416,450
Lebanese Republic
Senior Notes
6.60% due 11/27/2026.......... 1,712,000 1,746,240
Lebanese Republic
Senior Notes
8.25% due 04/12/2021.......... 1,000,000 1,155,000
Oriental Republic of Uruguay
Senior Notes
7.63% due 03/21/2036.......... 620,000 965,650
Oriental Republic of Uruguay
Senior Notes
7.88% due 01/15/2033.......... 580,000 904,800
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Argentina
Senior Notes
2.50% due 12/31/2038(5).............. $1,144,761 $ 421,844
Republic of Argentina
Senior Notes
7.00% due 10/03/2015................. 681,000 623,115
Republic of Argentina
Senior Notes
7.00% due 04/17/2017................. 500,000 426,750
Republic of Argentina
Senior Notes
8.28% due 12/31/2033................. 1,892,119 1,485,314
Republic of Argentina
Senior Notes
8.75% due 06/02/2017................. 440,000 429,000
Republic of Belarus
Bonds
8.75% due 08/03/2015................. 930,000 919,537
Republic of Belarus
Senior Notes
8.95% due 01/26/2018................. 550,000 539,550
Republic of Colombia
Senior Notes
4.38% due 07/12/2021................. 1,650,000 1,899,975
Republic of Colombia
Senior Notes
6.13% due 01/18/2041................. 1,380,000 1,869,900
Republic of Colombia
Senior Notes
7.38% due 03/18/2019................. 650,000 859,625
Republic of Colombia
Senior Notes
7.38% due 09/18/2037................. 300,000 460,500
Republic of Colombia
Senior Notes
8.13% due 05/21/2024................. 790,000 1,179,075
Republic of Croatia
Senior Notes
6.38% due 03/24/2021................. 470,000 521,300
Republic of Croatia
Senior Notes
6.63% due 07/14/2020................. 390,000 437,190
Republic of El Salvador
Senior Notes
7.38% due 12/01/2019................. 770,000 885,500
Republic of El Salvador
Senior Notes
7.63% due 02/01/2041................. 900,000 1,003,500
Republic of Hungary
Senior Notes
4.75% due 02/03/2015................. 400,000 400,420
Republic of Hungary
Senior Notes
6.38% due 03/29/2021................. 1,080,000 1,175,904
Republic of Hungary
Senior Notes
7.63% due 03/29/2041................. 722,000 815,860
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Indonesia
Bonds
3.75% due 04/25/2022...... $ 550,000 $ 581,625
Republic of Indonesia
Senior Notes
4.88% due 05/05/2021...... 1,010,000 1,156,450
Republic of Indonesia
Bonds
5.25% due 01/17/2042...... 1,244,000 1,412,954
Republic of Indonesia
Senior Notes
5.88% due 03/13/2020...... 400,000 482,000
Republic of Indonesia
Senior Notes
7.75% due 01/17/2038...... 300,000 447,000
Republic of Indonesia
Senior Notes
8.50% due 10/12/2035...... 390,000 618,150
Republic of Indonesia
Senior Notes
11.63% due 03/04/2019..... 850,000 1,298,375
Republic of Ivory Coast
Senior Notes
3.75% due 12/31/2032+(10). 700,000 602,000
Republic of Lithuania
Senior Notes
5.13% due 09/14/2017...... 420,000 468,300
Republic of Lithuania
Senior Notes
6.63% due 02/01/2022...... 600,000 744,000
Republic of Lithuania
Senior Notes
7.38% due 02/11/2020...... 730,000 927,100
Republic of Panama
Senior Notes
6.70% due 01/26/2036...... 850,000 1,194,250
Republic of Panama
Senior Notes
7.13% due 01/29/2026...... 620,000 878,850
Republic of Peru
Senior Notes
5.63% due 11/18/2050...... 330,000 429,825
Republic of Peru
Senior Notes
6.55% due 03/14/2037...... 631,000 929,147
Republic of Peru
Senior Notes
7.13% due 03/30/2019...... 660,000 874,500
Republic of Peru
Senior Notes
7.35% due 07/21/2025...... 957,000 1,402,005
Republic of Peru
Senior Notes
8.75% due 11/21/2033...... 720,000 1,254,600
Republic of Poland
Senior Notes
3.00% due 03/17/2023...... 2,470,000 2,422,423
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Poland
Bonds
4.75% due 04/25/2017................. PLN 1,700,000 $ 542,850
Republic of Poland
Senior Notes
5.00% due 03/23/2022................. $ 1,050,000 1,218,000
Republic of Poland
Senior Notes
5.13% due 04/21/2021................. 540,000 629,100
Republic of Poland
Bonds
5.25% due 10/25/2020................. PLN 6,400,000 2,088,618
Republic of Poland
Senior Notes
6.38% due 07/15/2019................. 750,000 926,250
Republic of Romania
Senior Notes
6.75% due 02/07/2022................. 600,000 675,000
Republic of Serbia
Notes
6.75% due 11/01/2024(5).............. 291,667 285,833
Republic of Serbia
Senior Notes
7.25% due 09/28/2021................. 300,000 317,250
Republic of Singapore
Senior Notes
2.25% due 06/01/2021................. SGD 1,900,000 1,665,903
Republic of Singapore
Senior Notes
2.38% due 04/01/2017................. SGD 1,980,000 1,750,971
Republic of South Africa
Senior Notes
4.67% due 01/17/2024................. 930,000 1,043,925
Republic of South Africa
Bonds
5.88% due 05/30/2022................. 2,000 2,463
Republic of South Africa
Bonds
6.75% due 03/31/2021................. ZAR 5,000,000 607,714
Republic of South Africa
Bonds
10.50% due 12/21/2026................ ZAR 3,800,000 577,328
Republic of Sri Lanka
Senior Notes
5.88% due 07/25/2022*................ 400,000 431,000
Republic of Sri Lanka
Senior Notes
6.25% due 10/04/2020................. 693,000 753,637
Republic of Sri Lanka
Senior Notes
6.25% due 07/27/2021................. 770,000 837,227
Republic of Sri Lanka
Notes
7.40% due 01/22/2015................. 887,000 962,395
Republic of the Philippines
Senior Notes
6.38% due 10/23/2034................. 1,010,000 1,391,275
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of the Philippines
Senior Notes
7.75% due 01/14/2031........ $1,990,000 $3,044,700
Republic of the Philippines
Senior Notes
9.50% due 02/02/2030........ 480,000 829,800
Republic of the Philippines
Senior Notes
9.88% due 01/15/2019........ 300,000 434,250
Republic of the Philippines
Senior Notes
10.63% due 03/16/2025....... 785,000 1,375,712
Republic of Turkey
Senior Notes
6.75% due 04/03/2018........ 520,000 611,650
Republic of Turkey
Senior Notes
6.88% due 03/17/2036........ 405,000 513,844
Republic of Turkey
Senior Notes
7.00% due 09/26/2016........ 750,000 868,125
Republic of Turkey
Notes
7.25% due 03/15/2015........ 800,000 886,000
Republic of Turkey
Senior Notes
7.38% due 02/05/2025........ 690,000 895,275
Republic of Turkey
Senior Notes
7.50% due 07/14/2017........ 760,000 912,000
Republic of Turkey
Bonds
9.50% due 01/12/2022........ TRY1,000,000 603,422
Republic of Turkey
Senior Notes
11.88% due 01/15/2030....... 700,000 1,313,550
Republic of Ukraine
Bonds
6.75% due 11/14/2017........ 970,000 926,350
Republic of Uruguay
Notes
8.00% due 11/18/2022........ 1,250,000 1,817,500
Republic of Venezuela
Senior Notes
11.75% due 10/21/2026....... 900,000 904,500
Republic of Venezuela
Senior Notes
11.95% due 08/05/2031....... 1,210,000 1,231,175
Republic of Venezuela
Senior Notes
12.75% due 08/23/2022....... 1,300,000 1,381,250
Russian Federation
Senior Notes
3.63% due 04/29/2015........ 800,000 842,000
Russian Federation
Senior Notes
4.50% due 04/04/2022........ 800,000 893,040
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Russian Federation
Senior Notes
5.63% due 04/04/2042.................. $ 1,200,000 $ 1,440,120
Russian Federation
Senior Notes
7.50% due 03/31/2030(5)............... 1,446,585 1,826,314
Russian Federation
Bonds
7.85% due 03/10/2018.................. RUB 15,000,000 515,708
United Mexican States
Senior Notes
3.63% due 03/15/2022.................. 1,720,000 1,875,660
United Mexican States
Senior Notes
5.13% due 01/15/2020.................. 760,000 908,200
United Mexican States
Senior Notes
6.05% due 01/11/2040.................. 1,020,000 1,359,150
United Mexican States
Senior Notes
6.75% due 09/27/2034.................. 350,000 498,400
United Mexican States
Bonds
7.25% due 12/15/2016.................. MXN 33,510,000 2,832,814
United Mexican States
Series A
Senior Notes
7.50% due 04/08/2033.................. 40,000 60,900
United Mexican States
Senior Notes
8.30% due 08/15/2031.................. 1,100,000 1,765,500
------------
119,094,864
------------
SOVEREIGN AGENCY -- 0.3%
Eskom Holdings SOC, Ltd.
Senior Notes
5.75% due 01/26/2021.................. 400,000 456,000
Financing of Infrastructural Projects
State Enterprise
Government Guar. Bonds
7.40% due 04/20/2018.................. 930,000 819,888
Vnesheconombank Via VEB Finance PLC
Senior Notes
6.03% due 07/05/2022*................. 690,000 768,522
------------
2,044,410
------------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $116,616,976)................... 122,376,597
------------
U.S. GOVERNMENT AGENCIES -- 14.5%
FEDERAL HOME LOAN MTG. CORP. -- 3.5%
3.50% due 02/01/2042.................. 1,385,629 1,488,577
3.50% due 03/01/2042.................. 696,272 751,484
3.50% due 04/01/2042.................. 654,443 702,248
4.00% due 09/01/2040.................. 693,016 745,743
4.00% due 02/01/2041.................. 1,766,798 1,901,221
4.50% due 02/01/2020.................. 51,023 54,916
4.50% due 08/01/2020.................. 138,327 148,880
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FEDERAL HOME LOAN MTG. CORP. (CONTINUED)
4.50% due 01/01/2039................... $ 146,912 $ 158,035
5.00% due 09/01/2018................... 133,462 144,416
5.00% due 07/01/2020................... 227,923 246,879
5.00% due 01/01/2024................... 249,868 269,517
5.00% due 02/01/2034................... 116,902 127,918
5.00% due 03/01/2034................... 968,713 1,052,740
5.00% due 05/01/2034................... 113,488 126,400
5.00% due 02/01/2035................... 159,001 172,793
5.00% due 07/01/2035................... 255,576 278,224
5.00% due 08/01/2035................... 291,970 317,843
5.00% due 04/01/2036................... 163,616 178,115
5.00% due 05/01/2036................... 91,799 99,748
5.00% due 08/01/2036................... 136,526 148,347
5.00% due 03/01/2039................... 640,088 703,011
5.00% due 07/01/2040................... 726,783 794,367
5.50% due 05/01/2037................... 379,793 416,382
5.50% due 06/01/2037................... 146,020 159,266
5.50% due 09/01/2037................... 359,737 392,371
5.50% due 10/01/2037................... 1,362,575 1,486,180
5.50% due 11/01/2037................... 403,326 450,539
5.50% due 12/01/2037................... 349,230 380,910
5.50% due 01/01/2038................... 848,677 927,256
5.50% due 02/01/2038................... 242,543 264,545
5.50% due 04/01/2038................... 277,072 301,946
5.50% due 07/01/2038................... 210,541 229,640
6.00% due 10/01/2037................... 403,966 444,084
6.00% due 12/01/2037................... 688,633 757,020
6.00% due 10/01/2039................... 1,295,983 1,423,064
6.00% due 03/01/2040................... 322,960 355,537
6.50% due 05/01/2029................... 2,237 2,557
6.50% due 02/01/2035................... 73,755 84,428
6.50% due 11/01/2037................... 1,483,647 1,691,609
7.00% due 06/01/2029................... 7,565 9,044
Federal Home Loan Mtg. Corp. REMIC
Series 41, Class F
10.00% due 05/15/2020(1)............... 4,285 4,654
Series 1103, Class N
11.57% due 06/15/2021(1)(17)........... 2,247 564
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
6.58% due 09/15/2039(1)(17)............ 5,531,078 1,003,504
-----------
21,396,522
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 10.5%
3.00% due 03/01/2042................... 96,183 101,640
3.00% due 06/01/2042................... 844,946 892,880
3.50% due 08/01/2027................... 870,405 932,227
3.50% due 12/01/2041................... 1,751,641 1,880,355
3.50% due 01/01/2042................... 980,926 1,053,006
3.50% due 04/01/2042................... 969,338 1,040,719
3.50% due 05/01/2042................... 1,289,287 1,384,228
3.50% due 07/01/2042................... 1,247,854 1,339,744
4.00% due 06/01/2039................... 714,783 796,999
4.00% due 09/01/2040................... 1,932,325 2,084,539
4.00% due 10/01/2040................... 1,158,836 1,250,120
4.00% due 12/01/2040................... 2,544,335 2,780,538
4.00% due 03/01/2041................... 1,364,730 1,472,234
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.00% due 08/01/2041.................. $1,825,316 $1,969,670
4.00% due 11/01/2041.................. 1,101,866 1,189,006
4.50% due 06/01/2019.................. 117,644 127,321
4.50% due 11/01/2022.................. 229,575 248,315
4.50% due 06/01/2023.................. 138,370 149,406
4.50% due 10/01/2024.................. 485,544 524,268
4.50% due 03/01/2025.................. 627,096 678,677
4.50% due 05/01/2025.................. 559,064 605,049
4.50% due 07/01/2025.................. 758,282 820,654
4.50% due 01/01/2039.................. 1,458,026 1,578,623
4.50% due 07/01/2040.................. 1,596,340 1,753,818
4.50% due 08/01/2040.................. 2,178,807 2,403,912
4.50% due 07/01/2041.................. 2,406,624 2,617,714
4.50% due 10/01/2041.................. 7,227,033 7,860,931
5.00% due 06/01/2019.................. 64,765 70,620
5.00% due 01/01/2023.................. 44,919 48,805
5.00% due 03/01/2034.................. 97,410 106,460
5.00% due 04/01/2035.................. 1,809,592 1,977,706
5.00% due 05/01/2035.................. 62,494 68,487
5.00% due 02/01/2037.................. 97,799 106,751
5.00% due 04/01/2037.................. 410,921 448,326
5.00% due 05/01/2037.................. 115,253 125,744
5.00% due 06/01/2037.................. 6,495 7,086
5.00% due 07/01/2037.................. 99,825 108,912
5.00% due 05/01/2040.................. 279,164 305,273
5.00% due 07/01/2040.................. 994,425 1,089,917
5.00% due 08/01/2040.................. 1,235,470 1,354,108
5.50% due 11/01/2019.................. 391,913 428,506
5.50% due 08/01/2020.................. 100,355 109,725
5.50% due 11/01/2022.................. 165,005 180,102
5.50% due 08/01/2023.................. 120,337 131,347
5.50% due 01/01/2029.................. 639 703
5.50% due 12/01/2029.................. 706,125 775,232
5.50% due 08/01/2034.................. 1,265,515 1,397,279
5.50% due 02/01/2035.................. 162,906 179,664
5.50% due 03/01/2035.................. 1,126,419 1,243,700
5.50% due 12/01/2035.................. 216,658 238,945
5.50% due 12/01/2036.................. 145,968 160,253
5.50% due 04/01/2037.................. 59,337 65,070
5.50% due 08/01/2037.................. 3,084,772 3,397,630
5.50% due 03/01/2038.................. 12,395 13,593
5.50% due 06/01/2038.................. 819,613 898,803
5.50% due 06/01/2039.................. 881,131 966,264
6.00% due 02/01/2032.................. 24,835 28,046
6.00% due 05/01/2034.................. 6,857 7,707
6.00% due 10/01/2034.................. 185,121 208,437
6.00% due 06/01/2035.................. 35,370 39,396
6.00% due 06/01/2037.................. 417,242 461,806
6.00% due 07/01/2037.................. 1,255,472 1,389,568
6.00% due 08/01/2037.................. 59,657 66,029
6.00% due 10/01/2037.................. 89,308 100,381
6.00% due 11/01/2037.................. 895,761 991,435
6.00% due 11/01/2038.................. 1,544,939 1,709,951
6.00% due 12/01/2038.................. 1,678,705 1,854,332
6.00% due 04/01/2040.................. 558,641 617,847
6.50% due 02/01/2035.................. 40,611 46,214
6.50% due 09/01/2037.................. 269,485 305,763
