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, 2013
-------------------------
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2013
SUNAMERICA
Income Funds
[PHOTO]
[LOGO]
SEPTEMBER 30, 2013 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
STATEMENTS OF ASSETS AND LIABILITIES........................ 6
STATEMENTS OF OPERATIONS.................................... 8
STATEMENTS OF CHANGES IN NET ASSETS......................... 9
FINANCIAL HIGHLIGHTS........................................ 11
PORTFOLIO OF INVESTMENTS.................................... 15
NOTES TO FINANCIAL STATEMENTS............................... 63
APPROVAL OF ADVISORY AGREEMENTS............................. 83
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, 2013. It was a period wherein
fixed income market performance was pressured, primarily by expectations that
the U.S. Federal Reserve (the "Fed") might taper its asset purchases via its
quantitative easing program. For the semi-annual period overall, the Barclays
U.S. Aggregate Bond Index*, a broad measure of the U.S. fixed income market,
returned -1.77%.
Fed Chair Bernanke first hinted at policy tightening in May 2013, stoking
market speculation that tapering might begin sooner than expected. He added to
those fears in June, suggesting the Fed might begin narrowing its quantitative
easing program toward a mid-2014 endpoint if the economy strengthened
sufficiently. Even as the Fed noted that downside economic risks had declined
and employment trends were strengthening, it stated it did not expect to begin
raising the federal funds rate until 2015. In contrast to the Fed's more
hawkish rhetoric, the European Central Bank (ECB) noted it was "clearly too
early" to end its accommodative stance. As speculation the Fed would cut
stimulus sooner than expected roiled financial markets, global sovereign
yields, including U.S. Treasury yields, rose sharply during the second calendar
quarter. The U.S. Treasury curve steepened, as long-term rates increased more
than short-term rates. While virtually all fixed income sectors posted negative
absolute returns during the quarter, performance relative to government bonds
was mixed. Indeed, performance patterns were somewhat unusual during the
quarter, with significant dispersion across sectors, regions, maturities and
issuers. Overall, investment grade corporate bonds and emerging market debt
underperformed U.S. Treasury securities during the quarter. Commercial
mortgage-backed securities and agency mortgage-backed securities performed
rather in line with U.S. Treasury securities, and asset-backed securities and
high yield corporate bonds modestly outpaced U.S. Treasury securities as a
whole though also posted negative returns.
As the third quarter of 2013 began, the Fed's tilt toward a reduction in asset
purchases continued to drive interest rates higher. Ongoing anticipation
surrounding the Fed's potential tapering also served to heighten volatility
broadly across the global fixed income markets. Debate over the successor to
Fed Chair Bernanke added to concerns about future Fed policy. Government bond
yields rose during July and continued to climb in August on speculation that
Larry Summers might be the frontrunner. Having made dismissive remarks about
the effectiveness of quantitative easing, it was widely believed the Fed would
implement a significant shift in U.S. monetary policy under Mr. Summers. At its
mid-September meeting, the Fed decided to keep its level of asset purchases
unchanged, catching most market participants off guard. Fixed income assets --
both those considered traditional safe havens and those considered risk assets
-- rallied in response. The shift in tone stemmed from the Fed's concern that
the economy was not expanding as fast as it had hoped. It also cited fiscal
headwinds in the form of sequestration spending cuts and the debt ceiling
debate as potential obstacles to growth. Bernanke stressed that the pace of
bond buying would be dependent on economic data and that the Fed would await
further evidence the recovery was sustainable before tapering. Also in
September 2013, Mr. Summers withdrew himself from consideration as the next Fed
Chair. For the quarter, virtually all fixed income sectors posted positive,
albeit modest, returns.
For the semi-annual period overall, U.S. Treasury securities posted negative
returns, with U.S. Treasury yields rising across the yield curve, or spectrum
of maturities. By the end of September 2013, the yield on the 10-year U.S.
Treasury had risen approximately 75 basis points+ to 2.61%. U.S. high yield
corporate bonds posted the strongest performance within the fixed income
market, eking out a modestly positive return. Mortgage-backed securities,
asset-backed securities and commercial mortgage-backed securities also
outperformed U.S. Treasury securities during the semi-annual period, but,
posting negative absolute returns, did so more modestly. Generating more
significant negative absolute returns, investment grade corporate bonds overall
lagged U.S. Treasury securities, and emerging market debt was weakest within
the fixed income market, as the combination of anticipation of the Fed tapering
its quantitative easing program, U.S. economic growth outpacing emerging
markets economic growth, worries over an economic slowdown in China and
protests in Brazil and Turkey weighed on the sector.
2
On the following pages, you will find detailed financial statements and
portfolio information for each of the SunAmerica Income Funds during the
semi-annual period.
We thank you for being a part of the SunAmerica Income Funds. 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
Timothy Pettee Robert Vanden Assem Christopher Jones
Andrew Doulos Anthony King John Yovanovic
Andrew Sheridan Rajeev Mittal John Dunlevy
--------
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 1/100/th/ of a percentage point.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 2013 -- (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, 2013 and held until September 30, 2013.
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, 2013" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
September 30, 2013" 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, 2013" 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, 2013" 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, 2013" 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, 2013" column does not include administrative fees that may apply
to qualified retirement plan accounts. See the Funds' 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, 2013" 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 Funds' 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, 2013 -- (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 2013 2013 2013* 2013 2013 2013* 2013*
---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $960.07 $ 4.86 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $956.99 $ 8.05 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $956.94 $ 8.05 $1,000.00 $1,016.85 $ 8.29 1.64%
GNMA
Class A#................. $1,000.00 $963.63 $ 4.87 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $960.62 $ 8.06 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C#................. $1,000.00 $960.70 $ 8.06 $1,000.00 $1,016.85 $ 8.29 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $976.83 $ 6.54 $1,000.00 $1,018.45 $ 6.68 1.32%
Class B.................. $1,000.00 $976.29 $ 9.81 $1,000.00 $1,015.14 $10.00 1.98%
Class C.................. $1,000.00 $973.78 $ 9.75 $1,000.00 $1,015.19 $ 9.95 1.97%
HIGH YIELD BOND
Class A#................. $1,000.00 $998.08 $ 6.81 $1,000.00 $1,018.25 $ 6.88 1.36%
Class B#................. $1,000.00 $994.85 $10.05 $1,000.00 $1,014.99 $10.15 2.01%
Class C#................. $1,000.00 $995.00 $10.05 $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,
2013" and the "Expense Ratios" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2013 --
(UNAUDITED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $124,679,497 $184,893,030
Repurchase agreements (cost approximates value)............................................... 2,682,000 3,311,000
------------ ------------
Total investments............................................................................. 127,361,497 188,204,030
------------ ------------
Cash.......................................................................................... 118 86
Foreign cash*................................................................................. -- --
Receivable for:
Shares of beneficial interest sold.......................................................... 15,824 52,235
Dividends and interest...................................................................... 424,138 525,572
Investments sold............................................................................ -- --
Prepaid expenses and other assets............................................................. 2,584 2,766
Due from investment adviser for expense reimbursements/fee waivers............................ 56,414 40,009
Unrealized appreciation on forward foreign currency contracts................................. -- --
------------ ------------
Total assets.................................................................................. 127,860,575 188,824,698
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 309,601 399,246
Investments purchased....................................................................... -- 27,469,896
Investment advisory and management fees..................................................... 68,059 63,801
Distribution and service maintenance fees................................................... 43,614 69,643
Transfer agent fees and expenses............................................................ 30,460 44,331
Trustees' fees and expenses................................................................. 5,174 3,181
Other accrued expenses...................................................................... 70,516 72,223
Dividends payable........................................................................... 9,878 25,361
------------ ------------
Total liabilities............................................................................. 537,302 28,147,682
------------ ------------
Net assets.................................................................................... $127,323,273 $160,677,016
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 135,099 $ 149,451
Paid-in capital............................................................................... 125,168,168 168,325,894
------------ ------------
125,303,267 168,475,345
Accumulated undistributed net investment income (loss)........................................ (327,383) (2,000,786)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short and foreign exchange transactions........................... (2,944,418) (8,200,296)
Unrealized appreciation (depreciation) on investments......................................... 5,291,807 2,402,753
Unrealized appreciation (depreciation) on foreign exchange transactions....................... -- --
------------ ------------
Net assets.................................................................................... $127,323,273 $160,677,016
============ ============
*Cost
Investments (unaffiliated).................................................................. $119,387,690 $182,490,277
============ ============
Foreign cash................................................................................ $ -- $ --
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $553,592,279 $108,220,550
Repurchase agreements (cost approximates value)............................................... 1,008,000 2,275,000
------------ ------------
Total investments............................................................................. 554,600,279 110,495,550
------------ ------------
Cash.......................................................................................... 3,378,558 272,759
Foreign cash*................................................................................. 158,037 --
Receivable for:
Shares of beneficial interest sold.......................................................... 809,958 79,268
Dividends and interest...................................................................... 7,787,747 1,984,111
Investments sold............................................................................ 15,416,617 1,878,445
Prepaid expenses and other assets............................................................. 4,392 2,507
Due from investment adviser for expense reimbursements/fee waivers............................ -- 30,902
Unrealized appreciation on forward foreign currency contracts................................. -- 54
------------ ------------
Total assets.................................................................................. 582,155,588 114,743,596
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 2,805,887 318,865
Investments purchased....................................................................... 21,352,263 2,657,831
Investment advisory and management fees..................................................... 291,330 69,222
Distribution and service maintenance fees................................................... 307,248 55,362
Transfer agent fees and expenses............................................................ 114,971 29,327
Trustees' fees and expenses................................................................. 3,757 2,641
Other accrued expenses...................................................................... 156,483 85,187
Dividends payable........................................................................... 328,151 87,534
------------ ------------
Total liabilities............................................................................. 25,360,090 3,305,969
------------ ------------
Net assets.................................................................................... $556,795,498 $111,437,627
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 1,613,375 $ 320,027
Paid-in capital............................................................................... 623,713,710 172,439,934
------------ ------------
625,327,085 172,759,961
Accumulated undistributed net investment income (loss)........................................ (979,314) 156,628
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short and foreign exchange transactions........................... (56,375,501) (52,403,732)
Unrealized appreciation (depreciation) on investments......................................... (11,188,287) (9,075,310)
Unrealized appreciation (depreciation) on foreign exchange transactions....................... 11,515 80
------------ ------------
Net assets.................................................................................... $556,795,498 $111,437,627
============ ============
*Cost
Investments (unaffiliated).................................................................. $564,780,566 $117,295,860
============ ============
Foreign cash................................................................................ $ 154,797 $ --
============ ============
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2013 --
(UNAUDITED) (CONTINUED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $114,545,919 $119,964,470
Shares of beneficial interest issued and outstanding............................................... 12,153,582 11,168,852
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 9.42 $ 10.74
Maximum sales charge (4.75% of offering price)..................................................... $ 0.47 $ 0.54
------------ ------------
Maximum offering price to public................................................................... $ 9.89 $ 11.28
============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 3,851,718 $ 11,736,015
Shares of beneficial interest issued and outstanding............................................... 408,551 1,089,620
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 9.43 $ 10.77
============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 8,925,636 $ 28,976,531
Shares of beneficial interest issued and outstanding............................................... 947,793 2,686,595
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 9.42 $ 10.79
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $287,935,034 $68,580,476
Shares of beneficial interest issued and outstanding............................................... 83,554,001 19,729,107
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 3.45 $ 3.48
Maximum sales charge (4.75% of offering price)..................................................... $ 0.17 $ 0.17
------------ -----------
Maximum offering price to public................................................................... $ 3.62 $ 3.65
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 49,324,044 $11,634,414
Shares of beneficial interest issued and outstanding............................................... 14,317,482 3,342,586
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.45 $ 3.48
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $219,536,420 $31,222,737
Shares of beneficial interest issued and outstanding............................................... 63,466,044 8,930,963
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.46 $ 3.50
============ ===========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2013
-- (UNAUDITED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)...................................................................... $ -- $ --
Interest (unaffiliated)....................................................................... 1,602,010 1,361,235
----------- -----------
Total investment income*..................................................................... 1,602,010 1,361,235
----------- -----------
EXPENSES:
Investment advisory and management fees....................................................... 431,923 453,721
Distribution and service maintenance fees:
Class A...................................................................................... 206,513 248,118
Class B...................................................................................... 21,177 65,031
Class C...................................................................................... 53,286 192,547
Transfer agent fees and expenses:
Class A...................................................................................... 140,667 167,696
Class B...................................................................................... 5,556 16,117
Class C...................................................................................... 13,015 45,531
Registration fees:
Class A...................................................................................... 12,973 14,833
Class B...................................................................................... 7,419 7,062
Class C...................................................................................... 11,824 11,598
Custodian and accounting fees................................................................. 34,291 75,595
Reports to shareholders....................................................................... 14,203 24,544
Audit and tax fees............................................................................ 23,427 23,308
Legal fees.................................................................................... 5,049 5,614
Trustees' fees and expenses................................................................... 5,711 9,242
Interest expense.............................................................................. -- 446
Other expenses................................................................................ 9,777 10,159
----------- -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits..................................................................................... 996,811 1,371,162
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3)............ (290,555) (246,913)
----------- -----------
Net expenses................................................................................. 706,256 1,124,249
----------- -----------
Net investment income (loss).................................................................... 895,754 236,986
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................................... (2,763,366) (5,751,750)
Net realized foreign exchange gain (loss) on other assets and liabilities....................... -- --
----------- -----------
Net realized gain (loss) on investments and foreign currencies.................................. (2,763,366) (5,751,750)
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).................. (3,675,170) (2,662,062)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities............... -- --
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies................................ (3,675,170) (2,662,062)
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies................... (6,438,536) (8,413,812)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(5,542,782) $(8,176,826)
=========== ===========
*Net of foreign withholding taxes on interest and dividends of.................................. $ -- $ --
=========== ===========
STRATEGIC HIGH YIELD
BOND FUND BOND FUND
------------ -----------
INVESTMENT INCOME:
Dividends (unaffiliated)...................................................................... $ 47,890 $ 93,478
Interest (unaffiliated)....................................................................... 15,977,769 3,979,259
------------ -----------
Total investment income*..................................................................... 16,025,659 4,072,737
------------ -----------
EXPENSES:
Investment advisory and management fees....................................................... 1,950,635 449,700
Distribution and service maintenance fees:
Class A...................................................................................... 552,545 128,835
Class B...................................................................................... 269,254 66,085
Class C...................................................................................... 1,256,864 165,416
Transfer agent fees and expenses:
Class A...................................................................................... 361,879 88,709
Class B...................................................................................... 61,008 15,404
Class C...................................................................................... 284,916 38,395
Registration fees:
Class A...................................................................................... 26,513 14,025
Class B...................................................................................... 6,852 8,185
Class C...................................................................................... 19,699 8,201
Custodian and accounting fees................................................................. 156,819 39,352
Reports to shareholders....................................................................... 65,443 13,693
Audit and tax fees............................................................................ 30,887 32,568
Legal fees.................................................................................... 10,865 4,218
Trustees' fees and expenses................................................................... 27,263 5,464
Interest expense.............................................................................. 15 131
Other expenses................................................................................ 16,004 11,510
------------ -----------
Total expenses before fee waivers, expense reimbursements, expense recoupments and custody
credits..................................................................................... 5,097,461 1,089,891
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3)............ -- (123,959)
------------ -----------
Net expenses................................................................................. 5,097,461 965,932
------------ -----------
Net investment income (loss).................................................................... 10,928,198 3,106,805
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated).......................................... (3,365,292) 919,184
Net realized foreign exchange gain (loss) on other assets and liabilities....................... (46,199) 775
------------ -----------
Net realized gain (loss) on investments and foreign currencies.................................. (3,411,491) 919,959
------------ -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated).................. (24,065,736) (4,604,143)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities............... 41,556 1,714
------------ -----------
Net unrealized gain (loss) on investments and foreign currencies................................ (24,024,180) (4,602,429)
------------ -----------
Net realized and unrealized gain (loss) on investments and foreign currencies................... (27,435,671) (3,682,470)
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................. $(16,507,473) $ (575,665)
============ ===========
*Net of foreign withholding taxes on interest and dividends of.................................. $ 31,136 $ --
============ ===========
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2013 MARCH 31,
(UNAUDITED) 2013
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 895,754 $ 1,803,688
Net realized gain (loss) on investments and foreign currencies......................... (2,763,366) 635,015
Net unrealized gain (loss) on investments and foreign currencies....................... (3,675,170) 127,518
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (5,542,782) 2,566,221
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,171,099) (2,407,603)
Net investment income (Class B)........................................................ (28,432) (66,885)
Net investment income (Class C)........................................................ (71,675) (193,462)
Net realized gain on securities (Class A).............................................. -- (1,485,196)
Net realized gain on securities (Class B).............................................. -- (64,225)
Net realized gain on securities (Class C).............................................. -- (181,121)
------------ ------------
Total distributions to shareholders...................................................... (1,271,206) (4,398,492)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (4,596,459) 2,700,859
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (11,410,447) 868,588
NET ASSETS:
Beginning of period...................................................................... 138,733,720 137,865,132
------------ ------------
End of period+........................................................................... $127,323,273 $138,733,720
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (327,383) $ 48,069
============ ============
GNMA FUND
---------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2013 MARCH 31,
(UNAUDITED) 2013
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 236,986 $ 623,550
Net realized gain (loss) on investments and foreign currencies......................... (5,751,750) 5,819,811
Net unrealized gain (loss) on investments and foreign currencies....................... (2,662,062) (7,628,267)
------------ -------------
Net increase (decrease) in net assets resulting from operations.......................... (8,176,826) (1,184,906)
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,437,119) (5,347,575)
Net investment income (Class B)........................................................ (89,697) (279,727)
Net investment income (Class C)........................................................ (263,832) (1,102,427)
Net realized gain on securities (Class A).............................................. -- (639,911)
Net realized gain on securities (Class B).............................................. -- (46,181)
Net realized gain on securities (Class C).............................................. -- (185,523)
------------ -------------
Total distributions to shareholders...................................................... (1,790,648) (7,601,344)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (49,987,779) (108,594,379)
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (59,955,253) (117,380,629)
NET ASSETS:
Beginning of period...................................................................... 220,632,269 338,012,898
------------ -------------
End of period+........................................................................... $160,677,016 $ 220,632,269
============ =============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,000,786) $ (447,124)
============ =============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC
BOND FUND
---------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2013 MARCH 31,
(UNAUDITED) 2013
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 10,928,198 $ 20,816,947
Net realized gain (loss) on investments and foreign currencies......................... (3,411,491) 19,525,014
Net unrealized gain (loss) on investments and foreign currencies....................... (24,024,180) 6,595,507
------------- ------------
Net increase (decrease) in net assets resulting from operations.......................... (16,507,473) 46,937,468
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (5,989,153) (12,197,323)
Net investment income (Class B)........................................................ (843,366) (1,852,378)
Net investment income (Class C)........................................................ (3,956,749) (8,911,106)
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...................................................... (10,789,268) (22,960,807)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (80,407,857) 37,772,753
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (107,704,598) 61,749,414
NET ASSETS:
Beginning of period...................................................................... 664,500,096 602,750,682
------------- ------------
End of period+........................................................................... $ 556,795,498 $664,500,096
============= ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (979,314) $ (1,118,244)
============= ============
HIGH YIELD
BOND FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2013 MARCH 31,
(UNAUDITED) 2013
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 3,106,805 $ 7,093,091
Net realized gain (loss) on investments and foreign currencies......................... 919,959 1,616,264
Net unrealized gain (loss) on investments and foreign currencies....................... (4,602,429) 4,749,186
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (575,665) 13,458,541
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,937,357) (4,437,764)
Net investment income (Class B)........................................................ (305,098) (658,906)
Net investment income (Class C)........................................................ (763,229) (1,809,761)
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...................................................... (3,005,684) (6,906,431)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (7,029,409) (14,215,891)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (10,610,758) (7,663,781)
NET ASSETS:
Beginning of period...................................................................... 122,048,385 129,712,166
------------ ------------
End of period+........................................................................... $111,437,627 $122,048,385
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 156,628 $ 55,507
============ ============
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
-------
03/31/09 $ 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
03/31/13 10.06 0.14 0.05 0.19 (0.21) (0.13) (0.34) 9.91 1.84 121,807
09/30/13+ 9.91 0.07 (0.46) (0.39) (0.10) -- (0.10) 9.42 (3.99) 114,546
CLASS B
-------
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
03/31/13 10.07 0.08 0.04 0.12 (0.14) (0.13) (0.27) 9.92 1.18 4,701
09/30/13+ 9.92 0.04 (0.47) (0.43) (0.06) -- (0.06) 9.43 (4.30) 3,852
CLASS C
-------
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
03/31/13 10.05 0.08 0.05 0.13 (0.14) (0.13) (0.27) 9.91 1.28 12,226
09/30/13+ 9.91 0.04 (0.47) (0.43) (0.06) -- (0.06) 9.42 (4.31) 8,926
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
0.99% 2.73% 84%
0.99 2.17 472
0.99 1.77 254
0.99 1.73 152
0.99 1.40 89
0.99(6) 1.42(6) 50
1.64% 2.08% 84%
1.64 1.59 472
1.64 1.10 254
1.64 1.09 152
1.64 0.75 89
1.64(6) 0.78(6) 50
1.64% 2.05% 84%
1.64 1.55 472
1.64 1.12 254
1.64 1.08 152
1.64 0.76 89
1.64(6) 0.78(6) 50
--------
+ 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):
03/31/09 03/31/10 03/31/11 03/31/12 03/31/13 09/30/13+(6)
-------- -------- -------- -------- -------- ------------
U.S. Government Securities Fund Class A. 0.35% 0.38% 0.37% 0.39% 0.40% 0.41%
U.S. Government Securities Fund Class B. 0.40 0.50 0.53 0.60 0.59 0.76
U.S. Government Securities Fund Class C. 0.40 0.44 0.44 0.46 0.45 0.62
(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
-------
03/31/09 $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
03/31/13 11.62 0.04 (0.07) (0.03) (0.29) (0.04) (0.33) 11.26 (0.34) 158,830 0.99
09/30/13+ 11.26 0.02 (0.43) (0.41) (0.11) -- (0.11) 10.74 (3.64) 119,964 0.99(4)
CLASS B
-------
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
03/31/13 11.65 (0.03) (0.08) (0.11) (0.21) (0.04) (0.25) 11.29 (0.97) 14,331 1.64
09/30/13+ 11.29 (0.01) (0.43) (0.44) (0.08) -- (0.08) 10.77 (3.94) 11,736 1.64(4)
CLASS C
-------
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
03/31/13 11.67 (0.03) (0.08) (0.11) (0.21) (0.04) (0.25) 11.31 (0.97) 47,471 1.64
09/30/13+ 11.31 (0.01) (0.43) (0.44) (0.08) -- (0.08) 10.79 (3.93) 28,977 1.64(4)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
3.32% 73%
2.28 104
2.59 148
1.76 96
0.38 150
0.42(4) 40
2.67% 73%
1.63 104
1.89 148
1.14 96
(0.27) 150
(0.23)(4) 40
2.55% 73%
1.63 104
1.94 148
1.12 96
(0.26) 150
(0.24)(4) 40
--------
+ 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):
03/31/09 03/31/10 03/31/11 03/31/12 03/31/13 09/30/13+(4)
-------- -------- -------- -------- -------- ------------
GNMA Fund Class A............. 0.13% 0.15% 0.15% 0.15% 0.18% 0.24%
GNMA Fund Class B............. 0.15 0.19 0.21 0.22 0.25 0.34
GNMA Fund Class C............. 0.15 0.16 0.17 0.17 0.19 0.28
(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
-------
03/31/09 $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
03/31/13 3.45 0.13 0.16 0.29 (0.14) -- (0.14) 3.60 8.64 336,759 1.30
09/30/13+ 3.60 0.07 (0.15) (0.08) (0.07) -- (0.07) 3.45 (2.32) 287,935 1.32(3)
CLASS B
-------
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
03/31/13 3.45 0.11 0.15 0.26 (0.12) -- (0.12) 3.59 7.62 56,776 1.97
09/30/13+ 3.59 0.06 (0.14) (0.08) (0.06) -- (0.06) 3.45 (2.37) 49,324 1.98(3)
CLASS C
-------
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
03/31/13 3.47 0.11 0.15 0.26 (0.12) -- (0.12) 3.61 7.62 270,965 1.94
09/30/13+ 3.61 0.06 (0.15) (0.09) (0.06) -- (0.06) 3.46 (2.62) 219,536 1.97(3)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
---------- ---------
6.54% 112%
6.13 157
5.50 152
4.72 144
3.70 166
3.84(3) 84
6.00% 112%
5.44 157
4.83 152
4.07 144
3.02 166
3.18(3) 84
6.03% 112%
5.48 157
4.85 152
4.09 144
3.05 166
3.19(3) 84
--------
+ 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)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 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 INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- -------------
CLASS A
-------
03/31/09 $4.16 $0.38 $(1.69) $(1.31) $(0.33) $-- $(0.33) $2.52 (32.66)% $59,210 1.36%
03/31/10 2.52 0.29 0.89 1.18 (0.34) -- (0.34) 3.36 48.44 79,245 1.36
03/31/11 3.36 0.25 0.16 0.41 (0.27) -- (0.27) 3.50 12.76 76,156 1.36
03/31/12 3.50 0.23 (0.08) 0.15 (0.25) -- (0.25) 3.40 4.52 81,477 1.36
03/31/13 3.40 0.20 0.18 0.38 (0.20) -- (0.20) 3.58 11.42 74,175 1.36
09/30/13+ 3.58 0.10 (0.11) (0.01) (0.09) -- (0.09) 3.48 (0.19) 68,580 1.36(4)
CLASS B
-------
03/31/09 $4.17 $0.36 $(1.69) $(1.33) $(0.31) $-- $(0.31) $2.53 (33.00)% $17,018 2.01%
03/31/10 2.53 0.27 0.89 1.16 (0.32) -- (0.32) 3.37 47.35 18,186 2.01
03/31/11 3.37 0.23 0.16 0.39 (0.25) -- (0.25) 3.51 12.02 15,818 2.01
03/31/12 3.51 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.40 3.55 11,512 2.01
03/31/13 3.40 0.18 0.17 0.35 (0.17) -- (0.17) 3.58 10.70 13,956 2.01
09/30/13+ 3.58 0.09 (0.11) (0.02) (0.08) -- (0.08) 3.48 (0.52) 11,634 2.01(4)
CLASS C
-------
03/31/09 $4.18 $0.36 $(1.69) $(1.33) $(0.31) $-- $(0.31) $2.54 (32.90)% $33,394 2.01%
03/31/10 2.54 0.27 0.89 1.16 (0.32) -- (0.32) 3.38 47.21 44,656 2.01
03/31/11 3.38 0.23 0.17 0.40 (0.25) -- (0.25) 3.53 12.33 39,301 2.01
03/31/12 3.53 0.21 (0.09) 0.12 (0.23) -- (0.23) 3.42 3.56 36,723 2.01
03/31/13 3.42 0.18 0.18 0.36 (0.18) -- (0.18) 3.60 10.67 33,918 2.01
09/30/13+ 3.60 0.09 (0.11) (0.02) (0.08) -- (0.08) 3.50 (0.50) 31,223 2.01(4)
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
10.74% 77%
9.34 110
7.47 48
6.72 52
5.82 44
5.43(4) 25
10.18% 77%
8.77 110
6.84 48
6.19 52
5.16 44
4.78(4) 25
10.16% 77%
8.70 110
6.83 48
6.11 52
5.18 44
4.78(4) 25
--------
+ 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):
03/31/09 03/31/10 03/31/11 03/31/12 03/31/13 09/30/13+(4)
-------- -------- -------- -------- -------- ------------
High Yield Bond Fund Class A............ 0.14% 0.18% 0.16% 0.18% 0.16% 0.20%
High Yield Bond Fund Class B............ 0.16 0.23 0.21 0.25 0.22 0.28
High Yield Bond Fund Class C............ 0.15 0.18 0.16 0.19 0.16 0.20
(4)Annualized
See Notes to Financial Statements
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
United States Treasury Bills.... 28.3%
Government National Mtg. Assoc.. 27.5
United States Treasury Notes.... 26.2
United States Treasury Bonds.... 15.3
Repurchase Agreement............ 2.1
Federal Farm Credit Bank........ 0.4
Small Business Administration... 0.2
-----
100.0%
=====
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, 2013 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 28.1%
FEDERAL FARM CREDIT BANK -- 0.4%
6.30% due 12/03/2013.................. $ 500,000 $ 505,354
----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/2023.................. 5,851 5,873
11.00% due 02/01/2015................. 8 9
11.50% due 09/01/2019................. 445 452
----------
6,334
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 27.5%
4.50% due 05/15/2018.................. 194,858 209,051
4.50% due 08/15/2018.................. 325,054 348,756
4.50% due 09/15/2018.................. 865,210 926,436
4.50% due 10/15/2018.................. 911,463 973,538
4.50% due 09/15/2033.................. 895,251 970,207
4.50% due 02/15/2039.................. 7,834 8,416
4.50% due 04/15/2039.................. 336,545 361,429
4.50% due 05/15/2039.................. 426,089 457,998
4.50% due 06/15/2039.................. 157,775 169,519
4.50% due 07/15/2039.................. 139,913 150,372
4.50% due 09/15/2039.................. 569,757 612,384
4.50% due 10/15/2039.................. 617,120 663,504
4.50% due 12/15/2039.................. 1,066,241 1,149,476
4.50% due 01/15/2040.................. 642,953 693,153
4.50% due 02/15/2040.................. 760,322 817,541
4.50% due 03/15/2040.................. 741,129 798,147
4.50% due 04/15/2040.................. 516,281 556,818
4.50% due 05/15/2040.................. 426,052 459,391
4.50% due 06/15/2040.................. 643,101 695,596
4.50% due 07/15/2040.................. 794,358 856,485
4.50% due 08/15/2040.................. 334,207 360,285
4.50% due 09/15/2040.................. 13,785 14,822
4.50% due 03/15/2041.................. 1,464,823 1,580,610
4.50% due 04/15/2041.................. 150,014 163,765
4.50% due 06/15/2041.................. 889,624 964,311
4.50% due 07/15/2041.................. 49,717 53,805
4.50% due 08/15/2041.................. 867,323 934,900
5.00% due 04/15/2018.................. 842,178 895,295
5.00% due 04/15/2033.................. 7,314 7,955
5.00% due 08/15/2033.................. 552,406 606,211
5.00% due 09/15/2033.................. 252,082 277,403
5.00% due 10/15/2033.................. 165,876 182,402
5.00% due 04/15/2034.................. 6,370 6,987
5.00% due 11/15/2034.................. 64,858 71,148
5.00% due 02/15/2035.................. 4,836 5,308
5.00% due 03/15/2035.................. 103,572 112,657
5.00% due 04/15/2035.................. 16,271 17,858
5.00% due 05/15/2035.................. 500,923 544,869
5.00% due 09/15/2035.................. 232,688 255,063
5.00% due 10/15/2035.................. 33,284 36,473
5.00% due 12/15/2035.................. 18,035 19,763
5.00% due 03/15/2036.................. 322,149 350,422
5.00% due 05/15/2036.................. 302,125 330,817
5.00% due 06/15/2036.................. 200,882 220,028
5.00% due 09/15/2036.................. 529,949 579,090
5.00% due 10/15/2036.................. 243,803 265,790
5.00% due 11/15/2036.................. 13,260 14,425
5.00% due 12/15/2036.................. 79,761 86,935
5.00% due 01/15/2037.................. 806,765 881,164
5.00% due 02/15/2037.................. 242,138 263,480
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 03/15/2037..................... $ 314,995 $ 343,257
5.00% due 04/15/2037..................... 318,212 346,745
5.00% due 08/15/2038..................... 1,869,040 2,031,801
5.50% due 11/15/2032..................... 2,646 2,912
5.50% due 03/15/2033..................... 75,046 82,289
5.50% due 04/15/2033..................... 195,646 216,172
5.50% due 05/15/2033..................... 317,258 350,748
5.50% due 06/15/2033..................... 1,549,182 1,709,897
5.50% due 07/15/2033..................... 457,763 505,247
5.50% due 10/15/2033..................... 385,684 427,114
5.50% due 12/15/2033..................... 74,489 82,491
5.50% due 01/15/2034..................... 1,241,876 1,371,455
5.50% due 02/15/2034..................... 705,920 776,359
6.00% due 01/15/2028..................... 541 598
6.00% due 04/15/2028..................... 355,700 394,236
6.00% due 04/15/2029..................... 18,926 21,019
6.00% due 05/15/2029..................... 10,862 12,069
6.00% due 06/15/2029..................... 4,771 5,269
6.00% due 04/15/2031..................... 9,987 11,175
6.00% due 05/15/2031..................... 12,864 14,402
6.00% due 11/15/2031..................... 117,960 130,432
6.00% due 12/15/2031..................... 3,372 3,724
6.00% due 01/15/2032..................... 43,255 48,375
6.00% due 02/15/2032..................... 7,996 8,851
6.00% due 03/15/2032..................... 2,021 2,233
6.00% due 08/15/2032..................... 96,116 107,737
6.00% due 11/15/2032..................... 13,214 14,784
6.00% due 12/15/2032..................... 4,830 5,334
6.00% due 01/15/2033..................... 10,626 11,793
6.00% due 02/15/2033..................... 7,963 8,794
6.00% due 03/15/2033..................... 32,230 36,060
6.00% due 04/15/2033..................... 154,210 172,193
6.00% due 07/15/2033..................... 71,152 79,608
6.00% due 08/15/2033..................... 604,041 676,605
6.00% due 09/15/2033..................... 102,675 114,753
6.00% due 10/15/2033..................... 394,797 438,249
6.00% due 11/15/2033..................... 28,349 31,309
6.00% due 12/15/2033..................... 246,897 276,465
6.00% due 02/15/2034..................... 60,687 67,026
6.00% due 05/15/2034..................... 8,535 9,519
6.00% due 06/15/2034..................... 15,102 17,665
6.00% due 07/15/2034..................... 396,354 439,494
6.00% due 08/15/2034..................... 43,697 48,264
6.00% due 09/15/2034..................... 128,597 143,490
6.00% due 10/15/2034..................... 473,958 528,730
6.00% due 12/15/2034..................... 141,145 155,895
6.00% due 08/15/2035..................... 65,929 72,842
6.50% due 02/15/2029..................... 4,766 5,348
6.50% due 06/15/2031..................... 6,846 7,675
6.50% due 07/15/2031..................... 19,474 21,828
6.50% due 08/15/2031..................... 22,475 25,198
6.50% due 09/15/2031..................... 61,075 68,494
6.50% due 10/15/2031..................... 89,516 104,398
6.50% due 11/15/2031..................... 3,058 3,439
6.50% due 01/15/2032..................... 5,383 6,041
6.50% due 02/15/2032..................... 82,307 92,286
7.00% due 07/15/2023..................... 8,180 9,111
7.00% due 10/15/2023..................... 21,711 21,789
7.00% due 09/15/2025..................... 70,535 79,909
7.00% due 03/20/2029..................... 7,710 9,105
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
--------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 06/20/2029..................... $ 1,111 $ 1,312
7.00% due 11/20/2030..................... 18,570 21,078
7.50% due 04/15/2017..................... 1,488 1,494
7.50% due 08/15/2023..................... 40,594 42,554
7.50% due 09/15/2023..................... 191,344 203,647
9.00% due 12/15/2016..................... 8,079 8,119
11.00% due 08/20/2015.................... 22 22
11.00% due 09/20/2015.................... 51 52
11.50% due 05/20/2015.................... 345 347
-----------
35,070,983
-----------
SMALL BUSINESS ADMINISTRATION -- 0.2%
6.30% due 06/01/2018..................... 222,871 238,322
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $33,565,106)....................... 35,820,993
-----------
U.S. GOVERNMENT TREASURIES -- 41.5%
UNITED STATES TREASURY BONDS -- 15.3%
3.88% due 08/15/2040..................... 1,000,000 1,042,031
4.25% due 11/15/2040..................... 8,000,000 8,866,248
4.75% due 02/15/2041..................... 8,000,000 9,586,248
-----------
19,494,527
-----------
UNITED STATES TREASURY NOTES -- 26.2%
0.88% due 09/15/2016..................... 4,000,000 4,029,376
1.25% due 10/31/2015..................... 2,000,000 2,037,032
1.50% due 07/31/2016..................... 16,000,000 16,404,992
2.00% due 02/15/2022..................... 5,000,000 4,860,545
2.50% due 08/15/2023..................... 5,000,000 4,949,220
3.13% due 05/15/2019..................... 1,000,000 1,083,516
-----------
33,364,681
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $49,823,406)....................... 52,859,208
-----------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $83,388,512)....................... 88,680,201
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 28.3%
U.S. GOVERNMENT TREASURIES -- 28.3%
United States Treasury Bills
(0.05)% due 10/10/2013.............. $ 6,000,000 $ 6,000,075
0.00% due 10/17/2013................ 17,000,000 17,000,000
0.03% due 03/20/2014................ 5,000,000 4,999,410
0.04% due 10/24/2013................ 8,000,000 7,999,811
------------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $35,999,178).................. 35,999,296
------------
REPURCHASE AGREEMENT -- 2.1%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $2,682,000)................... 2,682,000 2,682,000
------------
TOTAL INVESTMENTS --
(cost $122,069,690)(2).............. 100.0% 127,361,497
Liabilities in excess of other assets.. (0.0) (38,224)
----------- ------------
NET ASSETS -- 100.0% $127,323,273
=========== ============
--------
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 5 for cost of investments on a tax basis.
