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, LLC
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: March 31, 2014
-------------------------
Item 1. Reports to Stockholders
ANNUAL REPORT 2014
SUNAMERICA
Income Funds
[PHOTO]
[LOGO]
MARCH 31, 2014 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............................... 62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 81
TRUSTEE AND OFFICER INFORMATION............................. 82
SHAREHOLDER TAX INFORMATION................................. 86
COMPARISONS: PORTFOLIOS VS. INDICES......................... 87
SHAREHOLDER LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present this annual update for the SunAmerica Income Funds
for the 12 months ended March 31, 2014. It was a period wherein fixed income
market performance was pressured, primarily by economic conditions and monetary
policies of global central banks. For the annual period overall, the Barclays
U.S. Aggregate Bond Index/*/, a broad measure of the U.S. fixed income market,
returned -0.10%.
The financial markets, broadly, were active early in the annual period, as
yields rose sharply and credit spreads generally widened amidst speculation the
Federal Reserve (the "Fed") would cut its monetary stimulus sooner than
expected. Then-Fed chair Bernanke first hinted at policy tightening in May 2013
and 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. In contrast to the Fed's more hawkish rhetoric, the
European Central Bank (ECB) noted it was "clearly too early" to end the ECB's
accommodative stance. Meanwhile, stress in Chinese money markets coincided with
production data suggesting the country's economy was already weakening.
Moving into the third quarter of 2013, yields continued their march higher, but
risk assets recovered from the second calendar quarter's sell-off, as the
market adjusted to the idea of Fed asset purchase tapering, and economic data
pointed to sustained momentum in the global economic recovery. However, the Fed
decided to keep its level of asset purchases unchanged at its September
meeting, 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 U.S. economy was not expanding as fast as it had hoped. The Fed also
cited fiscal headwinds in the form of sequestration spending cuts and the debt
ceiling debate as potential obstacles to growth. Mr. Bernanke stressed that the
pace of the Fed's bond buying would be dependent on economic data and that the
Fed would await further evidence the recovery was sustainable before tapering.
During the second half of the annual period, generally solid economic data,
coupled with continued accommodative monetary policy from central banks around
the world, raised many investors' expectations for 2014 global economic growth.
Despite liquidity concerns in China and tepid economic growth in Europe, market
participants were emboldened by signs of expansionary traction in the U.S. and
Japan, the world's largest and third-largest economies, respectively. While the
two-year U.S. budget deal in December 2013 eased concerns of another U.S.
government shutdown in January 2014, the focus quickly shifted to the looming
debt-ceiling battle in early 2014. Through forward guidance, the Fed continued
to reinforce the message that short-term interest rates were unlikely to be
raised for an extended period, a concept that finally seemed to resonate with
the market. So, when the Fed announced it would begin tapering its bond buying
program in January 2014, the market took the news rather well, with only a
modest increase in U.S. Treasury yields immediately after the announcement. The
Bank of England also initiated forward guidance to steer policy expectations,
while the Bank of Japan pledged to extend its ultra-accommodative monetary
policy if needed. The ECB cut rates to 0.25% and confirmed that rates would
remain low for an extended period.
The annual period ended with emerging markets dominating headlines, as economic
and political developments sparked risk aversion across global markets.
Political turmoil in emerging markets, tensions between Russia and Ukraine, and
worries about weakening Chinese economic data contributed to risk aversion,
which led bond prices higher. In the first quarter of 2014, monetary policy
approaches across major central banks started to exhibit greater
differentiation after years of synchronized stimulus helped support the global
economy. The Fed tapered $10 billion in asset purchases in each month of the
quarter as the U.S. economy appeared poised for stronger economic growth, and
the Bank of England also managed rate-hike expectations amid an improving
domestic dynamic. In contrast, the ECB and Bank of Japan continued to lean
toward additional policy stimulus to fight disinflationary fears.
For the annual period overall, U.S. Treasuries posted negative returns, with
the yield on the 10-year U.S. Treasury having risen approximately 86 basis
points+ to 2.72% by the end of March 2014. Virtually all non-U.S. Treasury
sectors performed better, generating positive returns for the annual period.