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 10/01/2037.................. $ 221,097 $ 250,861
6.50% due 10/01/2038.................. 1,095,976 1,236,471
6.50% due 02/01/2039.................. 142,451 161,040
7.50% due 01/01/2030.................. 1,696 1,776
7.50% due 09/01/2030.................. 1,735 1,877
8.00% due 11/01/2028.................. 9,566 11,585
13.00% due 11/15/2015................. 167 168
Federal National Mtg. Assoc. REMIC
Series 1989-2, Class D
8.80% due 01/25/2019(1)............... 15,511 17,594
Series 1989-17, Class E
10.40% due 04/25/2019(1).............. 693 749
-----------
65,050,637
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.5%
5.00% due 04/15/2040.................. 2,626,292 2,948,540
7.50% due 07/15/2027.................. 8,548 9,059
7.50% due 10/15/2027.................. 24,394 25,471
-----------
2,983,070
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $85,372,433).................... 89,430,229
-----------
U.S. GOVERNMENT TREASURIES -- 3.7%
UNITED STATES TREASURY BONDS -- 0.9%
2.13% due 02/15/2040 TIPS(11)......... 356,214 519,905
2.13% due 02/15/2041 TIPS(11)......... 475,043 697,830
3.00% due 05/15/2042.................. 2,651,000 2,748,755
3.13% due 02/15/2042.................. 1,461,000 1,554,139
5.25% due 11/15/2028.................. 56,000 78,374
-----------
5,599,003
-----------
UNITED STATES TREASURY NOTES -- 2.8%
0.25% due 01/31/2014.................. 975,000 975,457
0.25% due 03/31/2014.................. 3,442,000 3,443,074
0.25% due 09/30/2014.................. 731,000 731,171
0.50% due 07/31/2017.................. 314,000 312,454
0.63% due 05/31/2017.................. 235,000 235,588
0.63% due 08/31/2017.................. 1,091,000 1,091,682
1.00% due 03/31/2017.................. 742,000 756,840
1.38% due 11/30/2015.................. 105,000 108,388
1.63% due 08/15/2022.................. 1,753,000 1,751,082
1.75% due 07/31/2015.................. 5,700,000 5,931,562
2.00% due 02/15/2022.................. 355,000 369,228
2.13% due 05/31/2015.................. 595,000 623,774
3.13% due 05/15/2021.................. 639,000 730,457
-----------
17,060,757
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $22,483,880).................... 22,659,760
-----------
LOANS(9)(15)(16) -- 0.3%
CASINO HOTELS -- 0.1%
Tropicana Entertainment
Term Loan
7.50% due 03/16/2018.................. 995,000 1,006,194
-----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
LOANS(9)(15)(16) (CONTINUED)
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Escrow Loan
16.50% due 08/30/2011+(7)(8)............ $ 1,720,938 $ 0
----------
PHARMACY SERVICES -- 0.2%
Axcan
Term Loan B
5.50% due 02/17/2017.................... 1,094,500 1,094,500
----------
TOTAL LOANS
(cost $2,050,454)....................... 2,100,694
----------
MUNICIPAL BONDS & NOTES -- 0.3%
Ohio State University
Revenue Bonds Series A
4.80% due 06/01/2111.................... 616,000 700,263
Port Authority of New York & New Jersey
Revenue Bonds
4.46% due 10/01/2062.................... 725,000 725,000
Port Authority of New York & New Jersey
Revenue Bonds
4.93% due 10/01/2051.................... 554,000 624,092
----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,888,855)....................... 2,049,355
----------
FOREIGN GOVERNMENT TREASURIES -- 0.8%
SOVEREIGN -- 0.8%
United Kingdom Gilt Treasury
Bonds
4.75% due 03/07/2020
(cost $4,665,572)....................... GBP 2,385,000 4,835,033
----------
COMMON STOCK -- 0.0%
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(8)(9)(13)
(cost $0)............................... 128,418 0
----------
PREFERRED STOCK -- 0.1%
BANKS-SUPER REGIONAL -- 0.1%
US Bancorp FRS
Series A
3.50%................................... 759 652,740
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings Capital Trust VII FRS
Escrow Security
0.00%+.................................. 222,000 22
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Federal Home Loan Mtg. Corp. FRS
Series Z
8.38%................................... 11,300 9,605
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Class C+(8)(9).......................... 39,177 0
----------
TOTAL PREFERRED STOCK
(cost $698,639)......................... 662,367
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
WARRANTS+ -- 0.0%
OIL-FIELD SERVICES -- 0.0%
Green Field Energy Services, Inc.
Expires 11/15/2021*................ $ 1,065 $ 31,950
------------
PUBLISHING-PERIODICALS -- 0.0%
Reader's Digest Assoc., Inc.
Expires 02/19/2014(8)(9)........... 6,739 0
------------
TELEVISION -- 0.0%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $500.00)(8)(9)(12)... 330 82,500
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $687.00)(8)(9)(12)... 325 48,750
------------
131,250
------------
TOTAL WARRANTS
(cost $6,978)...................... 163,200
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $570,644,108)................ 587,197,813
------------
SHORT-TERM INVESTMENT SECURITIES -- 3.3%
TIME DEPOSITS -- 3.3%
Euro Time Deposit with State Street Bank and Trust Co.
0.01% due 10/01/2012
(cost $20,243,000)................. $20,243,000 20,243,000
------------
REPURCHASE AGREEMENT -- 1.6%
State Street Bank and Trust Co.
Joint Repurchase Agreement(18)
(cost $9,935,000).................. 9,935,000 9,935,000
------------
TOTAL INVESTMENTS
(cost $600,822,108)(19)............ 99.9% 617,375,813
Other assets less liabilities......... 0.1 481,170
----------- ------------
NET ASSETS 100.0% $617,856,983
=========== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At September 30, 2012, the aggregate value
of these securities was $111,916,108 representing 18.1% 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)PIK ("Payment-in-Kind") Security -- Income may be paid in additional
securities or cash 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)Company has filed for Chapter 7 bankruptcy.
(7)Security is in default of interest and did not pay principal at maturity.
(8)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(9)Illiquid security. At September 30, 2012, the aggregate value of these
securities was $2,650,473 representing 0.4% of net assets.
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
(10)Security in default
(11)Principal amount of security is adjusted for inflation.
(12)Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack of a secondary market and resale restrictions
may result in the inability of a Fund to sell a security at a fair price
and may substantially delay the sale of the security. In addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of September 30, 2012, the Strategic
Bond Fund held the following restricted securities:
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- --------- ----------- -------- ----- ------
ION Media Networks,
Inc. Expires
12/18/2016 (strike
price $500.00)
Warrant............ 03/15/2011 $330 $0 $ 82,500 $250 0.01%
ION Media Networks,
Inc. Expires
12/18/2016 (strike
price $687.00)
Warrant............ 03/15/2011 325 0 48,750 150 0.01
-------- ----
$131,250 0.02%
======== ====
(13) Consists of more than one type of securities traded together as a unit.
(14) Company has filed for bankruptcy in country of issuance.
(15) 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.
(16) Senior loans in the Fund are generally subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions and
because there may be significant economic incentives for a borrower to
prepay, prepayments may occur. As a result, the actual remaining maturity
may be substantially less than the stated maturities shown.
(17) Interest Only
(18) See Note 2 for details of Joint Repurchase Agreements.
(19) See Note 5 for cost of investments on a tax basis.
(20) Security currently paying interest/dividends in the form of additional
securities.
REMIC --Real Estate Mortgage Investment Conduit
TIPS --Treasury Inflation Protected Security
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at September 30, 2012 and
unless noted otherwise, the dates shown are the original maturity dates.
AUD --Australian Dollar
BRL --Brazilian Real
CAD --Canadian Dollar
DKK --Danish Krone
EUR --Euro
GBP --British Pound
HUF --Hungarian Forint
MXN --Mexican Peso
NOK --Norwegian Krone
PLN --Polish Zloty
RUB --Russian Ruble
SEK --Swedish Krona
SGD --Singapore Dollar
TRY --New Turkish Lira
ZAR --South African Rand
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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 $ -- $ 17,502,513 $ -- $ 17,502,513
U.S. Corporate Bonds & Notes:
Airlines......................... -- -- 1,483,678 1,483,678
Electric-Generation.............. -- 3,840,971 395,196 4,236,167
Electric-Integrated.............. -- 6,185,326 476,773 6,662,099
Gambling (Non-Hotel)............. -- -- 418,405 418,405
Non-Ferrous Metals............... -- -- 0 0
Recycling........................ -- -- 124 124
Rubber/Plastic Products.......... -- -- 0 0
Other Industries*................ -- 247,024,625 -- 247,024,625
Foreign Corporate Bonds & Notes:
Independent Power Producers...... -- 559,375 0 559,375
Special Purpose Entities......... -- 472,882 0 472,882
Other Industries*................ -- 64,560,710 -- 64,560,710
Foreign Government Agencies:
Sovereign........................ -- 119,094,864 -- 119,094,864
Other Agencies*.................. 3,281,733 -- 3,281,733
U.S. Government Agencies:
Federal National Mtg. Assoc...... -- 65,050,637 -- 65,050,637
Other U.S. Government Agencies*.. -- 24,379,592 -- 24,379,592
U.S. Government Treasuries -- 22,659,760 -- 22,659,760
Loans -- -- 2,100,694 2,100,694
Municipal Bond & Notes -- 2,049,355 -- 2,049,355
Foreign Government Treasuries -- 4,835,033 -- 4,835,033
Common Stock -- -- 0 0
Preferred Stock:
Finance-Mortgage Loan/Banker..... -- 22 -- 22
Medical-Drugs.................... -- -- 0 0
Other Industries*................ 662,345 -- -- 662,345
Warrants:
Oil-Field Services............... -- 31,950 -- 31,950
Publishing-Periodicals........... -- -- 0 0
Television....................... -- -- 131,250 131,250
Short Term Investment Securities:
Time Deposit -- 20,243,000 -- 20,243,000
Repurchase Agreement -- 9,935,000 -- 9,935,000
-------- ------------ ---------- ------------
TOTAL............................... $662,345 $611,707,348 $5,006,120 $617,375,813
======== ============ ========== ============
--------
* Sum of all other industries or U.S. government agencies each of which
individually has an aggregate market value of less than 5% of net assets.
For a detailed presentation of securities by industry or U.S. government
agency classification, please refer to Portfolio of Investments.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
At the beginning and/or end of the reporting period, Level 3 investments in
securities and other financial instruments were not considered a material
portion of the Fund.
See Notes to Financial Statements
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2012 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Cable/Satellite TV...................... 5.5%
Oil Companies-Exploration & Production.. 5.0
Medical-Hospitals....................... 4.8
Cellular Telecom........................ 4.6
Pipelines............................... 3.5
Diversified Banking Institutions........ 2.9
Banks-Commercial........................ 2.6
Telephone-Integrated.................... 2.5
Casino Hotels........................... 2.4
Paper & Related Products................ 2.3
Television.............................. 2.3
Data Processing/Management.............. 2.3
Satellite Telecom....................... 2.1
Chemicals-Diversified................... 2.1
Coal.................................... 1.6
Electric-Integrated..................... 1.6
Aerospace/Defense-Equipment............. 1.6
Office Automation & Equipment........... 1.6
Theaters................................ 1.5
Auto/Truck Parts & Equipment-Original... 1.4
Building-Residential/Commercial......... 1.4
Finance-Consumer Loans.................. 1.4
Telecom Services........................ 1.4
Commercial Services..................... 1.3
Electric-Generation..................... 1.3
Electronic Components-Semiconductors.... 1.3
Diversified Financial Services.......... 1.3
Transport-Marine........................ 1.2
Finance-Auto Loans...................... 1.1
Medical-Drugs........................... 1.0
Diversified Minerals.................... 1.0
Building Products-Wood.................. 0.9
Insurance-Multi-line.................... 0.9
Retail-Propane Distribution............. 0.9
Banks-Mortgage.......................... 0.8
Machinery-Farming....................... 0.8
Medical-Outpatient/Home Medical......... 0.8
Medical Information Systems............. 0.8
Independent Power Producers............. 0.8
Computer Services....................... 0.8
Physical Therapy/Rehabilitation Centers. 0.8
Retail-Arts & Crafts.................... 0.8
Diagnostic Kits......................... 0.8
Chemicals-Plastics...................... 0.7
Funeral Services & Related Items........ 0.7
Rental Auto/Equipment................... 0.7
Enterprise Software/Service............. 0.7
Casino Services......................... 0.7
Shipbuilding............................ 0.7
Retail-Discount......................... 0.7
Telecommunication Equipment............. 0.7
Investment Management/Advisor Services.. 0.6
Gambling (Non-Hotel).................... 0.6
Consumer Products-Misc.................. 0.6
Diversified Manufacturing Operations.... 0.6
Agricultural Operations................. 0.6
Containers-Metal/Glass.................. 0.6
Medical Labs & Testing Services......... 0.5
Real Estate Investment Trusts........... 0.5
Chemicals-Specialty..................... 0.5
Food-Misc./Diversified.......... 0.5%
Cosmetics & Toiletries.......... 0.5
Applications Software........... 0.5
Retail-Perfume & Cosmetics...... 0.4
Medical Products................ 0.4
Retail-Home Furnishings......... 0.4
Oil & Gas Drilling.............. 0.4
Repurchase Agreements........... 0.4
Finance-Leasing Companies....... 0.4
Diversified Operations.......... 0.4
Pharmacy Services............... 0.4
Real Estate Management/Services. 0.4
Rubber-Tires.................... 0.3
Web Hosting/Design.............. 0.3
Alternative Waste Technology.... 0.3
Auto-Cars/Light Trucks.......... 0.2
Hotels/Motels................... 0.2
Broadcast Services/Program...... 0.2
Dialysis Centers................ 0.2
Wireless Equipment.............. 0.2
Advertising Sales............... 0.2
Internet Connectivity Services.. 0.2
Travel Services................. 0.2
X-Ray Equipment................. 0.2
Retail-Leisure Products......... 0.2
Finance-Other Services.......... 0.2
Agricultural Chemicals.......... 0.2
Radio........................... 0.2
Beverages-Wine/Spirits.......... 0.2
Wire & Cable Products........... 0.2
Motion Pictures & Services...... 0.1
Hazardous Waste Disposal........ 0.1
Aerospace/Defense............... 0.1
----
97.8%
====
CREDIT QUALITY ALLOCATION+#
Baa........ 1.6%
Ba......... 36.5
B.......... 45.7
Caa........ 13.8
Not Rated@. 2.4
-----
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 -- SEPTEMBER 30, 2012 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 1.6%
CELLULAR TELECOM -- 0.7%
Leap Wireless International, Inc.