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Long-Term Investment Securities:
U.S. Government Agencies:
Federal Farm Credit Bank......... $ -- $ 505,354 $ -- $ 505,354
Federal National Mtg. Assoc...... -- 6,334 -- 6,334
Government National Mtg. Assoc... -- 35,070,983 -- 35,070,983
Small Business Administration.... -- 238,322 238,322
U.S. Government Treasuries:
United States Treasury Bonds..... -- 19,494,527 -- 19,494,527
United States Treasury Notes..... -- 33,364,681 -- 33,364,681
Short-Term Investment Securities:
U.S. Government Treasuries....... -- 35,999,296 -- 35,999,296
Repurchase Agreement................ -- 2,682,000 -- 2,682,000
----- ------------ ----- ------------
Total............................... $ -- $127,361,497 $ -- $127,361,497
===== ============ ===== ============
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, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 97.0%
United States Treasury Bills.... 10.6
United States Treasury Notes.... 7.4
Repurchase Agreement............ 2.1
Small Business Administration... 0.0
-----
117.1%
=====
CREDIT QUALITY ALLOCATION+#
Aaa. 100.0%
=====
--------
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
18
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 97.0%
GOVERNMENT NATIONAL MTG. ASSOC. -- 97.0%
3.00% due November TBA................ $13,000,000 $12,780,624
3.50% due 11/15/2041.................. 1,146,017 1,181,961
3.50% due 01/15/2042.................. 434,381 447,321
3.50% due 02/15/2042.................. 459,339 473,023
3.50% due 03/15/2042.................. 1,147,188 1,181,403
3.50% due 06/15/2042.................. 5,569,710 5,735,626
3.50% due 07/15/2042.................. 2,322,433 2,391,617
3.50% due November TBA................ 15,000,000 15,377,344
4.00% due 03/15/2039.................. 467,660 494,038
4.00% due 04/15/2039.................. 526,148 555,926
4.00% due 05/15/2039.................. 33,547 35,426
4.00% due 06/15/2039.................. 1,481,568 1,564,526
4.00% due 08/15/2039.................. 125,011 132,010
4.00% due 11/15/2039.................. 19,041 20,107
4.00% due 12/15/2039.................. 675,795 714,892
4.00% due 08/15/2040.................. 630,525 668,505
4.00% due 09/15/2040.................. 1,049,509 1,109,877
4.00% due 11/15/2040.................. 790,615 837,543
4.00% due 12/15/2040.................. 1,887,155 2,002,924
4.00% due 01/15/2041.................. 22,389 23,804
4.00% due 02/15/2041.................. 796,404 843,766
4.00% due 03/15/2041.................. 578,527 615,275
4.00% due 04/15/2041.................. 148,371 157,808
4.00% due 06/15/2041.................. 60,386 64,216
4.00% due 07/15/2041.................. 1,407,533 1,496,597
4.00% due 08/15/2041.................. 1,895,734 2,012,278
4.00% due 09/15/2041.................. 4,215,021 4,479,208
4.00% due 10/15/2041.................. 2,268,885 2,405,497
4.00% due 11/15/2041.................. 5,354,240 5,664,016
4.00% due 12/15/2041.................. 2,181,487 2,304,735
4.00% due 01/15/2042.................. 4,084,403 4,313,904
4.00% due 02/15/2042.................. 2,495,315 2,637,787
4.00% due 03/15/2042.................. 741,594 783,320
4.00% due 04/15/2042.................. 136,336 144,073
4.00% due 05/15/2042.................. 138,204 146,033
4.00% due 06/15/2042.................. 1,164,648 1,230,311
4.50% due 05/15/2018.................. 308,317 330,775
4.50% due 08/15/2018.................. 169,741 182,115
4.50% due 09/15/2018.................. 523,893 560,382
4.50% due 10/15/2018.................. 763,337 815,335
4.50% due 08/15/2033.................. 47,910 51,788
4.50% due 09/15/2033.................. 131,221 141,845
4.50% due 10/15/2038.................. 107,497 115,720
4.50% due 12/15/2038.................. 89,395 96,056
4.50% due 02/15/2039.................. 35,754 38,428
4.50% due 03/15/2039.................. 309,987 333,048
4.50% due 04/15/2039.................. 88,415 95,067
4.50% due 05/15/2039.................. 1,094,731 1,176,637
4.50% due 06/15/2039.................. 4,265,975 4,585,785
4.50% due 07/15/2039.................. 1,841,071 1,979,045
4.50% due 08/15/2039.................. 129,569 139,547
4.50% due 09/15/2039.................. 171,210 184,053
4.50% due 10/15/2039.................. 62,203 66,859
4.50% due 11/15/2039.................. 695,137 746,858
4.50% due 12/15/2039.................. 641,686 691,792
4.50% due 01/15/2040.................. 81,234 87,571
4.50% due 02/15/2040.................. 2,832,589 3,053,773
4.50% due 03/15/2040.................. 877,998 944,574
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 04/15/2040..................... $1,994,518 $2,149,737
4.50% due 05/15/2040..................... 341,321 367,838
4.50% due 06/15/2040..................... 678,579 731,267
4.50% due 07/15/2040..................... 338,922 364,223
4.50% due 08/15/2040..................... 41,914 45,181
4.50% due 09/15/2040..................... 428,197 460,863
4.50% due 10/15/2040..................... 41,480 44,712
4.50% due 11/15/2040..................... 515,252 555,237
4.50% due 01/15/2041..................... 538,106 582,506
4.50% due 02/15/2041..................... 615,863 664,996
4.50% due 03/15/2041..................... 2,500,357 2,698,869
4.50% due 04/15/2041..................... 3,489,301 3,762,808
4.50% due 05/15/2041..................... 775,275 838,078
4.50% due 06/15/2041..................... 449,307 486,280
4.50% due 07/15/2041..................... 315,820 340,316
4.50% due 08/15/2041..................... 362,448 392,172
5.00% due 03/15/2018..................... 99,380 105,592
5.00% due 04/15/2018..................... 1,160,362 1,234,953
5.00% due 05/15/2018..................... 2,083,077 2,214,000
5.00% due 01/15/2033..................... 5,166 5,618
5.00% due 05/15/2033..................... 3,712 4,077
5.00% due 08/15/2033..................... 780,254 856,248
5.00% due 09/15/2033..................... 826,622 914,646
5.00% due 10/15/2033..................... 1,860,101 2,042,834
5.00% due 04/15/2034..................... 9,517 10,347
5.00% due 05/15/2034..................... 46,801 51,339
5.00% due 11/15/2034..................... 221,908 243,428
5.00% due 12/15/2034..................... 155,122 170,166
5.00% due 08/15/2035..................... 888,183 974,245
5.00% due 09/15/2035..................... 3,818 4,167
5.00% due 10/15/2035..................... 30,693 33,639
5.00% due 11/15/2035..................... 30,682 33,624
5.00% due 12/15/2035..................... 12,731 13,953
5.00% due 02/15/2036..................... 80,123 87,517
5.00% due 04/15/2036..................... 147,069 161,030
5.00% due 06/15/2036..................... 278,300 303,887
5.00% due 07/15/2036..................... 111,490 121,265
5.00% due 08/15/2036..................... 8,186 9,118
5.00% due 09/15/2036..................... 218,129 238,962
5.00% due 10/15/2036..................... 12,403 13,780
5.00% due 11/15/2036..................... 112,500 122,352
5.00% due 12/15/2036..................... 254,212 276,457
5.00% due 01/15/2037..................... 98,722 107,406
5.00% due 02/15/2037..................... 460,062 500,490
5.00% due 04/15/2037..................... 1,606,593 1,752,802
5.00% due 12/15/2037..................... 4,625 5,040
5.00% due 04/15/2038..................... 1,496,111 1,627,459
5.00% due 05/15/2038..................... 912,765 994,031
5.00% due 06/15/2038..................... 62,554 68,075
5.00% due 08/15/2038..................... 111,236 120,838
5.00% due 10/15/2038..................... 229,705 250,400
5.00% due 01/15/2039..................... 470,349 511,789
5.00% due 02/15/2039..................... 412,781 448,775
5.00% due 03/15/2039..................... 887,708 965,875
5.00% due 04/15/2039..................... 589,908 641,847
5.00% due 08/15/2039..................... 1,044,002 1,135,803
5.00% due 09/15/2039..................... 38,725 42,086
5.00% due 10/15/2039..................... 2,242,486 2,437,697
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 11/15/2039..................... $1,782,180 $1,937,841
5.00% due 12/15/2039..................... 1,575,017 1,718,478
5.00% due 04/15/2040..................... 1,760,368 1,920,628
5.00% due 05/15/2040..................... 3,459,878 3,771,478
5.00% due 06/15/2040..................... 184,125 200,835
5.50% due 06/15/2029..................... 1,504 1,648
5.50% due 01/15/2032..................... 10,581 11,651
5.50% due 03/15/2033..................... 171,056 188,492
5.50% due 04/15/2033..................... 355,355 392,248
5.50% due 05/15/2033..................... 356,099 392,989
5.50% due 06/15/2033..................... 126,499 139,405
5.50% due 07/15/2033..................... 1,977 2,182
5.50% due 08/15/2033..................... 3,575 3,946
5.50% due 12/15/2033..................... 21,247 23,657
5.50% due 01/15/2034..................... 105,181 117,192
5.50% due 02/15/2034..................... 106,624 117,966
5.50% due 04/15/2034..................... 70,863 78,519
5.50% due 04/20/2035..................... 1,050,331 1,172,429
5.50% due 06/15/2035..................... 86,385 95,281
5.50% due 09/15/2035..................... 853,066 960,650
5.50% due 10/15/2035..................... 766,089 845,847
5.50% due 11/15/2035..................... 11,767 12,979
5.50% due 12/15/2035..................... 17,622 19,507
5.50% due 02/15/2036..................... 163,254 179,991
5.50% due 03/15/2036..................... 50,916 56,133
5.50% due 05/15/2036..................... 38,588 42,264
5.50% due 09/15/2036..................... 89,807 98,433
5.50% due 03/15/2037..................... 73,306 80,210
5.50% due 05/15/2037..................... 43,627 47,818
5.50% due 12/15/2037..................... 143,238 157,060
5.50% due 01/15/2038..................... 80,594 88,379
5.50% due 02/15/2038..................... 517,571 566,657
5.50% due 04/15/2038..................... 273,576 299,380
5.50% due 05/15/2038..................... 592,320 652,248
5.50% due 06/15/2038..................... 354,979 388,934
5.50% due 07/15/2038..................... 280,570 309,520
5.50% due 08/15/2038..................... 278,359 306,337
5.50% due 10/15/2038..................... 144,695 158,722
5.50% due 11/15/2038..................... 52,658 57,711
5.50% due 12/15/2038..................... 239,454 262,751
5.50% due 01/15/2039..................... 117,174 128,351
5.50% due 02/15/2039..................... 247,690 271,948
5.50% due 03/15/2039..................... 138,888 152,443
5.50% due 05/15/2039..................... 38,103 41,777
5.50% due 08/15/2039..................... 203,406 222,927
5.50% due 09/15/2039..................... 264,576 290,061
5.50% due 10/15/2039..................... 89,986 98,555
5.50% due 11/15/2039..................... 2,776 3,044
5.50% due 01/15/2040..................... 58,542 64,073
5.50% due 03/15/2040..................... 517,494 567,497
5.50% due 04/15/2040..................... 182,548 202,887
5.50% due 05/15/2040..................... 81,972 89,752
5.50% due 08/15/2040..................... 399,558 437,831
5.50% due 09/15/2040..................... 153,644 168,131
5.50% due 11/15/2040..................... 135,573 148,529
5.50% due 02/15/2041..................... 122,576 134,320
5.50% due 03/15/2041..................... 53,555 58,665
5.50% due 04/15/2041..................... 90,456 99,027
5.50% due 05/15/2041..................... 29,292 32,087
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 06/15/2041..................... $162,819 $178,280
5.50% due 09/15/2041..................... 8,181 8,959
6.00% due 11/15/2023..................... 1,250 1,378
6.00% due 01/15/2024..................... 2,851 3,148
6.00% due 07/15/2028..................... 1,398 1,544
6.00% due 12/15/2028..................... 23,402 25,990
6.00% due 01/15/2029..................... 172,768 191,233
6.00% due 02/15/2029..................... 98,304 108,715
6.00% due 03/15/2029..................... 116,040 128,100
6.00% due 04/15/2029..................... 105,742 117,078
6.00% due 05/15/2029..................... 24,298 26,841
6.00% due 06/15/2029..................... 39,962 44,217
6.00% due 07/15/2029..................... 13,121 14,483
6.00% due 08/15/2029..................... 6,901 7,618
6.00% due 04/15/2031..................... 4,356 4,812
6.00% due 07/15/2031..................... 13,225 14,618
6.00% due 10/15/2031..................... 33,794 37,327
6.00% due 11/15/2031..................... 112,113 124,193
6.00% due 12/15/2031..................... 40,080 44,426
6.00% due 01/15/2032..................... 24,935 27,908
6.00% due 02/15/2032..................... 11,516 12,881
6.00% due 07/15/2032..................... 25,264 27,898
6.00% due 09/15/2032..................... 14,581 16,307
6.00% due 10/15/2032..................... 67,111 74,563
6.00% due 11/15/2032..................... 771 851
6.00% due 01/15/2033..................... 49,575 54,986
6.00% due 02/15/2033..................... 74,578 82,778
6.00% due 03/15/2033..................... 42,376 47,254
6.00% due 04/15/2033..................... 130,216 144,320
6.00% due 05/15/2033..................... 49,614 55,441
6.00% due 06/15/2033..................... 8,848 9,900
6.00% due 08/15/2033..................... 59,369 66,390
6.00% due 10/15/2033..................... 13,031 14,439
6.00% due 11/15/2033..................... 14,570 16,307
6.00% due 12/15/2033..................... 137,557 153,645
6.00% due 01/15/2034..................... 75,750 84,460
6.00% due 02/15/2034..................... 82,265 91,649
6.00% due 03/15/2034..................... 23,247 25,677
6.00% due 04/15/2034..................... 113,166 125,822
6.00% due 05/15/2034..................... 5,973 6,597
6.00% due 06/15/2034..................... 64,933 71,721
6.00% due 07/15/2034..................... 65,478 72,713
6.00% due 09/15/2034..................... 40,634 45,064
6.00% due 10/15/2034..................... 28,201 31,148
6.00% due 12/15/2034..................... 41,656 46,560
6.00% due 01/15/2035..................... 14,744 16,441
6.00% due 04/15/2035..................... 25,998 28,992
6.00% due 05/15/2035..................... 6,073 6,707
6.00% due 06/15/2035..................... 27,993 30,916
6.00% due 11/15/2035..................... 2,638 2,913
6.00% due 12/15/2035..................... 55,740 61,689
6.00% due 01/15/2036..................... 41,674 46,333
6.00% due 02/15/2036..................... 48,633 53,935
6.00% due 03/15/2036..................... 25,595 28,493
6.00% due 04/15/2036..................... 71,064 78,654
6.00% due 05/15/2036..................... 142,524 158,524
6.00% due 06/15/2036..................... 62,221 68,895
6.00% due 08/15/2036..................... 4,496 4,991
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 09/15/2036..................... $ 26,632 $ 29,368
6.00% due 10/15/2036..................... 43,217 47,805
6.00% due 11/15/2036..................... 44,673 49,348
6.00% due 07/15/2037..................... 8,276 9,178
6.00% due 09/15/2037..................... 6,505 7,183
6.00% due 11/15/2037..................... 11,061 12,216
6.00% due 12/15/2037..................... 12,584 13,882
6.00% due 01/15/2038..................... 1,536 1,695
6.00% due 02/15/2038..................... 11,787 13,011
6.00% due 05/15/2038..................... 21,131 23,295
6.00% due 06/15/2038..................... 15,127 16,710
6.00% due 07/15/2038..................... 47,238 52,138
6.00% due 08/15/2038..................... 5,914 6,533
6.00% due 10/15/2038..................... 78,756 86,927
6.00% due 11/15/2038..................... 54,783 60,485
6.00% due 12/15/2038..................... 60,556 66,865
6.00% due 01/15/2039..................... 106,561 117,708
6.00% due 02/15/2039..................... 26,147 28,882
6.00% due 08/15/2039..................... 30,337 33,523
6.00% due 09/15/2039..................... 16,564 18,297
6.00% due 10/15/2039..................... 25,744 28,389
6.00% due 02/15/2040..................... 5,233 5,781
6.00% due 04/15/2040..................... 14,545 16,031
6.00% due 05/15/2040..................... 2,522 2,779
6.50% due 03/15/2028..................... 7,349 8,436
6.50% due 08/15/2028..................... 8,670 9,727
6.50% due 01/15/2029..................... 1,226 1,377
6.50% due 02/15/2029..................... 480 551
6.50% due 03/15/2029..................... 49,473 55,501
6.50% due 04/15/2029..................... 446 514
6.50% due 05/15/2029..................... 3,954 4,454
6.50% due 06/15/2029..................... 13,892 15,920
6.50% due 07/15/2029..................... 1,066 1,196
6.50% due 10/15/2029..................... 2,616 2,932
6.50% due 08/15/2031..................... 64,100 71,949
6.50% due 09/15/2031..................... 9,554 10,709
6.50% due 10/15/2031..................... 89,516 104,398
6.50% due 11/15/2031..................... 33,762 37,889
6.50% due 12/15/2031..................... 56,454 63,344
6.50% due 02/15/2032..................... 112,074 125,733
6.50% due 05/15/2032..................... 289,197 324,893
6.50% due 06/15/2032..................... 27,883 31,256
7.00% due 03/15/2023..................... 7,753 7,780
7.00% due 01/20/2024..................... 219 246
7.00% due 03/20/2024..................... 194 217
7.00% due 07/20/2025..................... 729 813
7.00% due 09/15/2025..................... 30,632 34,703
7.00% due 01/20/2029..................... 14,836 16,769
7.00% due 02/20/2029..................... 2,652 3,060
7.00% due 06/20/2029..................... 5,508 6,505
7.00% due 07/20/2029..................... 18,006 20,542
7.00% due 09/20/2029..................... 1,880 2,206
7.00% due 10/20/2029..................... 3,652 4,139
7.00% due 11/20/2029..................... 1,163 1,343
7.00% due 03/20/2030..................... 2,456 2,910
7.00% due 06/20/2030..................... 2,396 2,721
7.00% due 08/20/2030..................... 5,455 6,195
7.00% due 09/20/2030..................... 8,016 9,510
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 10/20/2030..................... $ 8,664 $ 10,290
8.00% due 11/15/2026..................... 43,081 49,554
8.00% due 12/15/2029..................... 4,492 4,717
8.00% due 04/15/2030..................... 12,478 14,472
8.00% due 05/15/2030..................... 1,171 1,302
8.00% due 08/15/2030..................... 21,002 24,319
8.50% due 03/15/2017..................... 5,754 5,905
8.50% due 12/15/2022..................... 12,986 13,047
8.50% due 01/15/2023..................... 16,519 16,932
8.50% due 09/15/2024..................... 7,615 8,817
9.00% due 07/15/2016..................... 3,981 4,000
9.00% due 10/15/2016..................... 1,702 1,710
------------
155,848,669
------------
SMALL BUSINESS ADMINISTRATION -- 0.0%
6.30% due 06/01/2018..................... 74,290 79,441
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $153,615,009)...................... 155,928,110
------------
U.S. GOVERNMENT TREASURIES -- 7.4%
UNITED STATES TREASURY NOTES -- 7.4%
0.88% due 09/15/2016..................... 5,000,000 5,036,720
2.50% due 08/15/2023..................... 7,000,000 6,928,908
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $11,875,976)....................... 11,965,628
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $165,490,985)...................... 167,893,738
------------
SHORT-TERM INVESTMENT SECURITIES -- 10.6%
U.S. GOVERNMENT TREASURIES -- 10.6%
United States Treasury Bills
0.00% due 10/17/2013..................... 12,000,000 12,000,000
0.03% due 03/20/2014..................... 5,000,000 4,999,292
------------
TOTAL SHORT-TERM INVESTMENT SECURITIES
(cost $16,999,292)....................... 16,999,292
------------
REPURCHASE AGREEMENT -- 2.1%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $3,311,000)........................ 3,311,000 3,311,000
------------
TOTAL INVESTMENTS
(cost $185,801,277)(2)................... 117.1% 188,204,030
Liabilities in excess of other assets....... (17.1) (27,527,014)
----------- ------------
NET ASSETS 100.0% $160,677,016
=========== ============
--------
(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, 2013 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Long-Term Investment Securities:
U.S. Government Agencies:
Government National Mtg. Assoc... $ -- $155,848,669 $ -- $155,848,669
Small Business Administration.... -- 79,441 -- 79,441
U.S. Government Treasuries:
United States Treasury Notes..... -- 11,965,628 -- 11,965,628
Short-Term Investment Securities:
U.S. Government Treasuries........ -- 16,999,292 -- 16,999,292
Repurchase Agreement................ -- 3,311,000 -- 3,311,000
----- ------------ ----- ------------
Total............................... $ -- $188,204,030 $ -- $188,204,030
===== ============ ===== ============
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, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Sovereign.............................. 16.6%
Oil Companies-Exploration & Production. 5.6
Federal National Mtg. Assoc............ 5.4
Banks-Commercial....................... 4.0
Diversified Financial Services......... 3.4
Diversified Banking Institutions....... 3.4
United States Treasury Notes........... 2.7
Federal Home Loan Mtg. Corp............ 2.2
Telephone-Integrated................... 1.9
Pipelines.............................. 1.8
Oil Companies-Integrated............... 1.7
Electric-Integrated.................... 1.5
Casino Hotels.......................... 1.4
Computer Services...................... 1.2
United States Treasury Bonds........... 1.1
Medical-Drugs.......................... 1.1
Medical-Hospitals...................... 1.0
Paper & Related Products............... 1.0
Real Estate Investment Trusts.......... 1.0
Diversified Minerals................... 1.0
Aerospace/Defense-Equipment............ 1.0
Insurance-Life/Health.................. 1.0
Cable/Satellite TV..................... 0.9
Coal................................... 0.9
Retail-Restaurants..................... 0.9
Real Estate Operations & Development... 0.8
Finance-Leasing Companies.............. 0.8
Independent Power Producers............ 0.8
Building Products-Cement............... 0.8
Time Deposits.......................... 0.8
Medical Instruments.................... 0.8
Steel-Producers........................ 0.7
Multimedia............................. 0.7
Diversified Manufacturing Operations... 0.7
Telecom Services....................... 0.7
Cellular Telecom....................... 0.6
Enterprise Software/Service............ 0.6
Savings & Loans/Thrifts................ 0.6
Auto/Truck Parts & Equipment-Original.. 0.6
Consumer Products-Misc................. 0.6
Medical Products....................... 0.5
Auto-Cars/Light Trucks................. 0.5
Printing-Commercial.................... 0.5
Oil & Gas Drilling..................... 0.5
MRI/Medical Diagnostic Imaging......... 0.5
Finance-Commercial..................... 0.5
Medical-Generic Drugs.................. 0.5
Airlines............................... 0.5
Oil-Field Services..................... 0.4
Containers-Metal/Glass................. 0.4
Publishing-Newspapers.................. 0.4
Casino Services........................ 0.4
Electric-Distribution.................. 0.4
Chemicals-Diversified.................. 0.4
Commercial Services-Finance............ 0.4
Municipal Bonds........................ 0.4
Retail-Drug Store...................... 0.4
Banks-Special Purpose.................. 0.4
Alternative Waste Technology........... 0.4
Satellite Telecom...................... 0.4
Food-Retail............................ 0.3%
Insurance-Multi-line................... 0.3
Security Services...................... 0.3
Containers-Paper/Plastic............... 0.3
Petrochemicals......................... 0.3
Advertising Services................... 0.3
Food-Meat Products..................... 0.3
Finance-Other Services................. 0.3
Electronic Components-Semiconductors... 0.3
Brewery................................ 0.3
Rental Auto/Equipment.................. 0.3
Music.................................. 0.3
Special Purpose Entities............... 0.3
Retail-Regional Department Stores...... 0.3
Computer Software...................... 0.3
Electric-Generation.................... 0.3
Steel Pipe & Tube...................... 0.3
Real Estate Management/Services........ 0.3
Food-Dairy Products.................... 0.2
Oil Refining & Marketing............... 0.2
Coatings/Paint......................... 0.2
Travel Services........................ 0.2
Storage/Warehousing.................... 0.2
Building & Construction Products-Misc.. 0.2
Cruise Lines........................... 0.2
Transport-Services..................... 0.2
Marine Services........................ 0.2
E-Commerce/Services.................... 0.2
Transport-Rail......................... 0.2
Radio.................................. 0.2
Financial Guarantee Insurance.......... 0.2
Diversified Operations................. 0.2
Semiconductor Equipment................ 0.2
Chemicals-Plastics..................... 0.2
Data Processing/Management............. 0.2
Firearms & Ammunition.................. 0.2
SupraNational Banks.................... 0.2
Retail-Pawn Shops...................... 0.2
Beverages-Non-alcoholic................ 0.2
Shipbuilding........................... 0.2
Building & Construction-Misc........... 0.2
Electronics-Military................... 0.2
Home Furnishings....................... 0.2
Advanced Materials..................... 0.2
Retail-Automobile...................... 0.2
Repurchase Agreements.................. 0.2
Sovereign Agency....................... 0.2
Banks-Money Center..................... 0.2
Chemicals-Other........................ 0.2
Insurance-Mutual....................... 0.2
Broadcast Services/Program............. 0.2
Commercial Services.................... 0.2
Investment Management/Advisor Services. 0.2
Retail-Apparel/Shoe.................... 0.2
Direct Marketing....................... 0.2
Gold Mining............................ 0.2
Theaters............................... 0.2
Television............................. 0.1
Soap & Cleaning Preparation............ 0.1
Computers-Memory Devices............... 0.1
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Schools.......................... 0.1%
Retail-Building Products......... 0.1
Banks-Fiduciary.................. 0.1
Banks-Super Regional............. 0.1
Entertainment Software........... 0.1
Capacitors....................... 0.1
Advertising Agencies............. 0.1
Food-Misc./Diversified........... 0.1
Retail-Propane Distribution...... 0.1
Finance-Investment Banker/Broker. 0.1
Regional Authority............... 0.1
Sugar............................ 0.1
Medical-HMO...................... 0.1
Building-Residential/Commercial.. 0.1
Gambling (Non-Hotel)............. 0.1
Building-Heavy Construction...... 0.1
Pastoral & Agricultural.......... 0.1
Publishing-Periodicals........... 0.1
Investment Companies............. 0.1
Apparel Manufacturers............ 0.1
Aerospace/Defense................ 0.1
Retail-Major Department Stores... 0.1
Insurance-Reinsurance............ 0.1
Machinery-Construction & Mining.. 0.1
Appliances....................... 0.1
Insurance Brokers................ 0.1
Finance-Consumer Loans........... 0.1
Metal-Diversified................ 0.1
Metal Processors & Fabrication... 0.1
Chemicals-Specialty.............. 0.1
----
99.6%
====
CREDIT QUALITY ALLOCATION+#
Aaa........ 15.8%
Aa......... 4.0
A.......... 6.9
Baa........ 21.0
Ba......... 14.1
B.......... 19.0
Caa........ 10.4
Ca......... 0.4
Not Rated@. 8.4
-----
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.