2
On the following pages, you will find detailed financial statements and
portfolio information for each of the SunAmerica Income Funds during the 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 -- MARCH 31, 2014 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the
SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
contingent deferred sales charges and (2) ongoing costs, including management
fees, distribution and service fees and other Fund expenses. The example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at October 1, 2013 and held until March 31, 2014.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2014" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2014" column does not include small account fees that may be charged if your
account balance is below $500 ($250 for retirement plan accounts). In addition,
the "Expenses Paid During the Six Months Ended March 31, 2014" column does not
include administrative fees that may apply to qualified retirement plan
accounts. See the Trust's prospectus, your retirement plan document and/or
materials from your financial adviser for a full description of these fees. Had
these fees been included, the "Expenses Paid During the Six Months Ended March
31, 2014" column would have been higher and the "Ending Account Value" would
have been lower.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" section of the table provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in these Funds and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. The "Expenses Paid During the Six Months
Ended March 31, 2014" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During the Six Months Ended March
31, 2014" 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 March 31, 2014" 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 -- MARCH 31, 2014 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ ------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSES PAID VALUE USING EXPENSES PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE EXPENSE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS RATIO
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED AS OF
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, MARCH 31,
FUND 2013 2014 2014* 2013 2014 2014* 2014*
---- ------------- -------------- ------------- ------------- -------------- ------------- ---------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,009.15 $ 4.96 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $1,004.83 $ 8.20 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C# ................ $1,000.00 $1,004.83 $ 8.20 $1,000.00 $1,016.75 $ 8.25 1.64%
GNMA
Class A#................. $1,000.00 $1,004.36 $ 4.95 $1,000.00 $1,020.00 $ 4.99 0.99%
Class B#................. $1,000.00 $1,001.14 $ 8.18 $1,000.00 $1,016.75 $ 8.25 1.64%
Class C# ................ $1,000.00 $1,000.22 $ 8.18 $1,000.00 $1,016.75 $ 8.25 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,047.69 $ 6.64 $1,000.00 $1,018.45 $ 6.54 1.30%
Class B.................. $1,000.00 $1,044.24 $ 9.99 $1,000.00 $1,015.16 $ 9.85 1.96%
Class C ................. $1,000.00 $1,044.28 $ 9.89 $1,000.00 $1,015.26 $ 9.75 1.94%
HIGH YIELD BOND
Class A#................. $1,000.00 $1,058.05 $ 6.98 $1,000.00 $1,018.15 $ 6.84 1.36%
Class B#................. $1,000.00 $1,057.58 $10.31 $1,000.00 $1,014.91 $10.10 2.01%
Class C# ................ $1,000.00 $1,054.45 $10.30 $1,000.00 $1,014.91 $10.10 2.01%
--------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, small account fees
and administrative fees, if applicable to your account. Please refer to your
Prospectus, your retirement plan documents and/or materials from your
financial 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 March 31,
2014" and the "Expense Ratios" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2014
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $ 95,537,078 $137,912,333
Repurchase agreements (cost approximates value)............................................... 21,151,000 10,002,000
------------ ------------
Total investments........................................................................... 116,688,078 147,914,333
------------ ------------
Cash.......................................................................................... 558 665
Foreign cash*................................................................................. -- --
Receivable for:
Shares of beneficial interest sold.......................................................... 808,217 38,391
Dividends and interest...................................................................... 423,576 448,866
Investments sold............................................................................ -- --
Prepaid expenses and other assets............................................................. 676 1,071
Due from investment adviser for expense reimbursements/fee waivers............................ 33,869 16,742
Unrealized appreciation on forward foreign currency contracts................................. -- --
------------ ------------
Total assets.................................................................................. 117,954,974 148,420,068
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 166,147 302,467
Investments purchased....................................................................... -- 14,081,621
Investment advisory and management fees..................................................... 62,329 55,060
Distribution and service maintenance fees................................................... 39,547 58,772
Transfer agent fees and expenses............................................................ 27,644 38,335
Trustees' fees and expenses................................................................. 4,331 3,491
Other accrued expenses...................................................................... 97,451 109,243
Dividends payable........................................................................... 7,296 21,536
------------ ------------
Total liabilities............................................................................. 404,745 14,670,525
------------ ------------
Net assets.................................................................................... $117,550,229 $133,749,543
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 124,628 $ 125,590
Paid-in capital............................................................................... 115,353,007 142,840,398
------------ ------------
115,477,635 142,965,988
Accumulated undistributed net investment income (loss)........................................ (121,374) (426,424)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... (3,248,870) (9,790,651)
Unrealized appreciation (depreciation) on investments......................................... 5,442,838 1,000,630
Unrealized appreciation (depreciation) on foreign exchange transactions....................... -- --
------------ ------------
Net assets.................................................................................... $117,550,229 $133,749,543
============ ============
*Cost
Investments (unaffiliated).................................................................. $ 90,094,240 $136,911,703
============ ============
Foreign cash................................................................................ $ -- $ --
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $491,107,377 $108,180,345
Repurchase agreements (cost approximates value)............................................... 10,984,000 3,990,000
------------ ------------
Total investments........................................................................... 502,091,377 112,170,345
------------ ------------
Cash.......................................................................................... 297,294 143,146
Foreign cash*................................................................................. 275,789 --
Receivable for:
Shares of beneficial interest sold.......................................................... 632,943 1,837,344
Dividends and interest...................................................................... 7,042,210 1,853,034
Investments sold............................................................................ 8,238,814 79,873
Prepaid expenses and other assets............................................................. 3,141 2,493
Due from investment adviser for expense reimbursements/fee waivers............................ -- 7,312
Unrealized appreciation on forward foreign currency contracts................................. -- 325
------------ ------------
Total assets.................................................................................. 518,581,568 116,093,872
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 848,697 287,975
Investments purchased....................................................................... 16,448,127 1,013,278
Investment advisory and management fees..................................................... 270,150 71,570
Distribution and service maintenance fees................................................... 284,521 57,646
Transfer agent fees and expenses............................................................ 104,375 28,842
Trustees' fees and expenses................................................................. 5,396 3,058