Senior Notes
4.50% due 07/15/2014...................... $ 938,000 $ 893,445
----------
MEDICAL-DRUGS -- 0.2%
Savient Pharmaceuticals, Inc.
Senior Notes
4.75% due 02/01/2018...................... 697,000 194,725
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.7%
Chesapeake Energy Corp.
Company Guar. Notes
2.50% due 05/15/2037...................... 1,070,000 932,906
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $2,168,918)......................... 2,021,076
----------
U.S. CORPORATE BONDS & NOTES -- 81.4%
ADVERTISING SALES -- 0.2%
Lamar Media Corp.
Company Guar. Notes
5.88% due 02/01/2022...................... 240,000 255,600
----------
AEROSPACE/DEFENSE -- 0.1%
Esterline Technologies Corp.
Company Guar. Notes
7.00% due 08/01/2020...................... 85,000 94,350
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 1.6%
BE Aerospace, Inc.
Senior Notes
6.88% due 10/01/2020...................... 815,000 904,650
TransDigm, Inc.
Company Guar. Notes
7.75% due 12/15/2018...................... 1,025,000 1,132,625
----------
2,037,275
----------
AGRICULTURAL CHEMICALS -- 0.2%
CF Industries, Inc.
Company Guar. Notes
6.88% due 05/01/2018...................... 165,000 200,681
----------
AGRICULTURAL OPERATIONS -- 0.6%
American Rock Salt Co., LLC/American Rock
Capital Corp.
Sec. Notes
8.25% due 05/01/2018*..................... 191,000 173,333
Southern States Cooperative, Inc.
Senior Notes
11.25% due 05/15/2015*.................... 555,000 578,587
----------
751,920
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.3%
Darling International, Inc.
Company Guar. Notes
8.50% due 12/15/2018...................... 331,000 376,926
----------
APPLICATIONS SOFTWARE -- 0.5%
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/2019*.................... 550,000 624,250
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS -- 0.2%
Ford Motor Co.
Senior Notes
7.45% due 07/16/2031.............................. $ 258,000 $ 320,888
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.4%
Affinia Group, Inc.
Senior Sec. Notes
10.75% due 08/15/2016*............................ 371,000 402,071
Tenneco, Inc.
Company Guar. Notes
7.75% due 08/15/2018.............................. 145,000 157,688
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/2017*............................. 1,105,000 1,262,462
----------
1,822,221
----------
BANKS-COMMERCIAL -- 1.9%
CIT Group, Inc.
Senior Notes
5.00% due 05/15/2017.............................. 865,000 923,387
CIT Group, Inc.
Senior Notes
5.25% due 03/15/2018.............................. 406,000 435,435
CIT Group, Inc.
Senior Notes
5.38% due 05/15/2020.............................. 550,000 595,375
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*............................. 430,000 465,475
----------
2,419,672
----------
BANKS-MORTGAGE -- 0.8%
Provident Funding Associates LP/PFG Finance Corp.
Senior Sec. Notes
10.25% due 04/15/2017*............................ 970,000 1,042,750
----------
BEVERAGES-WINE/SPIRITS -- 0.2%
Constellation Brands, Inc.
Company Guar. Notes
4.63% due 03/01/2023.............................. 195,000 198,900
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes, Series A
9.25% due 12/15/2017.............................. 55,000 58,988
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes, Series B
9.25% due 12/15/2017.............................. 230,000 247,825
----------
306,813
----------
BUILDING PRODUCTS-WOOD -- 0.9%
Masco Corp.
Senior Notes
6.13% due 10/03/2016.............................. 265,000 291,670
Masco Corp.
Senior Notes
7.13% due 03/15/2020.............................. 710,000 808,204
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING PRODUCTS-WOOD (CONTINUED)
Masco Corp.
Senior Notes
7.75% due 08/01/2029.......................... $ 110,000 $ 116,206
----------
1,216,080
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 1.4%
K Hovnanian Enterprises, Inc.
Sec. Notes
9.13% due 11/15/2020*......................... 341,000 343,131
KB Home
Company Guar. Notes
7.50% due 09/15/2022.......................... 255,000 276,038
KB Home
Company Guar. Notes
8.00% due 03/15/2020.......................... 681,000 754,207
Lennar Corp.
Company Guar. Notes
5.60% due 05/31/2015.......................... 255,000 271,575
Ryland Group, Inc.
Company Guar. Notes
5.38% due 10/01/2022.......................... 175,000 175,438
----------
1,820,389
----------
CABLE/SATELLITE TV -- 4.9%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022.......................... 960,000 964,800
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.63% due 01/31/2022.......................... 580,000 633,650
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.25% due 10/30/2017.......................... 780,000 850,200
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.38% due 06/01/2020.......................... 570,000 636,263
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
8.13% due 04/30/2020.......................... 170,000 192,100
CSC Holdings LLC
Senior Notes
6.75% due 11/15/2021*......................... 645,000 711,112
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021.......................... 1,135,000 1,237,150
Harron Communications LP/Harron Finance Corp.
Senior Notes
9.13% due 04/01/2020*......................... 330,000 356,400
Mediacom LLC/Mediacom Capital Corp.
Senior Notes
9.13% due 08/15/2019.......................... 645,000 712,725
----------
6,294,400
----------
CASINO HOTELS -- 2.4%
Caesars Entertainment Operating Co., Inc.
Senior Sec. Notes
8.50% due 02/15/2020*......................... 500,000 500,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
CASINO HOTELS (CONTINUED)
Caesars Entertainment Operating Co., Inc.
Senior Sec. Notes
11.25% due 06/01/2017............................ $1,075,000 $1,155,625
CityCenter Holdings LLC/CityCenter Finance Corp.
Senior Sec. Notes
7.63% due 01/15/2016............................. 180,000 192,150
MGM Mirage, Inc.
Senior Sec. Notes
9.00% due 03/15/2020............................. 155,000 173,019
MGM Mirage, Inc.
Senior Sec. Notes
11.13% due 11/15/2017............................ 390,000 431,437
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp.
Senior Notes
5.38% due 03/15/2022*............................ 570,000 578,550
----------
3,030,781
----------
CASINO SERVICES -- 0.5%
Greektown Superholdings, Inc.
Sec. Notes
13.00% due 07/01/2015............................ 620,000 671,150
Greektown, Inc. LLC
Escrow Notes
10.75% due 12/01/2013+(1)(2)..................... 489,000 0
----------
671,150
----------
CELLULAR TELECOM -- 3.9%
Cricket Communications, Inc.
Senior Sec. Notes
7.75% due 05/15/2016............................. 590,000 622,450
Cricket Communications, Inc.
Company Guar. Notes
7.75% due 10/15/2020............................. 345,000 336,375
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 11/15/2020............................. 645,000 675,637
MetroPCS Wireless, Inc.
Company Guar. Notes
7.88% due 09/01/2018............................. 770,000 831,600
Sprint Nextel Corp.
Company Guar. Notes
7.00% due 03/01/2020*............................ 395,000 442,400
Sprint Nextel Corp.
Company Guar. Notes
9.00% due 11/15/2018*............................ 910,000 1,092,000
Syniverse Holdings, Inc.
Company Guar. Notes
9.13% due 01/15/2019............................. 900,000 967,500
----------
4,967,962
----------
CHEMICALS-DIVERSIFIED -- 0.8%
Celanese US Holdings LLC
Company Guar. Notes
6.63% due 10/15/2018............................. 395,000 432,525
Momentive Performance Materials, Inc.
Sec. Notes
9.00% due 01/15/2021............................. 471,000 341,475
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-DIVERSIFIED (CONTINUED)
Momentive Performance Materials, Inc.
Sec. Notes
12.50% due 06/15/2014................. $297,000 $ 305,910
----------
1,079,910
----------
CHEMICALS-PLASTICS -- 0.7%
Hexion US Finance Corp.
Senior Sec. Notes
6.63% due 04/15/2020.................. 230,000 234,025
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
Senior Sec. Notes
8.88% due 02/01/2018.................. 390,000 400,725
Hexion US Finance Corp./Hexion Nova Scotia Finance ULC
Sec. Notes
9.00% due 11/15/2020.................. 355,000 316,837
----------
951,587
----------
CHEMICALS-SPECIALTY -- 0.5%
Ferro Corp.
Senior Notes
7.88% due 08/15/2018.................. 675,000 651,375
----------
COAL -- 1.2%
Peabody Energy Corp.
Company Guar. Notes
6.00% due 11/15/2018*................. 875,000 875,000
Peabody Energy Corp.
Company Guar. Notes
6.50% due 09/15/2020.................. 641,000 655,422
----------
1,530,422
----------
COMMERCIAL SERVICES -- 1.3%
ARAMARK Holdings Corp.
Senior Notes
8.63% due 05/01/2016*(6).............. 765,000 784,133
Iron Mountain, Inc.
Senior Sub. Notes
5.75% due 08/15/2024.................. 380,000 380,950
Iron Mountain, Inc.
Company Guar. Notes
7.75% due 10/01/2019.................. 500,000 562,500
----------
1,727,583
----------
COMPUTER SERVICES -- 0.8%
SunGard Data Systems, Inc.
Company Guar. Notes
7.38% due 11/15/2018.................. 556,000 596,310
SunGard Data Systems, Inc.
Company Guar. Notes
7.63% due 11/15/2020.................. 275,000 298,375
SunGard Data Systems, Inc.
Company Guar. Notes
10.25% due 08/15/2015................. 80,000 82,000
----------
976,685
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
CONSUMER PRODUCTS-MISC. -- 0.6%
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Senior Sec. Notes
6.88% due 02/15/2021......................... $ 335,000 $ 353,425
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Senior Sec. Notes
7.88% due 08/15/2019......................... 430,000 464,400
----------
817,825
----------
CONTAINERS-METAL/GLASS -- 0.6%
Ball Corp.
Company Guar. Notes
7.38% due 09/01/2019......................... 145,000 161,675
Crown Americas LLC/Crown Americas Capital Corp. II
Company Guar. Notes
7.63% due 05/15/2017......................... 255,000 272,850
Crown Americas LLC/Crown Americas Capital Corp. III
Company Guar. Notes
6.25% due 02/01/2021......................... 265,000 295,475
----------
730,000
----------
COSMETICS & TOILETRIES -- 0.5%
Revlon Consumer Products Corp.
Sec. Notes
9.75% due 11/15/2015......................... 610,000 645,075
----------
DATA PROCESSING/MANAGEMENT -- 2.3%
Fidelity National Information Services, Inc.
Company Guar. Notes
5.00% due 03/15/2022......................... 345,000 356,212
Fidelity National Information Services, Inc.
Company Guar. Notes
7.63% due 07/15/2017......................... 205,000 224,475
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*........................ 1,115,000 1,149,844
First Data Corp.
Sec. Notes
8.25% due 01/15/2021*........................ 934,000 931,665
First Data Corp.
Sec. Notes
8.75% due 01/15/2022*(6)..................... 285,000 287,138
----------
2,949,334
----------
DIAGNOSTIC KITS -- 0.8%
Alere, Inc.
Senior Notes
7.88% due 02/01/2016......................... 745,000 778,525
Alere, Inc.
Company Guar. Notes
9.00% due 05/15/2016......................... 175,000 186,812
----------
965,337
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(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 07/31/2019*........................ $ 200,000 $ 213,000
Fresenius Medical Care U.S. Finance, Inc.
Company Guar. Notes
6.50% due 09/15/2018*........................ 65,000 73,288
----------
286,288
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.8%
Ally Financial, Inc.
Company Guar. Notes
8.00% due 03/15/2020......................... 875,000 1,023,750
GMAC LLC
Sub. Notes
8.00% due 12/31/2018......................... 1,100,000 1,237,500
----------
2,261,250
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.6%
Community Choice Financial, Inc.
Senior Sec. Notes
10.75% due 05/01/2019*....................... 725,000 706,875
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.6%
JM Huber Corp.
Senior Notes
9.88% due 11/01/2019*........................ 675,000 757,688
----------
DIVERSIFIED OPERATIONS -- 0.4%
Ladder Capital Finance Holdings
LLP/Ladder Capital Finance Corp.
Senior Notes
7.38% due 10/01/2017*........................ 470,000 479,400
----------
ELECTRIC-GENERATION -- 1.3%
AES Corp.
Senior Notes
8.00% due 10/15/2017......................... 1,490,000 1,720,950
----------
ELECTRIC-INTEGRATED -- 0.4%
DPL, Inc.
Senior Notes
7.25% due 10/15/2021*........................ 300,000 342,000
Texas Competitive Electric Holdings
Co. LLC/TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/2020*....................... 295,000 230,838
----------
572,838
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.3%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.05% due 02/01/2020......................... 450,000 443,250
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/2018*........................ 1,015,000 1,103,812
Freescale Semiconductor, Inc.
Company Guar. Notes
10.75% due 08/01/2020........................ 111,000 120,158
----------
1,667,220
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
ENTERPRISE SOFTWARE/SERVICE -- 0.7%
Infor US, Inc.
Company Guar. Notes
9.38% due 04/01/2019*.................. $426,000 $ 472,860
Infor US, Inc.
Company Guar. Notes
11.50% due 07/15/2018*................. 394,000 449,160
----------
922,020
----------
FINANCE-AUTO LOANS -- 1.1%
Credit Acceptance Corp.
Senior Sec. Notes
9.13% due 02/01/2017................... 685,000 755,213
Ford Motor Credit Co. LLC
Senior Notes
6.63% due 08/15/2017................... 270,000 313,177
Ford Motor Credit Co. LLC
Senior Notes
8.13% due 01/15/2020................... 300,000 376,911
----------
1,445,301
----------
FINANCE-CONSUMER LOANS -- 1.4%
SLM Corp.
Senior Notes
6.25% due 01/25/2016................... 335,000 363,475
SLM Corp.
Senior Notes
8.00% due 03/25/2020................... 211,000 243,705
SLM Corp.
Senior Notes
8.45% due 06/15/2018................... 484,000 566,869
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
13.25% due 07/15/2015.................. 580,000 643,800
----------
1,817,849
----------
FINANCE-LEASING COMPANIES -- 0.4%
Air Lease Corp.
Senior Notes
5.63% due 04/01/2017*.................. 475,000 484,500
----------
FINANCE-OTHER SERVICES -- 0.2%
CNH Capital LLC
Company Guar. Notes
6.25% due 11/01/2016*.................. 185,000 200,956
----------
FUNERAL SERVICES & RELATED ITEMS -- 0.7%
Service Corp. International
Senior Notes
7.63% due 10/01/2018................... 802,000 950,370
----------
GAMBLING (NON-HOTEL) -- 0.4%
Isle of Capri Casinos, Inc.
Company Guar. Notes
8.88% due 06/15/2020*.................. 515,000 543,325
----------
HAZARDOUS WASTE DISPOSAL -- 0.1%
Clean Harbors, Inc.
Company Guar. Notes
5.25% due 08/01/2020*.................. 120,000 123,600
----------
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
HOTEL/MOTELS -- 0.2%
Choice Hotels International, Inc.
Company Guar. Notes
5.75% due 07/01/2022........................ $ 285,000 $ 310,650
----------
INDEPENDENT POWER PRODUCERS -- 0.8%
Calpine Corp.