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
ASSET BACKED SECURITIES -- 2.2%
DIVERSIFIED FINANCIAL SERVICES -- 2.2%
AmeriCredit Automobile Receivables Trust
Series 2012-4, Class B
1.31% due 11/08/2017........................... $300,000 $299,824
AmeriCredit Automobile Receivables Trust
Series 2012-3, Class B
1.59% due 07/10/2017........................... 263,000 264,771
Banc of America Funding Trust FRS
Series 2006-A, Class 1A1
2.69% due 02/20/2036(1)........................ 611,009 607,878
Banc of America Funding Trust
Series 2005-8, Class 1A1
5.50% due 01/25/2036(1)........................ 855,563 840,886
Banc of America Funding Trust
Series 2006-2, Class 2A22
6.00% due 03/25/2036(1)........................ 268,995 258,212
Bear Stearns ALT-A Trust FRS
Series 2004-10, Class 1A3
1.18% due 09/25/2034(1)........................ 503,439 498,860
Citibank Omni Master Trust
Series 2009-A17, Class A17
4.90% due 11/15/2018*.......................... 330,000 345,470
Countrywide Alternative Loan Trust
Series 2004-24CB, Class 1A1
6.00% due 11/25/2034(1)........................ 480,645 482,232
Countrywide Asset-Backed Certs. FRS
Series 2004-6, Class 1A2
0.55% due 12/25/2034........................... 299,380 280,648
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-6, Class 1A11
5.25% due 02/25/2026(1)........................ 300,000 299,256
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-12, Class 2A4
5.50% due 05/25/2035(1)........................ 80,147 79,477
Discover Card Execution Note Trust
Series 2007-A1, Class A1
5.65% due 03/16/2020........................... 330,000 382,337
Dominos Pizza Master Issuer LLC
Series 2012-1A, Class A2
5.22% due 01/25/2042*.......................... 733,125 787,280
Entergy Arkansas Restoration Funding LLC
Series 2010-A, Class A1
2.30% due 08/01/2021........................... 192,162 197,651
Enterprise Fleet Financing LLC
Series 2012-2, Class A3
0.93% due 04/20/2018*.......................... 450,000 447,099
Fairway Outdoor Funding LLC
Series 2012-1A, Class A2
4.21% due 10/15/2042*.......................... 243,976 243,193
First Horizon Mtg. Pass-Through Trust
Series 2006-2, Class 1A3
6.00% due 08/25/2036(1)........................ 447,412 449,415
GS Mtg. Securities Corp. II
Series 2012-GCJ9, Class A2
1.76% due 11/10/2045(2)........................ 468,000 465,940
HLSS Servicer Advance Receivables Backed Notes
Series 2013-T1, Class B2
1.74% due 01/16/2046*.......................... 178,000 176,273
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Morgan Stanley Bank of America Merrill
Lynch Trust
Series 2012-C6, Class A2
1.87% due 11/15/2045(2)...................... $1,250,000 $ 1,261,014
Morgan Stanley Bank of America Merrill
Lynch Trust
Series 2012-C5, Class A2
1.97% due 08/15/2045(2)...................... 245,843 249,453
MortgageIT Trust FRS
Series 2004-2, Class A1
0.92% due 12/25/2034(1)...................... 247,406 236,380
Nationstar Mtg. Advance Receivable Trust
Series 2013-T2A, Class A2
1.68% due 06/20/2046*........................ 350,000 349,499
New Century Home Equity Loan Trust VRS
Series 2004-A, Class AII9
4.81% due 08/25/2034......................... 105,657 108,328
RFMSI Trust
Series 2006-S1, Class 1A3
5.75% due 01/25/2036(1)...................... 323,019 325,359
Structured Asset Securities Corp.
Pass Through Certs.
Series 2004-5H, Class A4
5.54% due 12/25/2033(1)...................... 323,101 332,363
UBS-Barclays Commercial Mtg. Trust
Series 2012-C2, Class A2
2.11% due 05/10/2063(2)...................... 1,334,239 1,350,230
Wells Fargo Mtg. Backed Securities Trust FRS
Series 2005-AR10, Class 2A16
2.64% due 06/25/2035(1)...................... 88,258 88,489
Wells Fargo Mtg. Backed Securities Trust
Series 2007-14, Class 1A1
6.00% due 10/25/2037(1)...................... 262,829 263,086
Wells Fargo Mtg. Backed Securities Trust
Series 2007-15, Class A1
6.00% due 11/25/2037(1)...................... 450,032 430,906
WF-RBS Commercial Mtg. Trust
Series 2012-C8, Class A2
1.88% due 08/15/2045(2)...................... 165,030 165,183
-----------
TOTAL ASSET BACKED SECURITIES
(cost $12,637,286)........................... 12,566,992
-----------
U.S. CORPORATE BONDS & NOTES -- 49.0%
ADVANCED MATERIALS -- 0.2%
Iracore International Holdings, Inc.
Senior Sec. Notes
9.50% due 06/01/2018*........................ 1,025,000 1,066,000
-----------
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
3.75% due 02/15/2023......................... 353,000 330,430
Interpublic Group of Cos., Inc.
Senior Notes
6.25% due 11/15/2014......................... 341,000 357,198
-----------
687,628
-----------
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ADVERTISING SERVICES -- 0.3%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/2015*........... $1,220,000 $1,001,925
Visant Corp.
Company Guar. Notes
10.00% due 10/01/2017................. 725,000 674,250
----------
1,676,175
----------
AEROSPACE/DEFENSE -- 0.1%
Boeing Co.
Senior Notes
0.95% due 05/15/2018.................. 490,000 470,789
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.6%
Erickson Air-Crane, Inc.
Sec. Notes
8.25% due 05/01/2020*................. 1,265,000 1,238,119
Exelis, Inc.
Company Guar. Notes
5.55% due 10/01/2021.................. 962,000 967,097
Sequa Corp.
Company Guar. Notes
7.00% due 12/15/2017*................. 1,205,000 1,205,000
----------
3,410,216
----------
AIRLINES -- 0.3%
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class A-1
7.20% due 01/02/2019.................. 838,048 888,331
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class B
7.63% due 01/02/2015.................. 100,048 101,673
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/2017.................. 293,395 310,998
United Airlines Pass Through Trust
Pass Through Certs.
Series 2013-1, Class B
5.38% due 02/15/2023.................. 127,000 125,984
----------
1,426,986
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.4%
ADS Waste Holdings, Inc.
Senior Notes
8.25% due 10/01/2020*................. 1,963,000 2,070,965
----------
APPAREL MANUFACTURERS -- 0.1%
Quiksilver, Inc./QS Wholesale, Inc.
Company Guar. Notes
10.00% due 08/01/2020*................ 451,000 474,678
----------
AUTO-CARS/LIGHT TRUCKS -- 0.4%
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.25% due 06/15/2021.................. 957,000 1,071,840
Daimler Finance North America LLC
Company Guar. Notes
1.88% due 01/11/2018*................. 655,000 648,481
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
AUTO-CARS/LIGHT TRUCKS (CONTINUED)
Daimler Finance North America LLC
Company Guar. Notes
2.38% due 08/01/2018*....................... $ 646,000 $ 647,028
----------
2,367,349
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.4%
Affinia Group, Inc.
Company Guar. Notes
7.75% due 05/01/2021*....................... 1,425,000 1,460,625
Chassix, Inc.
Senior Sec. Notes
9.25% due 08/01/2018*....................... 539,000 569,993
----------
2,030,618
----------
BANKS-COMMERCIAL -- 1.5%
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*....................... 1,870,000 1,963,500
FirstMerit Corp.
Sub. Notes
4.35% due 02/04/2023........................ 286,000 282,374
Regions Financial Corp.
Senior Notes
2.00% due 05/15/2018........................ 1,137,000 1,103,637
Union Bank NA
Senior Notes
1.50% due 09/26/2016........................ 416,000 418,266
Union Bank NA
Senior Notes
2.63% due 09/26/2018........................ 911,000 926,086
Zions Bancorporation
Senior Notes
4.00% due 06/20/2016........................ 658,000 679,977
Zions Bancorporation
Senior Notes
4.50% due 03/27/2017........................ 783,000 822,128
Zions Bancorporation
Senior Notes
4.50% due 06/13/2023........................ 1,932,000 1,915,831
----------
8,111,799
----------
BANKS-FIDUCIARY -- 0.1%
RBS Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*....................... 775,000 756,309
----------
BANKS-SUPER REGIONAL -- 0.1%
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/2026........................ 38,000 40,504
Wells Fargo & Co.
Sub. Notes
4.13% due 08/15/2023........................ 424,000 415,154
----------
455,658
----------
BEVERAGES-NON-ALCOHOLIC -- 0.1%
Innovation Ventures LLC/Innovation Ventures
Finance Corp.
Senior Sec. Notes
9.50% due 08/15/2019*....................... 805,000 737,581
----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BREWERY -- 0.3%
Anheuser-Busch InBev Worldwide, Inc.
Company Guar. Notes
0.80% due 07/15/2015........................ $1,606,000 $1,613,267
----------
BROADCAST SERVICES/PROGRAM -- 0.2%
Nexstar Broadcasting, Inc.
Company Guar. Notes
6.88% due 11/15/2020*....................... 912,000 927,960
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.2%
Building Materials Corp. of America
Senior Notes
6.75% due 05/01/2021*....................... 850,000 913,750
Owens Corning, Inc.
Company Guar. Notes
7.00% due 12/01/2036........................ 321,000 341,162
----------
1,254,912
----------
BUILDING & CONSTRUCTION-MISC. -- 0.2%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023*....................... 1,170,000 1,123,200
----------
BUILDING PRODUCTS-CEMENT -- 0.4%
Cemex Finance LLC
Senior Sec. Notes
9.50% due 12/14/2016........................ 403,000 427,684
Headwaters, Inc.
Sec. Notes
7.63% due 04/01/2019........................ 1,861,000 1,954,050
----------
2,381,734
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.1%
Standard Pacific Corp.
Company Guar. Notes
6.25% due 12/15/2021........................ 580,000 580,000
----------
CABLE/SATELLITE TV -- 0.7%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.50% due 04/30/2021........................ 1,838,000 1,865,570
DIRECTV Holdings LLC/DIRECTV
Financing Co., Inc.
Company Guar. Notes
5.15% due 03/15/2042........................ 711,000 604,909
TCI Communications, Inc.
Senior Notes
7.13% due 02/15/2028........................ 250,000 316,808
WideOpenWest Finance
LLC/WideOpenWest Capital Corp.
Company Guar. Notes
10.25% due 07/15/2019....................... 825,000 895,125
----------
3,682,412
----------
CAPACITORS -- 0.1%
Kemet Corp.
Senior Sec. Notes
10.50% due 05/01/2018....................... 773,000 687,970
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
CASINO HOTELS -- 1.2%
Caesars Entertainment Operating Co., Inc.
Senior Sec. Notes
8.50% due 02/15/2020........................ $1,333,000 $1,226,360
Caesars Entertainment Operating Co., Inc.
Company Guar. Notes
10.75% due 02/01/2016....................... 800,000 692,000
Caesars Entertainment Resort Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020*....................... 1,133,000 1,133,000
Caesars Entertainment Resort Properties LLC
Sec. Notes
11.00% due 10/01/2021*...................... 1,346,000 1,346,000
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*...................... 755,000 743,675
Eldorado Resorts LLC/Eldorado Capital Corp.
Senior Sec. Notes
8.63% due 06/15/2019*....................... 987,000 1,021,545
Seminole Hard Rock Entertainment,
Inc./Seminole Hard Rock International LLC
Company Guar. Notes
5.88% due 05/15/2021*....................... 575,000 552,000
----------
6,714,580
----------
CASINO SERVICES -- 0.4%
Chukchansi Economic Development Authority
Sec. Notes
9.75% due 05/30/2020*(4).................... 987,091 562,642
Greektown Superholdings, Inc.
Sec. Notes, Series A
13.00% due 07/01/2015....................... 1,243,000 1,295,827
Greektown Superholdings, Inc.
Sec. Notes, Series B
13.00% due 07/01/2015....................... 450,000 469,125
----------
2,327,594
----------
CELLULAR TELECOM -- 0.5%
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 04/01/2023*....................... 1,208,000 1,211,020
Sprint Communications, Inc.
Senior Notes
7.00% due 08/15/2020........................ 1,268,000 1,290,190
T-Mobile USA, Inc.
Senior Notes
5.25% due 09/01/2018*....................... 345,000 351,038
----------
2,852,248
----------
CHEMICALS-DIVERSIFIED -- 0.2%
Olin Corp.
Senior Notes
5.50% due 08/15/2022........................ 1,355,000 1,348,225
----------
CHEMICALS-OTHER -- 0.2%
Taminco Global Chemical Corp.
Sec. Notes
9.75% due 03/31/2020*....................... 870,000 983,100
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-PLASTICS -- 0.2%
PolyOne Corp.
Senior Notes
5.25% due 03/15/2023*......................... $1,229,000 $1,161,405
----------
CHEMICALS-SPECIALTY -- 0.1%
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034.......................... 248,000 300,707
----------
COAL -- 0.8%
Murray Energy Corp.
Senior Sec. Notes
8.63% due 06/15/2021*......................... 1,020,000 1,022,550
Peabody Energy Corp.
Company Guar. Notes
6.00% due 11/15/2018.......................... 1,075,000 1,072,312
SunCoke Energy Partners LP/SunCoke
Energy Partners Finance Corp.
Company Guar. Notes
7.38% due 02/01/2020*......................... 2,141,000 2,226,640
----------
4,321,502
----------
COATINGS/PAINT -- 0.2%
US Coatings Acquisition Inc./Flash Dutch 2 BV
Company Guar. Notes
7.38% due 05/01/2021*......................... 1,314,000 1,373,130
----------
COMMERCIAL SERVICES-FINANCE -- 0.4%
Harland Clarke Holdings Corp.
Company Guar. Notes
9.50% due 05/15/2015.......................... 820,000 820,000
Harland Clarke Holdings Corp.
Senior Sec. Notes
9.75% due 08/01/2018*......................... 1,345,000 1,418,975
----------
2,238,975
----------
COMPUTER SERVICES -- 1.2%
Affiliated Computer Services, Inc.
Senior Notes
5.20% due 06/01/2015.......................... 399,000 422,549
Compiler Finance Sub, Inc.
Senior Notes
7.00% due 05/01/2021*......................... 1,564,000 1,540,540
International Business Machines Corp.
Senior Notes
0.45% due 05/06/2016.......................... 2,179,000 2,160,927
International Business Machines Corp.
Senior Notes
1.63% due 05/15/2020.......................... 623,000 585,297
International Business Machines Corp.
Senior Notes
1.95% due 07/22/2016.......................... 1,200,000 1,235,673
International Business Machines Corp.
Senior Notes
6.22% due 08/01/2027.......................... 375,000 458,374
----------
6,403,360
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CONSUMER PRODUCTS-MISC. -- 0.6%
American Achievement Corp.
Sec. Notes
10.88% due 04/15/2016*.................... $1,373,000 $1,415,907
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Senior Sec. Notes
5.75% due 10/15/2020...................... 1,267,000 1,271,751
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Company Guar. Notes
9.88% due 08/15/2019...................... 351,000 380,835
----------
3,068,493
----------
CONTAINERS-METAL/GLASS -- 0.4%
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/2026...................... 2,200,000 2,420,000
----------
CONTAINERS-PAPER/PLASTIC -- 0.3%
Consolidated Container Co.
LLC/Consolidated Container Capital, Inc.
Company Guar. Notes
10.13% due 07/15/2020*.................... 947,000 1,013,290
Tekni-Plex, Inc.
Senior Sec. Notes
9.75% due 06/01/2019*..................... 612,000 688,500
----------
1,701,790
----------
DATA PROCESSING/MANAGEMENT -- 0.2%
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*..................... 1,103,000 1,160,908
----------
DIAGNOSTIC EQUIPMENT -- 0.0%
Life Technologies Corp.
Senior Notes
5.00% due 01/15/2021...................... 252,000 266,348
----------
DIRECT MARKETING -- 0.2%
Catalina Marketing Corp.
Company Guar. Notes
11.63% due 10/01/2017*.................... 850,100 884,104
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.3%
Bank of America Corp.
Sub. Notes
5.49% due 03/15/2019...................... 1,200,000 1,309,469
Bank of America Corp.
Sub. Notes
7.25% due 10/15/2025...................... 117,000 135,212
Citigroup, Inc.
Senior Notes
1.75% due 05/01/2018...................... 1,200,000 1,163,845
Citigroup, Inc.
Sub. Notes
3.50% due 05/15/2023...................... 397,000 358,252
Citigroup, Inc.
Sub. Notes
5.88% due 02/22/2033...................... 1,173,000 1,167,954
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Goldman Sachs Group, Inc.
Senior Notes
5.25% due 07/27/2021...................... $2,937,000 $ 3,169,478
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037...................... 701,000 731,589
JPMorgan Chase & Co.
Senior Notes
1.63% due 05/15/2018...................... 497,000 481,327
JPMorgan Chase & Co.
Senior Notes
4.25% due 11/02/2018...................... NZD 750,000 588,897
JPMorgan Chase & Co.
Senior Notes
6.30% due 04/23/2019...................... 386,000 452,246
Morgan Stanley
Senior Notes
2.13% due 04/25/2018...................... 1,643,000 1,601,347
Morgan Stanley
Senior Notes
4.75% due 03/22/2017...................... 700,000 755,805
Morgan Stanley
Senior Notes
6.25% due 08/09/2026...................... 579,000 647,710
-----------
12,563,131
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.8%
General Electric Capital Corp.
Senior Notes
1.50% due 07/12/2016...................... 794,000 799,309
General Electric Capital Corp.
Senior Notes
5.55% due 05/04/2020...................... 875,000 991,367
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/2038...................... 1,467,000 1,619,386
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/2032...................... 652,000 777,706
-----------
4,187,768
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/2022*..................... 1,325,000 1,391,250
Textron, Inc.
Senior Notes
4.63% due 09/21/2016...................... 595,000 642,019
-----------
2,033,269
-----------
E-COMMERCE/SERVICES -- 0.2%
Netflix, Inc.
Senior Notes
5.38% due 02/01/2021*..................... 1,215,000 1,205,888
-----------
ELECTRIC-DISTRIBUTION -- 0.0%
Oglethorpe Power Corp.
1st Mtg. Notes
4.20% due 12/01/2042...................... 161,000 139,737
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
ELECTRIC-GENERATION -- 0.3%
AES Corp.
Senior Notes
8.00% due 10/15/2017........................... $1,020,000 $1,173,000
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/2017........................... 299,035 302,025
----------
1,475,025
----------
ELECTRIC-INTEGRATED -- 1.3%
Dayton Power & Light Co.
1st Mtg. Notes
1.88% due 09/15/2016*.......................... 399,000 402,105
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033........................... 860,000 927,246
Exelon Generation Co. LLC
Senior Notes
5.60% due 06/15/2042........................... 631,000 603,062
FirstEnergy Corp.
Senior Notes
4.25% due 03/15/2023........................... 879,000 803,870
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/2031........................... 456,000 460,638
Georgia Power Co.
Senior Notes
3.00% due 04/15/2016........................... 180,000 187,721
Great Plains Energy, Inc.
Senior Notes
5.29% due 06/15/2022........................... 335,000 361,732
Mirant Mid Atlantic LLC Pass-Through Trust
Pass Through Certs., Series B
9.13% due 06/30/2017........................... 346,160 366,930
Pacific Gas & Electric Co.
Senior Notes
5.80% due 03/01/2037........................... 455,000 493,512
PPL Energy Supply LLC
Senior Notes
4.60% due 12/15/2021........................... 1,165,000 1,149,497
Puget Energy, Inc.
Senior Sec. Notes
6.00% due 09/01/2021........................... 376,000 410,112
Southern California Edison Co.
1st Mtg. Notes
3.50% due 10/01/2023........................... 434,000 433,374
Southern California Edison Co.
1st Mtg. Notes
4.65% due 10/01/2043........................... 359,000 354,880
Southern Co.
Senior Notes
2.45% due 09/01/2018........................... 327,000 330,179
----------
7,284,858
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.3%
Amkor Technology, Inc.
Senior Notes
6.38% due 10/01/2022........................... 1,697,000 1,620,635
----------
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRONICS-MILITARY -- 0.2%
L-3 Communications Corp.
Company Guar. Notes
4.95% due 02/15/2021............................... $1,030,000 $1,090,692
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.6%
BMC Software Finance, Inc.
Senior Notes
8.13% due 07/15/2021*.............................. 2,089,000 2,167,337
Epicor Software Corp.
Company Guar. Notes
8.63% due 05/01/2019............................... 1,340,000 1,430,450
----------
3,597,787
----------
ENTERTAINMENT SOFTWARE -- 0.1%
Activision Blizzard, Inc.
Company Guar. Notes
5.63% due 09/15/2021*.............................. 689,000 689,861
----------
FINANCE-COMMERCIAL -- 0.5%
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
7.38% due 04/01/2020*.............................. 1,270,000 1,257,300
Jefferies LoanCore LLC/JLC Finance Corp.
Senior Notes
6.88% due 06/01/2020*.............................. 1,428,000 1,399,440
----------
2,656,740
----------
FINANCE-CONSUMER LOANS -- 0.1%
HSBC Finance Corp.
Sub. Notes
6.68% due 01/15/2021............................... 322,000 367,710
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+(6)........................... 280,000 28
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+(6)........................... 361,000 36
Merrill Lynch & Co., Inc.
Sub. Notes
6.11% due 01/29/2037............................... 367,000 377,985
Merrill Lynch & Co., Inc.
Sub. Notes
7.75% due 05/14/2038............................... 232,000 287,267
----------
665,316
----------
FINANCE-LEASING COMPANIES -- 0.3%
Air Lease Corp.
Company Guar. Notes
4.75% due 03/01/2020............................... 1,620,000 1,591,650
----------
FINANCE-OTHER SERVICES -- 0.2%
Denali Borrower LLC/Denali Finance Corp.
Senior Sec. Notes
5.63% due 10/15/2020*.............................. 936,000 909,090
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
1.00% due 02/02/2015............................... 229,000 230,563
----------
1,139,653
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FIREARMS & AMMUNITION -- 0.2%
FGI Operating Co. LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020*................... $1,115,000 $1,159,600
----------
FOOD-MEAT PRODUCTS -- 0.2%
JBS USA LLC/JBS USA Finance, Inc.
Senior Notes
7.25% due 06/01/2021*................... 920,000 910,800
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
Mondelez International, Inc.
Senior Notes
6.50% due 02/09/2040.................... 578,000 678,418
----------
FOOD-RETAIL -- 0.3%
Kroger Co.
Senior Notes
5.15% due 08/01/2043.................... 460,000 450,219
SUPERVALU, Inc.
Senior Notes
6.75% due 06/01/2021*................... 1,573,000 1,494,350
----------
1,944,569
----------
GAMBLING (NON-HOTEL) -- 0.0%
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/2014*(6)(7)............. 715,890 271,179
----------
HOME FURNISHINGS -- 0.2%
Norcraft Cos. LP/Norcraft Finance Corp.
Sec. Notes
10.50% due 12/15/2015................... 1,033,000 1,067,864
----------
INDEPENDENT POWER PRODUCERS -- 0.7%
Calpine Corp.
Senior Sec. Notes
7.88% due 07/31/2020*................... 774,000 833,985
Calpine Corp.
Senior Sec. Notes
7.88% due 01/15/2023*................... 785,000 826,212
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/2018.................... 1,486,000 1,671,750
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/2018.................... 190,000 210,425
NRG Energy, Inc.
Company Guar. Notes
7.63% due 05/15/2019.................... 35,000 36,925
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2020.................... 430,000 471,925
----------
4,051,222
----------
INSURANCE BROKERS -- 0.1%
Marsh & McLennan Cos., Inc.
Senior Notes
2.55% due 10/15/2018.................... 382,000 383,964
----------
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INSURANCE-LIFE/HEALTH -- 0.7%
American Equity Investment Life Holding Co.
Company Guar. Notes
6.63% due 07/15/2021........................ $1,140,000 $1,179,900
Pacific LifeCorp
Senior Notes
6.00% due 02/10/2020*....................... 295,000 330,122
Pricoa Global Funding I
Senior Sec. Notes
1.60% due 05/29/2018*....................... 1,209,000 1,179,701
Principal Life Global Funding II
Sec. Notes
1.00% due 12/11/2015*....................... 699,000 699,986
Prudential Financial, Inc.
Senior Notes
4.75% due 09/17/2015........................ 274,000 293,988
----------
3,683,697
----------
INSURANCE-MULTI-LINE -- 0.2%
Metropolitan Life Global Funding I
Senior Sec. Notes
2.50% due 09/29/2015*....................... 1,222,000 1,262,304
----------
INSURANCE-MUTUAL -- 0.2%
Liberty Mutual Group, Inc.
Senior Notes
5.75% due 03/15/2014*....................... 195,000 198,592
New York Life Global Funding
Sec. Notes
1.65% due 05/15/2017*....................... 779,000 777,374
----------
975,966
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.2%
Patriot Merger Corp.
Senior Notes
9.00% due 07/15/2021*....................... 887,000 913,610
----------
MACHINERY-CONSTRUCTION & MINING -- 0.1%
Caterpillar Financial Services Corp.
Senior Notes
1.35% due 09/06/2016........................ 429,000 431,783
----------
MARINE SERVICES -- 0.2%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/2019........................ 1,226,000 1,216,805
----------
MEDICAL INSTRUMENTS -- 0.5%
Accellent, Inc.
Senior Sec. Notes
8.38% due 02/01/2017........................ 2,580,000 2,686,425
----------
MEDICAL PRODUCTS -- 0.4%
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/2027........................ 370,000 461,501
Universal Hospital Services, Inc.
Sec. Notes
7.63% due 08/15/2020........................ 1,894,000 1,955,555
----------
2,417,056
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
MEDICAL-DRUGS -- 0.5%
AbbVie, Inc.
Senior Notes
1.75% due 11/06/2017..................... $ 832,000 $ 825,169
Endo Pharmaceuticals Holdings, Inc.
Company Guar. Notes
7.00% due 07/15/2019..................... 1,825,000 1,879,750
----------
2,704,919
----------
MEDICAL-GENERIC DRUGS -- 0.5%
Actavis, Inc.
Senior Notes
3.25% due 10/01/2022..................... 994,000 931,886
Mylan, Inc.
Company Guar. Notes
2.60% due 06/24/2018*.................... 765,000 763,647
Mylan, Inc.
Company Guar. Notes
7.88% due 07/15/2020*.................... 827,000 943,662
----------
2,639,195
----------
MEDICAL-HMO -- 0.1%
Cigna Corp.
Senior Notes
4.38% due 12/15/2020..................... 591,000 626,833
----------
MEDICAL-HOSPITALS -- 1.0%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/2017..................... 1,855,000 1,984,850
HCA, Inc.
Senior Notes
7.50% due 11/15/2095..................... 1,823,000 1,636,142
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019..................... 1,020,000 1,058,250
Tenet Healthcare Corp.