Other accrued expenses...................................................................... 200,943 111,807
Dividends payable........................................................................... 232,219 73,037
------------ ------------
Total liabilities............................................................................. 18,394,428 1,647,213
------------ ------------
Net assets.................................................................................... $500,187,140 $114,446,659
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 1,415,362 $ 317,877
Paid-in capital............................................................................... 554,863,807 171,863,867
------------ ------------
556,279,169 172,181,744
Accumulated undistributed net investment income (loss)........................................ (2,115,922) 529,884
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short, and foreign exchange transactions.......................... (55,671,252) (57,580,207)
Unrealized appreciation (depreciation) on investments......................................... 1,684,843 (685,087)
Unrealized appreciation (depreciation) on foreign exchange transactions....................... 10,302 325
------------ ------------
Net assets.................................................................................... $500,187,140 $114,446,659
============ ============
*Cost
Investments (unaffiliated).................................................................. $489,422,534 $108,865,432
============ ============
Foreign cash................................................................................ $ 273,150 $ --
============ ============
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2014 -- (CONTINUED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $106,747,142 $101,149,817
Shares of beneficial interest issued and outstanding............................................... 11,316,926 9,506,607
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 9.43 $ 10.64
Maximum sales charge (4.75% of offering price)..................................................... $ 0.47 $ 0.53
------------ ------------
Maximum offering price to public................................................................... $ 9.90 $ 11.17
============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 3,508,498 $ 9,770,139
Shares of beneficial interest issued and outstanding............................................... 371,867 915,703
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 9.43 $ 10.67
============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 7,294,589 $ 22,829,587
Shares of beneficial interest issued and outstanding............................................... 773,995 2,136,724
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 9.42 $ 10.68
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND
------------ -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $255,820,890 $70,713,325
Shares of beneficial interest issued and outstanding............................................... 72,497,845 19,673,591
Net asset value and redemption price per share (excluding any applicable contingent deferred sales
charge)........................................................................................... $ 3.53 $ 3.59
Maximum sales charge (4.75% of offering price)..................................................... $ 0.18 $ 0.18
------------ -----------
Maximum offering price to public................................................................... $ 3.71 $ 3.77
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $ 46,461,765 $13,138,407
Shares of beneficial interest issued and outstanding............................................... 13,169,749 3,650,585
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.53 $ 3.60
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets......................................................................................... $197,904,485 $30,594,927
Shares of beneficial interest issued and outstanding............................................... 55,868,613 8,463,561
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)............................................................................ $ 3.54 $ 3.61
============ ===========
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED MARCH 31, 2014
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ----------- ------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ -- $ -- $ 119,379
Interest (unaffiliated)............................................................. 2,995,847 3,127,397 30,176,839
----------- ----------- ------------
Total investment income*........................................................... 2,995,847 3,127,397 30,296,218
----------- ----------- ------------
EXPENSES:
Investment advisory and management fees............................................. 808,571 801,811 3,590,135
Distribution and service maintenance fees:
Class A............................................................................ 389,108 441,366 1,013,141
Class B............................................................................ 39,371 118,064 507,230
Class C............................................................................ 92,851 319,360 2,289,966
Transfer agent fees and expenses:
Class A............................................................................ 265,301 298,928 663,234
Class B............................................................................ 10,671 29,695 115,939
Class C............................................................................ 23,590 75,855 518,258
Registration fees:
Class A............................................................................ 22,836 24,940 43,640
Class B............................................................................ 12,280 10,728 13,193
Class C............................................................................ 15,862 16,444 30,158
Custodian and accounting fees....................................................... 52,889 119,644 220,455
Reports to shareholders............................................................. 23,951 43,000 110,601
Audit and tax fees.................................................................. 50,047 49,003 62,736
Legal fees.......................................................................... 11,298 12,318 24,617
Trustees' fees and expenses......................................................... 10,494 15,693 47,623
Interest expense.................................................................... -- 446 131
Other expenses...................................................................... 18,328 18,951 28,250
----------- ----------- ------------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 1,847,448 2,396,246 9,279,307
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. (529,983) (430,437) --
----------- ----------- ------------
Net expenses....................................................................... 1,317,465 1,965,809 9,279,307
----------- ----------- ------------
Net investment income (loss).......................................................... 1,678,382 1,161,588 21,016,911
----------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ (2,745,233) (4,802,030) (2,393,230)
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- -- (55,981)
----------- ----------- ------------
Net realized gain (loss) on investments and foreign currencies........................ (2,745,233) (4,802,030) (2,449,211)
----------- ----------- ------------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (3,524,139) (4,064,185) (11,192,606)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- 40,343
----------- ----------- ------------
Net unrealized gain (loss) on investments and foreign currencies...................... (3,524,139) (4,064,185) (11,152,263)
----------- ----------- ------------
Net realized and unrealized gain (loss) on investments and foreign currencies......... (6,269,372) (8,866,215) (13,601,474)
----------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $(4,590,990) $(7,704,627) $ 7,415,437
=========== =========== ============
--------
* Net of foreign withholding taxes on interest and dividends of....................... $ -- $ -- $ 27,076
=========== =========== ============
HIGH YIELD
BOND
FUND
-----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 156,126
Interest (unaffiliated)............................................................. 7,653,909
-----------
Total investment income*........................................................... 7,810,035
-----------
EXPENSES:
Investment advisory and management fees............................................. 865,875
Distribution and service maintenance fees:
Class A............................................................................ 248,459
Class B............................................................................ 125,633
Class C............................................................................ 318,982
Transfer agent fees and expenses:
Class A............................................................................ 170,914
Class B............................................................................ 29,831