Senior Sec. Notes
7.50% due 02/15/2021*....................... 910,000 982,800
----------
INSURANCE-MULTI-LINE -- 0.5%
Hartford Financial Services Group, Inc. FRS
Jr. Sub. Debentures
8.13% due 06/15/2068........................ 560,000 644,700
----------
INTERNET CONNECTIVITY SERVICES -- 0.2%
Zayo Group LLC/Zayo Capital, Inc.
Senior Sec. Notes
8.13% due 01/01/2020........................ 135,000 147,488
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
10.13% due 07/01/2020....................... 95,000 104,975
----------
252,463
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.6%
Nuveen Investments, Inc.
Senior Notes
9.13% due 10/15/2017*....................... 245,000 243,163
Nuveen Investments, Inc.
Senior Notes
9.50% due 10/15/2020*....................... 590,000 587,050
----------
830,213
----------
MACHINERY-FARMING -- 0.8%
Case New Holland, Inc.
Company Guar. Notes
7.88% due 12/01/2017........................ 870,000 1,020,075
----------
MEDICAL INFORMATION SYSTEMS -- 0.8%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/2018*...................... 840,000 999,600
----------
MEDICAL LABS & TESTING SERVICES -- 0.5%
American Renal Holdings Co., Inc.
Senior Sec. Notes
8.38% due 05/15/2018........................ 650,000 685,750
----------
MEDICAL PRODUCTS -- 0.4%
Biomet, Inc.
Company Guar. Notes
6.50% due 08/01/2020*....................... 275,000 284,969
Biomet, Inc.
Company Guar. Notes
6.50% due 10/01/2020*....................... 245,000 240,100
----------
525,069
----------
MEDICAL-DRUGS -- 0.8%
Valeant Pharmaceuticals International
Company Guar. Notes
6.75% due 08/15/2021*....................... 1,050,000 1,089,375
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
MEDICAL-HOSPITALS -- 4.8%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/15/2018............... $ 320,000 $ 332,000
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020............... 2,030,000 2,258,375
HCA, Inc.
Senior Notes
7.50% due 11/15/2095............... 190,000 161,500
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/2020............... 1,030,000 1,157,462
HCA, Inc.
Senior Sec. Notes
8.50% due 04/15/2019............... 550,000 620,125
Health Management Associates, Inc.
Company Guar. Notes
7.38% due 01/15/2020............... 210,000 210,000
Tenet Healthcare Corp.
Senior Sec. Notes
6.25% due 11/01/2018............... 770,000 848,925
Tenet Healthcare Corp.
Senior Sec. Notes
10.00% due 05/01/2018.............. 505,000 583,275
----------
6,171,662
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.8%
Radiation Therapy Services, Inc.
Sec. Notes
8.88% due 01/15/2017............... 415,000 400,475
Radiation Therapy Services, Inc.
Company Guar. Notes
9.88% due 04/15/2017............... 836,000 608,190
----------
1,008,665
----------
MOTION PICTURES & SERVICES -- 0.1%
NAI Entertainment Holdings LLC
Senior Sec. Notes
8.25% due 12/15/2017*.............. 153,000 170,595
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Company Guar. Notes
11.50% due 07/01/2003+(1)(2)(3)(4). 2,150,000 0
----------
OFFICE AUTOMATION & EQUIPMENT -- 1.6%
CDW LLC/CDW Finance Corp.
Senior Sec. Notes
8.00% due 12/15/2018............... 910,000 1,005,550
CDW LLC/CDW Finance Corp.
Company Guar. Notes
8.50% due 04/01/2019............... 941,000 1,023,337
----------
2,028,887
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 3.6%
Antero Resources Finance Corp.
Company Guar. Notes
7.25% due 08/01/2019............... 310,000 335,575
Antero Resources Finance Corp.
Company Guar. Notes
9.38% due 12/01/2017............... 535,000 591,175
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Continental Resources, Inc.
Company Guar. Notes
5.00% due 09/15/2022.................. $ 330,000 $ 344,025
Endeavour International Corp.
Senior Sec. Notes
12.00% due 03/01/2018*................ 565,000 621,500
EP Energy LLC/EP Energy Finance, Inc.
Senior Sec. Notes
6.88% due 05/01/2019*................. 50,000 53,500
EP Energy LLC/EP Energy Finance, Inc.
Senior Notes
9.38% due 05/01/2020*................. 964,000 1,050,760
Newfield Exploration Co.
Senior Notes
5.75% due 01/30/2022.................. 320,000 357,600
Plains Exploration & Production Co.
Company Guar. Notes
6.63% due 05/01/2021.................. 97,000 98,455
Plains Exploration & Production Co.
Company Guar. Notes
6.75% due 02/01/2022.................. 280,000 284,200
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/2020.................. 355,000 390,500
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/2018.................. 505,000 558,025
----------
4,685,315
----------
PAPER & RELATED PRODUCTS -- 0.7%
Clearwater Paper Corp.
Company Guar. Notes
7.13% due 11/01/2018.................. 160,000 174,000
Neenah Paper, Inc.
Company Guar. Notes
7.38% due 11/15/2014.................. 647,000 651,853
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020*................. 105,000 106,050
----------
931,903
----------
PHARMACY SERVICES -- 0.4%
BioScrip, Inc.
Company Guar. Notes
10.25% due 10/01/2015................. 440,000 474,100
----------
PHYSICAL THERAPY/REHABILITATION CENTERS -- 0.8%
HealthSouth Corp.
Company Guar. Notes
7.25% due 10/01/2018.................. 900,000 974,250
----------
PIPELINES -- 3.5%
El Paso Corp.
Senior Notes
6.50% due 09/15/2020.................. 545,000 611,856
El Paso Corp.
Senior Notes
7.00% due 06/15/2017.................. 1,445,000 1,658,146
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
PIPELINES (CONTINUED)
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020................. $ 681,000 $ 772,935
Kinder Morgan Finance Co. LLC
Senior Sec. Notes
6.00% due 01/15/2018*................ 535,000 579,849
MarkWest Energy Partners
LP/MarkWest Energy Finance Corp.
Company Guar. Notes
6.25% due 06/15/2022................. 436,000 468,700
NGPL PipeCo LLC
Senior Sec. Notes
7.12% due 12/15/2017*................ 380,000 403,750
----------
4,495,236
----------
RADIO -- 0.2%
Sirius XM Radio, Inc.
Senior Notes
5.25% due 08/15/2022*................ 200,000 199,000
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.5%
Felcor Lodging LP
Senior Sec. Notes
6.75% due 06/01/2019................. 630,000 675,675
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.4%
Realogy Corp.
Senior Sec. Notes
7.63% due 01/15/2020*................ 418,000 460,845
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(1)(2).......... 2,145,000 81
----------
RENTAL AUTO/EQUIPMENT -- 0.7%
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022*................ 225,000 234,000
UR Merger Sub Corp.
Sec. Notes
5.75% due 07/15/2018*................ 100,000 105,625
UR Merger Sub Corp.
Company Guar. Notes
7.38% due 05/15/2020*................ 325,000 349,375
UR Merger Sub Corp.
Company Guar. Notes
7.63% due 04/15/2022*................ 225,000 246,375
----------
935,375
----------
RETAIL-ARTS & CRAFTS -- 0.8%
Michaels Stores, Inc.
Company Guar. Notes
7.75% due 11/01/2018................. 905,000 970,612
----------
RETAIL-DISCOUNT -- 0.7%
99 Cents Only Stores
Company Guar. Notes
11.00% due 12/15/2019*............... 775,000 869,938
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-HOME FURNISHINGS -- 0.4%
GRD Holdings III Corp.
Senior Sec. Notes
10.75% due 06/01/2019*...................... $510,000 $ 511,275
----------
RETAIL-LEISURE PRODUCTS -- 0.2%
Party City Holdings, Inc.
Senior Notes
8.88% due 08/01/2020*....................... 210,000 223,650
----------
RETAIL-PERFUME & COSMETICS -- 0.4%
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
5.75% due 06/01/2022........................ 235,000 250,275
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
6.88% due 11/15/2019........................ 286,000 318,175
----------
568,450
----------
RETAIL-PROPANE DISTRIBUTION -- 0.9%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020........................ 240,000 256,200
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022........................ 425,000 457,937
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/2021........................ 442,000 427,635
----------
1,141,772
----------
RUBBER-TIRES -- 0.3%
Continental Rubber of America Corp.
Senior Sec. Notes
4.50% due 09/15/2019*....................... 430,000 440,161
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(1)(2)(3)(4).......... 550,000 0
----------
SATELLITE TELECOM -- 0.6%
Hughes Satellite Systems Corp.
Senior Sec. Notes
6.50% due 06/15/2019........................ 750,000 802,500
----------
SHIPBUILDING -- 0.7%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/2018........................ 455,000 493,107
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021........................ 361,000 388,526
----------
881,633
----------
TELECOM SERVICES -- 0.3%
GCI, Inc.
Senior Notes
6.75% due 06/01/2021........................ 280,000 280,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
TELECOM SERVICES (CONTINUED)
Level 3 Communications, Inc.
Senior Notes
8.88% due 06/01/2019*............ $ 90,000 $ 94,500
----------
374,500
----------
TELECOMMUNICATION EQUIPMENT -- 0.7%
Sorenson Communications, Inc.
Sec. Notes
10.50% due 02/01/2015*........... 980,000 859,950
----------
TELEPHONE-INTEGRATED -- 2.5%
CenturyLink, Inc.
Senior Notes
6.00% due 04/01/2017............. 275,000 308,071
Level 3 Financing, Inc.
Company Guar. Notes
7.00% due 06/01/2020*............ 149,000 150,490
Level 3 Financing, Inc.
Company Guar. Notes
8.13% due 07/01/2019............. 66,000 70,125
Level 3 Financing, Inc.
Company Guar. Notes
8.63% due 07/15/2020............. 1,300,000 1,404,000
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/2020............. 930,000 997,425
Windstream Corp.
Company Guar. Notes
8.13% due 09/01/2018............. 275,000 297,000
----------
3,227,111
----------
TELEVISION -- 1.8%
Gray Television, Inc.
Company Guar. Notes
7.50% due 10/01/2020*............ 340,000 338,300
Gray Television, Inc.
Sec. Notes
10.50% due 06/29/2015............ 815,000 883,256
Sinclair Television Group, Inc.
Sec. Notes
9.25% due 11/01/2017*............ 540,000 598,050
Univision Communications, Inc.
Senior Sec. Notes
6.75% due 09/15/2022*............ 520,000 520,000
----------
2,339,606
----------
THEATERS -- 1.5%
AMC Entertainment, Inc.
Company Guar. Notes
8.75% due 06/01/2019............. 1,065,000 1,174,162
AMC Entertainment, Inc.
Company Guar. Notes
9.75% due 12/01/2020............. 105,000 118,256
Regal Cinemas Corp.
Company Guar. Notes
8.63% due 07/15/2019............. 325,000 360,750
Regal Entertainment Group
Company Guar. Notes
9.13% due 08/15/2018............. 215,000 240,263
----------
1,893,431
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORT-MARINE -- 1.2%
ACL I Corp.
Senior Notes
11.38% due 02/15/2016(6)(16).......................... $ 791,691 $ 775,857
Marquette Transportation Co./Marquette Transportation
Finance Corp.
Sec. Notes
10.88% due 01/15/2017................................. 785,000 826,213
------------
1,602,070
------------
WEB HOSTING/DESIGN -- 0.3%
Equinix, Inc.
Senior Notes
7.00% due 07/15/2021.................................. 350,000 392,000
------------
WIRE & CABLE PRODUCTS -- 0.2%
Anixter, Inc.
Company Guar. Notes
5.63% due 05/01/2019.................................. 185,000 193,325
------------
WIRELESS EQUIPMENT -- 0.2%
SBA Communications Corp.
Senior Notes
5.63% due 10/01/2019*................................. 280,000 284,900
------------
X-RAY EQUIPMENT -- 0.1%
Hologic, Inc.
Company Guar. Notes
6.25% due 08/01/2020*................................. 70,000 74,200
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $101,857,169)................................... 104,621,939
------------
FOREIGN CORPORATE BONDS & NOTES -- 9.0%
BANKS-COMMERCIAL -- 0.7%
LBG Capital No.1 PLC
Bank Guar. Notes
7.88% due 11/01/2020*................................. 920,000 920,000
------------
CABLE/SATELLITE TV -- 0.3%
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/2018*................................. 490,000 447,125
------------
CHEMICALS-DIVERSIFIED -- 1.3%
Ineos Finance PLC
Senior Sec. Notes
7.50% due 05/01/2020*................................. 210,000 213,150
Ineos Group Holdings SA
Sec. Notes
8.50% due 02/15/2016*................................. 1,140,000 1,077,300
LyondellBasell Industries NV
Senior Notes
6.00% due 11/15/2021.................................. 285,000 324,900
------------
1,615,350
------------
DIVERSIFIED BANKING INSTITUTIONS -- 0.3%
UBS AG
Sub. Notes
7.63% due 08/17/2022.................................. 320,000 331,200
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
DIVERSIFIED MINERALS -- 1.0%
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
7.00% due 11/01/2015*....................... $ 955,000 $ 950,225
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
8.25% due 11/01/2019*....................... 290,000 281,300
----------
1,231,525
----------
GAMBLING (NON-HOTEL) -- 0.2%
Great Canadian Gaming Corp.
Company Guar. Notes
6.63% due 07/25/2022*....................... CAD 265,000 278,316
----------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Senior Sec. Notes
11.50% due 08/30/2010+(1)(2)(3)(5).......... 4,460,000 0
----------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Escrow Notes
10.75% due 02/01/2008+(1)(2)................ 2,150,000 0
----------
OIL & GAS DRILLING -- 0.4%
Seadrill, Ltd.
Senior Notes
5.63% due 09/15/2017*....................... 495,000 498,713
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.7%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/2017........................ 640,000 700,800
MEG Energy Corp.
Company Guar. Notes
6.38% due 01/30/2023*....................... 220,000 234,850
----------
935,650
----------
PAPER & RELATED PRODUCTS -- 0.9%
Cascades, Inc.
Company Guar. Notes
7.88% due 01/15/2020........................ 305,000 319,487
Fibria Overseas Finance, Ltd.
Company Guar. Notes
7.50% due 05/04/2020*....................... 802,000 874,180
----------
1,193,667
----------
SATELLITE TELECOM -- 1.5%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019........................ 1,175,000 1,269,000
Intelsat Luxembourg SA
Company Guar. Notes
11.50% due 02/04/2017(6).................... 670,000 710,200
----------
1,979,200
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 01/15/2015*+(1)(2)(5)(7).......... 1,025,000 0
----------
TELECOM SERVICES -- 1.1%
UPCB Finance VI, Ltd.
Senior Sec. Notes
6.88% due 01/15/2022*....................... 875,000 927,500
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELECOM SERVICES (CONTINUED)
Wind Acquisition Finance SA
Sec. Notes
11.75% due 07/15/2017*...................... $ 510,000 $ 480,675
-----------
1,408,175
-----------
TELEVISION -- 0.4%
Videotron, Ltd.
Company Guar. Notes
5.00% due 07/15/2022........................ 460,000 480,700
-----------
TRAVEL SERVICES -- 0.2%
Carlson Wagonlit BV
Senior Sec. Notes
6.88% due 06/15/2019*....................... 236,000 247,800
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $16,692,831).......................... 11,567,421
-----------
LOANS(2)(8)(9) -- 2.0%
BEVERAGES-NON-ALCOHOLIC -- 0.0%
Le-Natures, Inc.