Senior Notes
6.88% due 11/15/2031..................... 1,075,000 911,062
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022*.................... 222,000 231,713
----------
5,822,017
----------
METAL PROCESSORS & FABRICATION -- 0.1%
Precision Castparts Corp.
Senior Notes
1.25% due 01/15/2018..................... 311,000 303,227
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.5%
Radnet Management, Inc.
Company Guar. Notes
10.38% due 04/01/2018.................... 2,547,000 2,693,453
----------
MULTIMEDIA -- 0.7%
News America, Inc.
Company Guar. Notes
4.00% due 10/01/2023*.................... 512,000 512,532
News America, Inc.
Company Guar. Notes
5.40% due 10/01/2043*.................... 449,000 449,533
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA (CONTINUED)
Time Warner Cos., Inc.
Company Guar. Notes
6.95% due 01/15/2028.......................... $ 924,000 $1,110,787
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/2033.......................... 385,000 419,717
Viacom, Inc.
Senior Notes
4.25% due 09/01/2023.......................... 434,000 431,642
Viacom, Inc.
Senior Notes
5.85% due 09/01/2043.......................... 998,000 1,015,984
----------
3,940,195
----------
MUSIC -- 0.3%
Gibson Brands, Inc.
Senior Sec. Notes
8.88% due 08/01/2018*......................... 750,000 761,250
WMG Acquisition Corp.
Senior Sec. Notes
6.00% due 01/15/2021*......................... 794,000 823,775
----------
1,585,025
----------
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Escrow Notes
11.50% due 07/01/2003+(6)(7).................. 500,000 0
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 5.0%
Alta Mesa Holdings LP/Alta Mesa Finance
Services Corp.
Company Guar. Notes
9.63% due 10/15/2018.......................... 1,140,000 1,202,700
Anadarko Holding Co.
Senior Notes
7.15% due 05/15/2028.......................... 637,000 764,687
Atlas Energy Holdings Operating Co. LLC/Atlas
Resource Finance Corp.
Company Guar. Notes
7.75% due 01/15/2021*......................... 1,271,000 1,182,030
Carrizo Oil & Gas, Inc.
Company Guar. Notes
7.50% due 09/15/2020.......................... 1,155,000 1,224,300
Chaparral Energy, Inc.
Company Guar. Notes
7.63% due 11/15/2022.......................... 526,000 533,890
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2021.......................... 635,000 669,925
Chesapeake Energy Corp.
Company Guar. Notes
5.75% due 03/15/2023.......................... 270,000 270,675
Chesapeake Energy Corp.
Company Guar. Notes
9.50% due 02/15/2015.......................... 880,000 969,100
Continental Resources, Inc.
Company Guar. Notes
4.50% due 04/15/2023.......................... 155,000 152,094
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Continental Resources, Inc.
Company Guar. Notes
5.00% due 09/15/2022............................ $ 472,000 $ 474,950
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
7.75% due 09/01/2022............................ 1,213,000 1,316,105
EPL Oil & Gas, Inc.
Company Guar. Notes
8.25% due 02/15/2018............................ 1,560,000 1,645,800
EV Energy Partners LP/EV Energy Finance Corp.
Company Guar. Notes
8.00% due 04/15/2019............................ 1,555,000 1,555,000
Halcon Resources Corp.
Company Guar. Notes
9.75% due 07/15/2020............................ 1,300,000 1,374,750
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
6.75% due 11/01/2019*........................... 1,402,000 1,321,385
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
8.63% due 04/15/2020............................ 635,000 656,431
Memorial Production Partners LP/Memorial
Production Finance Corp.
Company Guar. Notes
7.63% due 05/01/2021............................ 740,000 715,950
Midstates Petroleum Co., Inc./Midstates
Petroleum Co. LLC
Company Guar. Notes
9.25% due 06/01/2021*........................... 1,060,000 1,046,750
Northern Oil and Gas, Inc.
Company Guar. Notes
8.00% due 06/01/2020............................ 1,250,000 1,253,125
Penn Virginia Corp.
Company Guar. Notes
8.50% due 05/01/2020............................ 915,000 928,725
Plains Exploration & Production Co.
Company Guar. Notes
6.63% due 05/01/2021............................ 301,000 322,892
Plains Exploration & Production Co.
Company Guar. Notes
6.75% due 02/01/2022............................ 520,000 556,550
Plains Exploration & Production Co.
Company Guar. Notes
6.88% due 02/15/2023............................ 2,511,000 2,693,047
QEP Resources, Inc.
Senior Notes
6.88% due 03/01/2021............................ 754,000 801,125
Rex Energy Corp.
Company Guar. Notes
8.88% due 12/01/2020*........................... 1,300,000 1,365,000
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021............................ 1,115,000 1,059,250
Samson Investment Co.
Company Guar. Notes
10.25% due 02/15/2020*.......................... 1,115,000 1,181,900
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Talos Production LLC/Talos Production
Finance, Inc.
Senior Notes
9.75% due 02/15/2018*...................... $ 865,000 $ 869,325
-----------
28,107,461
-----------
OIL COMPANIES-INTEGRATED -- 0.5%
Chevron Corp.
Senior Notes
1.72% due 06/24/2018....................... 1,005,000 1,001,744
Hess Corp.
Senior Notes
5.60% due 02/15/2041....................... 770,000 791,613
Hess Corp.
Senior Notes
7.88% due 10/01/2029....................... 235,000 294,681
Murphy Oil Corp.
Senior Notes
5.13% due 12/01/2042....................... 166,000 145,030
Phillips 66
Company Guar. Notes
4.30% due 04/01/2022....................... 434,000 442,444
-----------
2,675,512
-----------
OIL REFINING & MARKETING -- 0.2%
Alon Refining Krotz Springs, Inc.
Senior Sec. Notes
13.50% due 10/15/2014...................... 735,000 764,400
Valero Energy Corp.
Company Guar. Notes
6.63% due 06/15/2037....................... 456,000 495,282
-----------
1,259,682
-----------
OIL-FIELD SERVICES -- 0.4%
Green Field Energy Services, Inc.
Sec. Notes
13.25% due 11/15/2016*+(4)(9).............. 1,091,000 981,900
Hiland Partners LP/Hiland Partners Finance
Corp.
Company Guar. Notes
7.25% due 10/01/2020*...................... 650,000 677,625
Oil States International, Inc.
Company Guar. Notes
6.50% due 06/01/2019....................... 700,000 742,000
-----------
2,401,525
-----------
PAPER & RELATED PRODUCTS -- 0.9%
Clearwater Paper Corp.
Company Guar. Notes
4.50% due 02/01/2023....................... 1,439,000 1,295,100
Georgia-Pacific LLC
Senior Notes
3.73% due 07/15/2023*...................... 1,950,000 1,900,912
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*...................... 866,000 969,076
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020........................... $1,012,000 $1,006,940
----------
5,172,028
----------
PETROCHEMICALS -- 0.2%
PetroLogistics LP/PetroLogistics Finance Corp.
Company Guar. Notes
6.25% due 04/01/2020*.......................... 1,184,000 1,160,320
----------
PIPELINES -- 1.8%
Access Midstream Partners LP/ACMP
Finance Corp.
Company Guar. Notes
6.13% due 07/15/2022........................... 1,020,000 1,048,050
Atlas Pipeline Partners LP/Atlas Pipeline
Finance Corp.
Company Guar. Notes
5.88% due 08/01/2023*.......................... 493,000 463,420
Atlas Pipeline Partners LP/Atlas Pipeline
Finance Corp.
Company Guar. Notes
6.63% due 10/01/2020*.......................... 775,000 790,500
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
4.70% due 11/01/2042........................... 224,000 194,584
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
5.00% due 10/01/2021........................... 87,000 92,349
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020........................... 1,100,000 1,177,000
Energy Transfer Partners LP
Senior Notes
5.95% due 10/01/2043........................... 449,000 445,747
Energy Transfer Partners LP
Senior Notes
7.60% due 02/01/2024*.......................... 240,000 290,892
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
7.88% due 12/15/2018........................... 805,000 859,337
Inergy Midstream LP/ NRGM Finance Corp.
Company Guar. Notes
6.00% due 12/15/2020*.......................... 840,000 833,700
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
4.50% due 07/15/2023........................... 260,000 245,050
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
6.50% due 08/15/2021........................... 614,000 656,980
Penn Virginia Resource Partners LP/Penn
Virginia Resource Finance Corp. II
Company Guar. Notes
8.38% due 06/01/2020........................... 1,140,000 1,185,600
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/2016........................... 650,000 656,500
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Tesoro Logistics LP/Tesoro Logistics Finance Corp.
Company Guar. Notes
6.13% due 10/15/2021............................... $ 926,000 $ 930,630
----------
9,870,339
----------
PRINTING-COMMERCIAL -- 0.4%
RR Donnelley & Sons Co.
Senior Notes
8.25% due 03/15/2019............................... 1,125,000 1,248,750
Valassis Communications, Inc.
Company Guar. Notes
6.63% due 02/01/2021............................... 990,000 977,625
----------
2,226,375
----------
PUBLISHING-NEWSPAPERS -- 0.4%
Gannett Co., Inc.
Company Guar. Notes
5.13% due 07/15/2020*.............................. 1,054,000 1,032,920
McClatchy Co.
Senior Sec. Notes
9.00% due 12/15/2022............................... 1,275,000 1,345,125
----------
2,378,045
----------
PUBLISHING-PERIODICALS -- 0.1%
Expo Event Transco, Inc.
Senior Notes
9.00% due 06/15/2021*.............................. 500,000 497,500
----------
RADIO -- 0.2%
Sirius XM Radio, Inc.
Senior Notes
4.63% due 05/15/2023*.............................. 1,298,000 1,184,425
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.0%
American Tower Corp.
Senior Notes
3.40% due 02/15/2019............................... 626,000 618,731
Corrections Corp of America
Company Guar. Notes
4.13% due 04/01/2020............................... 1,300,000 1,231,750
DuPont Fabros Technology LP
Senior Notes
5.88% due 09/15/2021*.............................. 477,000 477,000
Geo Group, Inc.
Company Guar. Notes
5.88% due 01/15/2022*.............................. 700,000 691,250
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.88% due 03/15/2024............................... 2,357,000 2,357,000
UDR, Inc.
Company Guar. Notes
3.70% due 10/01/2020............................... 258,000 259,317
----------
5,635,048
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.3%
Kennedy-Wilson, Inc.
Company Guar. Notes
8.75% due 04/01/2019............................... 1,340,000 1,447,200
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.3%
First Industrial LP
Senior Notes
5.75% due 01/15/2016........................ $1,535,000 $1,628,323
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(6)(7)................. 3,285,000 124
----------
RENTAL AUTO/EQUIPMENT -- 0.3%
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022........................ 1,089,000 1,159,785
NES Rentals Holdings, Inc.
Sec. Notes
7.88% due 05/01/2018*....................... 429,000 435,435
----------
1,595,220
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/2021........................ 820,000 886,625
----------
RETAIL-AUTOMOBILE -- 0.2%
AutoNation, Inc.
Company Guar. Notes
5.50% due 02/01/2020........................ 995,000 1,036,044
----------
RETAIL-BUILDING PRODUCTS -- 0.1%
Building Materials Holding Corp.
Senior Sec. Notes
9.00% due 09/15/2018*....................... 761,000 776,220
----------
RETAIL-DRUG STORE -- 0.4%
CVS Pass-Through Trust
Pass Through Certs.
5.77% due 01/10/2033*....................... 234,662 253,503
CVS Pass-Through Trust
Pass Through Certs.
5.93% due 01/10/2034*....................... 369,102 398,416
Rite Aid Corp.
Company Guar. Notes
6.75% due 06/15/2021*....................... 729,000 757,249
Rite Aid Corp.
Senior Sec. Notes
8.00% due 08/15/2020........................ 600,000 670,500
----------
2,079,668
----------
RETAIL-PAWN SHOPS -- 0.2%
Cash America International, Inc.
Senior Notes
5.75% due 05/15/2018*....................... 1,175,000 1,139,750
----------
RETAIL-PROPANE DISTRIBUTION -- 0.1%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022........................ 640,000 665,600
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.3%
Bon-Ton Department Stores, Inc.
Sec. Notes
8.00% due 06/15/2021........................ 1,670,000 1,561,450
----------
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-RESTAURANTS -- 0.8%
Dave & Buster's, Inc.
Company Guar. Notes
11.00% due 06/01/2018.................... $1,095,000 $1,209,975
Landry's, Inc.
Senior Notes
9.38% due 05/01/2020*.................... 1,213,000 1,279,715
Wok Acquisition Corp.
Company Guar. Notes
10.25% due 06/30/2020*................... 1,607,000 1,747,612
----------
4,237,302
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(6)(7)............. 100,000 0
----------
SAVINGS & LOANS/THRIFTS -- 0.6%
Astoria Financial Corp.
Senior Notes
5.00% due 06/19/2017..................... 718,000 756,890
First Niagara Financial Group, Inc.
Senior Notes
6.75% due 03/19/2020..................... 717,000 831,052
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021..................... 1,214,000 1,412,003
Santander Holdings USA, Inc.
Senior Notes
3.00% due 09/24/2015..................... 300,000 308,697
----------
3,308,642
----------
SCHOOLS -- 0.1%
Northwestern University
Bonds
4.20% due 12/01/2047..................... 386,000 359,386
President and Fellows of Harvard College
Bonds
3.62% due 10/01/2037..................... 191,000 166,666
University of Pennsylvania
Senior Notes
4.67% due 09/01/2112..................... 292,000 258,818
----------
784,870
----------
SECURITY SERVICES -- 0.3%
ADT Corp.
Senior Notes
2.25% due 07/15/2017..................... 892,000 851,884
ADT Corp.
Senior Notes
3.50% due 07/15/2022..................... 596,000 503,860
ADT Corp.
Senior Notes
6.25% due 10/15/2021*.................... 462,000 468,930
----------
1,824,674
----------
SEMICONDUCTOR EQUIPMENT -- 0.2%
Magnachip Semiconductor Corp.
Senior Notes
6.63% due 07/15/2021*.................... 1,180,000 1,165,250
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
SHIPBUILDING -- 0.2%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021........................ $1,043,000 $1,123,833
----------
SPECIAL PURPOSE ENTITIES -- 0.2%
MassMutual Global Funding II
Senior Sec. Notes
2.00% due 04/05/2017*....................... 856,000 856,300
MassMutual Global Funding II
Sec. Notes
2.50% due 10/17/2022*....................... 345,000 315,504
----------
1,171,804
----------
STEEL PIPE & TUBE -- 0.3%
JMC Steel Group, Inc.
Senior Notes
8.25% due 03/15/2018*....................... 1,490,000 1,456,475
----------
STEEL-PRODUCERS -- 0.5%
AK Steel Corp.
Senior Sec. Notes
8.75% due 12/01/2018........................ 935,000 1,019,150
Glencore Funding LLC
Company Guar. Notes
2.50% due 01/15/2019*....................... 678,000 635,540
Nucor Corp.
Senior Notes
4.00% due 08/01/2023........................ 450,000 440,406
Ryerson, Inc./Joseph T. Ryerson & Son, Inc.
Senior Sec. Notes
9.00% due 10/15/2017........................ 800,000 828,000
----------
2,923,096
----------
STORAGE/WAREHOUSING -- 0.2%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/2020........................ 1,165,000 1,266,938
----------
TELECOM SERVICES -- 0.2%
BellSouth Telecommunications, Inc.
Senior Notes
6.38% due 06/01/2028........................ 251,000 273,753
Consolidated Communications Finance Co.
Company Guar. Notes
10.88% due 06/01/2020....................... 825,000 944,625
----------
1,218,378
----------
TELEPHONE-INTEGRATED -- 1.5%
AT&T, Inc.
Senior Notes
6.50% due 09/01/2037........................ 519,000 573,393
BellSouth Corp.
Senior Notes
6.55% due 06/15/2034........................ 430,000 461,930
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/2018........................ 1,000,000 1,110,000
Frontier Communications Corp.
Senior Notes
9.25% due 07/01/2021........................ 99,000 113,355
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (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.................. $2,110,000 $ 2,144,287
Verizon Communications, Inc.
Senior Notes
3.65% due 09/14/2018.................. 548,000 577,424
Verizon Communications, Inc.
Senior Notes
5.15% due 09/15/2023.................. 651,000 697,733
Verizon Communications, Inc.
Senior Notes
6.40% due 09/15/2033.................. 449,000 498,620
Verizon Communications, Inc.
Senior Notes
6.55% due 09/15/2043.................. 1,305,000 1,473,263
Windstream Corp.
Company Guar. Notes
6.38% due 08/01/2023.................. 1,051,000 961,665
------------
8,611,670
------------
TELEVISION -- 0.1%
Sinclair Television Group, Inc.
Company Guar. Notes
6.38% due 11/01/2021*................. 788,000 791,940
------------
THEATERS -- 0.2%
Regal Entertainment Group
Senior Notes
5.75% due 06/15/2023.................. 891,000 839,768
------------
TRANSPORT-RAIL -- 0.1%
Norfolk Southern Corp.
Senior Notes
6.00% due 05/23/2111.................. 402,000 436,601
------------
TRANSPORT-SERVICES -- 0.1%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.................. 675,000 702,000
------------
TRAVEL SERVICES -- 0.2%
Sabre, Inc.
Senior Sec. Notes
8.50% due 05/15/2019*................. 1,229,000 1,328,856
------------
WIRELESS EQUIPMENT -- 0.0%
Motorola Solutions, Inc.
Senior Notes
6.63% due 11/15/2037.................. 11,445 11,642
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $274,879,515)................... 272,788,744
------------
FOREIGN CORPORATE BONDS & NOTES -- 14.7%
AEROSPACE/DEFENSE-EQUIPMENT -- 0.1%
EADS Finance BV
Company Guar. Notes
2.70% due 04/17/2023*................. 322,000 296,627
------------
AIRLINES -- 0.2%
Air Canada
Senior Sec. Notes
6.75% due 10/01/2019*................. 924,000 919,380
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
APPLIANCES -- 0.1%
Arcelik AS
Senior Notes
5.00% due 04/03/2023*................ $ 500,000 $ 429,375
----------
AUTO-CARS/LIGHT TRUCKS -- 0.1%
Automotores Gildemeister SA
Company Guar. Notes
6.75% due 01/15/2023*................ 800,000 620,000
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.2%
Schaeffler Finance BV
Senior Sec. Notes
4.75% due 05/15/2021*................ 1,125,000 1,091,250
----------
BANKS-COMMERCIAL -- 2.4%
Abbey National Treasury Services PLC
Bank Guar. Notes
3.05% due 08/23/2018................. 297,000 301,731
Akbank TAS
Senior Notes
7.50% due 02/05/2018*................ TRY 2,385,000 1,073,460
ANZ New Zealand Int'l, Ltd.
Bank Guar. Notes
1.13% due 03/24/2016*................ 915,000 913,245
Banco ABC Brasil SA
Senior Notes
8.50% due 03/28/2016*................ BRL 3,100,000 1,248,364
Banco de Bogota SA
Senior Notes
5.00% due 01/15/2017*................ 260,000 268,775
Bank of Montreal
Senior Notes
1.45% due 04/09/2018................. 804,000 785,688
Bank of Nova Scotia
Senior Notes
1.38% due 07/15/2016................. 479,000 482,285
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA
Senior Notes
2.63% due 05/29/2018................. NOK 5,000,000 821,636
Credit Suisse AG
Sub. Notes
6.50% due 08/08/2023*................ 1,029,000 1,041,863
ING Bank NV
Notes
2.00% due 09/25/2015*................ 1,499,000 1,519,401
Malayan Banking Bhd VRS
Sub. Notes
3.25% due 09/20/2022................. 500,000 487,500
National Australia Bank, Ltd.
Senior Notes
1.60% due 08/07/2015................. 719,000 730,509
National Bank of Canada
Bank Guar. Notes
1.45% due 11/07/2017................. 1,040,000 1,021,255
PKO Finance AB
Senior Notes
4.63% due 09/26/2022*................ 700,000 687,225
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
RHB Bank Bhd
Senior Notes
3.25% due 05/11/2017................. $ 425,000 $ 428,023
Sberbank of Russia Via SB Capital SA
Senior Notes
6.13% due 02/07/2022................. 500,000 523,750
Standard Chartered PLC
Sub. Notes
5.20% due 01/26/2024*................ 457,000 459,157
Svenska Handelsbanken AB
Notes
2.50% due 01/25/2019................. 464,000 465,855
Turkiye Halk Bankasi AS
Senior Notes
3.88% due 02/05/2020*................ 355,000 316,838
-----------
13,576,560
-----------
BANKS-MONEY CENTER -- 0.2%
Lloyds TSB Bank PLC
Bank Guar. Notes
6.50% due 09/14/2020*................ 896,000 989,102
-----------
BANKS-SPECIAL PURPOSE -- 0.4%
Burgan Finance No. 1, Ltd.
Bank Guar. Notes
7.88% due 09/29/2020................. 305,000 329,400
Development Bank of Kazakhstan JSC
Senior Notes
4.13% due 12/10/2022*................ 600,000 553,500
Korea Development Bank
Senior Notes
3.00% due 03/17/2019................. 250,000 250,754
Kreditanstalt fuer Wiederaufbau
Government Guar. Notes
3.75% due 09/25/2015................. NOK 5,500,000 944,784
-----------
2,078,438
-----------
BEVERAGES-NON-ALCOHOLIC -- 0.1%
Fomento Economico Mexicano SAB de CV
Senior Notes
2.88% due 05/10/2023................. 450,000 400,393
-----------
BUILDING PRODUCTS-CEMENT -- 0.4%
Cemex SAB de CV
Senior Sec. Notes
5.88% due 03/25/2019*................ 200,000 192,000
Cemex SAB de CV
Senior Sec. Notes
6.50% due 12/10/2019*................ 1,406,000 1,384,910
Rearden G Holdings EINS GmbH
Company Guar. Notes
7.88% due 03/30/2020................. 550,000 563,750
-----------
2,140,660
-----------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
Andrade Gutierrez International SA
Company Guar. Notes
4.00% due 04/30/2018*................ 560,000 526,400
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CABLE/SATELLITE TV -- 0.2%
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/2018*................. $ 1,200,000 $1,266,000
----------
CELLULAR TELECOM -- 0.1%
Rogers Communications, Inc.
Company Guar. Notes
5.45% due 10/01/2043.................. 450,000 445,934
VimpelCom Holdings BV
Company Guar. Notes
9.00% due 02/13/2018*................. RUB12,000,000 370,724
----------
816,658
----------
CHEMICALS-DIVERSIFIED -- 0.2%
NOVA Chemicals Corp.
Senior Notes
5.25% due 08/01/2023*................. 901,000 903,252
----------
COAL -- 0.1%
Indo Energy Finance BV
Senior Sec. Notes
7.00% due 05/07/2018.................. 200,000 192,500
Indo Energy Finance II BV
Senior Sec. Notes
6.38% due 01/24/2023*................. 450,000 378,000
----------
570,500
----------
COMMERCIAL SERVICES -- 0.2%
Global A&T Electronics, Ltd.
Senior Sec. Notes
10.00% due 02/01/2019*................ 1,089,000 925,650
----------
COMPUTERS-MEMORY DEVICES -- 0.1%
Seagate HDD Cayman
Company Guar. Notes
4.75% due 06/01/2023*................. 840,000 808,500
----------
CRUISE LINES -- 0.2%
Royal Caribbean Cruises, Ltd.
Senior Notes
5.25% due 11/15/2022.................. 1,286,000 1,247,420
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.4%
Credit Agricole SA
Sub. Notes
8.13% due 09/19/2033*................. 467,000 472,214
Royal Bank of Scotland Group PLC
Senior Notes
6.40% due 10/21/2019.................. 1,092,000 1,247,973
Societe Generale SA
Bank Guar. Notes
2.63% due 10/01/2018.................. 447,000 447,944
----------
2,168,131
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.3%
DTEK Finance PLC
Company Guar. Notes
7.88% due 04/04/2018*................. 650,000 552,500
Hyundai Capital Services, Inc.
Senior Notes
6.00% due 05/05/2015*................. 1,033,000 1,102,598
----------
1,655,098
----------
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
2.88% due 01/15/2019*................... $ 307,000 $ 306,023
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
4.25% due 06/15/2023*................... 1,066,000 1,058,648
Pentair Finance SA
Company Guar. Notes
1.35% due 12/01/2015.................... 467,000 468,740
----------
1,833,411
----------
DIVERSIFIED MINERALS -- 1.0%
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
2.05% due 09/30/2018.................... 203,000 203,291
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
3.85% due 09/30/2023.................... 435,000 438,335
BHP Billiton Finance USA, Ltd.
Company Guar. Notes
5.00% due 09/30/2043.................... 629,000 640,630
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.00% due 04/01/2017*................... 825,000 845,625
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.88% due 04/01/2022*................... 1,250,000 1,250,000
Teck Resources, Ltd.
Company Guar. Notes
6.00% due 08/15/2040.................... 1,458,000 1,355,040
Volcan Cia Minera SAA
Company Guar. Notes
5.38% due 02/02/2022*................... 610,000 581,025
----------
5,313,946
----------
DIVERSIFIED OPERATIONS -- 0.2%
KOC Holding AS
Senior Notes
3.50% due 04/24/2020*................... 650,000 553,475
Tenedora Nemak SA de CV
Senior Notes
5.50% due 02/28/2023*................... 650,000 614,250
----------
1,167,725
----------
ELECTRIC-INTEGRATED -- 0.1%
E-CL SA
Senior Notes
5.63% due 01/15/2021.................... 550,000 562,060
Empresas Publicas de Medellin ESP
Senior Notes
8.38% due 02/01/2021.................... COP 266,000,000 145,343
----------
707,403
----------
FINANCE-LEASING COMPANIES -- 0.5%
Aircastle, Ltd.
Senior Notes
6.25% due 12/01/2019.................... 1,800,000 1,903,500
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
FINANCE-LEASING COMPANIES (CONTINUED)
Milestone Aviation Group, Ltd.
Senior Notes
8.63% due 12/15/2017*................. $ 1,047,000 $1,099,350
----------
3,002,850
----------
FOOD-MEAT PRODUCTS -- 0.1%
BRF SA
Senior Notes
3.95% due 05/22/2023*................. 200,000 172,000
BRF SA
Senior Notes
7.75% due 05/22/2018*................. BRL 1,000,000 357,578
ESAL GmbH
Company Guar. Notes
6.25% due 02/05/2023*................. 260,000 229,450
----------
759,028
----------
GAS-TRANSPORTATION -- 0.0%
Transportadora de Gas del Peru SA
Senior Notes
4.25% due 04/30/2028*................. 200,000 173,000
----------
GOLD MINING -- 0.2%
AngloGold Ashanti Holdings PLC
Company Guar. Notes
8.50% due 07/30/2020.................. 293,000 301,058
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/2020.................. 700,000 565,851
----------
866,909
----------
INDEPENDENT POWER PRODUCERS -- 0.1%
AES Drax Energy, Ltd.
Senior Sec. Notes
11.50% due 08/30/2010+(6)(7)(8)(16)... 725,000 0
PT Perusahaan Listrik Negara
Senior Notes
5.50% due 11/22/2021*................. 500,000 477,500
----------
477,500
----------
INVESTMENT COMPANIES -- 0.1%
Temasek Financial I, Ltd.
Company Guar. Notes
2.38% due 01/23/2023*................. 539,000 493,313
----------
MEDICAL PRODUCTS -- 0.1%
Mallinckrodt International Finance SA
Company Guar. Notes
3.50% due 04/15/2018*................. 269,000 264,679
Mallinckrodt International Finance SA
Company Guar. Notes
4.75% due 04/15/2023*................. 387,000 367,962
----------
632,641
----------
MEDICAL-DRUGS -- 0.2%
Takeda Pharmaceutical Co., Ltd.
Senior Notes
1.63% due 03/17/2017*................. 989,000 992,066
----------
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
METAL-DIVERSIFIED -- 0.1%
Vedanta Resources PLC
Senior Notes
7.13% due 05/31/2023*.......................... $ 370,000 $ 344,100
----------
METAL-IRON -- 0.0%
OJSC Novolipetsk Steel via Steel Funding, Ltd.
Senior Notes
4.95% due 09/26/2019*.......................... 265,000 257,713
----------
MUNICIPAL BONDS -- 0.1%
City of Kyiv Via Kyiv Finance PLC
Senior Notes
9.38% due 07/11/2016*.......................... 870,000 752,550
----------
OIL & GAS DRILLING -- 0.5%
Pacific Drilling SA
Senior Sec. Notes
5.38% due 06/01/2020*.......................... 1,050,000 1,023,750
Transocean, Inc.
Company Guar. Notes
6.38% due 12/15/2021........................... 1,156,000 1,284,973
Transocean, Inc.
Company Guar. Notes
6.80% due 03/15/2038........................... 209,000 221,885
Transocean, Inc.
Company Guar. Notes
7.50% due 04/15/2031........................... 280,000 314,647
----------
2,845,255
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.5%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031........................... 1,106,000 1,378,772
KazMunayGas National Co.
Senior Notes
7.00% due 05/05/2020........................... 500,000 563,750
PT Pertamina Persero
Senior Notes
4.88% due 05/03/2022*.......................... 720,000 651,600
----------
2,594,122
----------
OIL COMPANIES-INTEGRATED -- 1.2%
BP Capital Markets PLC
Company Guar. Notes
1.38% due 11/06/2017........................... 1,075,000 1,058,742
BP Capital Markets PLC
Company Guar. Notes
1.85% due 05/05/2017........................... 840,000 847,186
BP Capital Markets PLC
Company Guar. Notes
2.25% due 11/01/2016........................... 511,000 525,975
BP Capital Markets PLC
Company Guar. Notes
2.75% due 05/10/2023........................... 634,000 579,055
MOL Group Finance SA
Company Guar. Notes
6.25% due 09/26/2019........................... 625,000 631,250
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/2027........................... 350,000 201,250
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
OIL COMPANIES-INTEGRATED (CONTINUED)
Petroleos de Venezuela SA
Company Guar. Notes
8.50% due 11/02/2017....................... $900,000 $ 815,400
Petroleos Mexicanos
Company Guar. Notes
4.88% due 01/18/2024....................... 419,000 419,000
Petroleos Mexicanos
Company Guar. Notes
5.50% due 06/27/2044....................... 271,000 246,024
Petronas Capital, Ltd.
Company Guar. Notes
5.25% due 08/12/2019....................... 600,000 664,545
Rosneft Oil Co via Rosneft International
Finance, Ltd.
Senior Notes
4.20% due 03/06/2022*...................... 200,000 184,500
Shell International Finance BV
Company Guar. Notes
3.63% due 08/21/2042....................... 441,000 385,281
Sibur Securities, Ltd.