Class C............................................................................ 74,209
Registration fees:
Class A............................................................................ 20,251
Class B............................................................................ 13,406
Class C............................................................................ 14,845
Custodian and accounting fees....................................................... 55,768
Reports to shareholders............................................................. 24,663
Audit and tax fees.................................................................. 66,261
Legal fees.......................................................................... 10,866
Trustees' fees and expenses......................................................... 10,296
Interest expense.................................................................... 144
Other expenses...................................................................... 20,590
-----------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 2,070,993
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. (211,873)
-----------
Net expenses....................................................................... 1,859,120
-----------
Net investment income (loss).......................................................... 5,950,915
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ (3,947,535)
Net realized foreign exchange gain (loss) on other assets and liabilities............. 6,279
-----------
Net realized gain (loss) on investments and foreign currencies........................ (3,941,256)
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 3,786,080
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... 1,959
-----------
Net unrealized gain (loss) on investments and foreign currencies...................... 3,788,039
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... (153,217)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 5,797,698
===========
--------
* Net of foreign withholding taxes on interest and dividends of....................... $ 510
===========
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2014 2013
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 1,678,382 $ 1,803,688
Net realized gain (loss) on investments and foreign currencies......................... (2,745,233) 635,015
Net unrealized gain (loss) on investments and foreign currencies....................... (3,524,139) 127,518
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (4,590,990) 2,566,221
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,014,439) (2,407,603)
Net investment income (Class B)........................................................ (46,032) (66,885)
Net investment income (Class C)........................................................ (109,939) (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...................................................... (2,170,410) (4,398,492)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (14,422,091) 2,700,859
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (21,183,491) 868,588
NET ASSETS:
Beginning of period...................................................................... 138,733,720 137,865,132
------------ ------------
End of period+........................................................................... $117,550,229 $138,733,720
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (121,374) $ 48,069
============ ============
GNMA FUND
---------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2014 2013
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 1,161,588 $ 623,550
Net realized gain (loss) on investments and foreign currencies......................... (4,802,030) 5,819,811
Net unrealized gain (loss) on investments and foreign currencies....................... (4,064,185) (7,628,267)
------------ -------------
Net increase (decrease) in net assets resulting from operations.......................... (7,704,627) (1,184,906)
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (2,949,014) (5,347,575)
Net investment income (Class B)........................................................ (200,563) (279,727)
Net investment income (Class C)........................................................ (528,565) (1,102,427)
Net realized gain on securities (Class A).............................................. (2,136) (639,911)
Net realized gain on securities (Class B).............................................. (203) (46,181)
Net realized gain on securities (Class C).............................................. (482) (185,523)
------------ -------------
Total distributions to shareholders...................................................... (3,680,963) (7,601,344)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (75,497,136) (108,594,379)
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (86,882,726) (117,380,629)
NET ASSETS:
Beginning of period...................................................................... 220,632,269 338,012,898
------------ -------------
End of period+........................................................................... $133,749,543 $ 220,632,269
============ =============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (426,424) $ (447,124)
============ =============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC BOND FUND
---------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2014 2013
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 21,016,911 $ 20,816,947
Net realized gain (loss) on investments and foreign currencies......................... (2,449,211) 19,525,014
Net unrealized gain (loss) on investments and foreign currencies....................... (11,152,263) 6,595,507
------------- ------------
Net increase (decrease) in net assets resulting from operations.......................... 7,415,437 46,937,468
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (12,243,178) (12,197,323)
Net investment income (Class B)........................................................ (1,817,175) (1,852,378)
Net investment income (Class C)........................................................ (8,212,267) (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...................................................... (22,272,620) (22,960,807)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (149,455,773) 37,772,753
------------- ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (164,312,956) 61,749,414
NET ASSETS:
Beginning of period...................................................................... 664,500,096 602,750,682
------------- ------------
End of period+........................................................................... $ 500,187,140 $664,500,096
============= ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,115,922) $ (1,118,244)
============= ============
HIGH YIELD BOND FUND
--------------------------
FOR THE YEAR FOR THE YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2014 2013
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 5,950,915 $ 7,093,091
Net realized gain (loss) on investments and foreign currencies......................... (3,941,256) 1,616,264
Net unrealized gain (loss) on investments and foreign currencies....................... 3,788,039 4,749,186
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 5,797,698 13,458,541
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (3,680,417) (4,437,764)
Net investment income (Class B)........................................................ (569,761) (658,906)
Net investment income (Class C)........................................................ (1,446,220) (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...................................................... (5,696,398) (6,906,431)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (7,703,026) (14,215,891)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (7,601,726) (7,663,781)
NET ASSETS:
Beginning of period...................................................................... 122,048,385 129,712,166
------------ ------------
End of period+........................................................................... $114,446,659 $122,048,385
============ ============
--------
+ Includes accumulated undistributed net investment income (loss)........................ $ 529,884 $ 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
-------
03/31/10 $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
03/31/14 9.91 0.14 (0.45) (0.31) (0.17) -- (0.17) 9.43 (3.11) 106,747
CLASS B
-------
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
03/31/14 9.92 0.07 (0.45) (0.38) (0.11) -- (0.11) 9.43 (3.84) 3,508
CLASS C
-------
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
03/31/14 9.91 0.08 (0.46) (0.38) (0.11) -- (0.11) 9.42 (3.84) 7,295
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
0.99% 2.17% 472%
0.99 1.77 254
0.99 1.73 152
0.99 1.40 89
0.99 1.42 122
1.64% 1.59% 472%
1.64 1.10 254
1.64 1.09 152
1.64 0.75 89
1.64 0.77 122
1.64% 1.55% 472%
1.64 1.12 254
1.64 1.08 152
1.64 0.76 89
1.64 0.77 122
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.38% 0.37% 0.39% 0.40% 0.40%
U.S. Government Securities Fund Class B. 0.50 0.53 0.60 0.59 0.73
U.S. Government Securities Fund Class C. 0.44 0.44 0.46 0.45 0.57
(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.