BTL
9.39% due 03/01/2011+(3)(10)................ 1,200,000 0
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
BTL
12.25% due 08/15/2013+(1)(6)(7)(10)(16)..... 1,807,069 0
-----------
CABLE/SATELLITE TV -- 0.3%
Kabel Deutschland V&S GMBH
BTL
3.25% due 02/01/2019........................ 370,000 371,090
-----------
COAL -- 0.4%
Arch Coal, Inc.
BTL, 2nd Lien
5.75% due 05/01/2018........................ 533,663 538,664
-----------
COMMERCIAL SERVICES -- 0.0%
Vertrue, Inc.
BTL
13.25% due 08/14/2015+(7)................... 1,010,000 7,575
-----------
ELECTRIC-INTEGRATED -- 1.2%
Texas Competitive Electric Holdings Co. LLC
BTL
4.74% due 10/10/2014........................ 1,977,835 1,478,184
-----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Escrow Loan
16.50% due 08/30/2011+(1)(3)................ 1,720,938 0
-----------
X-RAY EQUIPMENT -- 0.1%
Hologic, Inc.
BTL
4.50% due 07/19/2019........................ 150,000 151,950
-----------
TOTAL LOANS
(cost $5,905,290)........................... 2,547,463
-----------
VALUE
SECURITY DESCRIPTION SHARES** (NOTE 2)
------------------------------------------------------------------
COMMON STOCK -- 1.2%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite Worldwide Holdings, Inc.+........... $ 692 $ 24,220
----------
CASINO SERVICES -- 0.0%
Greektown, Inc.+(1)(2)....................... 370 0
----------
FOOD-MISC./DIVERSIFIED -- 0.5%
Wornick Co.+(1)(2)........................... 7,270 650,229
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(1)(2)(12)......... 128,418 0
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(1)(2)..... 19,388 0
----------
PAPER & RELATED PRODUCTS -- 0.7%
Caraustar Industries, Inc.+(1)(2)............ 73 932,216
----------
TOTAL COMMON STOCK
(cost $2,586,741)........................... 1,606,665
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.2%
CASINO SERVICES -- 0.2%
Herbst Gaming, Inc.+(2)(11)(13)
(cost $232,720)............................. 23,439 250,017
----------
PREFERRED STOCK -- 1.9%
DIVERSIFIED BANKING INSTITUTIONS -- 0.8%
GMAC Capital Trust I FRS
8.13%....................................... 39,000 979,290
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.7%
Citigroup Capital XIII FRS
7.88%....................................... 34,000 946,900
----------
INSURANCE-MULTI-LINE -- 0.4%
Hartford Financial Services Group, Inc. FRS
7.88%....................................... 18,000 503,820
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Class C+(1)(2).............................. 39,177 0
----------
TOTAL PREFERRED STOCK
(cost $2,345,345)........................... 2,430,010
----------
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 7,028
Masonite Worldwide Holdings, Inc.
Expires 05/20/16
(strike price $55.31)(1)(2)................. 2,517 12,795
----------
19,823
----------
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 12/18/2016
(strike price $500.00)(1)(2)(13)............ 332 83,000
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
WARRANTS (CONTINUED)
TELEVISION (CONTINUED) -- 0.1%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $687.00)(1)(2)(13)... $ 328 $ 49,200
------------
132,200
------------
TOTAL WARRANTS
(cost $3,365)...................... 152,023
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $131,792,379)................ 125,196,614
------------
REPURCHASE AGREEMENTS -- 0.4%
Bank of America Securities LLC
Joint Repurchase Agreement(14)..... 125,000 125,000
Barclays Capital PLC
Joint Repurchase Agreement(14)..... 70,000 70,000
BNP Paribas SA
Joint Repurchase Agreement(14)..... 70,000 70,000
Deutsche Bank AG
Joint Repurchase Agreement(14)..... 60,000 60,000
Royal Bank of Scotland
Joint Repurchase Agreement(14)..... 90,000 90,000
UBS Securities LLC
Joint Repurchase Agreement(14)..... 75,000 75,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $490,000).................... 490,000
------------
TOTAL INVESTMENTS
(cost $132,282,379)(15)............ 97.8% 125,686,614
Other assets less liabilities......... 2.2 2,880,184
-------- ------------
NET ASSETS 100.0% $128,566,798
======== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At September 30, 2012,
the aggregate value of these securities was $40,186,432 representing 31.3%
of net assets. Unless otherwise indicated these securities are not
considered to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(2) Illiquid security. At September 30, 2012, the aggregate value of these
securities was $4,532,029 representing 3.5% of net assets.
(3) Security is in default and did not pay principal at maturity.
(4) Company has filed for Chapter 7 bankruptcy.
(5) Company has filed for bankruptcy protection in country of issuance.
(6) PIK ("Payment-in-Kind") Security -- Income may be paid in additional
securities or cash at the discretion of the issuer.
(7) Security in default
(8) 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.
(9) 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.
(10) Company has filed for Chapter 11 bankruptcy protection.
(11) Fair valued security. Securities are classified as Level 2 based on the
securities valuation inputs; see Note 2.
(12) Consists of more than one type of securities traded together as a unit.
(13) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
September 30, 2012, the SunAmerica High Yield Bond Fund held the following
restricted securities:
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- --------- ----------- -------- ------- ------
Herbst Gaming, Inc.
Membership
Interest
Certificate........ 03/26/2008 23,439 $232,720 $250,017 $ 10.67 0.20%
ION Media
Networks, Inc.
Expires 12/18/2016
(strike price
$500.00)
Warrant............ 03/01/2011 332 -- 83,000 250.00 0.06
ION Media
Networks, Inc.
Expires 12/18/2016
(strike price
$687.00)
Warrant............ 11/11/2010 327 --
03/01/2011 1 --
------ --------
328 -- 49,200 150.00 0.04
-------- ----
$382,217 0.30%
======== ====
(14) See Note 2 for details of Joint Repurchase Agreements.
(15) See Note 5 for cost of investments on a tax basis.
(16) Security currently paying interest/dividends in the form of additional
securities.
BTL --Bank Term Loan
FRS --Floating Rate Securities
The rates shown on FRS are the current interest rates at September 30, 2012 and
unless noted otherwise, the dates shown are the original maturity dates.
59
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT IN EXCHANGE DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY TO DELIVER FOR DATE APPRECIATION DEPRECIATION
---------------
Credit Suisse
London Branch CAD 265,000 USD 271,388 10/17/2012 $1,924 $--
====== ===
CAD --Canadian Dollar
USD --United States Dollar
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2012 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS
- --------------------- ----------------- ----------------------
LONG-TERM INVESTMENT SECURITIES:
Convertible Bonds & Notes $ -- $ 2,021,076 $ --
U.S. Corporate Bonds & Notes:
Casino Services......................................... -- 671,150 0
Non-Ferrous Metals...................................... -- -- 0
Recycling............................................... -- -- 81
Rubber/Plastic Products................................. -- -- 0
Other Industries*....................................... -- 103,950,708 --
Foreign Corporate Bonds & Notes:
Independent Power Producers............................. -- -- 0
Metal Processors & Fabrication.......................... -- -- 0
Special Purpose Entity.................................. -- -- 0
Other Industries*....................................... -- 11,567,421 --
Loans:
Beverages-Non-alcoholic................................. -- -- 0
Building-Residential/Commercial......................... -- -- 0
Commercial Services..................................... -- -- 7,575
Medical-Drugs........................................... -- -- 0
Other Industries*....................................... -- 2,539,888 --
Common Stock:
Building Products-Doors & Windows....................... 24,220 -- --
Other Industries*....................................... -- -- 1,582,445
Membership Interest Certificates -- 250,017 --
Preferred Stock:
Medical-Drugs........................................... -- -- 0
Other Industries*....................................... 2,430,010 -- --
Warrants -- -- 152,023
Repurchase Agreements...................................... -- 490,000 --
Other Financial Instruments:+
Other Forward Foreign Currency Contracts -- Appreciation. -- 1,924 --
---------- ------------ ----------
Total...................................................... $2,454,230 $121,492,184 $1,742,124
========== ============ ==========
TOTAL
- ------------
LONG-TERM INVESTMENT SECURITIES:
Convertible Bonds & Notes 2,021,076
U.S. Corporate Bonds & Notes:
Casino Services......................................... 671,150
Non-Ferrous Metals...................................... 0
Recycling............................................... 81
Rubber/Plastic Products................................. 0
Other Industries*....................................... 103,950,708
Foreign Corporate Bonds & Notes:
Independent Power Producers............................. 0
Metal Processors & Fabrication.......................... 0
Special Purpose Entity.................................. 0
Other Industries*....................................... 11,567,421
Loans:
Beverages-Non-alcoholic................................. 0
Building-Residential/Commercial......................... 0
Commercial Services..................................... 7,575
Medical-Drugs........................................... 0
Other Industries*....................................... 2,539,888
Common Stock:
Building Products-Doors & Windows....................... 24,220
Other Industries*....................................... 1,582,445
Membership Interest Certificates 250,017
Preferred Stock:
Medical-Drugs........................................... 0
Other Industries*....................................... 2,430,010
Warrants 152,023
Repurchase Agreements...................................... 490,000
Other Financial Instruments:+
Other Forward Foreign Currency Contracts -- Appreciation. 1,924
------------
Total...................................................... $125,688,538
============
--------
* Sum of all other industries each of which individually has an aggregate
market value of less than 5% of net assets. For a detailed presentation of
securities by industry classification, please refer to Portfolio of
Investments.
+ Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as futures, forwards, swap and written option
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no material transfers between Levels during the
period.
See Notes to Financial Statements
60
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The following is a reconciliation of Level 3 assets which significant
unobservable 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 3/31/2012.............. $ 604,857 $ 0 $ 1,707,039 $1,888,847 $ 251,969 $ 0 $145,860
Accrued discounts.................... 2,746 2,272 26,374 -- -- -- --
Accrued premiums..................... -- -- -- -- -- -- --
Realized gain........................ 21,867 -- 51,181 -- -- -- --
Realized loss........................ (164,969) -- (1,042,087) (53,936) -- (78,353) --
Change in unrealized appreciation(1). 191,771 -- 1,126,149 53,936 -- 78,353 6,163
Change in unrealized depreciation(1). (14,053) (2,272) (212,674) (306,402) (1,952) -- --
Net purchases........................ -- -- 7,343 -- -- -- --
Net sales............................ (642,138) -- (1,655,750) (0) -- (0) --
Transfers into Level 3............... -- -- -- -- -- -- --
Transfers out of Level 3............. -- -- -- (250,017) -- --
--------- ------- ----------- ---------- --------- -------- --------
Balance as of 09/30/2012............. $ 81 $ 0 $ 7,575 $1,582,445 $ -- $ 0 $152,023
========= ======= =========== ========== ========= ======== ========
(1)The total change in unrealized appreciation (depreciation) attributable to
Level 3 investments still held at September 30, 2012 includes:
MEMBERSHIP
U.S. CORPORATE FOREIGN CORPORATE COMMON INTEREST PREFERRED
BONDS & NOTES BONDS & NOTES LOANS STOCK CERTIFICATES STOCK WARRANTS
-------------- ----------------- --------- --------- ------------ --------- --------
$(2,222) $(2,272) $(161,040) $(306,402) $-- $-- $6,163
======= ======= ========= ========= === === ======
The following is quantitative information about Level 3 fair value measurements:
FAIR VALUE AT
DESCRIPTION 09/30/12(1) VALUATION TECHNIQUE(S) UNOBSERVABLE INPUT(2) RANGE (WEIGHTED AVERAGE)
----------- ------------- ---------------------- ---------------------- ------------------------
U.S. Corporate Bonds & Notes $ 81 Potential Future Cash Future cash flows and $0.004
Flows lack of marketability
--------------------------------------------------------------------------------------------------------------------
Common Stock $ 0 Potential Future Cash Future cash flows and $0.00
Flows lack of marketability
------------------------------------------------------------------------------------
$1,582,436 Market Comparable EBITDA Multiple and 7.41-8.28 (7.85)
Discount for lack of 10%
marketability
--------------------------------------------------------------------------------------------------------------------
Warrants $ 19,823 Black Scholes Model Discount for lack of 10%
marketability
--------------------------------------------------------------------------------------------------------------------
(1)The Fund's other securities classified as Level 3, with a fair value of
$139,784 at 09/30/12, are attributable to valuations from a single broker
which were deemed to be indicative quotes (which do not necessarily
represent prices on which the broker may be willing to trade.)
(2)The significant unobservable inputs regarding the Level 3 securities in the
table above are securities that lack marketability and may include
assumptions made from non public and/or unaudited financial statements and
market comparables. Significant increases (decreases) in any of those inputs
in isolation may result in a significantly higher (lower) fair value
measurement.
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
Note 1. Organization
The SunAmerica Income Funds is an open-end diversified management investment
company organized as a Massachusetts business trust (the "Trust"). It
currently consists of 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. The Funds are
considered to be separate entities for financial and tax reporting purposes.
The investment goals 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 adviser) 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.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(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 Trust in the
preparation of its financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under accounting principles generally
accepted in the United States of America ("GAAP"), the Funds disclose the
fair value of its investments in a hierarchy that prioritizes the inputs to
valuation techniques used to measure the fair value. In accordance with
GAAP, fair value is defined as the price that the Funds would receive upon
selling an asset or transferring a liability in a timely transaction to an
independent third party in the principal or most advantageous market. GAAP
established a three-tier hierarchy to provide more transparency around the
inputs used to measure fair value and to establish classification of fair
value measurements for disclosure purposes. Inputs refer broadly to the
assumptions that market participants would use in pricing the asset or
liability, including assumptions about risk. Inputs may be observable or
unobservable. Observable inputs are inputs that reflect the assumptions
market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of the reporting
entity. Unobservable inputs are inputs that reflect the reporting entity's
own assumptions about the assumptions market participants would use in
pricing the asset or liability developed based on the best information
available in the circumstances. The three-tiers are as follows:
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.)
Changes in valuation techniques may result in transfers in or out of an
investment's assigned Level within the hierarchy. The methodology used for
valuing investments are not necessarily an indication of the risk associated
with investing in those investments and the determination of the
significance of a particular input to the fair value measurement in its
entirety requires judgment and consideration of factors specific to each
security.
The availability of observable inputs can vary from security to security and
is affected by a wide variety of factors, including, for example, the type
of security, whether the security is recently issued and not yet established
in the marketplace, the liquidity of markets, and other characteristics
particular to the security. To the extent that valuation is based on models
or inputs that are less observable or unobservable in the market, the
determination of fair value requires more judgment. Accordingly, the degree
of judgment exercised in determining fair value is greatest for instruments
categorized in Level 3.
The summary of inputs used to value the Funds' net assets as of
September 30, 2012 are reported on a schedule following the Portfolio of
Investments.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on which the securities are principally
traded and are generally categorized as Level 1. Stocks listed on the NASDAQ
are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the
NOCP will be the last sale price unless the reported trade for the stock is
outside the range of the bid/ask price. In such cases, the NOCP will be
normalized to the nearer of the bid or ask price. For listed securities
having no sales reported and for unlisted securities, such securities will
be valued based upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
Fund uses the exchange that is the primary market for the security. Such
securities are generally categorized as Level 1. 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 a Fund determines that
closing prices do not reflect the fair value of the securities, the Fund
will adjust the previous closing prices in accordance with pricing
procedures approved by the Board of Trustees ("the Board") to reflect what
it believes to be the fair value of the securities as of the close of
regular trading on the NYSE. The Funds may also fair value securities in
other situations, for example, when a particular foreign market is closed
but a Fund is open. For foreign equity securities and foreign equity futures
contracts, the Funds use an outside pricing service to provide it with
closing market prices and information used for adjusting those prices, and
when so adjusted, such securities and futures are generally catagorized as
Level 2.