Company Guar. Notes
3.91% due 01/31/2018*...................... 310,000 294,500
----------
6,852,708
----------
OIL REFINING & MARKETING -- 0.0%
Thai Oil PCL
Senior Notes
3.63% due 01/23/2023*...................... 200,000 179,487
----------
PAPER & RELATED PRODUCTS -- 0.1%
Inversiones CMPC SA
Company Guar. Notes
4.50% due 04/25/2022....................... 500,000 465,648
----------
PASTORAL & AGRICULTURAL -- 0.1%
MHP SA
Company Guar. Notes
8.25% due 04/02/2020*...................... 650,000 516,880
----------
PETROCHEMICALS -- 0.1%
Mexichem SAB de CV
Company Guar. Notes
6.75% due 09/19/2042*...................... 559,000 519,870
----------
PIPELINES -- 0.0%
Transportadora de Gas Internacional SA ESP
Senior Notes
5.70% due 03/20/2022*...................... 200,000 200,500
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.5%
Agile Property Holdings, Ltd.
Company Guar. Notes
9.88% due 03/20/2017....................... 350,000 378,875
China Overseas Finance Cayman II, Ltd.
Company Guar. Notes
5.50% due 11/10/2020....................... 300,000 310,722
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.25% due 04/04/2021*...................... 200,000 199,140
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
REAL ESTATE OPERATIONS & DEVELOPMENT
(CONTINUED)
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.50% due 01/10/2023*......................... $ 200,000 $ 192,500
Country Garden Holdings Co., Ltd.
Company Guar. Notes
11.13% due 02/23/2018......................... 410,000 457,150
Mattamy Group Corp.
Senior Notes
6.50% due 11/15/2020*......................... 1,325,000 1,301,813
Shimao Property Holdings, Ltd.
Company Guar. Notes
6.63% due 01/14/2020.......................... 200,000 192,500
----------
3,032,700
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
LS Finance 2022, Ltd.
Company Guar. Notes
4.25% due 10/16/2022.......................... 500,000 454,609
----------
RETAIL-RESTAURANTS -- 0.1%
Arcos Dorados Holdings, Inc.
Company Guar. Notes
6.63% due 09/27/2023*......................... 325,000 321,750
----------
SATELLITE TELECOM -- 0.4%
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021*......................... 1,930,000 1,997,550
----------
SOAP & CLEANING PREPARATION -- 0.1%
Reckitt Benckiser Treasury Services PLC
Company Guar. Notes
2.13% due 09/21/2018*......................... 355,000 356,591
Reckitt Benckiser Treasury Services PLC
Company Guar. Notes
3.63% due 09/21/2023*......................... 461,000 464,371
----------
820,962
----------
SOVEREIGN -- 0.2%
Perusahaan Penerbit SBSN
Senior Notes
3.30% due 11/21/2022*......................... 950,000 783,750
Republic of Angola Via Northern Lights III BV
Senior Notes
7.00% due 08/16/2019.......................... 250,000 268,125
----------
1,051,875
----------
SPECIAL PURPOSE ENTITIES -- 0.1%
Federal Grid Co. OJS via Federal Grid
Finance, Ltd.
Notes
8.45% due 03/13/2019.......................... RUB 13,000,000 402,219
Hellas Telecommunications
Luxembourg II FRS
Sub. Notes
6.03% due 01/15/2015*+(4)(6)(7)(16)........... 1,330,000 0
----------
402,219
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
STEEL-PRODUCERS -- 0.2%
ArcelorMittal
Senior Notes
6.75% due 02/25/2022.................. $ 500,000 $ 526,250
ArcelorMittal
Senior Notes
7.25% due 03/01/2041.................. 695,000 635,925
Severstal OAO Via Steel Capital SA
Senior Notes
5.90% due 10/17/2022*................. 200,000 192,750
----------
1,354,925
----------
SUGAR -- 0.1%
Cosan Luxembourg SA
Company Guar. Notes
9.50% due 03/14/2018*................. BRL 1,590,000 629,529
----------
SUPRANATIONAL BANKS -- 0.2%
Eurasian Development Bank
Senior Notes
5.00% due 09/26/2020*................. 556,000 551,368
International Bank for Reconstruction
& Development
Senior Notes
3.63% due 02/20/2018.................. NZD 750,000 601,675
----------
1,153,043
----------
TELECOM SERVICES -- 0.4%
UPCB Finance III, Ltd.
Senior Sec. Notes
6.63% due 07/01/2020*................. 900,000 954,000
Wind Acquisition Holdings Finance SA
Senior Sec. Notes
12.25% due 07/15/2017*(10)(13)........ 1,075,710 1,062,264
----------
2,016,264
----------
TELEPHONE-INTEGRATED -- 0.4%
Empresa de Telecomunicaciones de
Bogota
Senior Notes
7.00% due 01/17/2023*................. COP 640,000,000 285,371
Oi SA
Senior Notes
5.75% due 02/10/2022.................. 600,000 525,000
Oi SA
Senior Notes
9.75% due 09/15/2016*................. BRL 575,000 227,219
Telefonica Chile SA
Senior Notes
3.88% due 10/12/2022.................. 700,000 621,421
Telefonica Emisiones SAU
Company Guar. Notes
4.57% due 04/27/2023.................. 321,000 307,832
----------
1,966,843
----------
TELEVISION -- 0.0%
Myriad International Holdings BV
Company Guar. Notes
6.38% due 07/28/2017.................. 200,000 217,000
----------
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TRANSPORT-RAIL -- 0.1%
Russian Railways via RZD Capital PLC
Senior Notes
5.70% due 04/05/2022................. $ 400,000 $ 407,500
Russian Railways via RZD Capital PLC
Senior Notes
8.30% due 04/02/2019................. RUB 11,000,000 341,358
-----------
748,858
-----------
TRANSPORT-SERVICES -- 0.1%
Transnet SOC, Ltd.
Senior Notes
4.00% due 07/26/2022*................ 600,000 529,500
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $87,875,101)................... 82,075,646
-----------
FOREIGN GOVERNMENT AGENCIES -- 16.0%
ELECTRIC-DISTRIBUTION -- 0.1%
Hydro-Quebec
Government Guar. Notes
1.38% due 06/19/2017................. 527,000 527,780
-----------
REGIONAL AUTHORITY -- 0.1%
Province of British Columbia
Senior Notes
2.85% due 06/15/2015................. 612,000 637,312
-----------
SOVEREIGN -- 15.8%
Arab Republic of Egypt
Senior Notes
5.75% due 04/29/2020................. 930,000 855,600
Arab Republic of Egypt
Senior Notes
6.88% due 04/30/2040................. 530,000 431,950
Commonwealth of Jamaica
Senior Notes
8.00% due 06/24/2019................. 260,000 256,100
Commonwealth of Jamaica
Senior Notes
8.00% due 03/15/2039................. 250,000 210,000
Dominican Republic
Senior Notes
5.88% due 04/18/2024*................ 370,000 343,175
Dominican Republic
Senior Notes
5.88% due 04/18/2024................. 500,000 463,750
Dominican Republic
Senior Notes
7.50% due 05/06/2021................. 798,000 850,867
Dominican Republic
Senior Notes
8.63% due 04/20/2027................. 600,000 652,500
Federal Republic of Nigeria
Bonds
5.13% due 07/12/2018................. 325,000 329,875
Federal Republic of Nigeria
Bonds
6.38% due 07/12/2023................. 525,000 535,500
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
SOVEREIGN (CONTINUED)
Federal Republic of Nigeria
Senior Notes
6.75% due 01/28/2021.......... $ 500,000 $ 536,250
Federative Republic of Brazil
Senior Notes
2.63% due 01/05/2023.......... 822,000 721,305
Federative Republic of Brazil
Senior Notes
4.88% due 01/22/2021.......... 750,000 805,312
Federative Republic of Brazil
Senior Notes
7.13% due 01/20/2037.......... 37,000 43,475
Federative Republic of Brazil
Senior Notes
10.25% due 01/10/2028......... BRL 2,000,000 900,149
Federative Republic of Brazil
Senior Notes
12.25% due 03/06/2030......... 329,000 550,252
Government of Belize
Senior Notes
5.00% due 02/20/2038(5)....... 677,000 406,200
Government of Bermuda
Senior Notes
4.85% due 02/06/2024*......... 405,000 402,975
Government of Canada
Senior Notes
0.88% due 02/14/2017.......... 527,000 526,684
Government of Canada
Bonds
4.25% due 06/01/2018.......... CAD 300,000 322,851
Government of Canada
Bonds
5.75% due 06/01/2029.......... CAD 2,105,000 2,772,559
Government of Malaysia
Senior Notes
3.31% due 10/31/2017.......... MYR 7,100,000 2,161,680
Government of New Zealand
Senior Notes
6.00% due 04/15/2015.......... NZD 4,090,000 3,547,402
Kingdom of Bahrain
Senior Notes
6.13% due 08/01/2023*......... 821,000 818,947
Kingdom of Morocco
Senior Notes
4.25% due 12/11/2022*......... 798,000 726,340
Kingdom of Norway
Bonds
3.75% due 05/25/2021.......... NOK 7,620,000 1,364,143
Kingdom of Sweden
Bonds
3.50% due 06/01/2022.......... SEK 19,250,000 3,272,108
Lebanese Republic
Notes
4.00% due 12/31/2017.......... 18,000 17,370
Lebanese Republic
Senior Notes
8.25% due 04/12/2021.......... 500,000 539,250
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Oriental Republic of Uruguay
Senior Notes
4.50% due 08/14/2024........... $ 323,000 $ 327,845
Plurinational State of Bolivia
Senior Notes
4.88% due 10/29/2022........... 644,000 580,405
Plurinational State of Bolivia
Senior Notes
5.95% due 08/22/2023*.......... 280,000 267,400
Republic of Argentina
Senior Notes
2.50% due 12/31/2038(5)........ 1,144,761 406,390
Republic of Argentina
Senior Notes
8.28% due 12/31/2033........... 2,002,220 1,280,175
Republic of Argentina
Senior Notes
8.75% due 06/02/2017........... 419,000 342,533
Republic of Armenia
Senior Notes
6.00% due 09/30/2020*.......... 323,000 314,477
Republic of Austria
Senior Notes
4.15% due 03/15/2037*.......... EUR 310,000 511,648
Republic of Belarus
Senior Notes
8.75% due 08/03/2015........... 815,000 786,475
Republic of Belarus
Senior Notes
8.95% due 01/26/2018........... 550,000 517,000
Republic of Bulgaria
Bonds
8.25% due 01/15/2015........... 1,144,000 1,247,990
Republic of Colombia
Senior Notes
2.63% due 03/15/2023........... 200,000 177,000
Republic of Colombia
Senior Notes
4.00% due 02/26/2024........... 576,000 564,480
Republic of Colombia
Senior Notes
4.38% due 07/12/2021........... 1,650,000 1,703,625
Republic of Colombia
Senior Notes
6.13% due 01/18/2041........... 400,000 436,000
Republic of Colombia
Senior Notes
7.38% due 03/18/2019........... 150,000 181,650
Republic of Colombia
Senior Notes
8.25% due 12/22/2014........... 984,000 1,062,720
Republic of Colombia
Bonds
9.85% due 06/28/2027........... COP 1,200,000,000 821,806
Republic of Costa Rica
Senior Notes
4.38% due 04/30/2025*.......... 200,000 174,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Croatia
Notes
5.50% due 04/04/2023*... $ 426,000 $ 407,895
Republic of El Salvador
Senior Notes
7.38% due 12/01/2019.... 770,000 837,375
Republic of El Salvador
Senior Notes
7.63% due 02/01/2041.... 700,000 703,500
Republic of Ghana
Notes
7.88% due 08/07/2023*... 473,000 458,810
Republic of Honduras
Senior Notes
7.50% due 03/15/2024.... 608,000 512,240
Republic of Hungary
Senior Notes
4.13% due 02/19/2018.... 450,000 445,500
Republic of Hungary
Bonds
5.50% due 12/20/2018.... HUF100,000,000 462,478
Republic of Hungary
Bonds
6.00% due 11/24/2023.... HUF 92,000,000 423,258
Republic of Hungary
Senior Notes
6.25% due 01/29/2020.... 570,000 608,475
Republic of Hungary
Senior Notes
6.38% due 03/29/2021.... 880,000 936,100
Republic of Hungary
Bonds
6.75% due 10/22/2028.... HUF 80,000,000 375,237
Republic of Hungary
Senior Notes
7.63% due 03/29/2041.... 752,000 804,640
Republic of Indonesia
Bonds
3.75% due 04/25/2022.... 350,000 315,000
Republic of Indonesia
Bonds
5.25% due 01/17/2042.... 700,000 593,250
Republic of Indonesia
Bonds
6.63% due 02/17/2037.... 117,000 118,463
Republic of Ireland
Bonds
4.50% due 04/18/2020.... EUR 850,000 1,211,444
Republic of Italy
Bonds
5.00% due 03/01/2022.... EUR 2,140,000 3,058,094
Republic of Ivory Coast
Senior Notes
7.10% due 12/31/2032(5). 700,000 616,000
Republic of Latvia
Senior Notes
5.25% due 06/16/2021.... 540,000 584,550
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Lithuania
Senior Notes
5.13% due 09/14/2017..... $ 100,000 $ 109,250
Republic of Lithuania
Senior Notes
6.75% due 01/15/2015..... 429,000 457,189
Republic of Panama
Senior Notes
4.30% due 04/29/2053..... 630,000 486,675
Republic of Panama
Senior Notes
6.70% due 01/26/2036..... 170,000 194,225
Republic of Peru
Senior Notes
7.13% due 03/30/2019..... 350,000 424,375
Republic of Peru
Senior Notes
8.20% due 08/12/2026..... PEN 2,700,000 1,178,296
Republic of Peru
Senior Notes
8.38% due 05/03/2016..... 514,000 593,670
Republic of Poland
Senior Notes
3.00% due 03/17/2023..... 1,917,000 1,755,972
Republic of Poland
Senior Notes
3.88% due 07/16/2015..... 133,000 139,490
Republic of Poland
Bonds
4.00% due 10/25/2023..... PLN 5,100,000 1,570,412
Republic of Poland
Senior Notes
5.00% due 03/23/2022..... 800,000 860,400
Republic of Poland
Senior Notes
5.13% due 04/21/2021..... 540,000 587,250
Republic of Poland
Bonds
5.25% due 10/25/2020..... PLN 5,500,000 1,865,475
Republic of Poland
Bonds
5.75% due 09/23/2022..... PLN 1,200,000 420,500
Republic of Singapore
Senior Notes
2.25% due 06/01/2021..... SGD 1,900,000 1,531,427
Republic of Slovenia
Senior Notes
4.75% due 05/10/2018*.... 430,000 413,875
Republic of Slovenia
Bonds
5.85% due 05/10/2023*.... 440,000 418,000
Republic of South Africa
Senior Notes
4.67% due 01/17/2024..... 1,648,000 1,598,560
Republic of South Africa
Bonds
5.88% due 05/30/2022..... 200,000 216,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of South Africa
Bonds
6.25% due 03/08/2041........ $ 612,000 $ 641,070
Republic of South Africa
Bonds
7.00% due 02/28/2031........ ZAR 4,600,000 393,670
Republic of South Africa
Bonds
10.50% due 12/21/2026....... ZAR 6,700,000 802,899
Republic of South Africa
Bonds
13.50% due 09/15/2015....... ZAR 3,800,000 429,310
Republic of Sri Lanka
Senior Notes
5.88% due 07/25/2022*....... 200,000 183,000
Republic of the Philippines
Senior Notes
4.00% due 01/15/2021........ 1,543,000 1,600,862
Republic of the Philippines
Senior Notes
6.50% due 01/20/2020........ 865,000 1,016,375
Republic of the Philippines
Senior Notes
7.75% due 01/14/2031........ 365,000 475,413
Republic of the Philippines
Senior Notes
9.38% due 01/18/2017........ 200,000 245,250
Republic of the Philippines
Senior Notes
10.63% due 03/16/2025....... 411,000 622,665
Republic of Turkey
Senior Notes
3.25% due 03/23/2023........ 450,000 388,125
Republic of Turkey
Bonds
4.88% due 04/16/2043........ 530,000 437,250
Republic of Turkey
Bonds
6.00% due 01/14/2041........ 1,550,000 1,496,137
Republic of Turkey
Senior Notes
6.88% due 03/17/2036........ 40,000 42,510
Republic of Ukraine
Bonds
6.75% due 11/14/2017........ 470,000 401,850
Republic of Ukraine
Bonds
7.50% due 04/17/2023........ 1,034,000 854,342
Republic of Ukraine
Senior Notes
7.80% due 11/28/2022........ 1,186,000 988,827
Republic of Ukraine
Senior Notes
7.95% due 02/23/2021........ 460,000 393,300
Republic of Venezuela
Senior Notes
9.00% due 05/07/2023........ 550,000 446,325
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
FOREIGN GOVERNMENT AGENCIES (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Venezuela
Senior Notes
9.38% due 01/13/2034........... $ 368,000 $ 290,720
Republic of Venezuela
Senior Notes
11.75% due 10/21/2026.......... 780,000 719,550
Republic of Venezuela
Senior Notes
11.95% due 08/05/2031.......... 1,038,000 957,555
Republic of Venezuela
Senior Notes
12.75% due 08/23/2022.......... 100,000 99,600
Russian Federation
Senior Notes
3.50% due 01/16/2019*.......... 400,000 403,000
Russian Federation
Senior Notes
3.63% due 04/29/2015........... 700,000 727,300
Russian Federation
Senior Notes
4.50% due 04/04/2022........... 600,000 612,720
Russian Federation
Senior Notes
4.88% due 09/16/2023*.......... 600,000 613,500
Russian Federation
Senior Notes
5.63% due 04/04/2042........... 400,000 410,000
Russian Federation
Senior Notes
5.88% due 09/16/2043*.......... 600,000 621,000
Russian Federation
Senior Notes
7.50% due 03/31/2030(5)........ 1,507,220 1,776,229
United Mexican States
Senior Notes
2.75% due 04/22/2023........... EUR 200,000 255,215
United Mexican States
Senior Notes
3.63% due 03/15/2022........... 230,000 228,160
United Mexican States
Senior Notes
4.00% due 10/02/2023........... 476,000 473,025
United Mexican States
Senior Notes
4.75% due 03/08/2044........... 826,000 747,530
United Mexican States
Senior Notes
5.75% due 10/12/2110........... 674,000 633,560
United Mexican States
Bonds
10.00% due 12/05/2024.......... MXN 8,000,000 803,835
United Mexican States
Bonds
10.00% due 11/20/2036.......... MXN 4,200,000 422,620
-----------
88,015,837
-----------
TOTAL FOREIGN GOVERNMENT AGENCIES
(cost $92,778,076)............. 89,180,929
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN GOVERNMENT TREASURIES -- 0.6%
SOVEREIGN -- 0.6%
United Kingdom Gilt Treasury
Bonds
1.75% due 09/07/2022
(cost $3,072,185)...................... GBP 2,100,000 $ 3,184,015
-----------
U.S. GOVERNMENT AGENCIES -- 7.8%
FEDERAL HOME LOAN MTG. CORP. -- 2.2%
2.50% due 01/01/2028................... 485,887 489,491
3.00% due 02/01/2043................... 1,460,456 1,422,765
3.50% due 02/01/2042................... 1,031,197 1,047,432
3.50% due 03/01/2042................... 558,693 567,477
3.50% due 04/01/2042................... 567,497 576,444
4.00% due 09/01/2040................... 487,610 509,824
4.00% due 02/01/2041................... 1,267,764 1,325,241
4.50% due 02/01/2020................... 33,603 35,527
4.50% due 08/01/2020................... 49,713 52,574
4.50% due 01/01/2039................... 68,611 72,886
5.00% due 02/01/2034................... 69,069 74,872
5.00% due 05/01/2034................... 81,323 88,953
5.00% due 07/01/2038................... 957,544 1,030,264
5.00% due 03/01/2039................... 143,282 155,140
5.00% due 07/01/2040................... 475,334 513,382
5.50% due 05/01/2037................... 203,076 219,605
5.50% due 09/01/2037................... 187,546 202,811
5.50% due 10/01/2037................... 705,751 763,196
5.50% due 11/01/2037................... 262,876 288,749
5.50% due 01/01/2038................... 439,764 475,559
5.50% due 04/01/2038................... 127,055 137,397
5.50% due 06/01/2041................... 490,565 530,495
6.00% due 03/01/2040................... 182,620 199,035
6.50% due 05/01/2029................... 1,783 1,982
6.50% due 02/01/2035................... 62,949 69,700
6.50% due 11/01/2037................... 787,528 871,138
Federal Home Loan Mtg. Corp. REMIC
Series 41, Class F
10.00% due 05/15/2020(1)............... 1,446 1,506
Series 1103, Class N IO
11.57% due 06/15/2021(1)(11).......... 1,468 305
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
6.62% due 09/15/2039(1)(11)............ 4,391,271 718,755
-----------
12,442,505
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 5.4%
2.50% due 03/01/2028................... 957,904 964,748
3.00% due 10/01/2027................... 474,896 492,566
3.00% due 11/01/2027................... 624,908 647,763
3.00% due 03/01/2042................... 82,170 80,344
3.00% due 06/01/2042................... 726,147 710,012
3.00% due 12/01/2042................... 1,892,321 1,850,275
3.50% due 08/01/2027................... 413,254 436,384
3.50% due 12/01/2041................... 1,434,216 1,461,113
3.50% due 01/01/2042................... 859,014 875,121
3.50% due 04/01/2042................... 870,212 886,520
3.50% due 05/01/2042................... 1,168,004 1,189,868
3.50% due 07/01/2042................... 1,142,114 1,163,555
4.00% due 06/01/2039................... 611,707 645,850
4.00% due 09/01/2040................... 1,246,625 1,307,923
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.00% due 10/01/2040.................. $ 696,048 $ 729,876
4.00% due 08/01/2041.................. 1,344,548 1,409,841
4.00% due 11/01/2041.................. 787,995 826,917
4.50% due 06/01/2019.................. 66,453 70,629
4.50% due 11/01/2022.................. 142,558 151,744
4.50% due 06/01/2023.................. 64,518 68,473
4.50% due 01/01/2039.................. 741,359 791,064
4.50% due 07/01/2040.................. 1,196,942 1,293,638
4.50% due 08/01/2040.................. 1,587,814 1,700,526
4.50% due 07/01/2041.................. 1,737,987 1,858,867
4.50% due October TBA................. 1,000,000 1,067,969
5.00% due 06/01/2019.................. 44,958 47,858
5.00% due 01/01/2023.................. 30,018 32,207
5.00% due 03/01/2034.................. 64,548 70,209
5.00% due 04/01/2035.................. 1,060,183 1,150,900
5.00% due 05/01/2035.................. 43,208 47,181
5.00% due 02/01/2036.................. 364,367 395,025
5.00% due 05/01/2040.................. 233,031 253,382
5.00% due 07/01/2040.................. 641,155 696,077
5.00% due 08/01/2040.................. 729,810 790,950
5.50% due 06/01/2038.................. 103,754 113,050
6.00% due 02/01/2032.................. 10,857 11,852
6.00% due 05/01/2034.................. 4,444 4,924
6.00% due 10/01/2034.................. 49,203 53,771
6.00% due 07/01/2037.................. 469,827 512,977
6.00% due 10/01/2037.................. 49,490 54,009
6.00% due 11/01/2037.................. 305,014 332,866
6.00% due 11/01/2038.................. 607,861 663,367
6.00% due 04/01/2040.................. 301,402 328,987
6.00% due 06/01/2040.................. 385,719 420,941
6.50% due 02/01/2035.................. 30,592 33,818
6.50% due 09/01/2037.................. 194,615 215,604
6.50% due 10/01/2037.................. 138,156 152,920
6.50% due 10/01/2038.................. 509,978 564,820
6.50% due 02/01/2039.................. 78,303 86,565
7.50% due 01/01/2030.................. 1,612 1,680
7.50% due 09/01/2030.................. 1,576 1,683
8.00% due 11/01/2028.................. 7,899 9,310
13.00% due 11/15/2015................. 17 17
Federal National Mtg. Assoc. REMIC
Series 2011-117, Class MA
2.00% due 08/25/2040(1)............... 191,106 189,981
Series 1989-2, Class D
8.80% due 01/25/2019(1)............... 11,409 12,738
Series 1989-17, Class E
10.40% due 04/25/2019(1).............. 90 91
-----------
29,931,346
-----------
SOVEREIGN AGENCY -- 0.2%
Tennessee Valley Authority
Notes
1.75% due 10/15/2018.................. 335,000 335,326
Senior Notes
3.50% due 12/15/2042.................. 819,000 667,184
-----------
1,002,510
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $42,733,994).................... 43,376,361
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 3.8%
UNITED STATES TREASURY BONDS -- 1.1%
2.88% due 05/15/2043.............. $ 419,000 $ 355,626
3.13% due 02/15/2043.............. 6,459,400 5,787,222
-----------
6,142,848
-----------
UNITED STATES TREASURY NOTES -- 2.7%
0.13% due 04/15/2018 TIPS(12)..... 1,298,518 1,337,676
0.50% due 07/31/2017.............. 314,000 308,088
0.63% due 05/31/2017.............. 105,000 103,819
0.63% due 08/31/2017.............. 170,000 167,357
0.75% due 10/31/2017.............. 56,000 55,230
1.00% due 10/31/2016.............. 2,000,000 2,018,594
1.00% due 03/31/2017.............. 242,000 243,115
1.00% due 05/31/2018.............. 2,118,000 2,090,864
1.38% due 11/30/2015.............. 105,000 107,248
1.38% due 06/30/2018.............. 134,000 134,346
1.38% due 07/31/2018.............. 1,296,000 1,298,329
1.50% due 07/31/2016.............. 1,000,000 1,025,312
1.50% due 08/31/2018.............. 1,938,000 1,950,870
1.75% due 05/15/2023.............. 2,272,000 2,105,328
2.50% due 08/15/2023.............. 1,886,000 1,866,846
-----------
14,813,022
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $21,176,921)................ 20,955,870
-----------
LOANS(6)(14)(15) -- 2.0%
AEROSPACE/DEFENSE-EQUIPMENT -- 0.3%
Sequa Corp.
BTL B
5.25% due 05/29/2017.............. 1,492,481 1,498,078
-----------
CASINO HOTELS -- 0.2%
Tropicana Entertainment, Inc.
BTL
7.50% due 03/16/2018.............. 985,000 988,694
Twin River Management Group, Inc.
BTL B
5.25% due 09/27/2018.............. 271,598 274,653
-----------
1,263,347
-----------
COMPUTER SOFTWARE -- 0.3%
Vertafore, Inc.
Ist Lien
4.25% due 10/03/2019.............. 1,492,500 1,498,097
-----------
ELECTRIC-DISTRIBUTION -- 0.3%
Cedar Bay Generating Company LP
BTL
6.25% due 04/15/2020.............. 1,642,377 1,656,747
-----------
GAMBLING (NON-HOTEL) -- 0.0%
Northfield Park Assoc. LLC
1st Lien
9.00% due 10/23/2018 262,500 273,000
-----------
MEDICAL INSTRUMENTS -- 0.3%
Immucor
BTL B
5.00% due 08/19/2018 1,491,732 1,501,987
-----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
LOANS(6)(14)(15) (CONTINUED)
MEDICAL-DRUGS -- 0.4%
Auxilium Pharmaceuticals, Inc.
BTL B
6.25% due 04/26/2017.................... $2,068,649 $ 2,091,921
Triax Pharmaceuticals LLC
Escrow Loans
16.50% due 08/30/2011+(7)............... 1,720,938 0
-----------
2,091,921
-----------
MEDICAL-HOSPITALS -- 0.0%
Ardent Health Services, Inc.
BTL
6.75% due 03/15/2018.................... 238,200 239,838
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.1%
Sabine Oil & Gas, LLC
BTL
8.75% due 12/31/2018.................... 647,315 650,552
-----------
PRINTING-COMMERCIAL -- 0.1%
Cenveo Corp.
BTL B
6.25% due 02/13/2017.................... 724,360 729,340
-----------
TOTAL LOANS
(cost $11,339,728)...................... 11,402,907
-----------
MUNICIPAL BONDS & NOTES -- 0.3%
Ohio State University
Revenue Bonds
Series A
4.80% due 06/01/2111.................... 616,000 533,203
Port Authority of New York & New Jersey
Revenue Bonds
Series 174
4.46% due 10/01/2062.................... 725,000 612,792
Port Authority of New York & New Jersey
Revenue Bonds
Series 168
4.93% due 10/01/2051.................... 353,000 335,767
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,687,917)....................... 1,481,762
-----------
COMMON STOCK -- 0.0%
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(6)(7)(17)
(cost $0)............................... 128,418 0
-----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 1.7%
BANKS-COMMERCIAL -- 0.1%
Zions Bancorporation FRS
Series I
5.80% due 06/15/2023(3)................. 481,000 420,875
-----------
BANKS-SUPER REGIONAL -- 0.0%
Wells Fargo & Co. FRS
Series K
7.98% due 03/15/2018(3)................. 235,000 258,500
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.5%
BAC Capital Trust XIII FRS
Series F
4.00% due 11/04/2013(3)................. 1,070,000 813,200
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
JPMorgan Chase & Co. FRS
Series Q
5.15% due 05/01/2023(3)............................ $ 670,000 $ 586,250
JPMorgan Chase & Co. FRS
Series R
6.00% due 08/01/2023(3)............................ 757,000 709,688
JPMorgan Chase & Co. FRS
Series 1
7.90% due 04/30/2018(3)............................ 304,000 329,840
JPMorgan Chase Capital XXIII FRS
1.26% due 05/15/2077............................... 140,000 102,900
----------
2,541,878
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.1%
General Electric Capital Corp. FRS
Series C
5.25% due 06/15/2023(3)............................ 500,000 463,500
----------
ELECTRIC-INTEGRATED -- 0.1%
Enel SpA VRS
8.75% due 09/24/2073*.............................. 536,000 545,585
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings Capital Trust VII
Escrow Security
0.00%+(6).......................................... 222,000 22
----------
FINANCE-OTHER SERVICES -- 0.1%
National Rural Utilities Cooperative Finance Corp.
FRS
4.75% due 04/30/2043............................... 547,000 505,975
----------
FINANCIAL GUARANTEE INSURANCE -- 0.2%
Assured Guaranty Municipal Holdings, Inc. FRS
6.40% due 12/15/2066*.............................. 1,360,000 1,183,200
----------
FOOD-DAIRY PRODUCTS -- 0.2%
Land O'Lakes Capital Trust I
7.45% due 03/15/2028*.............................. 1,450,000 1,402,875
----------
INSURANCE-LIFE/HEALTH -- 0.3%
Prudential Financial, Inc. FRS
5.63% due 06/15/2043............................... 1,638,000 1,542,799
----------
INSURANCE-MULTI-LINE -- 0.1%
MetLife, Inc.