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
-------
03/31/10 $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
03/31/14 11.26 0.09 (0.45) (0.36) (0.26) (0.00) (0.26) 10.64 (3.22) 101,150 0.99
CLASS B
-------
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
03/31/14 11.29 0.02 (0.45) (0.43) (0.19) (0.00) (0.19) 10.67 (3.83) 9,770 1.64
CLASS C
-------
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
03/31/14 11.31 0.02 (0.46) (0.44) (0.19) (0.00) (0.19) 10.68 (3.91) 22,830 1.64
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
2.28% 104%
2.59 148
1.76 96
0.38 150
0.86 83
1.63% 104%
1.89 148
1.14 96
(0.27) 150
0.21 83
1.63% 104%
1.94 148
1.12 96
(0.26) 150
0.18 83
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14
-------- -------- -------- -------- --------
GNMA Fund Class A............. 0.15% 0.15% 0.15% 0.18% 0.24%
GNMA Fund Class B............. 0.19 0.21 0.22 0.25 0.33
GNMA Fund Class C............. 0.16 0.17 0.17 0.19 0.27
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
-------
03/31/10 $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
03/31/14 3.60 0.14 (0.06) 0.08 (0.15) -- (0.15) 3.53 2.34 255,821 1.31
CLASS B
-------
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
03/31/14 3.59 0.12 (0.05) 0.07 (0.13) -- (0.13) 3.53 1.95 46,462 1.97
CLASS C
-------
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
03/31/14 3.61 0.12 (0.06) 0.06 (0.13) -- (0.13) 3.54 1.69 197,904 1.96
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS TURNOVER
---------- ---------
6.13% 157%
5.50 152
4.72 144
3.70 166
4.01 158
5.44% 157%
4.83 152
4.07 144
3.02 166
3.35 158
5.48% 157%
4.85 152
4.09 144
3.05 166
3.37 158
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
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
-------
03/31/10 $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
03/31/14 3.58 0.19 0.00 0.19 (0.18) -- (0.18) 3.59 5.60 70,713 1.36
CLASS B
-------
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
03/31/14 3.58 0.17 0.01 0.18 (0.16) -- (0.16) 3.60 5.21 13,138 2.01
CLASS C
-------
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
03/31/14 3.60 0.17 0.00 0.17 (0.16) -- (0.16) 3.61 4.92 30,595 2.01
RATIO
OF NET
INVESTMENT
INCOME TO
AVERAGE PORTFOLIO
NET ASSETS(3) TURNOVER
------------- ---------
9.34% 110%
7.47 48
6.72 52
5.82 44
5.41 49
8.77% 110%
6.84 48
6.19 52
5.16 44
4.75 49
8.70% 110%
6.83 48
6.11 52
5.18 44
4.76 49
--------
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14
-------- -------- -------- -------- --------
High Yield Bond Fund Class A............ 0.18% 0.16% 0.18% 0.16% 0.17%
High Yield Bond Fund Class B............ 0.23 0.21 0.25 0.22 0.25
High Yield Bond Fund Class C............ 0.18 0.16 0.19 0.16 0.18
See Notes to Financial Statements
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 29.2%
United States Treasury Notes.... 22.4
Repurchase Agreement............ 18.0
United States Treasury Bonds.... 16.9
Federal Farm Credit Bank........ 10.1
Federal Home Loan Bank.......... 2.5
Small Business Administration... 0.2
Federal National Mtg. Assoc..... 0.0
----
99.3%
====
CREDIT QUALITY ALLOCATION+#
Aaa........ 96.7%
Not Rated@. 3.3
-----
100.0%
=====
--------
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 42.0%
FEDERAL FARM CREDIT BANK -- 10.1%
0.37% due 02/12/2016.................. $4,500,000 $ 4,494,173
1.79% due 03/12/2019.................. 2,500,000 2,483,350
1.84% due 07/24/2020.................. 5,000,000 4,847,605
-----------
11,825,128
-----------
FEDERAL HOME LOAN BANK -- 2.5%
0.97% due 01/30/2017.................. 3,000,000 2,993,289
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 0.0%
8.00% due 01/01/2023.................. 5,070 5,088
11.00% due 02/01/2015................. 6 6
11.50% due 09/01/2019................. 340 342
-----------
5,436
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 29.2%
4.50% due 05/15/2018.................. 156,595 163,793
4.50% due 08/15/2018.................. 278,022 291,247
4.50% due 09/15/2018.................. 697,129 731,258
4.50% due 10/15/2018.................. 779,761 818,442
4.50% due 09/15/2033.................. 856,753 932,300
4.50% due 02/15/2039.................. 7,314 7,896
4.50% due 04/15/2039.................. 292,670 315,768
4.50% due 05/15/2039.................. 382,937 413,304
4.50% due 06/15/2039.................. 141,915 153,162
4.50% due 07/15/2039.................. 125,615 135,564
4.50% due 09/15/2039.................. 522,675 564,106