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 and are generally categorized as Level 2 or Level 3
depending on the observability of inputs. 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.
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, and are generally
categorized as Level 2.
Other securities are valued on the basis of last sale or bid price (if a
last sale price is not available) which 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 and are generally categorized as Level 1
or Level 2.
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, and are generally categorized as Level 2 or
Level 3 depending on the availability of market activity and/or observable
market data.
Investments in registered investment companies that do not trade on an
exchange are valued at the end of day net asset value per share. Investments
in 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. Registered investment companies are generally categorized as Level 1.
The Board is responsible for the share valuation process and has adopted a
policy and procedures (the "PRC Procedures") for valuing the securities and
other assets held by the Fund, including procedures for the fair valuation
of securities and other assets for which market quotations are not readily
available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
Trust's fair valuation procedures. Securities for which market quotations
are not readily available or the values of which may be significantly
impacted by the occurrence of developments or significant events are
generally categorized as Level 3. There is no single standard for making
fair value determinations, which may result in prices that vary from those
of other funds.
DERIVATIVE INSTRUMENTS: The following tables represent the value of
derivatives held as of September 30, 2012, by their primary underlying risk
exposure and respective location on the Statement of Assets and Liabilities
and the effect of derivatives on the Statement of Operations for the six
months ending September 30, 2012:
STRATEGIC BOND FUND
-------------------------------------------------------------------
ASSET DERIVATIVES 2012 LIABILITY DERIVATIVES 2012
--------------------------------- ---------------------------------
STATEMENTS OF ASSETS AND STATEMENTS OF ASSETS AND
DERIVATIVE CONTRACTS(1) LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------------------------ --------------------------- ----- --------------------------- -----
Foreign exchange contracts(2). Unrealized appreciation on Unrealized depreciation on
forward foreign currency forward foreign currency
contracts $ -- contracts $ --
==== ====
CHANGE IN UNREALIZED
LOCATION OF GAIN (LOSS) REALIZED GAIN (LOSS) APPRECIATION (DEPRECIATION)
ON DERIVATIVES ON DERIVATIVES ON DERIVATIVES
RECOGNIZED IN STATEMENT RECOGNIZED IN STATEMENT RECOGNIZED IN STATEMENT
DERIVATIVE CONTRACTS(1) OF OPERATIONS OF OPERATIONS OF OPERATIONS
---------------------- --------------------------------------- ----------------------- ---------------------------
Foreign exchange contracts(2). Net realized foreign exchange gain
(loss) on other assets and liabilities/
Change in unrealized foreign
exchange gain (loss) on other
assets and liabilities $25,163 $ --
======= ====
--------
(1)The Fund's derivative contracts held during the period ended September 30,
2012, are not accounted for as hedging instruments under accounting
principles generally accepted in the United States of America.
(2)The average notional par amount outstanding for forward foreign currency
contracts was $1,295,806.
HIGH YIELD BOND FUND
--------------------------------------------------------------------
ASSET DERIVATIVES 2012 LIABILITY DERIVATIVES 2012
---------------------------------- ---------------------------------
STATEMENTS OF ASSETS AND STATEMENTS OF ASSETS AND
DERIVATIVE CONTRACTS(1) LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------------------------ --------------------------- ------ --------------------------- -----
Foreign exchange contracts(2). Unrealized appreciation on Unrealized depreciation on
forward foreign currency forward foreign currency
contracts $1,924 contracts $ --
====== ====
CHANGE IN UNREALIZED
LOCATION OF GAIN (LOSS) REALIZED GAIN (LOSS) APPRECIATION (DEPRECIATION)
ON DERIVATIVES ON DERIVATIVES ON DERIVATIVES
RECOGNIZED IN STATEMENT RECOGNIZED IN STATEMENT RECOGNIZED IN STATEMENT
DERIVATIVE CONTRACTS(1) OF OPERATIONS OF OPERATIONS OF OPERATIONS
---------------------- --------------------------------------- ----------------------- ---------------------------
Foreign exchange contracts(2). Net realized foreign exchange gain
(loss) on other assets and liabilities/
Change in unrealized foreign
exchange gain (loss) on other
assets and liabilities $(8,869) $1,924
======== ======
--------
(1)The Fund's derivative contracts held during the period ended September 30,
2012, are not accounted for as hedging instruments under accounting
principles generally accepted in the United States of America.
(2)The average notional par amount outstanding for forward foreign currency
contracts was $133,513.
Forward Foreign Currency Contracts: Certain Funds may enter into forward
foreign currency contracts ("forward contracts") for various purposes,
including to facilitate settlement of foreign currency denominated Fund
transactions, to attempt to protect securities and related receivables and
payables against changes in future foreign exchange rates, to hedge
portfolio exposure to benchmark currency allocations or to manage and/or
gain exposure to certain foreign currencies. During the period ended
September 30, 2012, the Strategic Bond Fund and the High Yield Bond Fund
used forward contracts to protect securities and related receivables and
payables against changes in future foreign exchange rates. As of
September 30, 2012, the High Yield Bond Fund had open forward contracts,
which are reported on a schedule following the Fund's Portfolio of
Investments.
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
A forward contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the forward rate and the cumulative change in
market value is recorded by the Fund as unrealized appreciation or
depreciation. On the settlement date, the Fund records either realized gains
or losses equal to the difference between the value of the contract at the
time it was opened and the value at the time it was closed.
Risks to the Funds of entering into forward contracts include counterparty
risk, market risk and illiquidity risk. Counterparty risk arises upon
entering into these contracts from the potential inability of counterparties
to meet the terms of their contracts. If the counterparty defaults, the
Fund's loss will generally consist of the net amount of contractual payments
that the Fund has not yet received though the Fund's maximum risk due to
counterparty risk could extend to the notional amount of the contract.
Market risk is the risk that the value of the forward contract will
depreciate due to unfavorable changes in the exchange rates. These contracts
may involve market risk in excess of the unrealized appreciation or
depreciation reported on the Statement of Assets and Liabilities.
Illiquidity risk arises because the secondary market for forwards may have
less liquidity relative to markets for other securities. Currency
transactions are also subject to risks different from those of other Fund
transactions. Because currency control is of great importance to the issuing
governments and influences economic planning and policy, purchases and sales
of currency and related instruments can be adversely affected by government
exchange controls, limitations or restrictions on repatriation of currency,
and manipulations or exchange restrictions imposed by governments.
MORTGAGE-BACKED DOLLAR ROLLS: During the period ended September 30, 2012,
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 Fund's
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. The
GNMA Fund had TBA Rolls outstanding at period end, which are included in
receivable for investments sold and payable for investments purchased in the
Statements of Assets and Liabilities. 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 six months ended September 30,
2012, the GNMA Fund had realized gains (losses) from mortgage-backed dollar
rolls of $30,312.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: The Funds may purchase or
sell when-issued securities, including TBA securities that have been
authorized, but not yet issued in the market. In addition, a Fund may
purchase or sell securities on a forward commitment basis. A forward
commitment involves entering into a contract to purchase or sell securities,
typically on an extended settlement basis, for a fixed price at a future
date. The Funds may engage in when-issued or forward commitment transactions
in order to secure what is considered to be an advantageous price and yield
at the time of entering into the obligation. The purchase of securities on a
when-issued or forward commitment basis involves a risk of loss if the value
of the security to be purchased declines before the settlement date.
Conversely, the sale of securities on a when-issued or forward commitment
basis involves the risk that the value of the securities sold may increase
before the settlement date.
STRIPPED MORTGAGE-BACKED SECURITIES: Stripped Mortgage-Backed Securities
("SMBS") are derivative multiple-class mortgage-backed securities. SMBS are
often structured with two classes that receive different proportions of the
interest and principal distributions on a pool of mortgage assets. SMBSs
have greater market volatility than other types of U.S. government
securities in which a Fund invests. A common type of SMBS has one class
receiving some of the interest and all or most of the principal (the
"principal only" class) from the mortgage pool, while the other class will
receive all or most of the interest (the "interest only" class). The yield
to maturity on an interest only class is extremely sensitive not only to
changes in prevailing interest rates, but also to the rate of principal
payments, including principal prepayments, on the underlying pool of
mortgage assets, and a rapid rate of principal payment may have a material
adverse effect on a Fund's yield.
INFLATION-INDEXED BONDS: Certain Funds may purchase inflation-indexed bonds.
Inflation-indexed bonds are fixed income securities whose principal value is
adjusted periodically according to the rate of inflation. Two structures are
common. The
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
U.S. Treasury and certain other issuers use a structure that reflects
inflation in the principal value of the bond. Other issuers pay out any
inflation related accruals as part of a semiannual coupon. The value of
inflation-indexed bonds is expected to change in response to changes in real
interest rates. Real interest rates, in turn, are tied to the relationship
between nominal interest rates (i.e., stated interest rates) and the rate of
inflation. Therefore, if the rate of inflation rises at a faster rate than
nominal interest rates, real interest rates (i.e., nominal interest rates
minus inflation) might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increase at
a faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly
correlated to changes in nominal interest rates, and short-term increases in
inflation may lead to a decline in their value. Coupon payments received
from inflation-indexed bonds are recorded in the Statement of Operations as
interest income. In addition, any increase or decrease in the principal
amount of an inflation-indexed bond will be recorded in the Statement of
Operations as an increase or decrease to interest income, even though
principal is not paid until maturity.
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 ("repo" or collectively "repos"). 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, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If
the seller defaults and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
As of September 30, 2012, the following Fund held an undivided interest in
the joint repurchase agreement with Bank of America Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.10% $125,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Bank of America Securities LLC, dated September 28, 2012, bearing interest
at a rate of 0.12% per annum, with a principal amount of $122,920,000, a
repurchase price of $122,921,229, and a maturity date of October 1, 2012.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 0.63% 07/15/2014 $124,322,000 $125,297,928
As of September 30, 2012, the following Fund held an undivided interest in
the joint repurchase agreement with Barclays Capital PLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.09% $70,000
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Barclays Capital PLC, dated September 28, 2012, bearing interest at a rate
of 0.20% per annum, with a principal amount of $74,965,000, a repurchase
price of $74,966,249, and a maturity date of October 1, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Bonds. 4.50% 08/15/2039 $56,302,000 $76,249,236
As of September 30, 2012, the Fund held an undivided interest in the joint
repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.09% $70,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
BNP Paribas SA, dated September 28, 2012, bearing interest at a rate of
0.18% per annum, with a principal amount of $74,965,000, a repurchase price
of $74,966,125, and a maturity date of October 1, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 0.38% 07/31/2013 $76,404,500 $76,573,354
As of September 30, 2012 the following Fund held an undivided interest in
the joint repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.09% $60,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Deutsche Bank AG, dated September 28, 2012, bearing interest at a rate of
0.14% per annum, with a principal amount of $65,600,000, a repurchase price
of $65,600,765, and a maturity date of October 1, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 1.25% 03/15/2014 $65,972,000 $66,972,795
As of September 30, 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. 0.09% $90,000
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
Royal Bank of Scotland, dated September 28, 2012, bearing interest at a rate
of 0.20% per annum, with a principal amount of $99,960,000, a repurchase
price of $99,961,666, and a maturity date of October 1, 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% 12/31/2013 $100,041,000 $102,014,809
As of September 30, 2012, the following Funds held an undivided interest in
the joint repurchase agreement with State Street Bank and Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
U.S. Government. 7.47% $20,828,000
GNMA............ 11.58 32,309,000
Strategic Bond.. 3.56 9,935,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank and Trust Co., dated September 28, 2012 bearing interest
at a rate of 0.01% per annum, with a principal amount of $278,920,000, a
repurchase price of $278,920,232, and a maturity date of October 1, 2012.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 1.75% 05/15/2022 $188,915,000 $193,165,588
U.S. Treasury Bonds. 3.50 02/15/2039 78,770,000 91,333,579
As of September 30, 2012, the following Fund held an undivided interest in
the joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
GNMA. 11.84% $11,843,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated September 28, 2012, bearing interest at a rate of
0.15% per annum, with a principal amount of $100,000,000, a repurchase price
of $100,001,250, and a maturity date of October 1, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- ------------
U.S. Treasury Inflation Index Notes. 2.00% 01/15/2014 $78,461,600 $102,000,080
As of September 30, 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. 0.09% $75,000
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated September 28, 2012, bearing interest at a rate of
0.18% per annum, with a principal amount of $81,325,000, a repurchase price
of $81,326,220, and a maturity date of October 1, 2012. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S Treasury Notes. 2.38% 09/30/2014 $78,952,100 $83,227,356
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 Funds are informed after the ex-dividend date.
Paydown gains and 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 aspects expenses are charged to
each Fund as incurred on a specific identification basis. Interest earned on
cash balances held at the custodian are shown as custody credits on the
Statement of Operations.
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The Funds record
dividends and distributions to their shareholders on the ex-dividend date.
The Funds reserve the right to declare and pay dividends less frequently
than disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined 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 assets are not affected by these
reclassifications.
Each Fund is considered a separate entity for tax purposes and 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 net capital gains on investments, to its
shareholders. Each Fund also intends to distribute sufficient net investment
income and net capital gains, if any, so that each Fund will not be subject
to excise tax on undistributed income and gains. Therefore, no federal
income tax or excise tax provision is required.
Each Fund recognizes the tax benefits of uncertain tax positions only when
the position is more likely than not to be sustained, assuming examination
by tax authorities. Management has analyzed each Fund's tax positions and
concluded that no liability for unrecognized tax benefits should be recorded
related to uncertain tax positions taken on returns filed for open tax years
2009-2011 or expected to be taken in each Funds' 2012 tax return. The Funds
are not aware of any tax provisions for which it is reasonably possible that
the total amounts of unrecognized tax benefits will change materially in the
next twelve months. The
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
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 2009.
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
period.
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 and realized gains and losses on forward
foreign currency contracts.
NEW ACCOUNTING PRONOUNCEMENTS: 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.
All required changes to accounting policies have been made in accordance
with ASU No. 2011-04.