6.40% due 12/15/2066............................... 633,000 639,330
----------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $9,242,611).................................. 9,504,539
----------
PREFERRED SECURITIES -- 0.5%
BANKS-COMMERCIAL -- 0.1%
Zions Bancorporation FRS
Series G
6.30%.............................................. 21,275 500,813
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.2%
Citigroup, Inc.
Series J
7.13%.............................................. 31,375 792,219
----------
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
PREFERRED SECURITIES (CONTINUED)
ELECTRIC-INTEGRATED -- 0.0%
Entergy Louisiana LLC
4.70%............................... $ 12,300 $ 233,577
------------
FINANCE-MORTGAGE LOAN/BANKER -- 0.0%
Federal Home Loan Mtg. Corp. FRS
Series Z
8.38%............................... GBP 11,300 66,105
------------
INSURANCE-REINSURANCE -- 0.1%
RenaissanceRe Holdings, Ltd.
5.38%............................... 23,075 450,655
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Class C+(6)(7)...................... 39,177 0
------------
TELECOM SERVICES -- 0.1%
Qwest Corp.
6.13%............................... 25,250 534,290
------------
TOTAL PREFERRED SECURITIES
(cost $3,006,272)................... 2,577,659
------------
WARRANTS+ -- 0.0%
OIL-FIELD SERVICES -- 0.0%
Green Field Energy Services, Inc.
Expires 11/15/2021*................. 2,031 60,930
------------
TELEVISION -- 0.0%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $500.00)(6)(7)(18).... 330 102,300
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $687.00)(6)(7)(18).... 325 40,625
------------
142,925
------------
TOTAL WARRANTS
(cost $57,960)...................... 203,855
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $560,487,566)................. 549,299,279
------------
SHORT-TERM INVESTMENT SECURITIES -- 0.8%
TIME DEPOSITS -- 0.8%
Euro Time Deposit with State Street
Bank and Trust Co.
0.01% due 10/01/2013
(cost $4,293,000)................... $4,293,000 4,293,000
------------
REPURCHASE AGREEMENT -- 0.2%
State Street Bank and Trust Co.
Joint Repurchase Agreement(19)
(cost $1,008,000)................... 1,008,000 1,008,000
------------
TOTAL INVESTMENTS
(cost $565,788,566)(20)............. 99.6% 554,600,279
Other assets less liabilities.......... 0.4 2,195,219
------------ ------------
NET ASSETS 100.0% $556,795,498
============ ============
--------
* 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, 2013,
the aggregate value of these securities was $154,846,422 representing
27.8% of net assets. Unless otherwise indicated these securities are not
considered to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
(1) Collateralized Mortgage Obligation
(2) Commercial Mortgage Backed Security
(3) Perpetual maturity -- maturity date reflects the next call date.
(4) Security in default of interest.
(5) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(6) Illiquid security. At September 30, 2013, the aggregate value of these
securities was $11,817,221 representing 2.1% of net assets.
(7) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(8) Security in default of principal and interest at maturity.
(9) Subsequent to September 30, 2013, the company has filed for Chapter 11
bankruptcy protection.
(10) PIK ("Payment-in-Kind") security -- Income may be paid in additional
securities or cash at the discretion of the issuer.
(11) Interest Only
(12) Principal amount of security is adjusted for inflation.
(13) Security currently paying interest/dividends in the form of additional
securities.
(14) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior
loans are generally considered to be restrictive in that the Fund is
ordinarily contractually obligated to receive approval from the Agent Bank
and/or borrower prior to the disposition of a senior loan.
(15) 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.
(16) Company has filed for bankruptcy protection in country of issuance.
(17) Consists of more than one type of securities traded together as a unit.
(18) 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
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
September 30, 2013, 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........ 3/15/2011 330 $0 $102,300 $310.00 0.00%
ION Media
Networks, Inc.
Expires
12/18/2016
(strike price
$687.00)
Warrant........ 3/15/2011 325 0 40,625 125.00 0.00
-------- ----
$142,925 0.00%
======== ====
(19) See Note 2 for details of Joint Repurchase Agreements.
(20) See Note 5 for cost of investments on a tax basis.
BTL --Bank Term Loan
REMIC --Real Estate Mortgage Investment Conduit
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date.
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, 2013 and
unless noted otherwise the dates are the original maturity dates.
BRL --Brazilian Real
CAD --Canadian Dollar
COP --Columbian Peso
EUR --Euro
GBP --British Pound
HUF --Hungarian Forint
MXN --Mexican Peso
MYR --Malaysian Ringgit
NOK --Norwegian Krone
NZD --New Zealand Dollar
PEN --Peruvian Nuevo Sol
PLN --Polish Zloty
RUB --Russian Ruble
SEK --Swedish Krona
SGD --Singapore Dollar
TRY --Turkish Lira
ZAR --South African Rand
48
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Long-Term Investment Securities:
Asset Backed Securities....................... $ -- $ 12,566,992 $ -- $ 12,566,992
U.S. Corporate Bonds & Notes:
Airlines..................................... -- 1,301,002 125,984 1,426,986
Electric-Generation.......................... -- 1,173,000 302,025 1,475,025
Gambling (Non-Hotel)......................... -- -- 271,179 271,179
Non-Ferrous Metals........................... -- -- 0 0
Oil Companies -- Exploration and Production.. -- 28,107,461 -- 28,107,461
Recycling.................................... -- -- 124 124
Rubber/Plastic Products...................... -- -- 0 0
Other Industries*............................ -- 241,507,969 -- 241,507,969
Foreign Corporate Bonds & Notes:
Independent Power Producers.................. -- 477,500 0 477,500
Special Purpose Entities..................... -- 402,219 0 402,219
Other Industries*............................ -- 81,195,927 -- 81,195,927
Foreign Government Agencies:
Sovereign.................................... -- 88,015,837 -- 88,015,837
Other Foreign Government Agencies*........... -- 1,165,092 -- 1,165,092
Foreign Government Treasuries -- 3,184,015 -- 3,184,015
U.S. Government Agencies:
Federal National Mtg. Assoc.................. -- 29,931,346 -- 29,931,346
Other U.S. Government Agencies*.............. -- 13,445,015 -- 13,445,015
U.S. Government Treasuries -- 20,955,870 -- 20,955,870
Loans:
Medical-Drugs................................ -- 2,091,921 0 2,091,921
Other Industries*............................ -- 9,310,986 -- 9,310,986
Municipal Bond & Notes -- 1,481,762 -- 1,481,762
Common Stock -- -- 0 0
Preferred Securities/Capital Securities:
Finance-Investment Banker/Broker............. -- 22 -- 22
Other Industries*............................ -- 9,504,517 -- 9,504,517
Preferred Securities:
Medical-Drugs................................ -- -- 0 0
Other Industries*............................ 2,577,659 -- -- 2,577,659
Warrants:
Oil-Field Services........................... -- 60,930 -- 60,930
Television................................... -- -- 142,925 142,925
Short Term Investment Securities:
Time Deposits................................. -- 4,293,000 -- 4,293,000
Repurchase Agreement............................ -- 1,008,000 -- 1,008,000
---------- ------------ -------- ------------
Total........................................... $2,577,659 $551,180,383 $842,237 $554,600,279
========== ============ ======== ============
--------
* Sum of all other industries or 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 government agency
classification, please refer to the Portfolio of Investments.
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
reporting period.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Financial Statements
49
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2013 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Cellular Telecom....................... 7.1%
Oil Companies-Exploration & Production. 6.0
Cable/Satellite TV..................... 5.6
Medical-Hospitals...................... 4.6
Data Processing/Management............. 3.0
Satellite Telecom...................... 2.8
Telephone-Integrated................... 2.7
Telecom Services....................... 2.4
Theaters............................... 2.3
Television............................. 2.3
Building-Residential/Commercial........ 2.3
Diversified Banking Institutions....... 2.3
Pipelines.............................. 2.1
Repurchase Agreements.................. 2.0
Food-Misc./Diversified................. 1.9
Finance-Consumer Loans................. 1.8
Chemicals-Diversified.................. 1.7
Banks-Commercial....................... 1.5
Electric-Integrated.................... 1.5
Investment Management/Advisor Services. 1.4
Electronic Components-Semiconductors... 1.4
Finance-Other Services................. 1.2
Electric-Generation.................... 1.1
Machinery-Farming...................... 1.1
Retail-Propane Distribution............ 1.0
Building Products-Wood................. 1.0
Insurance-Multi-line................... 1.0
Diversified Financial Services......... 1.0
Funeral Services & Related Items....... 1.0
Office Automation & Equipment.......... 0.9
Medical Products....................... 0.9
Real Estate Management/Services........ 0.9
Computer Services...................... 0.9
Medical Information Systems............ 0.9
Publishing-Newspapers.................. 0.9
Chemicals-Plastics..................... 0.9
Retail-Arts & Crafts................... 0.9
Medical-Drugs.......................... 0.8
Casino Services........................ 0.8
Enterprise Software/Service............ 0.8
Auto/Truck Parts & Equipment-Original.. 0.8
Aerospace/Defense-Equipment............ 0.8
Shipbuilding........................... 0.8
Building & Construction Products-Misc.. 0.8
Retail-Leisure Products................ 0.8
Metal Processors & Fabrication......... 0.7
Diversified Manufacturing Operations... 0.7
X-Ray Equipment........................ 0.7
Chemicals-Specialty.................... 0.6
Radio.................................. 0.6
Entertainment Software................. 0.6
Gambling (Non-Hotel)................... 0.6
Retail-Discount........................ 0.6
Finance-Mortgage Loan/Banker........... 0.6
Machinery-General Industrial........... 0.6
Applications Software.................. 0.6
Retail-Home Furnishings................ 0.6
Medical-Biomedical/Gene................ 0.5
Web Hosting/Design..................... 0.5
Diagnostic Kits........................ 0.5
Independent Power Producers.................. 0.5%
Casino Hotels................................ 0.5
Commercial Services.......................... 0.5
Special Purpose Entities..................... 0.5
Coal......................................... 0.5
Oil & Gas Drilling........................... 0.5
Broadcast Services/Program................... 0.4
Paper & Related Products..................... 0.4
Banks-Mortgage............................... 0.4
Insurance-Property/Casualty.................. 0.4
Telecommunication Equipment.................. 0.4
Rubber-Tires................................. 0.4
Containers-Paper/Plastic..................... 0.4
Multimedia................................... 0.4
Rental Auto/Equipment........................ 0.3
Non-Hazardous Waste Disposal................. 0.3
Building Products-Cement..................... 0.3
Diversified Operations/Commercial Services... 0.3
Containers-Metal/Glass....................... 0.3
Retail-Regional Department Stores............ 0.2
Semiconductor Components-Integrated Circuits. 0.2
Internet Connectivity Services............... 0.2
Retail-Perfume & Cosmetics................... 0.2
Agricultural Operations...................... 0.2
Building Products-Doors & Windows............ 0.2
Beverages-Wine/Spirits....................... 0.1
Distribution/Wholesale....................... 0.1
Aerospace/Defense............................ 0.1
Building & Construction-Misc................. 0.1
Home Furnishings............................. 0.1
E-Commerce/Services.......................... 0.1
----
99.2%
====
CREDIT QUALITY ALLOCATION+#
Baa........ 1.1%
Ba......... 33.5
B.......... 38.8
Caa........ 20.6
Not Rated@. 6.0
-----
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.
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 1.8%
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.1%
M/I Homes, Inc.
Company Guar. Notes
3.00% due 03/01/2018.............. $ 116,000 $ 117,740
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.2%
ON Semiconductor Corp.
Company Guar. Notes
2.63% due 12/15/2026.............. 187,000 202,077
----------
MEDICAL-BIOMEDICAL/GENE -- 0.5%
Cubist Pharmaceuticals, Inc.
Senior Notes
1.13% due 09/01/2018*............. 122,000 131,836
Cubist Pharmaceuticals, Inc.
Senior Notes
1.88% due 09/01/2020*............. 170,000 182,963
Exelixis, Inc.
Senior Sub. Notes
4.25% due 08/15/2019.............. 255,000 298,509
----------
613,308
----------
MEDICAL-DRUGS -- 0.1%
Savient Pharmaceuticals, Inc.
Senior Notes
4.75% due 02/01/2018(6)........... 745,000 142,481
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.3%
Cobalt International Energy, Inc.
Senior Notes
2.63% due 12/01/2019.............. 330,000 348,975
----------
X-RAY EQUIPMENT -- 0.6%
Hologic, Inc.
Senior Notes
2.00% due 03/01/2042(1)........... 625,000 628,125
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $2,263,039)................. 2,052,706
----------
U.S. CORPORATE BONDS & NOTES -- 74.8%
AEROSPACE/DEFENSE -- 0.1%
Esterline Technologies Corp.
Company Guar. Notes
7.00% due 08/01/2020.............. 85,000 90,950
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.8%
B/E Aerospace, Inc.
Senior Notes
6.88% due 10/01/2020.............. 815,000 890,387
----------
AGRICULTURAL OPERATIONS -- 0.2%
American Rock Salt Co., LLC/
American Rock Capital Corp.
Sec. Notes
8.25% due 05/01/2018*............. 191,000 184,315
----------
APPLICATIONS SOFTWARE -- 0.6%
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/2019............. 550,000 626,313
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.8%
TRW Automotive, Inc.
Company Guar. Notes
7.25% due 03/15/2017*............. 795,000 910,275
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
BANKS-COMMERCIAL -- 1.0%
CIT Group, Inc.
Senior Notes
5.25% due 03/15/2018.................... $ 406,000 $ 425,285
CIT Group, Inc.
Senior Notes
5.38% due 05/15/2020.................... 275,000 284,625
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*................... 430,000 451,500
----------
1,161,410
----------
BANKS-MORTGAGE -- 0.4%
Provident Funding Associates LP/PFG
Finance Corp.
Company Guar. Notes
6.75% due 06/15/2021*................... 470,000 472,350
----------
BEVERAGES-WINE/SPIRITS -- 0.1%
Constellation Brands, Inc.
Company Guar. Notes
4.25% due 05/01/2023.................... 145,000 133,038
----------
BROADCAST SERVICES/PROGRAM -- 0.4%
Nexstar Broadcasting, Inc.
Company Guar. Notes
6.88% due 11/15/2020*................... 465,000 473,138
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.8%
Associated Materials LLC/AMH
New Finance, Inc.
Senior Sec. Notes
9.13% due 11/01/2017*................... 170,000 180,625
Associated Materials LLC/AMH
New Finance, Inc.
Senior Sec. Notes
9.13% due 11/01/2017.................... 35,000 37,188
Nortek, Inc.
Company Guar. Notes
8.50% due 04/15/2021.................... 560,000 609,000
Ply Gem Industries, Inc.
Company Guar. Notes
9.38% due 04/15/2017.................... 39,000 41,145
----------
867,958
----------
BUILDING & CONSTRUCTION-MISC. -- 0.1%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023*................... 85,000 81,600
----------
BUILDING PRODUCTS-WOOD -- 1.0%
Boise Cascade Co.
Company Guar. Notes
6.38% due 11/01/2020.................... 170,000 175,950
Masco Corp.
Senior Notes
7.13% due 03/15/2020.................... 710,000 800,525
Masco Corp.
Senior Notes
7.75% due 08/01/2029.................... 110,000 121,496
----------
1,097,971
----------
51
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-RESIDENTIAL/COMMERCIAL -- 2.2%
K Hovnanian Enterprises, Inc.
Sec. Notes
9.13% due 11/15/2020*......................... $ 341,000 $ 369,132
KB Home
Company Guar. Notes
7.50% due 09/15/2022.......................... 255,000 265,200
KB Home
Company Guar. Notes
8.00% due 03/15/2020.......................... 681,000 735,480
Lennar Corp.
Company Guar. Notes
4.75% due 11/15/2022.......................... 890,000 818,800
Pulte Group, Inc.
Company Guar. Notes
6.38% due 05/15/2033.......................... 135,000 120,488
Ryland Group, Inc.
Company Guar. Notes
5.38% due 10/01/2022.......................... 175,000 163,625
----------
2,472,725
----------
CABLE/SATELLITE TV -- 4.5%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022.......................... 960,000 888,000
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.63% due 01/31/2022.......................... 580,000 588,700
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
7.38% due 06/01/2020.......................... 365,000 394,200
DISH DBS Corp.
Company Guar. Notes
5.00% due 03/15/2023.......................... 520,000 482,300
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021.......................... 1,820,000 1,913,275
DISH DBS Corp.
Company Guar. Notes
7.88% due 09/01/2019.......................... 160,000 182,400
Harron Communications LP/Harron Finance Corp.
Senior Notes
9.13% due 04/01/2020*......................... 485,000 533,500
----------
4,982,375
----------
CASINO HOTELS -- 0.5%
Wynn Las Vegas LLC/Wynn Las Vegas
Capital Corp.
1st. Mtg. Notes
5.38% due 03/15/2022.......................... 570,000 572,850
----------
CASINO SERVICES -- 0.6%
Greektown Superholdings, Inc.
Sec. Notes, Series A
13.00% due 07/01/2015......................... 620,000 646,350
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
CASINO SERVICES (CONTINUED)
Greektown, Inc. LLC
Escrow Notes
10.75% due 12/01/2013+(2)(3).......... $ 489,000 $ 0
----------
646,350
----------
CELLULAR TELECOM -- 6.3%
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 11/15/2020.................. 645,000 668,381
MetroPCS Wireless, Inc.
Company Guar. Notes
7.88% due 09/01/2018.................. 770,000 832,562
NII Capital Corp.
Company Guar. Notes
7.63% due 04/01/2021.................. 520,000 369,200
NII Capital Corp.
Company Guar. Notes
8.88% due 12/15/2019.................. 135,000 104,625
Sprint Communications, Inc.
Company Guar. Notes
7.00% due 03/01/2020*................. 395,000 424,625
Sprint Communications, Inc.
Company Guar. Notes
9.00% due 11/15/2018*................. 910,000 1,066,975
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021*................. 1,255,000 1,267,550
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023*................. 1,170,000 1,193,400
Syniverse Holdings, Inc.
Company Guar. Notes
9.13% due 01/15/2019.................. 1,000,000 1,077,500
T-Mobile USA, Inc.
Senior Notes
5.25% due 09/01/2018*................. 65,000 66,138
----------
7,070,956
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Momentive Performance Materials, Inc.
Senior Sec. Notes
8.88% due 10/15/2020.................. 275,000 288,750
----------
CHEMICALS-PLASTICS -- 0.9%
Hexion US Finance Corp.
Senior Sec. Notes
6.63% due 04/15/2020.................. 230,000 230,000
Hexion US Finance Corp./Hexion
Nova Scotia Finance ULC
Senior Sec. Notes
8.88% due 02/01/2018.................. 390,000 403,650
Hexion US Finance Corp./Hexion
Nova Scotia Finance ULC
Sec. Notes
9.00% due 11/15/2020.................. 355,000 347,012
----------
980,662
----------
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CHEMICALS-SPECIALTY -- 0.6%
Ferro Corp.
Senior Notes
7.88% due 08/15/2018............................. $ 675,000 $ 708,750
----------
COMMERCIAL SERVICES -- 0.5%
Iron Mountain, Inc.
Company Guar. Notes
7.75% due 10/01/2019............................. 500,000 549,375
----------
COMPUTER SERVICES -- 0.9%
SunGard Data Systems, Inc.
Company Guar. Notes
6.63% due 11/01/2019............................. 355,000 362,100
SunGard Data Systems, Inc.
Company Guar. Notes
7.38% due 11/15/2018............................. 316,000 334,960
SunGard Data Systems, Inc.
Company Guar. Notes
7.63% due 11/15/2020............................. 275,000 294,250
----------
991,310
----------
CONTAINERS-PAPER/PLASTIC -- 0.4%
BOE Intermediate Holding Corp.
Senior Notes
9.75% due 11/01/2017*(4)......................... 425,000 444,125
----------
DATA PROCESSING/MANAGEMENT -- 3.0%
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*............................ 1,115,000 1,173,537
First Data Corp.
Sec. Notes
8.25% due 01/15/2021*............................ 1,844,000 1,903,930
First Data Corp.
Sec. Notes
8.75% due 01/15/2022*(4)......................... 285,000 297,113
----------
3,374,580
----------
DIAGNOSTIC KITS -- 0.5%
Alere, Inc.
Company Guar. Notes
6.50% due 06/15/2020............................. 600,000 594,750
----------
DISTRIBUTION/WHOLESALE -- 0.1%
American Builders & Contractors Supply Co., Inc.
Senior Notes
5.63% due 04/15/2021*............................ 115,000 113,131
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.6%
Ally Financial, Inc.
Sub. Notes
8.00% due 12/31/2018............................. 270,000 303,750
Ally Financial, Inc.
Company Guar. Notes
8.00% due 03/15/2020............................. 270,000 310,500
----------
614,250
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
Community Choice Financial, Inc.
Senior Sec. Notes
10.75% due 05/01/2019............................ 580,000 510,400
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.7%
JM Huber Corp.
Senior Notes
9.88% due 11/01/2019*................... $ 675,000 $ 766,125
----------
E-COMMERCE/SERVICES -- 0.1%
IAC/InterActiveCorp.
Company Guar. Notes
4.75% due 12/15/2022.................... 59,000 54,280
----------
ELECTRIC-GENERATION -- 1.1%
AES Corp.
Senior Notes
8.00% due 10/15/2017.................... 1,060,000 1,219,000
----------
ELECTRIC-INTEGRATED -- 0.5%
DPL, Inc.
Senior Notes
7.25% due 10/15/2021.................... 300,000 306,750
Texas Competitive Electric Holdings Co.
LLC/TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/2020*.................. 295,000 203,919
----------
510,669
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.8%
Freescale Semiconductor, Inc.
Company Guar. Notes
8.05% due 02/01/2020.................... 305,000 321,013
Freescale Semiconductor, Inc.
Senior Sec. Notes
9.25% due 04/15/2018*................... 535,000 579,137
----------
900,150
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.8%
Infor US, Inc.
Company Guar. Notes
9.38% due 04/01/2019.................... 426,000 476,055
Infor US, Inc.
Company Guar. Notes
11.50% due 07/15/2018................... 394,000 455,070
----------
931,125
----------
ENTERTAINMENT SOFTWARE -- 0.6%
Activision Blizzard, Inc.
Company Guar. Notes
5.63% due 09/15/2021*................... 675,000 675,844
----------
FINANCE-CONSUMER LOANS -- 1.8%
SLM Corp.
Senior Notes
8.00% due 03/25/2020.................... 211,000 227,880
SLM Corp.
Senior Notes
8.45% due 06/15/2018.................... 484,000 545,710
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
8.50% due 09/15/2018*................... 1,210,000 1,264,450
----------
2,038,040
----------
53
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-MORTGAGE LOAN/BANKER -- 0.6%
Ladder Capital Finance Holdings
LLP/Ladder Capital Finance Corp.
Senior Notes
7.38% due 10/01/2017......................... $ 620,000 $ 648,675
----------
FINANCE-OTHER SERVICES -- 1.2%
Nationstar Mtg. LLC/Nationstar Capital Corp.
Company Guar. Notes
6.50% due 08/01/2018......................... 770,000 773,850
Nationstar Mtg. LLC/Nationstar Capital Corp.
Company Guar. Notes
6.50% due 07/01/2021......................... 610,000 584,075
----------
1,357,925
----------
FOOD-MISC./DIVERSIFIED -- 1.3%
ARAMARK Corp.
Company Guar. Notes
5.75% due 03/15/2020*........................ 930,000 939,300
Pinnacle Foods Finance LLC/Pinnacle Foods
Finance Corp.
Company Guar. Notes
4.88% due 05/01/2021*........................ 565,000 525,450
----------
1,464,750
----------
FUNERAL SERVICES & RELATED ITEMS -- 1.0%
Service Corp International
Senior Notes
5.38% due 01/15/2022*........................ 180,000 171,675
Service Corp. International
Senior Notes
7.63% due 10/01/2018......................... 802,000 908,265
----------
1,079,940
----------
GAMBLING (NON-HOTEL) -- 0.4%
Isle of Capri Casinos, Inc.
Company Guar. Notes
8.88% due 06/15/2020......................... 395,000 410,800
----------
HOME FURNISHINGS -- 0.1%
Tempur Sealy International, Inc.
Company Guar. Notes
6.88% due 12/15/2020......................... 75,000 78,375
----------
INDEPENDENT POWER PRODUCERS -- 0.5%
Calpine Corp.
Senior Sec. Notes
7.50% due 02/15/2021*........................ 554,000 588,625
----------
INTERNET CONNECTIVITY SERVICES -- 0.2%
Zayo Group LLC/Zayo Capital, Inc.
Senior Sec. Notes
8.13% due 01/01/2020......................... 135,000 147,656
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
10.13% due 07/01/2020........................ 95,000 109,013
----------
256,669
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 1.4%
Nuveen Investments, Inc.
Senior Notes
9.13% due 10/15/2017*.............. $ 970,000 $ 953,025
Nuveen Investments, Inc.
Senior Notes
9.50% due 10/15/2020*.............. 675,000 659,812
----------
1,612,837
----------
MACHINERY-FARMING -- 1.1%
Case New Holland, Inc.
Company Guar. Notes
7.88% due 12/01/2017............... 870,000 1,011,375
CNH Capital LLC
Company Guar. Notes
6.25% due 11/01/2016............... 185,000 203,500
----------
1,214,875
----------
MEDICAL INFORMATION SYSTEMS -- 0.9%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/2018*............. 840,000 991,200
----------
MEDICAL PRODUCTS -- 0.9%
Biomet, Inc.
Company Guar. Notes
6.50% due 08/01/2020............... 275,000 283,937
Biomet, Inc.
Company Guar. Notes
6.50% due 10/01/2020............... 745,000 755,244
----------
1,039,181
----------
MEDICAL-DRUGS -- 0.5%
Pinnacle Merger Sub, Inc.
Senior Notes
9.50% due 10/01/2023*.............. 540,000 555,525
----------
MEDICAL-HOSPITALS -- 4.6%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/15/2018............... 405,000 412,087
HCA Holdings, Inc.
Senior Notes
6.25% due 02/15/2021............... 360,000 365,850
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020............... 2,030,000 2,200,012
HCA, Inc.
Senior Notes
7.50% due 11/15/2095............... 380,000 341,050
HCA, Inc.
Senior Sec. Notes
7.88% due 02/15/2020............... 550,000 592,969
Health Management Associates, Inc.
Company Guar. Notes
7.38% due 01/15/2020............... 555,000 608,072
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022*.............. 605,000 631,469
----------
5,151,509
----------
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
NON-FERROUS METALS -- 0.0%
Renco Metals, Inc.
Escrow Notes
11.50% due 07/01/2003+(2)(3).................... $2,150,000 $ 0
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.3%
Casella Waste Systems, Inc.
Company Guar. Notes
7.75% due 02/15/2019............................ 320,000 318,400
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.9%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
8.50% due 04/01/2019............................ 941,000 1,039,805
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 4.9%
Antero Resources Finance Corp.
Company Guar. Notes
6.00% due 12/01/2020............................ 350,000 353,500
Antero Resources Finance Corp.
Company Guar. Notes
7.25% due 08/01/2019............................ 310,000 327,050
Antero Resources Finance Corp.
Company Guar. Notes
9.38% due 12/01/2017............................ 275,000 290,813
Continental Resources, Inc.
Company Guar. Notes
5.00% due 09/15/2022............................ 330,000 332,063
Denbury Resources, Inc.
Company Guar. Notes
4.63% due 07/15/2023............................ 230,000 210,450
Diamondback Energy, Inc.
Company Guar. Notes
7.63% due 10/01/2021*........................... 350,000 357,000
Endeavour International Corp.
Senior Sec. Notes
12.00% due 03/01/2018........................... 850,000 884,000
EP Energy LLC/EP Energy Finance, Inc.
Senior Notes
9.38% due 05/01/2020............................ 964,000 1,084,500
EP Energy LLC/Everest Acquisition Finance, Inc.
Senior Sec. Notes
6.88% due 05/01/2019............................ 50,000 53,375
EPE Holdings LLC/EP Energy Bond Co., Inc.
Senior Notes
8.88% due 12/15/2017*(4)(8)..................... 281,581 293,900
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/2020............................ 355,000 382,512
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021............................ 365,000 346,750
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/2018............................ 505,000 544,137
----------
5,460,050
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------
PAPER & RELATED PRODUCTS -- 0.0%
Clearwater Paper Corp.
Company Guar. Notes
4.50% due 02/01/2023.......... $ 40,000 $ 36,000
----------
PIPELINES -- 2.2%
El Paso LLC
Senior Sec. Notes
6.50% due 09/15/2020.......... 545,000 570,754
El Paso LLC
Senior Sec. Notes
7.00% due 06/15/2017.......... 785,000 875,489
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020.......... 571,000 610,970
Kinder Morgan Finance Co. LLC
Senior Sec. Notes
6.00% due 01/15/2018*......... 310,000 336,199
----------
2,393,412
----------
PUBLISHING-NEWSPAPERS -- 0.9%
Gannett Co., Inc.
Company Guar. Notes
5.13% due 10/15/2019*......... 990,000 982,575
----------
RADIO -- 0.6%
Sirius XM Radio, Inc.
Senior Notes
4.25% due 05/15/2020*......... 175,000 163,625
Sirius XM Radio, Inc.
Senior Notes
4.63% due 05/15/2023*......... 490,000 447,125
Sirius XM Radio, Inc.
Company Guar. Notes
5.25% due 08/15/2022*......... 70,000 67,550
----------
678,300
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.9%
CBRE Services, Inc.
Company Guar. Notes
5.00% due 03/15/2023.......... 590,000 553,125
Realogy Group LLC
Senior Sec. Notes
7.63% due 01/15/2020*......... 418,000 466,070
----------
1,019,195
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(2)(3)... 2,145,000 81
----------
RENTAL AUTO/EQUIPMENT -- 0.3%
Hertz Corp.
Company Guar. Notes
5.88% due 10/15/2020.......... 215,000 221,450
Hertz Corp.
Company Guar. Notes
6.25% due 10/15/2022.......... 140,000 144,550
----------
366,000
----------
55
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-ARTS & CRAFTS -- 0.9%
Michaels Stores, Inc.
Company Guar. Notes
7.75% due 11/01/2018........................... $905,000 $ 972,875
----------
RETAIL-DISCOUNT -- 0.6%
99 Cents Only Stores
Company Guar. Notes
11.00% due 12/15/2019.......................... 595,000 666,400
----------
RETAIL-HOME FURNISHINGS -- 0.6%
GRD Holdings III Corp.