4.50% due 10/15/2039.................. 456,116 492,269
4.50% due 12/15/2039.................. 972,330 1,051,343
4.50% due 01/15/2040.................. 604,060 653,163
4.50% due 02/15/2040.................. 663,808 719,692
4.50% due 03/15/2040.................. 618,551 668,470
4.50% due 04/15/2040.................. 458,608 496,169
4.50% due 05/15/2040.................. 398,284 430,577
4.50% due 06/15/2040.................. 593,102 641,201
4.50% due 07/15/2040.................. 785,500 849,227
4.50% due 08/15/2040.................. 303,834 328,528
4.50% due 09/15/2040.................. 13,551 14,624
4.50% due 03/15/2041.................. 1,288,348 1,394,064
4.50% due 04/15/2041.................. 148,512 160,965
4.50% due 06/15/2041.................. 850,852 920,369
4.50% due 07/15/2041.................. 41,227 44,555
4.50% due 08/15/2041.................. 763,950 824,761
5.00% due 04/15/2018.................. 677,798 723,893
5.00% due 04/15/2033.................. 7,199 7,872
5.00% due 08/15/2033.................. 484,913 534,899
5.00% due 09/15/2033.................. 230,111 253,890
5.00% due 10/15/2033.................. 146,843 161,978
5.00% due 04/15/2034.................. 5,894 6,499
5.00% due 11/15/2034.................. 56,125 61,882
5.00% due 02/15/2035.................. 4,764 5,257
5.00% due 03/15/2035.................. 102,140 111,693
5.00% due 04/15/2035.................. 15,128 16,691
5.00% due 05/15/2035.................. 454,713 497,251
5.00% due 09/15/2035.................. 227,868 250,864
5.00% due 10/15/2035.................. 29,860 32,894
5.00% due 12/15/2035.................. 15,419 16,988
5.00% due 03/15/2036.................. 318,035 350,257
5.00% due 05/15/2036.................. 264,376 290,863
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 06/15/2036..................... $ 192,026 $ 211,492
5.00% due 09/15/2036..................... 456,583 501,313
5.00% due 10/15/2036..................... 221,752 242,175
5.00% due 11/15/2036..................... 13,103 14,397
5.00% due 12/15/2036..................... 76,719 84,048
5.00% due 01/15/2037..................... 766,160 841,113
5.00% due 02/15/2037..................... 215,290 235,488
5.00% due 03/15/2037..................... 278,771 305,134
5.00% due 04/15/2037..................... 288,623 316,043
5.00% due 08/15/2038..................... 1,746,312 1,909,459
5.00% due 07/20/2039..................... 2,671,982 2,917,578
5.50% due 11/15/2032..................... 2,075 2,299
5.50% due 03/15/2033..................... 59,808 66,351
5.50% due 04/15/2033..................... 165,121 184,351
5.50% due 05/15/2033..................... 288,828 322,681
5.50% due 06/15/2033..................... 1,353,220 1,508,194
5.50% due 07/15/2033..................... 415,025 462,882
5.50% due 10/15/2033..................... 336,837 376,925
5.50% due 12/15/2033..................... 63,668 71,245
5.50% due 01/15/2034..................... 1,118,410 1,247,831
5.50% due 02/15/2034..................... 672,836 749,183
6.00% due 01/15/2028..................... 530 593
6.00% due 04/15/2028..................... 314,592 360,778
6.00% due 04/15/2029..................... 14,521 16,249
6.00% due 05/15/2029..................... 10,561 12,154
6.00% due 06/15/2029..................... 1,387 1,553
6.00% due 04/15/2031..................... 7,699 8,869
6.00% due 05/15/2031..................... 12,581 14,492
6.00% due 11/15/2031..................... 55,892 62,768
6.00% due 12/15/2031..................... 3,322 3,721
6.00% due 01/15/2032..................... 37,251 42,880
6.00% due 02/15/2032..................... 7,701 8,678
6.00% due 03/15/2032..................... 1,635 1,882
6.00% due 08/15/2032..................... 86,370 99,169
6.00% due 11/15/2032..................... 12,880 14,613
6.00% due 12/15/2032..................... 4,726 5,293
6.00% due 01/15/2033..................... 7,995 9,055
6.00% due 02/15/2033..................... 5,735 6,422
6.00% due 03/15/2033..................... 25,936 29,046
6.00% due 04/15/2033..................... 117,586 131,687
6.00% due 07/15/2033..................... 52,261 60,002
6.00% due 08/15/2033..................... 539,322 621,032
6.00% due 09/15/2033..................... 99,705 114,730
6.00% due 10/15/2033..................... 381,127 431,164
6.00% due 11/15/2033..................... 19,921 22,309
6.00% due 12/15/2033..................... 238,622 270,975
6.00% due 02/15/2034..................... 45,349 50,785