In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about
Offsetting Assets and Liabilities". ASU 2011-11 requires an entity to
disclose information about offsetting and related arrangements to enable
users of its financial statements to understand the effect of those
arrangements on its financial position. The new and revised disclosures are
effective for annual reporting periods beginning on or after January 1,
2013, and interim periods within those annual periods. At this time,
management is evaluating the implications of ASU 2011-11 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
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(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 Management 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 two years after the occurrence of the waiver and/or reimbursement,
provided that the Funds are able to effect such payments to SunAmerica and
remain in compliance with the expense limitations in effect at the time the
waivers and/or reimbursements were made.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
For the six months ended September 30, 2012, pursuant to the contractual and
voluntary expense limitations in the above tables SunAmerica has waived
and/or reimbursed expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $ 93,309
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A........................................................................... $155,209
U.S. Government Securities Class B........................................................................... 12,540
U.S. Government Securities Class C........................................................................... 24,872
GNMA Class A................................................................................................. 201,691
GNMA Class B................................................................................................. 19,585
GNMA Class C................................................................................................. 59,235
High Yield Bond Class A...................................................................................... 64,128
High Yield Bond Class B...................................................................................... 14,588
High Yield Bond Class C...................................................................................... 29,790
At September 30, 2012, expenses previously waived or reimbursed by
SunAmerica that are subject to recoupment and expire during the time period
indicated are as follows:
OTHER EXPENSES
REIMBURSED
------------------------------------------------
FUND MARCH 31, 2013 MARCH 31, 2014 SEPTEMBER 30, 2014
---- -------------- -------------- ------------------
U.S. Government Securities...................................................... $119,619 $228,627 $ 93,309
CLASS SPECIFIC EXPENSES REIMBURSED
- ------------------------------------------------
FUND MARCH 31, 2013 MARCH 31, 2014 SEPTEMBER 30, 2014
---- -------------- -------------- ------------------
U.S. Government Securities Class A.............................................. $181,550 $315,150 $155,209
U.S. Government Securities Class B.............................................. 12,769 22,735 12,540
U.S. Government Securities Class C.............................................. 19,769 45,128 24,872
GNMA Class A.................................................................... 200,685 385,748 201,691
GNMA Class B.................................................................... 21,365 36,628 19,585
GNMA Class C.................................................................... 53,808 104,517 59,235
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 six months ended
September 30, 2012, SACS received fees (see the Statement of Operations)
based upon the aforementioned rates.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that for the six
months ended September 30, 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. $ 44,079 $32,582 $ 8,624 $ -- $ 3,281 $ 1,614
GNMA....................... 140,549 61,086 59,568 -- 15,027 4,117
Strategic Bond............. 219,222 33,015 149,238 2,106 25,686 12,211
High Yield Bond............ 47,536 8,391 30,445 -- 4,069 5,735
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 six months ended September 30, 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 SEPTEMBER 30, 2012
---- -------- ------------------
US Government Securities Class A. $132,097 $20,731
US Government Securities Class B. 5,285 834
US Government Securities Class C. 15,824 2,552
GNMA Class A..................... 261,421 39,135
GNMA Class B..................... 16,966 2,754
GNMA Class C..................... 69,146 11,009
Strategic Bond Class A........... 316,572 52,981
Strategic Bond Class B........... 58,446 9,838
Strategic Bond Class C........... 280,605 47,137
High Yield Bond Class A.......... 87,160 14,036
High Yield Bond Class B.......... 13,378 2,336
High Yield Bond Class C ......... 40,577 6,627
As of September 30, 2012, 8% 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
outstanding shares of the following funds; Focused Balanced Strategy
Portfolio and Focused Multi-Asset Strategy Portfolio, each a series of
SunAmerica Series, Inc., owned 6% and 14% of the U.S. Government Securities
Fund, respectively; and Focused Balanced Strategy Portfolio owned 10% of the
GNMA Fund.
As of the date of this report, the United States Department of the Treasury
("Department of the Treasury") owned less than 25% of the outstanding shares
of common stock of American International Group, Inc. ("AIG"), the ultimate
parent of SAAMCo. 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.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
Note 4. Purchases and Sales of Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six months ended September 30, 2012 were as follows:
U.S.
GOVERNMENT
SECURITIES GNMA STRATEGIC HIGH YIELD
FUND FUND BOND FUND BOND FUND
----------- ------------ ------------ -----------
Purchases (excluding U.S. government securities). $ -- $ -- $453,068,377 $32,690,538
Sales (excluding U.S. government securities)..... -- -- 460,220,241 33,373,423
Purchases of U.S. government securities.......... 63,495,000 136,820,365 118,466,825 --
Sales of U.S. government securities.............. 70,840,648 204,858,851 111,892,185 --
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 losses, distributions payable, deferred
compensation plans, amortization of premium/discount, and treatment of
defaulted securities.
TAX DISTRIBUTIONS
DISTRIBUTABLE EARNINGS FOR THE YEAR ENDED
FOR THE YEAR ENDED MARCH 31, 2012 MARCH 31, 2012
--------------------------------------- -------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
FUND INCOME LOSS CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS
---- ---------- -------------- -------------- ----------- -------------
U.S. Government Securities. $2,245,412 $ -- $ 8,513,265 $ 3,484,062 $ --
GNMA....................... 291,878 3,556 12,070,792 12,404,286 7,272,727
Strategic Bond............. -- (68,706,115) 4,683,936 29,313,671 --
High Yield Bond............ -- (54,084,740) (9,886,333) 8,905,911 --
As of September 30, 2012, 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.......................................... $122,821,553 $277,955,716 $602,430,621 $131,853,771
============ ============ ============ ============
Appreciation.................................. 11,192,742 8,402,278 25,027,704 8,475,541
Depreciation.................................. (172,089) (231,878) (10,082,513) (14,642,698)
------------ ------------ ------------ ------------
Unrealized appreciation (depreciation) -- net. $ 11,020,653 $ 8,170,400 $ 14,945,191 $ (6,167,157)
============ ============ ============ ============
As of March 31, 2012, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwards, which expire in the year indicated,
which are available to offset future capital gains, if any:
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 -- -- --
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(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 SIX MONTHS ENDED FOR THE FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012 (UNAUDITED) MARCH 31, 2012
------------------------ -------------------------- ----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(1)(2)....... 1,263,605 $ 12,950,403 1,405,257 $ 14,128,533 55,025 $ 564,513 163,944 $ 1,641,064
Reinvested dividends.... 99,036 1,016,884 265,168 2,644,161 2,313 23,757 6,063 60,550
Shares redeemed(1)(2)... (1,618,039) (16,589,728) (5,046,881) (50,447,645) (63,414) (649,775) (297,805) (2,949,533)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (255,398) $ (2,622,441) (3,376,456) $ (33,674,951) (6,076) $ (61,505) (127,798) $(1,247,919)
========== ============ =========== ============= ======== =========== ======== ===========
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold............. 267,114 $ 2,737,447 463,474 $ 4,664,490
Reinvested dividends.... 6,628 68,012 16,984 169,767
Shares redeemed......... (366,104) (3,746,938) (406,740) (4,067,868)
---------- ------------ ----------- -------------
Net increase (decrease). (92,362) $ (941,479) 73,718 $ 766,389
========== ============ =========== =============
GNMA FUND
----------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- ----------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012 (UNAUDITED) MARCH 31, 2012
------------------------ -------------------------- ----------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(3)(4)....... 3,907,437 $ 45,372,621 10,752,999 $ 127,166,757 177,584 $ 2,065,649 303,238 $ 3,588,788
Reinvested dividends.... 164,178 1,904,786 950,324 11,157,553 7,365 85,696 50,306 591,739
Shares redeemed(3)(4)... (7,274,523) (84,388,284) (10,644,733) (125,557,144) (194,221) (2,260,151) (679,990) (8,029,528)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (3,202,908) $(37,110,877) 1,058,590 $ 12,767,166 (9,272) $ (108,806) (326,446) $(3,849,001)
========== ============ =========== ============= ======== =========== ======== ===========
GNMA FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold............. 543,049 $ 6,323,487 1,561,756 $ 18,543,947
Reinvested dividends.... 30,016 349,675 180,002 2,120,243
Shares redeemed......... (832,825) (9,700,520) (1,454,595) (17,222,966)
---------- ------------ ----------- -------------
Net increase (decrease). (259,760) $ (3,027,358) 287,163 $ 3,441,224
========== ============ =========== =============
--------
(1)For the six months ended September 30, 2012, includes automatic conversion
of 22,161 shares of Class B shares in the amount of $227,419 to 22,174
shares of Class A shares in the amount of $227,419.
(2)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.
(3)For the six months ended September 30, 2012, includes automatic conversion
of 64,746 shares of Class B shares in the amount of $753,874 to 64,921
shares of Class A shares in the amount of $753,874.
(4)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 409,970 shares of
Class A shares in the amount of $4,825,027.
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
STRATEGIC BOND FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012 (UNAUDITED) MARCH 31, 2012
------------------------- ------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ---------- ----------- ---------- ------------
Shares sold(1)(2)....... 12,418,238 $ 43,624,933 36,753,274 $125,996,809 1,392,554 $ 4,879,662 2,571,494 $ 8,806,180
Reinvested dividends.... 1,170,218 4,112,290 3,129,147 10,710,874 135,574 476,017 372,194 1,273,594
Shares redeemed(1)(2)... (16,840,671) (58,645,463) (26,954,012) (92,309,285) (1,244,060) (4,348,041) (2,941,428) (10,102,470)
----------- ------------ ----------- ------------ ---------- ----------- ---------- ------------
Net increase (decrease). (3,252,215) $(10,908,240) 12,928,409 $ 44,398,398 284,068 $ 1,007,638 2,260 $ (22,696)
=========== ============ =========== ============ ========== =========== ========== ============
STRATEGIC BOND FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Shares sold............. 6,013,473 $ 21,188,116 13,236,961 $ 45,773,697
Reinvested dividends.... 666,525 2,352,151 1,758,235 6,038,058
Shares redeemed......... (5,944,524) (20,876,076) (14,347,592) (49,387,349)
----------- ------------ ----------- ------------
Net increase (decrease). 735,474 $ 2,664,191 647,604 $ 2,424,406
=========== ============ =========== ============
HIGH YIELD BOND FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012 (UNAUDITED) MARCH 31, 2012
------------------------- ------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ---------- ----------- ---------- ------------
Shares sold(3)(4)....... 5,061,811 $ 17,156,220 19,270,829 $ 64,460,601 902,079 $ 3,109,647 386,434 $ 1,305,757
Reinvested dividends.... 416,871 1,429,798 933,291 3,152,130 59,542 204,670 144,270 487,870
Shares redeemed(3)(4)... (6,794,110) (23,131,719) (17,965,878) (60,320,917) (433,775) (1,494,111) (1,654,246) (5,614,909)
----------- ------------ ----------- ------------ ---------- ----------- ---------- ------------
Net increase (decrease). (1,315,428) $ (4,545,701) 2,238,242 $ 7,291,814 527,846 $ 1,820,206 (1,123,542) $ (3,821,282)
=========== ============ =========== ============ ========== =========== ========== ============
HIGH YIELD BOND FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2012 YEAR ENDED
(UNAUDITED) MARCH 31, 2012
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Shares sold............. 720,118 $ 2,480,494 2,588,354 $ 8,822,795
Reinvested dividends.... 173,250 597,740 374,739 1,272,132
Shares redeemed......... (1,374,348) (4,759,230) (3,367,694) (11,416,462)
----------- ------------ ----------- ------------
Net increase (decrease). (480,980) $ (1,680,996) (404,601) $ (1,321,535)
=========== ============ =========== ============
--------
(1)For the six months ended September 30, 2012, includes automatic conversion
of 246,773 shares of Class B shares in the amount of $863,281 to 249,692
shares of Class A shares in the amount of $863,281.
(2)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.
(3)For the six months ended September 30, 2012, includes automatic conversion
of 121,244 shares of Class B shares in the amount of $418,548 to 121,385
shares of Class A shares in the amount of $418,548.
(4)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.
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
Note 7. Line of Credit
The SunAmerica family of mutual funds has established a $75 million
committed and a $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
overnight 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.
Borrowings under the line of credit will commence when the respective Fund's
cash shortfall exceeds $100,000. For the six months ended September 30,
2012, the following Funds had borrowings:
DAYS INTEREST AVERAGE DEBT WEIGHTED AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ------------ ----------------
Strategic Bond.. 8 $91 $ 285,362 1.43%
High Yield Bond. 1 59 1,484,482 1.43
At September 30, 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 six months ended September 30, 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.
78
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statement of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statement of Operations.
AS OF SEPTEMBER 30, 2012
-----------------------------------------------
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
FUND LIABILITY EXPENSE PAYMENTS
---- --------------- --------------- ---------------
U.S. Government Securities. $8,618 $ 95 $1,893
GNMA....................... 4,814 236 990
Strategic Bond ............ 5,337 384 1,052
High Yield Bond............ 3,764 81 813
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
September 30, 2012, the Funds had 38.9% and 81.5%, 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 six
months ended September 30, 2012, the following Fund engaged in security
transactions with affiliated Funds:
COST OF PROCEED REALIZED
FUND PURCHASES FROM SALES GAIN/LOSS
---- --------- ---------- ---------
Strategic Bond. $350,761 $685,000 $12,788
79
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENTS
The Board of the Trust, including the Trustees who are not "interested
persons," as defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended (the "1940 Act"), of the Trust or its Funds, SunAmerica, PineBridge
or Wellington Management (Wellington Management, together with PineBridge, the
"Subadvisers") (the "Disinterested Trustees"), approved the continuation of the
Investment Advisory and Management Agreement between the Trust, on behalf of
the Funds, and SunAmerica (the "Advisory Agreement") for a one-year period
ending June 30, 2013 at an in-person meeting held on May 29, 2012 (the
"Meeting"). The Trust currently consists of four separate Funds, including the
SunAmerica GNMA Fund ("GNMA Fund"), SunAmerica High Yield Bond Fund ("High
Yield Bond Fund"), SunAmerica Strategic Bond Fund ("Strategic Bond Fund") and
SunAmerica U.S. Government Securities Fund ("U.S. Government Securities Fund").
At the Meeting, the Board, including the Disinterested Trustees, also approved
the continuation of the Subadvisory Agreement between SunAmerica and PineBridge
with respect to the Strategic Bond Portfolio and the Subadvisory Agreement
between SunAmerica and Wellington Management with respect to the High Yield
Bond Portfolio (the "Subadvisory Agreements" and together with the Advisory
Agreements, the "Agreements") for a one-year period ending June 30, 2013.
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and the Subadvisers provided, materials relating to the Board's
consideration of whether to approve the continuation of the Agreements. These
materials included (a) a summary of the services provided by SunAmerica and its
affiliates to the Funds and by the Subadvisers; (b) information independently
compiled and prepared by Lipper, Inc. ("Lipper") on Fund fees and expenses, and
the investment performance of the Fund as compared with a peer group of funds,
along with fee and performance data with respect to the Funds and any other
mutual funds or other accounts advised or subadvised by SunAmerica or the
Subadvisers with similar investment objectives and/or strategies, as
applicable; (c) information on the profitability of SunAmerica and its
affiliates, and a discussion relating to indirect benefits; (d) a report on
economies of scale; (e) information about SunAmerica's general compliance
policies and procedures and the services it provides in connection with its
oversight of subadvisers, (f) information about SunAmerica's and the
Subadvisers' risk management process; (g) information regarding brokerage and
soft dollar practices; and (h) information about the key personnel of
SunAmerica and its affiliates, and the Subadvisers, that are involved in the
investment management, administration, compliance and risk management
activities with respect to the Funds, as well as current and projected staffing
levels and compensation practices.
In determining whether to approve the continuation of the Agreements, the
Board, including the Disinterested Trustees, considered at the Meetings, and
from time to time as appropriate, factors it deemed relevant, including the
following information:
Nature, Extent and Quality of Services Provided by SunAmerica and the
Subadvisers. The Board, including the Disinterested Trustees, considered the
nature, quality and extent of services provided by SunAmerica. The Board noted
that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that SunAmerica
provides office space, bookkeeping, accounting, legal, and compliance, clerical
and administrative services and has authorized its officers and employees, if
elected, to serve as officers or trustees of the Funds without compensation.
Finally, the Board noted that SunAmerica is responsible for monitoring and
reviewing the activities of affiliated and unaffiliated third-party service
providers, including the Subadvisers. In addition to the quality of the
advisory services provided by SunAmerica, the Board considered the quality of
the administrative and other services provided by SunAmerica to the Funds
pursuant to the Advisory Agreement.