Senior Sec. Notes
10.75% due 06/01/2019*......................... 585,000 620,100
----------
RETAIL-LEISURE PRODUCTS -- 0.8%
Party City Holdings, Inc.
Company Guar. Notes
8.88% due 08/01/2020*.......................... 210,000 225,750
PC Nextco Holdings LLC/PC Nextco Finance, Inc.
Company Guar. Notes
8.75% due 08/15/2019*(4)....................... 640,000 640,000
----------
865,750
----------
RETAIL-PERFUME & COSMETICS -- 0.2%
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
5.75% due 06/01/2022........................... 235,000 235,588
----------
RETAIL-PROPANE DISTRIBUTION -- 1.0%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020........................... 240,000 255,000
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022........................... 425,000 442,000
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/2021........................... 442,000 440,895
----------
1,137,895
----------
RUBBER-TIRES -- 0.4%
Continental Rubber of America Corp.
Senior Sec. Notes
4.50% due 09/15/2019*.......................... 430,000 448,490
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(2)(3)................... 550,000 0
----------
SATELLITE TELECOM -- 0.8%
DigitalGlobe, Inc.
Company Guar. Notes
5.25% due 02/01/2021*.......................... 575,000 549,125
Hughes Satellite Systems Corp.
Senior Sec. Notes
6.50% due 06/15/2019........................... 325,000 343,687
----------
892,812
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
SHIPBUILDING -- 0.8%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
6.88% due 03/15/2018................ $ 455,000 $ 489,125
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021................ 361,000 388,978
----------
878,103
----------
SPECIAL PURPOSE ENTITY -- 0.5%
MPH Intermediate Holding Co. 2
Senior Notes
8.38% due 08/01/2018*(4)............ 535,000 548,041
----------
TELECOM SERVICES -- 0.1%
Level 3 Communications, Inc.
Senior Notes
8.88% due 06/01/2019................ 90,000 96,300
----------
TELECOMMUNICATION EQUIPMENT -- 0.3%
Alcatel-Lucent USA, Inc.
Senior Notes
6.45% due 03/15/2029................ 260,000 219,700
Alcatel-Lucent USA, Inc.
Senior Notes
6.50% due 01/15/2028................ 160,000 133,600
----------
353,300
----------
TELEPHONE-INTEGRATED -- 2.2%
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 70,620
Level 3 Financing, Inc.
Company Guar. Notes
8.63% due 07/15/2020................ 1,075,000 1,174,437
Windstream Corp.
Company Guar. Notes
6.38% due 08/01/2023................ 145,000 132,675
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/2020................ 930,000 960,225
----------
2,488,447
----------
TELEVISION -- 1.9%
Gray Television, Inc.
Company Guar. Notes
7.50% due 10/01/2020................ 915,000 951,600
Sinclair Television Group, Inc.
Sec. Notes
9.25% due 11/01/2017*............... 540,000 568,134
Univision Communications, Inc.
Senior Sec. Notes
6.75% due 09/15/2022*............... 520,000 548,600
----------
2,068,334
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
THEATERS -- 2.3%
AMC Entertainment, Inc.
Company Guar. Notes
8.75% due 06/01/2019............. $1,065,000 $ 1,144,875
AMC Entertainment, Inc.
Company Guar. Notes
9.75% due 12/01/2020............. 520,000 592,800
Cinemark USA, Inc.
Company Guar. Notes
4.88% due 06/01/2023............. 235,000 216,200
Cinemark USA, Inc.
Company Guar. Notes
5.13% due 12/15/2022............. 105,000 98,437
Regal Cinemas Corp.
Company Guar. Notes
8.63% due 07/15/2019............. 325,000 352,625
Regal Entertainment Group
Senior Notes
5.75% due 02/01/2025............. 78,000 71,955
Regal Entertainment Group
Company Guar. Notes
9.13% due 08/15/2018............. 125,000 138,125
-----------
2,615,017
-----------
WEB HOSTING/DESIGN -- 0.5%
Equinix, Inc.
Senior Notes
4.88% due 04/01/2020............. 35,000 33,950
Equinix, Inc.
Senior Notes
5.38% due 04/01/2023............. 200,000 189,000
Equinix, Inc.
Senior Notes
7.00% due 07/15/2021............. 350,000 372,750
-----------
595,700
-----------
X-RAY EQUIPMENT -- 0.1%
Hologic, Inc.
Company Guar. Notes
6.25% due 08/01/2020............. 70,000 72,888
-----------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $84,149,971)............... 83,301,021
-----------
FOREIGN CONVERTIBLE BONDS & NOTES -- 0.3%
BUILDING PRODUCTS-CEMENT -- 0.3%
Cemex SAB de CV
Sub. Notes
3.75% due 03/15/2018
(cost $322,711).................. 240,000 312,000
-----------
FOREIGN CORPORATE BONDS & NOTES -- 12.2%
BANKS-COMMERCIAL -- 0.5%
LBG Capital No. 1 PLC
Bank Guar. Notes
7.88% due 11/01/2020*............ 475,000 503,025
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
CABLE/SATELLITE TV -- 1.1%
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/2018*.............. 490,000 516,950
Unitymedia Hessen GmbH & Co. KG
Senior Sec. Notes
5.50% due 01/15/2023*.............. 780,000 739,050
---------
1,256,000
---------
CELLULAR TELECOM -- 0.8%
NII International Telecom SCA
Company Guar. Notes
7.88% due 08/15/2019*.............. 830,000 753,225
NII International Telecom SCA
Company Guar. Notes
11.38% due 08/15/2019*............. 135,000 139,725
---------
892,950
---------
CHEMICALS-DIVERSIFIED -- 1.4%
INEOS Finance PLC
Senior Sec. Notes
7.50% due 05/01/2020*.............. 210,000 225,225
INEOS Group Holdings SA
Company Guar. Notes
6.13% due 08/15/2018*.............. 1,305,000 1,275,638
---------
1,500,863
---------
CONTAINERS-METAL/GLASS -- 0.3%
Ardagh Packaging Finance
PLC/Ardagh MP Holdings USA, Inc.
Senior Notes
7.00% due 11/15/2020*.............. 290,000 278,400
---------
DIVERSIFIED BANKING INSTITUTIONS -- 0.6%
Deutsche Bank AG VRS
Sub. Notes
4.30% due 05/24/2028............... 340,000 307,074
UBS AG
Sub. Notes
7.63% due 08/17/2022............... 320,000 353,780
---------
660,854
---------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
National Money Mart Co.
Company Guar. Notes
10.38% due 12/15/2016.............. 550,000 576,125
---------
GAMBLING (NON-HOTEL) -- 0.2%
Great Canadian Gaming Corp.
Company Guar. Notes
6.63% due 07/25/2022*.............. CAD 265,000 261,771
---------
INDEPENDENT POWER PRODUCERS -- 0.0%
AES Drax Energy, Ltd.
Senior Sec. Notes
11.50% due 08/30/2010+(2)(3)(7)(9). 4,460,000 0
---------
57
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-DRUGS -- 0.2%
Valeant Pharmaceutical International
Senior Notes
6.75% due 08/15/2018*....................... $ 255,000 $ 272,850
----------
METAL PROCESSORS & FABRICATION -- 0.0%
International Utility Structures
Escrow Notes
10.75% due 02/01/2007+(2)(3)................ 2,150,000 0
----------
OIL & GAS DRILLING -- 0.5%
Seadrill, Ltd.
Senior Notes
5.63% due 09/15/2017*....................... 495,000 499,950
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.8%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/2017........................ 640,000 684,800
MEG Energy Corp.
Company Guar. Notes
6.38% due 01/30/2023*....................... 220,000 215,600
----------
900,400
----------
PAPER & RELATED PRODUCTS -- 0.3%
Fibria Overseas Finance, Ltd.
Company Guar. Notes
7.50% due 05/04/2020*....................... 358,000 384,850
----------
SATELLITE TELECOM -- 1.7%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019........................ 900,000 963,000
Intelsat Luxembourg SA
Company Guar. Notes
6.75% due 06/01/2018*....................... 85,000 88,188
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021*....................... 805,000 833,175
----------
1,884,363
----------
SEMICONDUCTOR COMPONENTS-INTEGRATED CIRCUITS -- 0.2%
NXP BV/NXP Funding LLC
Company Guar. Notes
3.75% due 06/01/2018*....................... 275,000 268,125
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 1/15/2015*+(2)(3)(9)(10).......... 1,025,000 0
----------
TELECOM SERVICES -- 2.3%
Altice Financing SA
Senior Sec. Notes
7.88% due 12/15/2019*....................... 350,000 369,250
Altice Finco SA
Senior Sec. Notes
9.88% due 12/15/2020*....................... 255,000 274,762
UPCB Finance VI, Ltd.
Senior Sec. Notes
6.88% due 01/15/2022*....................... 650,000 689,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
TELECOM SERVICES (CONTINUED)
Wind Acquisition Finance SA
Senior Sec. Notes
7.25% due 02/15/2018*....................... $ 640,000 $ 662,400
Wind Acquisition Finance SA
Sec. Notes
11.75% due 07/15/2017*...................... 510,000 541,875
-----------
2,537,287
-----------
TELEPHONE-INTEGRATED -- 0.5%
Softbank Corp.
Company Guar. Notes
4.50% due 04/15/2020*....................... 545,000 523,745
-----------
TELEVISION -- 0.3%
Videotron, Ltd.
Company Guar. Notes
5.00% due 07/15/2022........................ 405,000 384,750
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $18,988,933).......................... 13,586,308
-----------
LOANS(3)(11)(12) -- 4.2%
BEVERAGES-NON-ALCOHOLIC -- 0.0%
Le-Natures, Inc.
Escrow Loan
9.36% due 03/01/2011+(2).................... 1,200,000 0
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA Inc.
Escrow Loan
12.25% due 08/15/2013+(2)................... 2,037,810 0
-----------
COAL -- 0.5%
Arch Coal, Inc.
BTL 2nd Lien
5.75% due 05/01/2018........................ 528,315 514,997
-----------
DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES -- 0.3%
Pacific Industrial Services
BTL
4.25% due 09/24/2018........................ 300,000 301,125
-----------
ELECTRIC-INTEGRATED -- 1.0%
Texas Competitive Electric Holdings Co. LLC
BTL
4.71% due 10/10/2014........................ 1,622,835 1,095,413
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
BTL
3.75% due 01/15/2021........................ 435,000 436,269
-----------
INSURANCE-PROPERTY/CASUALTY -- 0.4%
Asurion LLC
BTL
3.50% due 07/08/2020........................ 483,788 467,611
-----------
MACHINERY-GENERAL INDUSTRIAL -- 0.6%
Gardner Denver, Inc.
BTL
4.25% due 07/30/2020........................ 640,000 635,022
-----------
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES** (NOTE 2)
--------------------------------------------------------------------
LOANS (CONTINUED)
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Escrow Loans
16.50% due 08/30/2011+(2)................... $1,720,938 $ 0
----------
METAL PROCESSORS & FABRICATION -- 0.7%
Rexnord LLC
BTL 1st Lien
4.00% due 08/14/2020........................ 795,000 787,050
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.2%
JC Penney Corp., Inc.
BTL
6.00% due 05/21/2018........................ 294,263 286,605
----------
TELECOMMUNICATION EQUIPMENT -- 0.1%
Alcatel-Lucent USA, Inc.
BTL
5.75% due 01/30/2019........................ 99,250 100,065
----------
TOTAL LOANS
(cost $6,075,750)........................... 4,624,157
----------
COMMON STOCK -- 0.7%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.0%
Masonite International Corp.+................ 692 33,860
----------
CASINO SERVICES -- 0.0%
Greektown, Inc.+(2)(3)....................... 370 29,970
----------
FOOD-MISC./DIVERSIFIED -- 0.6%
Wornick Co.+(2)(3)........................... 7,270 697,338
----------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC+(2)(3)(13)......... 128,418 0
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(2)(3)..... 19,388 0
----------
PAPER & RELATED PRODUCTS -- 0.1%
Caraustar Industries, Inc.+(2)(3)............ 73 73,914
----------
TOTAL COMMON STOCK
(cost $2,396,653)........................... 835,082
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.2%
CASINO SERVICES -- 0.2%
Herbst Gaming, Inc.+(3)(14)
(cost $232,720)............................. 23,439 257,829
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 1.2%
INSURANCE-MULTI-LINE -- 0.8%
Hartford Financial Services Group, Inc. FRS
8.13% due 06/15/2038........................ 560,000 634,900
ING US, Inc. FRS
5.65% due 05/15/2053........................ 255,000 233,107
----------
868,007
----------
MULTIMEDIA -- 0.4%
NBCUniversal Enterprise, Inc.
5.25% due 03/19/2021*(5).................... 445,000 440,550
----------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $1,236,546)........................... 1,308,557
----------
PREFERRED SECURITIES -- 1.6%
DIVERSIFIED BANKING INSTITUTIONS -- 1.1%
GMAC Capital Trust I FRS
Series 2
8.13%....................................... 46,500 1,243,875
----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
INSURANCE-MULTI-LINE -- 0.2%
Hartford Financial Services Group, Inc. FRS
7.88%....................................... 8,000 $ 224,960
------------
MEDICAL-DRUGS -- 0.0%
Triax Pharmaceuticals LLC
Class C+(2)(3).............................. 39,177 0
------------
SATELLITE TELECOM -- 0.3%
Intelsat SA
Series A
5.75%....................................... 4,751 290,144
------------
TOTAL PREFERRED SECURITIES
(cost $1,629,537)........................... 1,758,979
------------
WARRANTS+ -- 0.2%
BUILDING PRODUCTS-DOORS & WINDOWS -- 0.1%
Masonite International Corp.
Expires 06/09/2014
(strike price $50.77)(2)(3)................. 3,355 15,284
Masonite International Corp.
Expires 06/09/2016
(strike price $50.77)(2)(3)................. 2,517 24,707
------------
39,991
------------
TELEVISION -- 0.1%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $500.00)(2)(3)(14)............ 332 102,920
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $687.00)(2)(3)(14)............ 328 41,000
------------
143,920
------------
TOTAL WARRANTS
(cost $0)................................... 183,911
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $117,295,860)......................... 108,220,550
------------
REPURCHASE AGREEMENTS -- 2.0%
Bank of America Securities LLC
Joint Repurchase Agreement(15).............. $ 615,000 615,000
Barclays Capital PLC
Joint Repurchase Agreement(15).............. 355,000 355,000
BNP Paribas SA
Joint Repurchase Agreement(15).............. 355,000 355,000
Deutsche Bank AG
Joint Repurchase Agreement(15).............. 235,000 235,000
UBS Securities LLC
Joint Repurchase Agreement(15).............. 715,000 715,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $2,275,000)........................... 2,275,000
------------
TOTAL INVESTMENTS --
(cost $119,570,860)(16)..................... 99.2% 110,495,550
Other assets less liabilities.................. 0.8 942,077
---------- ------------
NET ASSETS -- 100.0% $111,437,627
========== ============
59
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
--------
* 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, 2013, the aggregate value
of these securities was $39,446,927 representing 35.4% 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)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(2)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(3)Illiquid security. At September 30, 2013, the aggregate value of these
securities was $5,867,200 representing 5.3% of net assets.
(4)PIK ("Payment-in-Kind") security -- Income may be paid in additional
securities or cash at the discretion of the issuer.
(5)Perpetual maturity -- maturity date reflects the next call date.
(6)Subsequent to September 30, 2013, the company has filed for Chapter 11
bankruptcy protection.
(7)Security in default of interest and principal at maturity.
(8)Security currently paying interest/dividends in the form of additional
securities.
(9)Company has filed for bankruptcy protection in country of issuance.
(10)Security in default of interest.
(11)The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London Inter-
Bank Offer Rate ("LIBOR") or the prime rate offered by one or more major
United States banks, or the certificate of deposit rate. Senior loans are
generally considered to be restrictive in that the Fund is ordinarily
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a senior loan.
(12)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.
(13)Consists of more than one type of securities traded together as a unit.
(14)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, 2013, 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 $257,829 $ 11.00 0.23%
ION Media
Networks, Inc.
Expires
12/18/2016
(strike price
$500.00)
Warrants........... 03/01/2011 332 0 102,920 310.00 0.09
ION Media
Networks, Inc.
Expires
12/18/2016
(strike price
$687.00)
Warrants........... 11/11/2010 327 0
03/01/2011 1 0
------ --------
328 0 41,000 125.00 0.04
-------- ----
$401,749 0.36%
======== ====
(15)See Note 2 for details of Joint Repurchase Agreements.
(16)See Note 5 for cost of investments on a tax basis.
BTL -- Bank Term Loan
FRS -- Floating Rate Securities
VRS -- Variable Rate Securities
The rates shown on FRS and VRS are the current interest rates at September 30,
2013 and unless noted otherwise, the dates shown are the original maturity
dates.
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY CONTRACT TO DELIVER IN EXCHANGE FOR DATE APPRECIATION DEPRECIATION
------------------------------------------
Bank of Montreal CAD 265,000 USD 257,197 10/21/2013 $54 $--
=== ===
--------
CURRENCY LEGEND
CAD -- Canadian Dollar
USD -- United States Dollar
60
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 2013 (see Note 2):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS
- --------------------- ----------------- ----------------------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes............................... $ -- $ 2,052,706 $ --
U.S. Corporate Bonds & Notes:
Casino Services........................................ -- 646,350 0
Cellular Telecom....................................... -- 7,070,956 --
Non-Ferrous Metals..................................... -- -- 0
Recycling.............................................. -- -- 81
Rubber/Plastic Products................................ -- -- 0
Other Industries*...................................... -- 75,583,634 --
Foreign Convertible Bonds & Notes....................... -- 312,000 --
Foreign Corporate Bonds & Notes:
Independent Power Producers............................ -- -- 0
Metal Processors & Fabrication......................... -- -- 0
Special Purpose Entity................................. -- -- 0
Other Industries*...................................... -- 13,586,308 --
Loans:
Beverages-Non-alcoholic................................ -- -- 0
Building-Residential/Commercial........................ -- -- 0
Medical-Drugs.......................................... -- -- 0
Other Industries*...................................... -- 4,624,157 --
Common Stock:
Building Products-Doors & Windows...................... 33,860 -- --
Other Industries*...................................... -- -- 801,222
Membership Interest Certificates........................ -- 257,829 --
Preferred Securities/Capital Securities................. -- 1,308,557 --
Preferred Securities:
Medical-Drugs.......................................... -- -- 0
Other Industries*...................................... 1,758,979 -- --
Warrants................................................ -- -- 183,911
Repurchase Agreements..................................... -- 2,275,000 --
Other Financial Instruments:@
Open Forward Foreign Currency Contracts -- Appreciation. -- 54 --
---------- ------------ --------
Total..................................................... $1,792,839 $107,717,551 $985,214
========== ============ ========
TOTAL
- ------------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes............................... 2,052,706
U.S. Corporate Bonds & Notes:
Casino Services........................................ 646,350
Cellular Telecom....................................... 7,070,956
Non-Ferrous Metals..................................... 0
Recycling.............................................. 81
Rubber/Plastic Products................................ 0
Other Industries*...................................... 75,583,634
Foreign Convertible Bonds & Notes....................... 312,000
Foreign Corporate Bonds & Notes:
Independent Power Producers............................ 0
Metal Processors & Fabrication......................... 0
Special Purpose Entity................................. 0
Other Industries*...................................... 13,586,308
Loans:
Beverages-Non-alcoholic................................ 0
Building-Residential/Commercial........................ 0
Medical-Drugs.......................................... 0
Other Industries*...................................... 4,624,157
Common Stock:
Building Products-Doors & Windows...................... 33,860
Other Industries*...................................... 801,222
Membership Interest Certificates........................ 257,829
Preferred Securities/Capital Securities................. 1,308,557
Preferred Securities:
Medical-Drugs.......................................... 0
Other Industries*...................................... 1,758,979
Warrants................................................ 183,911
Repurchase Agreements..................................... 2,275,000
Other Financial Instruments:@
Open Forward Foreign Currency Contracts -- Appreciation. 54
------------
Total..................................................... $110,495,604
============
--------
* 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 the Portfolio of
Investments.
@ Other financial instruments are derivative instruments not reflected in the
Portfolio of Investments, such as futures, forwards and swap 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
reporting period.
61
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
The following is a reconciliation of Level 3 assets which significant
unobservable inputs were used to determine fair value:
U.S. CORPORATE FOREIGN CORPORATE COMMON PREFERRED
BONDS & NOTES BONDS & NOTES LOANS STOCK SECURITIES WARRANTS
-------------- ----------------- ----------- ----------- ---------- --------
Balance as of 03/31/2013..................... $81 $ 0 $ 0 $ 2,411,510 $ 0 $181,800
Accrued discounts............................ -- 2,603 -- -- -- --
Accrued premiums............................. -- -- -- -- -- --
Realized gain................................ -- -- -- 765,298 -- --
Realized loss................................ -- -- (1,110,333) -- -- (3,365)
Change in unrealized appreciation(1)......... -- -- 1,154,067 29,970 -- 3,365
Change in unrealized depreciation(1)......... -- (2,603) -- (1,450,170) -- (37,880)
Net purchases................................ -- -- 13,634 -- -- --
Net sales.................................... -- -- (57,368) (955,386) -- --
Transfers in of Level 3...................... -- -- -- -- -- 39,991
Transfers out of Level 3..................... -- -- -- -- -- --
--- ------- ----------- ----------- --- --------
Balance as of 09/30/2013..................... $81 $ 0 $ 0 $ 801,222 $ 0 $183,911
=== ======= =========== =========== === ========
(1)The total change in unrealized appreciation (depreciation) attributable to
Level 3 investments still held at September 30, 2013 includes:
U.S. CORPORATE FOREIGN CORPORATE COMMON PREFERRED
BONDS & NOTES BONDS & NOTES LOANS STOCK STOCK WARRANTS
-------------- ----------------- ---------- ----------- --------- --------
$ -- $(2,603) $1,154,067 $(1,420,200) $-- $(37,880)
===== ======= ========== =========== === ========
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Financial Statements
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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 ("U.S. Government Securities
Fund"), SunAmerica GNMA Fund ("GNMA Fund"), SunAmerica Strategic Bond Fund
("Strategic Bond Fund"), and SunAmerica High Yield Bond Fund ("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. and foreign government and agency obligations, and
mortgage-backed securities, without regard to the maturities of such
securities. Under normal market conditions, at least 80% of the Fund's net
assets plus any borrowing for investment purposes will be invested in bonds.
HIGH YIELD BOND FUND seeks a high level of total return by the active
trading of below-investment grade U.S. and foreign junk bonds (rated below
Baa by Moody's or below BBB by S&P or determined to be of comparable quality
by the investment advisor) without regard to the maturities of such
securities. For purposes of this policy, bonds include fixed-income
securities other than short-term commercial paper and preferred stock. Under
normal market conditions, at least 80% of the Fund's net assets plus
borrowing for investment purposes will be invested in such securities.
Each Fund offers multiple classes of shares. The classes within each Fund
are presented in the Statements 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.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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 ("GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those
estimates and those differences could be significant. The following is a
summary of significant accounting policies consistently followed by the
Trust/Fund in the preparation of its financial statements:
SECURITY VALUATION: In accordance with the authoritative guidance on fair
value measurements and disclosures under 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 of Trustees ("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, 2013 are reported on a schedule following the Portfolio of
Investments.
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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, the
Funds use 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 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 categorized 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. 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.
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.
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.
Forward foreign currency contracts ("forward contracts") are valued at the
4:00 p.m. Eastern Time forward rate 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.
The Board is responsible for the share valuation process and has adopted
policy and procedures (the "PRC Procedures") for valuing the securities and
other assets held by the Funds, 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
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
pricing review committee, which is responsible for, among other things,
making certain determinations in connection with the 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:
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, 2013, the High Yield Bond Fund used forward contracts to
attempt to protect securities and related receivables and payables against
changes in future foreign exchange rates. As of September 30, 2013, the High
Yield Bond Fund had open forward contracts, which are reported on a schedule
following the Fund's Portfolio of Investments.
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 Statements 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.
MASTER AGREEMENTS: Certain Funds that hold derivative instruments and other
financial instruments may be a party to ISDA (International Swap and
Derivatives Association, Inc.) Master Agreements or similar agreements
("Master Agreements") with certain counterparties that govern certain
instruments. Master Agreements may contain provisions regarding, among other
things, the parties' general obligations, representations, agreements,
collateral requirements, events of default and early termination. Collateral
can be in the form of cash or securities as agreed to by the Fund and
applicable counterparty. Collateral requirements are generally determined
based on a Fund's net position with each counterparty. Master Agreements may
also include certain provisions that require a Fund to post additional
collateral upon the occurrence of certain events, such as when a Fund's net
assets fall below a specified level. In addition, Master Agreements also
typically specify certain standard termination events, such as failure of a
party to pay or deliver, credit support defaults and other events of
default. Termination events applicable to a Fund may also occur upon a
decline in the Fund's net assets below a specified level over a certain
period of time. Additional termination events applicable to counterparties
may occur upon a decline in a counterparty's long-term and short-term credit
ratings below a specified level, or upon a decline in the ratings of a
counterparty's credit support provider. Upon the occurrence of a termination
event, the other party may elect to terminate early and cause settlement of
all instruments outstanding pursuant to a particular Master Agreement,
including the payment of any losses and costs resulting from such early
termination, as reasonably determined by the terminating party. Any decision
by one or more of a Fund's counterparties to elect early termination could
cause the Fund to accelerate the payment of liabilities, which settlement
amounts could be in excess of the amount of assets that are already posted
as collateral. Typically the Master Agreement will permit a single net
payment in the event of default. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset in bankruptcy, insolvency or other
events. As a result, the early termination with respect to
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
instruments subject to Master Agreements that are in a net liability
position could be material to the Fund's financial statements. See
additional information on specific types of derivative instruments and other
financial instruments as disclosed in the Notes to the Financial Statements.
The Funds do not offset derivative assets and derivative liabilities that
are subject to netting arrangements in the Statements of Asset and
Liabilities.
The following tables represent the value of derivatives held as of
September 30, 2013, by their primary underlying risk exposure and respective
location on the Statements of Assets and Liabilities and the effect of
derivatives on the Statements of Operations for the six months ended
September 30, 2013:
HIGH YIELD BOND FUND
---------------------------------------------------------------------------------------------------
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------------------- -------------------------------------------------
STATEMENTS OF ASSETS AND STATEMENTS OF ASSETS AND
DERIVATIVE CONTRACTS(1) LIABILITIES LOCATION VALUE LIABILITIES LOCATION
------------------------------ ------------------------------------------- ----- -------------------------------------------
Foreign exchange contracts(2). Unrealized appreciation on forward foreign Unrealized depreciation on forward foreign
currency contracts $54 currency contracts
===
HIGH YIELD BOND FUND
---------------------------------------------------------------------------------------------------
ASSET DERIVATIVES LIABILITY DERIVATIVES
------------------------------------------------- -------------------------------------------------
STATEMENTS OF ASSETS AND STATEMENTS OF ASSETS AND
DERIVATIVE CONTRACTS(1) LIABILITIES LOCATION LIABILITIES LOCATION VALUE
------------------------------ ------------------------------------------- ------------------------------------------- -----
Foreign exchange contracts(2). Unrealized appreciation on forward foreign Unrealized depreciation on forward foreign
currency contracts currency contracts $ --
====
CHANGE IN UNREALIZED
APPRECIATION
LOCATION OF GAIN (LOSS) REALIZED GAIN (LOSS) (DEPRECIATION)
ON DERIVATIVES ON DERIVATIVES ON DERIVATIVES
RECOGNIZED IN STATEMENTS RECOGNIZED IN STATEMENTS RECOGNIZED IN STATEMENTS
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 $837 $1,680
==== ======
--------
(1)The Fund's derivative contracts held during the period ended September 30,
2013, 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 $259,862.
As of September 30, 2013, the following tables represent derivative and
financial assets and liabilities (by type) on a gross basis and related
collateral pledged for derivatives and financial instruments subject to
master netting arrangements. If a Fund does not have a derivative or
financial asset or liability a table will not be presented. Futures
contracts are presented at the variation margin receivable or payable:
U.S. GOVERNMENT SECURITIES FUND
-------------------------------------------------------
GROSS NET AMOUNTS OF ASSETS
AMOUNTS OF GROSS AMOUNTS OFFSET PRESENTED IN THE
RECOGNIZED IN THE STATEMENTS OF STATEMENTS OF ASSETS
ASSETS: ASSETS ASSETS AND LIABILITIES AND LIABILITIES
------- ---------- ---------------------- ---------------------
DESCRIPTION
-----------
Derivatives:
Total derivatives, subject to a master netting arrangement or
similar arrangement............................................... $ -- $ -- $ --
---------- --------- ----------
Total derivatives, not subject to a master netting arrangement or
similar arrangement............................................... -- -- --
---------- --------- ----------
Total derivatives.................................................... -- -- --
---------- --------- ----------
Repurchase Agreements subject to a master netting arrangement or
similar arrangement................................................. 2,682,000 -- 2,682,000
---------- --------- ----------
Total................................................................ $2,682,000 $ -- $2,682,000
========== ========= ==========
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND
LIABILITIES
-------------------------------
NET AMOUNT OF
ASSETS IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL
COUNTERPARTY LIABILITIES INSTRUMENTS@ RECEIVED@ NET AMOUNT#
------------ ------------- ------------ ---------- -----------
State Street Bank and Trust Company. $2,682,000 $(2,682,000) $ -- $ --
========== =========== ========= =========
--------
@ For each respective counterparty, collateral received or (pledged) is
limited to an amount not to exceed 100% of the net amount of the derivative
or financial asset/liability in the table above.
# Net amount represents the net amount due from (due to) the counterparty in
the event of a default based on the contractual set-off rights under the
master netting arrangement.
GNMA FUND
-------------------------------------------------------
GROSS NET AMOUNTS OF ASSETS
AMOUNTS OF GROSS AMOUNTS OFFSET PRESENTED IN THE
RECOGNIZED IN THE STATEMENTS OF STATEMENTS OF ASSETS
ASSETS: ASSETS ASSETS AND LIABILITIES AND LIABILITIES
------- ---------- ---------------------- ---------------------
DESCRIPTION
-----------
Derivatives:
Total derivatives, subject to a master netting arrangement or
similar arrangement............................................... $ -- $ -- $ --
---------- --------- ----------
Total derivatives, not subject to a master netting arrangement or
similar arrangement............................................... -- -- --
---------- --------- ----------
Total derivatives.................................................... -- -- --
---------- --------- ----------
Repurchase Agreements subject to a master netting arrangement or
similar arrangement................................................. 3,311,000 -- 3,311,000
---------- --------- ----------
Total................................................................ $3,311,000 $ -- $3,311,000
========== ========= ==========
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND
LIABILITIES
-------------------------------
NET AMOUNT OF
ASSETS IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL
COUNTERPARTY LIABILITIES INSTRUMENTS@ RECEIVED@ NET AMOUNT#
------------ ------------- ------------ ---------- -----------
State Street Bank and Trust Company. $3,311,000 $(3,311,000) $ -- $ --
========== =========== ========= =========
--------
@ For each respective counterparty, collateral received or (pledged) is
limited to an amount not to exceed 100% of the net amount of the derivative
or financial asset/liability in the table above.