6.00% due 05/15/2034..................... 8,419 9,530
6.00% due 06/15/2034..................... 14,426 16,599
6.00% due 07/15/2034..................... 318,230 356,573
6.00% due 08/15/2034..................... 37,496 42,951
6.00% due 09/15/2034..................... 124,413 141,062
6.00% due 10/15/2034..................... 315,318 353,129
6.00% due 12/15/2034..................... 139,256 155,956
6.00% due 08/15/2035..................... 65,213 73,052
6.50% due 02/15/2029..................... 3,848 4,339
6.50% due 06/15/2031..................... 6,715 7,574
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 07/15/2031..................... $ 7,450 $ 8,397
6.50% due 08/15/2031..................... 21,503 24,243
6.50% due 09/15/2031..................... 59,636 67,259
6.50% due 10/15/2031..................... 84,052 96,568
6.50% due 11/15/2031..................... 2,360 2,661
6.50% due 01/15/2032..................... 5,306 5,985
6.50% due 02/15/2032..................... 72,812 82,270
7.00% due 07/15/2023..................... 7,513 8,247
7.00% due 10/15/2023..................... 20,934 21,006
7.00% due 09/15/2025..................... 63,463 70,675
7.00% due 03/20/2029..................... 6,772 7,709
7.00% due 06/20/2029..................... 1,004 1,181
7.00% due 11/20/2030..................... 18,004 21,461
7.50% due 04/15/2017..................... 1,117 1,121
7.50% due 08/15/2023..................... 39,055 40,764
7.50% due 09/15/2023..................... 167,300 176,307
9.00% due 12/15/2016..................... 6,959 6,992
11.00% due 08/20/2015.................... 17 17
11.00% due 09/20/2015.................... 37 38
11.50% due 05/20/2015.................... 230 231
-----------
34,315,466
-----------
SMALL BUSINESS ADMINISTRATION -- 0.2%
6.30% due 06/01/2018..................... 194,979 206,739
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $46,922,837)....................... 49,346,058
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 39.3%
UNITED STATES TREASURY BONDS -- 16.9%
3.88% due 08/15/2040............... $ 1,000,000 $ 1,065,938
4.25% due 11/15/2040............... 8,000,000 9,062,496
4.75% due 02/15/2041............... 8,000,000 9,787,504
------------
19,915,938
------------
UNITED STATES TREASURY NOTES -- 22.4%
1.25% due 10/31/2015............... 2,000,000 2,030,938
1.50% due 07/31/2016............... 16,000,000 16,338,752
2.00% due 02/15/2022............... 5,000,000 4,834,375
2.75% due 02/15/2024............... 2,000,000 2,004,376
3.13% due 05/15/2019............... 1,000,000 1,066,641
------------
26,275,082
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $43,171,403)................. 46,191,020
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $90,094,240)................. 95,537,078
------------
REPURCHASE AGREEMENT -- 18.0%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $21,151,000)................. 21,151,000 21,151,000
------------
TOTAL INVESTMENTS --
(cost $111,245,240)(2)............. 99.3% 116,688,078
Other assets less liabilities......... 0.7 862,151
----------- ------------
NET ASSETS -- 100.0% $117,550,229
=========== ============
--------
(1)See Note 2 for details of Joint Repurchase Agreements.
(2)See Note 5 for cost of investments on a tax basis.
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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......... $-- $ 11,825,128 $-- $ 11,825,128
Federal Home Loan Bank........... -- 2,993,289 -- 2,993,289
Federal National Mtg. Assoc...... -- 5,436 -- 5,436
Government National Mtg. Assoc... -- 34,315,466 -- 34,315,466
Small Business Administration.... -- 206,739 206,739
U.S. Government Treasuries:
United States Treasury Bonds..... -- 19,915,938 -- 19,915,938
United States Treasury Notes..... -- 26,275,082 -- 26,275,082
Repurchase Agreement................ -- 21,151,000 -- 21,151,000
--- ------------ --- ------------
Total............................... $-- $116,688,078 $-- $116,688,078
=== ============ === ============
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
18
SUNAMERICA GNMA FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 92.7%
Federal Farm Credit Bank........ 8.1
Repurchase Agreement............ 7.5
United States Treasury Notes.... 2.2
Small Business Administration... 0.1
-----
110.6%
=====
CREDIT QUALITY ALLOCATION+#
Aaa........ 99.9%
Not Rated@. 0.1
-----
100.0%
=====
--------
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues, excluding short-term
securities.