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Funds. The Board also reviewed the personnel
responsible for providing advisory services to the Funds and other key
personnel of SunAmerica, in addition to current and projected staffing levels
and compensation practices and concluded, based on its experience and
interaction with SunAmerica, that: (i) SunAmerica has been able to retain
quality portfolio managers, analysts and other personnel; (ii) SunAmerica has
exhibited a high level of diligence and attention to detail in carrying out its
advisory and other responsibilities under the Advisory Agreement;
(iii) SunAmerica has been responsive to requests of the Board; and
(iv) SunAmerica has kept the Board apprised of developments relating to the
Funds and the industry in general. The Board concluded that the nature and
extent of services provided under the Advisory Agreement were reasonable and
appropriate in relation to the management fee and that the quality of services
continues to be high.
80
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2011 -- (UNAUDITED)
(CONTINUED)
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of March 31,
2012, SunAmerica managed, advised and/or administered approximately $46.3
billion in assets. In addition, the Board considered SunAmerica's code of
ethics and its commitment to compliance generally and with respect to its
management and administration of the Funds. The Board also considered
SunAmerica's risk management process. The Board further observed that
SunAmerica has developed internal procedures for monitoring compliance with the
investment objectives, policies and restrictions of the Funds as set forth in
the Funds' prospectus. The Board also reviewed SunAmerica's compliance and
regulatory history and noted that there were no material legal, regulatory or
compliance issues that would potentially impact SunAmerica from effectively
serving as the investment adviser to the Funds.
The Board also considered the nature, quality and extent of services provided
by each Subadviser to the applicable Fund. The Board observed that the
Subadvisers are responsible for providing day-to-day investment management
services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by a Fund, or portion
thereof, that each Subadviser manages, subject to the oversight and review of
SunAmerica. The Board reviewed each Subadviser's history, structure, size,
visibility and resources, which are needed to attract and retain highly
qualified investment professionals. The Board reviewed the personnel that are
responsible for providing subadvisory services to the Funds, in addition to
current and projected staffing levels and compensation practices, and
concluded, based on its experience with each Subadviser, that each Subadviser:
(i) has been able to retain high quality portfolio managers and other
investment personnel; (ii) has exhibited a high level of diligence and
attention to detail in carrying out its responsibilities under the Subadvisory
Agreements; and (iii) has been responsive to requests of the Board and of
SunAmerica. In addition, the Board considered each Subadviser's code of ethics
and risk management process. The Board further observed that each Subadviser
has developed internal policies and procedures for monitoring compliance with
the investment objectives, policies and restrictions of the Funds as set forth
in the Funds' prospectus. The Board also reviewed each Subadviser's compliance
and regulatory history and noted that there were no material legal, regulatory
or compliance issues that would potentially impact the Subadvisers from
effectively serving as Subadvisers to the Funds. The Board concluded that the
nature and extent of services provided by the Subadvisers under the Subadvisory
Agreements were reasonable and appropriate in relation to the subadvisory fees
and that the quality of services continues to be high.
Investment Performance. The Board, including the Disinterested Trustees, also
considered the investment performance of SunAmerica and the Subadvisers with
respect to the Funds, as applicable. In connection with its review, the Board
received and reviewed information regarding the investment performance of the
Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe
("Peer Universe") as independently determined by Lipper and to an appropriate
index or combination of indices, including the Funds' benchmarks. The Board was
provided with a description of the methodology used by Lipper to select the
funds in the Peer Groups and Universes.
It was noted that performance information was for the periods ended March 31,
2012. The Board also noted that it regularly reviews the performance of the
Funds throughout the year. The Board further noted that, while it monitors
performance of the Funds closely, it generally attaches more importance to
performance over relatively long periods of time, typically three to five years.
GNMA Fund. The Board considered that the Fund's performance was at the median
of its Peer Group for the one-year period, below the median of its Peer Group
for the three-year period and above the median of its Peer Group for the five-
and ten-year period. The Board also considered that the Fund's performance was
above the median of its Peer Universe for the one- and ten-year periods, and
below the median of its Peer Universe for the three- and five-year periods. The
Board also considered that the Fund underperformed its Lipper Index for the
one-, three- and five-year periods and outperformed its Lipper Index for the
ten-year period. The Board noted management's discussion of the Fund's
performance, including the continued monitoring of the Fund, and concluded that
the Fund's overall performance was satisfactory.
U.S. Government Securities Fund. The Board considered that the Fund's
performance was above the median of its Peer Group and Peer Universe for the
one- and ten-year periods and below the median of its Peer Group and Peer
Universe for the three- and five-year periods. The Board also considered that
the Fund underperformed its Lipper Index for the one-, three- and five-year
periods. The Board noted management's discussion of the Fund's performance,
including the continued monitoring of the Fund, as well as its competitive
performance over the longer-term, and concluded that the Fund's overall
performance was satisfactory.
81
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
High Yield Bond Fund. The Board considered that the Fund's performance was
below the median of its Peer Group for the one- and five-year periods and at
the median of its Peer Group for the three-year period. The Board also
considered that the Fund's performance was below the median of its Peer
Universe for the one-, three- and five-year periods. The Board further
considered that the Fund underperformed its Lipper Index for the one-, three-
and five-year periods. The Board noted management's discussion of the Fund's
performance, including the continued monitoring of the Fund, and concluded that
the Fund's performance was being addressed.
Strategic Bond Fund. The Board considered that the Fund's performance was below
the median of its Peer Group and Peer Universe for the one- and five-year
periods and above the median of its Peer Group and Peer Universe for the three-
and ten-year periods. The Board also considered that the Fund underperformed
its Lipper Index for the one-, three- and five-year periods and outperformed
its Lipper Index for the ten-year period. The Board noted management's
discussion of the Fund's performance and concluded that the Fund's overall
performance was satisfactory.
Consideration of the Management Fees and Subadvisory Fees and the Cost of the
Services and Profits to be Realized by SunAmerica and the Subadvisers and their
Affiliates from the Relationship with the Funds. The Board, including the
Disinterested Trustees, received and reviewed information regarding the fees to
be paid by the Funds to SunAmerica pursuant to the Advisory Agreement and the
fees to be paid by SunAmerica to the Subadvisers pursuant to the Subadvisory
Agreements. The Board examined this information in order to determine the
reasonableness of the fees in light of the nature and quality of services to be
provided and any potential additional benefits to be received by SunAmerica,
the Subadvisers or their affiliates in connection with providing such services
to the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe as determined by Lipper, including rankings within each category. In
considering the reasonableness of the management fee to be paid by each Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering each Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to each Fund.
The Board further considered that, unlike the funds in the Peer Group and Peer
Universe, the fee waivers and/or reimbursements being made by SunAmerica with
respect to the Funds are only reflected in the total expenses category of the
Lipper reports, rather than also being reflected as specific management fee
waivers in the actual management fees category of the Lipper reports. As a
result, the Board took into account that the actual management fees presented
by Lipper for the funds in the Peer Group and Peer Universe may appear lower on
a relative basis. The Board also considered the various expense components of
the Funds and compared each Fund's net expense ratio (taking into account the
contractual fee caps and waivers) to those of other funds within its Peer Group
and/or Peer Universe as a guide to help assess the reasonableness of the
management fee for the Funds. The Board acknowledged that it was difficult to
make precise comparisons with other funds in the Peer Groups and Peer Universes
since the exact nature of services provided under the various fund agreements
is often not apparent. The Board noted, however, that the comparative fee
information provided by Lipper as a whole was useful in assessing whether
SunAmerica was providing services at a cost that was competitive with other,
similar funds.
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable. The Board noted, however, that a mutual
fund identified as similar to the U.S. Government Securities Fund is sold only
in the variable annuity market and, accordingly, is in an entirely different
Lipper classification, with a peer group consisting of funds underlying
variable insurance products. The Board then noted the management fees paid by
the Funds were reasonable as compared to the fees SunAmerica was receiving from
other mutual funds and accounts for which it serves as adviser or subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to the Subadvisers pursuant to the Subadvisory Agreements. To assist
in analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Fund's Peer Group that the Board used as a guide to help
assess the reasonableness of the subadvisory fees. The Board noted that Peer
Group information as a whole was useful in assessing whether the Subadvisers
were providing services at a cost that was competitive with other similar
funds. The Board also considered that the subadvisory fees are paid by
SunAmerica out of its management fee and not by the Funds, and that subadvisory
fees may vary widely within a Peer Group for various reasons, including market
pricing demands, existing relationships, experience and success, and individual
client needs. The Board further considered the amount of subadvisory fees paid
out by SunAmerica and the amount of the
82
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
management fees which it retained and determined that these amounts were
reasonable in light of the services performed by SunAmerica and the Subadviser,
respectively.
The Board also considered fees received by the Subadvisers with respect to
other mutual funds and accounts with similar investment strategies to the Funds
for which they serves as adviser or subadviser, to the extent applicable. The
Board noted in particular that certain of the similar accounts identified by
Wellington Management were institutional separate accounts, and Wellington
Management highlighted certain differences between these separate accounts and
the High Yield Bond Fund, including that these separate accounts are subject to
different investment limitations and restrictions and do not experience daily
cash flows in a manner similar to the Fund. The Board then noted that the
subadvisory fees paid by SunAmerica to the Subadvisers were reasonable as
compared to fees the Subadvisers receive for other mutual funds and accounts
for which they serve as adviser or subadviser.
GNMA Fund. The Board considered that the Fund's actual management fees were
below the median of its Peer Group and slightly above the median of its Peer
Universe. The Board also considered that the Fund's total expenses were
slightly above the median of its Peer Group and Peer Universe. The Board noted
that the Fund's advisory fee contains breakpoints and further noted
management's discussions regarding the Fund's expenses.
U.S. Government Securities Fund. The Board considered that the Fund's actual
management fees were above the median of its Peer Group and Peer Universe. The
Board also considered that the Fund's total expenses were below the median of
its Peer Group and above the median of its Peer Universe. The Board noted that
the Fund's advisory fee contains breakpoints and further noted management's
discussion regarding the Fund's expenses.
High Yield Bond Fund. The Board considered that the Fund's actual management
fees were above the median of its Peer Group and Peer Universe. The Board also
considered that the Fund's total expenses were above the median of its Peer
Group and Peer Universe. The Board noted that the Fund's advisory fee contains
breakpoints and further noted management's discussion regarding the Fund's
expenses.
Strategic Bond Fund. The Board considered that the Fund's actual management
fees were above the median of its Peer Group and above the median of its Peer
Universe. The Board also considered that the Fund's total expenses were above
the median of its Peer Group and Peer Universe. The Board noted that the Fund's
advisory fee contains breakpoints and further noted management's discussions
regarding the Fund's expenses.
Profitability. The Board also considered SunAmerica's profitability and the
benefits SunAmerica and its affiliates received from its relationship with the
Funds. The Board received and reviewed financial statements relating to
SunAmerica's financial condition and profitability with respect to the services
it provided the Funds and considered how profit margins could affect
SunAmerica's ability to attract and retain high quality investment
professionals and other key personnel. The Board was also provided with a
profitability analysis that detailed the revenues earned and the expenses
incurred by SunAmerica and its affiliates that provide services to the Funds on
a Fund by Fund basis. In particular, the Board considered the contractual fee
waivers and/or expense reimbursements agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, including the amount of management fees it retained after payment to
the Subadvisers, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans and Service Agreements. Additionally, the Board
considered whether SunAmerica and their affiliates received any indirect
benefits from the relationship with the Funds. Specifically, the Board observed
that AIG Federal Savings Bank, an affiliate of SunAmerica serves as custodian
with respect to certain shareholder retirement accounts that are administered
by SunAmerica and receives a fee payable by the qualifying shareholders. The
Board further considered whether there were any collateral or "fall-out"
benefits that SunAmerica and its affiliates may derive as a result of their
relationship with the Funds. The Board noted that SunAmerica believes that any
such benefits are de minimis and do not impact the reasonableness of the
management fees.
The Board also reviewed financial statements from the Subadvisers and their
affiliates and considered whether the Subadvisers had the financial resources
necessary to attract and retain high quality investment management personnel
and to provide a high quality of services.
83
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2012 -- (UNAUDITED)
(CONTINUED)
The Board concluded that SunAmerica and the Subadvisers had the financial
resources necessary to perform their obligations under the Agreements and to
continue to provide the Funds with the high quality services that they had
provided in the past. The Board also concluded that the management fee and
subadvisory fees were reasonable in light of the factors discussed above.
Economies of Scale. The Board, including the Disinterested Trustees, considered
whether the shareholders would benefit from economies of scale and whether
there was potential for future realization of economies with respect to the
Funds. The Board considered that as a result of being part of the SunAmerica
fund complex, the Funds share common resources and may share certain expenses,
and if the size of the complex increases, each Fund could incur lower expenses
than they otherwise would achieve as stand-alone entities. The Board also took
into account that each of the Funds had management fee arrangements that
included breakpoints that will adjust the fee downward as the size of the Fund
increases, thereby allowing the shareholders to potentially participate in any
economies of scale. The Board further noted that SunAmerica has agreed to
contractually cap the total annual operating expenses of the Funds, at certain
levels. The Board observed that those expense caps and fee waivers benefited
shareholders by keeping total fees down even in the absence of breakpoints or
economies of scale. The Board concluded that the Funds' management fee
structure was reasonable and that it would continue to review fees in
connection with the renewal of the Advisory Agreement, including whether the
implementation of additional breakpoints would be appropriate in the future due
to an increase in asset size or otherwise.
The Board noted that the Subadvisory Agreements included breakpoints, but did
not review specific information regarding whether there have been economies of
scale with respect to the Subadvisers' management of the Funds because it
regards that information as less relevant at the subadviser level. Rather, the
Board considered information regarding economies of scale in the context of the
renewal of the Advisory Agreement.
Other Factors. In consideration of the Agreements, the Board also received
information regarding SunAmerica's and the Subadvisers' brokerage and soft
dollar practices. The Board considered that SunAmerica and the Subadvisers are
responsible for decisions to buy and sell securities for the Funds they manage,
selection of broker-dealers and negotiation of commission rates. The Board also
considered the benefits SunAmerica and the Subadvisers may derive from soft
dollar arrangements, including arrangements under which brokers provide
brokerage and/or research services to SunAmerica and/or the Subadvisers in
return for allocating brokerage; however, the Board noted that the securities
in which the Funds invest are traded primarily in the over-the-counter market
on a "net" basis with dealers acting as principal for their own accounts
without a stated commission (although the price of the security usually
includes a profit to the dealer) and, therefore, the Funds generally do not
incur brokerage commissions. Accordingly, the Board observed that SunAmerica
and the Subadvisers typically would not receive soft dollar benefits in return
for allocating the Funds' brokerage transactions. The Board further observed
that when making purchases of new issues with fixed underwriting fees,
SunAmerica or the Subadvisers may designate the use of broker-dealers who have
agreed to provide certain statistical, research and other information.
Conclusion. After a full and complete discussion, the Board approved the
Agreements, each for a one-year period ending June 30, 2013. Based upon their
evaluation of all these factors in their totality, the Board, including the
Disinterested Trustees, was satisfied that the terms of the Agreements were
fair and reasonable and in the best interests of the Funds and the Funds'
shareholders. In arriving at a decision to approve the Advisory Agreement and
Subadvisory Agreements the Board did not identify any single factor or group of
factors as all-important or controlling, but considered all factors together.
The Disinterested Trustees were also assisted by the advice of independent
counsel in making this determination.
84
[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
John E. Smith Jr., 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 The accompanying
P.O. Box 419572 SunAmerica Mutual report has not been
Kansas City, MO Funds c/o BFDS, P.O. audited by independent
64141-6572 Box 219186, Kansas accountants and
City MO, 64121-9186. accordingly no opinion
We will resume has been expressed
individual mailings thereon.
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
INSAN - 9/12
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not Applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------
John T. Genoy
President
Date: December 6, 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: December 6, 2012
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 6, 2012