# Net amount represents the net amount due from (due to) the counterparty in
the event of a default based on the contractual set-off rights under the
master netting arrangement.
STRATEGIC BOND FUND
-------------------------------------------------------
GROSS NET AMOUNTS OF ASSETS
AMOUNTS OF GROSS AMOUNTS OFFSET PRESENTED IN THE
RECOGNIZED IN THE STATEMENTS OF STATEMENTS OF ASSETS
ASSETS: ASSETS ASSETS AND LIABILITIES AND LIABILITIES
------- ---------- ---------------------- ---------------------
DESCRIPTION
-----------
Derivatives:
Total derivatives, subject to a master netting arrangement or
similar arrangement............................................... $ -- $ -- $ --
---------- --------- ----------
Total derivatives, not subject to a master netting arrangement or
similar arrangement............................................... -- -- --
---------- --------- ----------
Total derivatives.................................................... -- -- --
---------- --------- ----------
Repurchase Agreements subject to a master netting arrangement or
similar arrangement................................................. 1,008,000 -- 1,008,000
---------- --------- ----------
Total................................................................ $1,008,000 $ -- $1,008,000
========== ========= ==========
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND
LIABILITIES
-------------------------------
NET AMOUNT OF
ASSETS IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL
COUNTERPARTY LIABILITIES INSTRUMENTS@ RECEIVED@ NET AMOUNT#
------------ ------------- ------------ ---------- -----------
State Street Bank and Trust Company. $1,008,000 $(1,008,000) $ -- $ --
========== =========== ========= =========
--------
@ For each respective counterparty, collateral received or (pledged) is
limited to an amount not to exceed 100% of the net amount of the derivative
or financial asset/liability in the table above.
# Net amount represents the net amount due from (due to) the counterparty in
the event of a default based on the contractual set-off rights under the
master netting arrangement.
HIGH YIELD BOND FUND
-------------------------------------------------------
GROSS NET AMOUNTS OF ASSETS
AMOUNTS OF GROSS AMOUNTS OFFSET PRESENTED IN THE
RECOGNIZED IN THE STATEMENTS OF STATEMENTS OF ASSETS
ASSETS: ASSETS ASSETS AND LIABILITIES AND LIABILITIES
------- ---------- ---------------------- ---------------------
DESCRIPTION
-----------
Derivatives:
Total derivatives, subject to a master netting arrangement or
similar arrangement............................................... $ -- $ -- $ --
---------- --------- ----------
Total derivatives, not subject to a master netting arrangement or
similar arrangement............................................... 54 -- 54
---------- --------- ----------
Total derivatives.................................................... 54 -- 54
---------- --------- ----------
Repurchase Agreements subject to a master netting arrangement or
similar arrangement................................................. 2,275,000 -- 2,275,000
---------- --------- ----------
Total................................................................ $2,275,054 $ -- $2,275,054
========== ========= ==========
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND
LIABILITIES
-------------------------------
NET AMOUNT OF
ASSETS IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL
COUNTERPARTY LIABILITIES INSTRUMENTS@ RECEIVED@ NET AMOUNT#
------------ ------------- ------------ ---------- -----------
Bank of America Securities LLC. $ 615,000 $ (615,000) $ -- $ --
Barclays Capital PLC........... 355,000 (355,000) -- --
BNP Paribas SA................. 355,000 (355,000) -- --
Deutsche Bank AG............... 235,000 (235,000) -- --
UBS Securities LLC............. 715,000 (715,000) -- --
---------- ----------- --------- ---------
$2,275,000 $(2,275,000) $ -- $ --
========== =========== ========= =========
--------
@ For each respective counterparty, collateral received or (pledged) is
limited to an amount not to exceed 100% of the net amount of the derivative
or financial asset/liability in the table above.
# Net amount represents the net amount due from (due to) the counterparty in
the event of a default based on the contractual set-off rights under the
master netting arrangement.
MORTGAGE-BACKED DOLLAR ROLLS: During the six months ended September 30,
2013, the GNMA Fund and the Strategic Bond 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 and the Strategic Bond Fund had
TBA Rolls outstanding at period end, which are included in receivable for
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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, 2013,
the GNMA Fund and the Strategic Bond Fund had realized gains (losses) from
mortgage-backed dollar rolls of $(3,227,266) and $(74,766) respectively.
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. For the six months ended September 30, 2013, the
GNMA Fund and Strategic Bond Fund purchased and/or sold when-issued
securities and/or forward commitments.
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 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 Statements 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 Statements 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
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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, 2013, 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. 0.48% $615,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated September 30, 2013, bearing interest
at a rate of 0.04% per annum, with a principal amount of $128,920,000, a
repurchase price of $128,920,143, and a maturity date of October 1, 2013.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 2.00% 09/30/2020 $131,890,000 $131,731,732
As of September 30, 2013, the following Fund held an undivided interest in
the joint repurchase agreement with Barclays Capital PLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.47% $355,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital PLC, dated September 30, 2013, bearing interest at a rate
of 0.06% per annum, with a principal amount of $74,950,000, a repurchase
price of $74,950,125, and a maturity date of October 1, 2013. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 0.63% 05/31/2017 $77,176,000 $76,445,915
As of September 30, 2013, the following Fund held an undivided interest in
the joint repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.47% $355,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated September 30, 2013, bearing interest at a rate of
0.05% per annum, with a principal amount of $74,950,000, a repurchase price
of $74,950,104, and a maturity date of October 1, 2013. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 1.00% 05/15/2014 $75,836,500 $76,555,430
As of September 30, 2013, the following Fund held an undivided interest in
the joint repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.47% $235,000
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated September 30, 2013, bearing interest at a rate of
0.04% per annum, with a principal amount of $49,945,000, a repurchase price
of $49,945,056, and a maturity date of October 1, 2013. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ----------- -----------
U.S. Treasury Notes. 4.13% 05/15/2015 $47,321,000 $51,025,288
As of September 30, 2013, the following Fund held an undivided interest in
the joint repurchase agreement with State Street Bank and Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ----------
U.S. Government Securities. 1.43% $2,682,000
GNMA....................... 1.77 3,311,000
Strategic Bond............. 0.54 1,008,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank and Trust Co., dated September 30, 2013, bearing interest
at a rate of 0.00% per annum, with a principal amount of $187,306,000, a
repurchase price of $187,306,000, and a maturity date of October 1, 2013.
The repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 0.25% 10/15/2015 $ 53,835,000 $ 53,787,410
U.S. Treasury Notes. 0.63 7/15/2016 7,385,000 7,403,315
U.S. Treasury Notes. 0.88 2/28/2017 925,000 926,827
U.S. Treasury Notes. 2.13 12/31/2015 123,525,000 128,938,854
As of September 30, 2013, the following Fund held an undivided interest in
the joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.49% $715,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
UBS Securities LLC, dated September 30, 2013, bearing interest at a rate of
0.04% per annum, with a principal amount of $145,205,000, a repurchase price
of $145,205,161, and a maturity date of October 1, 2013. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL MARKET
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ -----------
U.S. Treasury Notes. 0.75% 10/31/2017 $100,000,000 $98,908,000
U.S. Treasury Notes. 1.75 01/31/2014 49,020,200 49,444,225
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 Trust is 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 Statements of Operations.
For financial statement purposes, the Funds amortize all premiums and
accrete all discounts on fixed income securities.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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 from the sale of foreign securities
at various rates.
Net investment income, expenses other than class specific expenses, and
realized and unrealized gains and losses are allocated daily to each class
of shares based upon the relative net asset value of outstanding shares of
each class of shares at the beginning of the day (after adjusting for
current capital shares activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds are
allocated among the Funds based upon relative net assets or other
appropriate allocation methods. In all other respects, expenses are charged
to each Fund as incurred on a specific identification basis.
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 GAAP. 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 Fund's 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 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 Statements 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.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS: In December 2011, the FASB issued Accounting
Standards Update ("ASU") No. 2011-11 "Disclosures about Offsetting Assets
and Liabilities" which was subsequently clarified in ASU 2013-01 "Clarifying
the Scope of Disclosures about Offsetting Assets and Liabilities" which was
issued in January 2013. The amended Standard 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 after January 1, 2013. All required changes to
accounting policies have been made in accordance with ASU No. 2011-11 and
2013-01.
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
The Strategic Bond Fund is subadvised by PineBridge Investments, LLC
("PineBridge). The High Yield Bond Fund is subadvised by Wellington
Management Company, LLP ("Wellington Management"). Under the Subadvisory
Agreements, PineBridge and Wellington Management manage the investment and
reinvestment of the assets of the Strategic Bond Fund and the High Yield
Bond Fund, respectively.
SunAmerica pays PineBridge and Wellington Management fees out of the
investment advisory fees it receives from the respective Funds. The portion
of the investment advisory fees received by SunAmerica that are paid to
PineBridge and Wellington with respect to the Strategic Bond Fund and High
Yield Bond Fund are as follows:
SUBADVISORY
ASSETS FEES
---------------------------- -----------
Strategic Bond Fund.. $0 - 200 million 0.350%
(greater than) $200 million 0.250
(greater than) $500 million 0.200
High Yield Bond Fund. $0 - $150 million 0.400
(greater than) $150 million 0.350
(greater than) $500 million 0.300
SunAmerica has contractually agreed to waive fees and/or reimburse expenses,
to the extent necessary to cap the Funds' annual fund operating expenses at
the following percentages of each Fund's average net assets. For the
purposes of waived fees and/or reimbursed expense calculations annual Fund
operating expenses shall not include extraordinary expenses as determined
under
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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 waivers and/or reimbursements,
provided that the Funds are able to effect such payment to SunAmerica and
remain in compliance with the expense limitations in effect at the time the
waivers and/or reimbursements were made.
For the six months ended September 30, 2013, pursuant to the contractual
expense limitations in the above tables SunAmerica has waived and/or
reimbursed expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities. $99,148
GNMA....................... 1,229
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A. $153,616
U.S. Government Securities Class B. 12,969
U.S. Government Securities Class C. 24,822
GNMA Class A....................... 170,053
GNMA Class B....................... 22,055
GNMA Class C....................... 53,576
High Yield Bond Class A............ 72,677
High Yield Bond Class B............ 18,182
High Yield Bond Class C............ 33,100
At September 30, 2013, 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
---------------------------------
MARCH 31, MARCH 31, SEPTEMBER 30,
FUND 2014 2015 2015
---- --------- --------- -------------
U.S. Government Securities. $119,482 $202,369 $99,148
GNMA....................... -- -- 1,229
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
CLASS SPECIFIC EXPENSES REIMBURSED
---------------------------------
MARCH 31, MARCH 31, SEPTEMBER 30,
FUND 2014 2015 2015
---- --------- --------- -------------
U.S. Government Securities Class A. $137,238 $297,796 $153,616
U.S. Government Securities Class B. 9,473 21,636 12,969
U.S. Government Securities Class C. 21,307 42,702 24,822
GNMA Class A....................... 203,781 394,834 170,053
GNMA Class B....................... 15,497 37,793 22,055
GNMA Class C....................... 51,904 115,143 53,576
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, 2013, SACS received fees (see the Statements of Operations)
based upon the aforementioned rates.
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of Class A,
Class B and Class C shares. SACS has advised the Funds that for the six
months ended September 30, 2013, 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. $ 16,265 $ 9,930 $ 3,748 $ -- $ 6,666 $ 1,178
GNMA....................... 76,359 52,726 10,700 2,265 21,058 4,411
Strategic Bond............. 293,728 152,608 90,640 2,264 46,389 24,276
High Yield Bond............ 28,767 12,655 11,420 -- 8,990 854
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
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
annually by the Trustees. For the six months ended September 30, 2013, the
Funds incurred the following expenses which are included in transfer agent
fees and expenses in the Statements of Operations to compensate SAFS
pursuant to the terms of the Service Agreement:
PAYABLE AT
FUND EXPENSES SEPTEMBER 30, 2013
---- -------- ------------------
U.S. Government Securities Class A. $129,191 20,060
U.S. Government Securities Class B. 4,659 688
U.S. Government Securities Class C. 11,723 1,670
GNMA Class A....................... 155,399 21,536
GNMA Class B....................... 14,283 2,070
GNMA Class C....................... 42,336 5,469
Strategic Bond Class A............. 346,805 51,725
Strategic Bond Class B............. 59,236 8,977
Strategic Bond Class C............. 276,486 40,312
High Yield Bond Class A............ 80,800 12,319
High Yield Bond Class B............ 14,466 2,050
High Yield Bond Class C............ 36,344 5,634
At September 30, 2013, Focused Balanced Strategy Portfolio and Focused
Multi-Asset Strategy Portfolio, each a series of SunAmerica Series, Inc.,
and shares 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, owned a percentage of the outstanding shares of the
following Funds:
FUND HOLDER PERCENTAGE
--------------------------- --------------------------------------- ----------
U.S. Government Securities. Focused Balanced Strategy Portfolio 16%
Focused Multi-Asset Strategy Portfolio 13
Pershing LLC 5
GNMA....................... Focused Balanced Strategy Portfolio 5
Pershing LLC 24
Strategic Bond............. Pershing LLC 6
High Yield Bond............ Pershing LLC 9
Note 4. Purchases and Sales of Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six month ended September 30, 2013 were as follows:
U.S.
GOVERNMENT
SECURITIES GNMA STRATEGIC HIGH YIELD
FUND FUND BOND FUND BOND FUND
----------- ------------ ------------ -----------
Purchases (excluding U.S. government securities).. $ -- $ -- $439,808,679 $29,378,936
Sales (excluding U.S. government securities)...... -- -- 506,338,527 33,068,987
Purchases of U.S. government securities........... 57,639,274 87,633,637 64,285,171 --
Sales of U.S. government securities............... 79,615,650 162,370,819 70,793,515 --
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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 Statements
of Assets and Liabilities by temporary book/tax differences primarily
arising from wash sales, post October capital losses, distributions payable,
deferred compensation plans, amortization of premium/discount, and treatment
of defaulted securities.
DISTRIBUTABLE EARNINGS TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2013 FOR THE YEAR ENDED MARCH 31, 2013
- --------------------------------------- -----------------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
FUND INCOME LOSS CARRYOVER (DEPRECIATION) INCOME CAPITAL GAINS
---- ---------- -------------- -------------- ----------- -------------
U.S. Government Securities. $ 431,193 $ -- $ 8,597,708 $ 4,398,492 $ --
GNMA....................... 32,626 2,683 4,588,431 6,729,729 871,615
Strategic Bond............. 1,850,698 (52,812,990) 10,351,778 22,960,807 --
High Yield Bond............ 642,302 (53,081,995) (4,857,300) 6,906,431 --
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.......................................... $122,484,168 $186,484,246 $568,284,196 $119,956,986
============ ============ ============ ============
Appreciation.................................. 5,203,605 3,510,440 8,683,255 4,086,967
Depreciation.................................. (326,276) (1,790,656) (22,367,172) (13,548,403)
------------ ------------ ------------ ------------
Unrealized appreciation (depreciation) -- net. $ 4,877,329 $ 1,719,784 $(13,683,917) $ (9,461,436)
============ ============ ============ ============
As of March 31, 2013, 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 2016 2017 2018 ST LT
---- ---------- ---------- ----------- --- ---
U.S. Government Securities. $ -- $ -- $ -- $-- $--
GNMA....................... -- -- -- -- --
Strategic Bond............. -- -- 52,812,990 -- --
High Yield Bond............ 2,374,447 9,384,737 41,322,811 -- --
--------
+ On December 22, 2010, the Regulated Investment Company Modernization Act of
2010 (the "Act") was enacted which changes various technical rules governing
the tax treatment of regulated investment companies. The changes are
generally effective taxable years beginning after the date of enactment.
Under the Act, the fund will be permitted to carry forward capital losses
incurred in taxable years beginning after the date of enactment for an
unlimited period. However, any losses incurred during those future taxable
years will be required to be utilized prior to the losses incurred in
pre-enactment taxable years, which carry an expiration date. As a result of
this ordering rule, pre-enactment capital loss carryforwards may be more
likely to expire unused. Additionally, post-enactment capital losses that
are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
78
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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 FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013 (UNAUDITED) MARCH 31, 2013
------------------------ -------------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(1)(2)....... 1,777,426 $ 17,245,063 3,921,197 $ 39,447,474 49,179 $ 466,702 127,429 $ 1,295,234
Reinvested dividends.... 107,960 1,036,747 328,546 3,322,601 2,235 21,513 9,726 98,256
Shares redeemed(1)(2)... (2,018,104) (19,504,880) (3,733,737) (37,849,010) (116,869) (1,117,894) (135,820) (1,372,818)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (132,718) $ (1,223,070) 516,006 $ 4,921,065 (65,455) $ (629,679) 1,335 $ 20,672
========== ============ =========== ============= ======== =========== ======== ===========
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold............. 47,357 $ 460,061 420,100 $ 4,283,867
Reinvested dividends.... 5,923 56,919 28,048 283,084
Shares redeemed......... (339,710) (3,260,690) (673,224) (6,807,829)
---------- ------------ ----------- -------------
Net increase (decrease). (286,430) $ (2,743,710) (225,076) $ (2,240,878)
========== ============ =========== =============
GNMA FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013 (UNAUDITED) MARCH 31, 2013
------------------------ -------------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(3)(4)....... 867,276 $ 9,497,699 5,416,785 $ 62,579,052 93,575 $ 1,021,611 282,061 $ 3,259,259
Reinvested dividends.... 119,087 1,291,193 380,593 4,365,435 6,488 70,483 19,598 225,123
Shares redeemed(3)(4)... (3,921,754) (42,394,500) (13,849,327) (159,070,338) (279,522) (3,031,854) (371,142) (4,278,192)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (2,935,391) $(31,605,608) (8,051,949) $ (92,125,851) (179,459) $(1,939,760) (69,483) $ (793,810)
========== ============ =========== ============= ======== =========== ======== ===========
GNMA FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold............. 178,863 $ 1,981,985 1,048,290 $ 12,116,850
Reinvested dividends.... 18,762 204,375 80,372 924,664
Shares redeemed......... (1,709,029) (18,628,771) (2,502,463) (28,716,232)
---------- ------------ ----------- -------------
Net increase (decrease). (1,511,404) $(16,442,411) (1,373,801) $ (15,674,718)
========== ============ =========== =============
--------
(1)For the six months ended September 30, 2013, includes automatic conversion
of 11,030 shares of Class B shares in the amount of $107,455 to 11,032
shares of Class A shares in the amount of $107,455.
(2)For the year ended March 31, 2013, includes automatic conversion of 43,544
shares of Class B shares in the amount of $441,515 to 43,558 shares of Class
A shares in the amount of $441,515.
(3)For the six months ended September 30, 2013, includes automatic conversion
of 26,219 shares of Class B shares in the amount of $286,120 to 26,289
shares of Class A shares in the amount of $286,120.
(4)For the year ended March 31, 2013, includes automatic conversion of 97,771
shares of Class B shares in the amount of $1,131,290 to 98,033 shares of
Class A shares in the amount of $1,131,290.
79
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
STRATEGIC BOND FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- -------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013 (UNAUDITED) MARCH 31, 2013
------------------------- -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(1)(2).... 11,844,353 $ 41,983,667 39,698,118 $ 141,997,626 923,998 $ 3,261,627 3,254,487 $ 11,593,612
Reinvested
dividends..... 1,352,541 4,733,689 2,550,049 9,085,201 178,623 624,848 302,081 1,075,790
Shares
redeemed(1)(2) (23,310,229) (81,629,486) (35,270,059) (125,154,964) (2,582,219) (9,009,749) (2,823,364) (10,038,084)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net
increase
(decrease).... (10,113,335) $(34,912,130) 6,978,108 $ 25,927,863 (1,479,598) $(5,123,274) 733,204 $ 2,631,318
=========== ============ =========== ============= ========== =========== ========== ============
STRATEGIC BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares
sold.......... 3,261,627 $ 13,508,144 14,476,888 $ 51,811,193
Reinvested
dividends..... 624,848 2,537,804 1,475,837 5,280,489
Shares
redeemed...... (9,009,749) (56,418,401) (13,406,963) (47,878,110)
----------- ------------ ----------- -------------
Net
increase
(decrease).... (5,123,274) $(40,372,453) 2,545,762 $ 9,213,572
=========== ============ =========== =============
HIGH YIELD BOND FUND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------------------------- -------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013 (UNAUDITED) MARCH 31, 2013
------------------------- -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares
sold(3)(4).... 3,685,093 $ 13,085,940 9,122,794 $ 31,448,594 214,880 $ 764,956 1,546,059 $ 5,378,068
Reinvested
dividends..... 394,304 1,386,090 819,177 2,850,296 61,799 217,476 125,945 439,400
Shares
redeemed(3)(4) (5,089,102) (17,830,654) (13,173,287) (45,652,403) (831,008) (2,916,249) (1,157,337) (4,051,421)
----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net
increase
(decrease).... (1,009,705) $ (3,358,624) (3,231,316) $ (11,353,513) (554,329) $(1,933,817) 514,667 $ 1,766,047
=========== ============ =========== ============= ========== =========== ========== ============
HIGH YIELD BOND FUND
-----------------------------------------------------
CLASS C
-----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2013 YEAR ENDED
(UNAUDITED) MARCH 31, 2013
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- -------------
Shares
sold.......... 563,958 $ 2,017,556 1,161,535 $ 4,046,891
Reinvested
dividends..... 153,233 541,487 342,771 1,199,593
Shares
redeemed...... (1,215,775) (4,296,011) (2,817,449) (9,874,909)
----------- ------------ ----------- -------------
Net
increase
(decrease).... (498,584) $ (1,736,968) (1,313,143) $ (4,628,425)
=========== ============ =========== =============
--------
(1)For the six months ended September 30, 2013, includes automatic conversion
of 222,563 shares of Class B shares in the amount of $778,984 to 222,563
shares of Class A shares in the amount of $778,984.
(2)For the year ended March 31, 2013, includes automatic conversion of 396,814
shares of Class B shares in the amount of $1,403,483 to 396,709 shares of
Class A shares in the amount of $1,403,483.
(3)For the six months ended September 30, 2013, includes automatic conversion
of 63,215 shares of Class B shares in the amount of $225,023 to 63,245
shares of Class A shares in the amount of $225,023.
(4)For the year ended March 31, 2013, includes automatic conversion of 207,491
shares of Class B shares in the amount of $724,006 to 207,774 shares of
Class A shares in the amount of $724,006.
80
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (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 Statements 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,
2013, the following Funds had borrowings:
WEIGHTED
DAYS INTEREST AVERAGE AVERAGE
FUND OUTSTANDING CHARGES DEBT UTILIZED INTEREST
---- ----------- -------- ------------- --------
GNMA............ 1 $446 $11,378,000 1.41%
Strategic Bond.. 1 15 405,931 1.36
High Yield Bond. 6 131 563,219 1.41
At September 30, 2013, 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, 2013, 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 Trustees may become a participant
("Participant") in the Retirement Plan if he or she has at least 10 years of
consecutive service as a Disinterested Trustees of any of the adopting
SunAmerica mutual funds (the "Adopting Funds") or has attained the age of 60
while a Trustees and completed five (5) consecutive years of service as a
Trustees of any Adopting Fund (an "Eligible Trustee/Director"). Pursuant to
the Retirement Plan, an Eligible Trustees may receive benefits upon (i) his
or her death or disability while a Trustees or (ii) the termination of his
or her tenure as a Trustees, 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 Trustees and Participant, each Eligible Trustees
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Trustees 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 Trustees'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 Trustees 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.
81
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statements of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statements of Operations.
AS OF SEPTEMBER 30, 2013
- -----------------------------------------------
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
FUND LIABILITY EXPENSE PAYMENTS
---- --------------- --------------- ---------------
U.S. Government Securities. $5,095 $ 37 $1,786
GNMA....................... 3,015 79 1,027
Strategic Bond............. 3,529 176 1,158
High Yield Bond............ 2,270 35 787
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 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, 2013, the Funds had 28.1% and 97.0%, respectively, of their
net assets invested in such securities.
82
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENTS
The Board of Trustees (the "Board" the members of which are referred to as
"Trustees") of SunAmerica Income Funds (the "Trust"), including the Trustees
who are not "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"), of the Trust or
its separate series (each a "Fund" and collectively, the "Funds"), SunAmerica
Asset Management Corp. ("SunAmerica") PineBridge Investments LLC ("PineBridge")
or Wellington Management Company, LLP ("Wellington," and 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, 2014 at an in-person meeting held on June 4-5,
2013 (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 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, 2014.
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 fees and expenses of the
Funds, and the investment performance of the Funds 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) information relating to 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 Meeting, 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 Trust 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. The Board further considered certain strategic
changes that SunAmerica intended to implement with respect to its investment
department and concluded, based on its experience and interaction with
SunAmerica, that: (i) SunAmerica would continue to be able to retain quality
investment and other personnel; (ii) SunAmerica has exhibited a high level of
diligence and attention to detail in carrying out its advisory and other
83
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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.
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,
2013, SunAmerica managed, advised and/or administered approximately $54.8
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,
2013. 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 below the
median of its Peer Group and Peer Universe for the one-, three- and five-year
periods. The Board also considered that the Fund underperformed its Lipper
Index 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 also considered that management had provided the Board with
information regarding certain potential options that were under consideration
by management with respect to the Fund in order to address these performance
concerns. The Board concluded that the Fund's performance was being addressed.
U.S. Government Securities 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-year period.
84
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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, and
also considered that management had provided the Board with information
regarding certain potential options that were under consideration by management
with respect to the Fund in order to address these performance concerns. The
Board concluded that the Fund's performance was being addressed.
High Yield Bond Fund. The Board considered that the Fund's performance was
below the median of its Peer Group and 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 also considered that management had provided the
Board with information regarding certain potential options that were under
consideration with respect to the Fund in order to address these performance
concerns. The Board concluded that the Fund's performance was being addressed.
Strategic Bond Fund. The Board considered that the Fund's performance was above
the median of its Peer Group for the three-year period and below the median of
its Peer Group for the one- and five-year periods. The Board also considered
that the Fund's performance was above the median of its Peer Universe for the
one- and three-year periods and below the median for the five-year period. The
Board further 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 the
mutual funds identified as similar to the U.S. Government Securities Fund and
the GNMA fund are sold only in the variable annuity market and, accordingly,
are in different Lipper classifications, with a peer groups consisting of funds
underlying variable insurance products. The Board further noted that SunAmerica
serves as subadviser to the mutual fund identified as similar to the U.S.
Government Securities Fund and observed that the services SunAmerica provides
as subadviser are much more limited in scope than in its role as investment
manager
85
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
and adviser to the Fund. 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 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 were institutional separate accounts, and Wellington 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 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.
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 below 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 discussion
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
86
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2013 -- (UNAUDITED)
(CONTINUED)
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.
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, 2014. 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,
and each Disinterested Trustee may have attributed different weights to
different factors. The Disinterested Trustees were also assisted by the advice
of independent counsel in making this determination.
87
[LOGO] SunAmerica
Mutual Funds
HARBORSIDE FINANCIAL CENTER
3200 PLAZA 5
JERSEY CITY, NJ 07311-4992
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
Katherine Stoner, Vice charge upon request, website at
President and Chief by calling (800) www.sec.gov. You can
Compliance Officer 858-8850. The also review and obtain
Gregory N. Bressler, in-formation is also copies of the Forms
Secretary available from the N-Q at the U.S.
Nori L. Gabert, Vice EDGAR database on the Securities and
President and U.S. Secu-rities and Exchange Commission
Assistant Secretary Exchange Commission's Public Refer-ence Room
Kathleen Fuentes, Chief website at in Washington DC
Legal Officer and http://www.sec.gov. (information on the
Assistant Secretary operation of the
Gregory R. Kingston, DELIVERY OF Public Reference Room
Vice President and SHAREHOLDER DOCUMENTS may be ob-tained by
Assistant Treasurer The Funds have adopted calling
John E. Smith Jr., a policy that allows 1-800-SEC-0330).
Assistant Treasurer them to send only one
Matthew J. Hackethal, copy of a Fund's PROXY VOTING RECORD ON
Anti-Money Laundering prospectus, proxy SUNAMERICA INCOME FUNDS
Compliance Officer material, annual Information regarding
report and semi-annual how the Funds voted
INVESTMENT ADVISER report (the proxies relating to
SunAmerica Asset "shareholder securities held in the
Management Corp. documents") to Funds during the most
Harborside Financial shareholders with recent twelve month
Center multiple accounts period ended June 30
3200 Plaza 5 residing at the same is available, once
Jersey City, NJ "household." This filed with the U.S.
07311-4992 practice is called Securities and
householding and Exchange Commission,
DISTRIBUTOR reduces Fund expenses, without charge, upon
SunAmerica Capital which benefits you and request, by calling
Services, Inc. other shareholders. (800) 858-8850 or on
Harborside Financial Unless the Funds the U.S. Securities
Center receive instructions and Exchange
3200 Plaza 5 to the con-trary, you Commission's website
Jersey City, NJ will only receive one at http://www.sec.gov.
07311-4992 copy of the
shareholder documents. This report is
SHAREHOLDER SERVICING The Funds will submitted solely for
AGENT continue to household the general
SunAmerica Fund the share-holder information of
Services, Inc. documents shareholders of the
Harborside Financial indefinitely, until we Funds. Distribution of
Center are instructed this report to persons
3200 Plaza 5 otherwise. If you do other than
Jersey City, NJ not wish to shareholders of the
07311-4992 participate in Funds is authorized
householding please only in con-nection
CUSTODIAN AND TRANSFER contact Shareholder with a currently
AGENT Services at (800) effective pro-spectus,
State Street Bank and 858-8850 ext. 6010 or setting forth details
Trust Company send a written request of the Funds, which
P.O. Box 5607 with your name, the must precede or
Boston, MA 02110 name of your fund(s) accom-pany this report.
and your account
number(s) to The accompanying
SunAmerica Mutual report has not been
Funds c/o BFDS, P.O. audited by independent
Box 219186, Kansas accountants and
City MO, 64121-9186. accordingly no
We will resume opinions has been
individual mailings expressed 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 - 9/13
[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, 2013
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, 2013
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 6, 2013