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 100.9%
FEDERAL FARM CREDIT BANK -- 8.1%
0.37% due 02/12/2016.................. $5,500,000 $ 5,492,877
1.79% due 03/12/2019.................. 2,500,000 2,483,350
1.84% due 07/24/2020.................. 3,000,000 2,908,563
-----------
10,884,790
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 92.7%
3.50% due 11/15/2041.................. 1,074,572 1,099,948
3.50% due 01/15/2042.................. 399,207 407,983
3.50% due 02/15/2042.................. 417,221 426,394
3.50% due 03/15/2042.................. 1,099,377 1,123,546
3.50% due 06/15/2042.................. 5,160,857 5,274,312
3.50% due 07/15/2042.................. 1,985,625 2,029,276
4.00% due 03/15/2039.................. 441,644 464,652
4.00% due 04/15/2039.................. 491,061 516,734
4.00% due 05/15/2039.................. 31,836 33,481
4.00% due 06/15/2039.................. 1,379,745 1,451,021
4.00% due 08/15/2039.................. 116,409 122,423
4.00% due 11/15/2039.................. 18,819 19,791
4.00% due 12/15/2039.................. 630,536 663,799
4.00% due 08/15/2040.................. 581,555 611,734
4.00% due 09/15/2040.................. 1,005,389 1,057,380
4.00% due 11/15/2040.................. 781,295 821,655
4.00% due 12/15/2040.................. 1,475,221 1,551,842
4.00% due 01/15/2041.................. 20,527 21,588
4.00% due 02/15/2041.................. 764,321 803,857
4.00% due 03/15/2041.................. 541,022 568,971
4.00% due 04/15/2041.................. 127,644 134,259
4.00% due 06/15/2041.................. 54,682 57,507
4.00% due 07/15/2041.................. 1,290,681 1,357,403
4.00% due 08/15/2041.................. 1,800,935 1,894,132
4.00% due 09/15/2041.................. 3,867,583 4,067,493
4.00% due 10/15/2041.................. 2,049,182 2,155,878
4.00% due 11/15/2041.................. 4,978,068 5,235,318
4.00% due 12/15/2041.................. 2,121,869 2,230,896
4.00% due 01/15/2042.................. 3,676,955 3,865,170
4.00% due 02/15/2042.................. 2,380,843 2,504,185
4.00% due 03/15/2042.................. 630,705 663,286
4.00% due 04/15/2042.................. 116,510 122,533
4.00% due 05/15/2042.................. 132,089 138,925
4.00% due 06/15/2042.................. 1,082,122 1,138,023
4.00% due May TBA..................... 6,000,000 6,285,000
4.50% due 05/15/2018.................. 247,775 259,163
4.50% due 08/15/2018.................. 146,631 153,583
4.50% due 09/15/2018.................. 417,359 437,682
4.50% due 10/15/2018.................. 663,572 696,588
4.50% due 08/15/2033.................. 44,012 47,771
4.50% due 09/15/2033.................. 119,573 129,786
4.50% due 10/15/2038.................. 96,259 104,015
4.50% due 12/15/2038.................. 80,684 87,609
4.50% due 02/15/2039.................. 31,558 34,057
4.50% due 03/15/2039.................. 277,198 299,251
4.50% due 04/15/2039.................. 77,542 83,777
4.50% due 05/15/2039.................. 1,004,376 1,084,096
4.50% due 06/15/2039.................. 3,823,351 4,126,578
4.50% due 07/15/2039.................. 1,695,837 1,830,411
4.50% due 08/15/2039.................. 123,139 133,157
4.50% due 09/15/2039.................. 159,702 172,370
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 10/15/2039..................... $ 60,564 $ 65,484
4.50% due 11/15/2039..................... 566,934 611,848
4.50% due 12/15/2039..................... 590,807 638,819
4.50% due 01/15/2040..................... 71,226 77,000
4.50% due 02/15/2040..................... 2,592,226 2,802,896
4.50% due 03/15/2040..................... 847,196 915,102
4.50% due 04/15/2040..................... 1,777,619 1,921,530
4.50% due 05/15/2040..................... 336,028 363,286
4.50% due 06/15/2040..................... 627,487 678,264
4.50% due 07/15/2040..................... 323,745 349,297
4.50% due 08/15/2040..................... 35,715 38,609
4.50% due 09/15/2040..................... 402,404 434,840
4.50% due 10/15/2040..................... 35,167 37,992
4.50% due 11/15/2040..................... 386,827 417,643
4.50% due 01/15/2041..................... 492,117 531,508
4.50% due 02/15/2041..................... 499,930 539,482
4.50% due 03/15/2041..................... 2,275,382 2,462,382
4.50% due 04/15/2041..................... 2,899,789 3,129,809
4.50% due 05/15/2041..................... 730,510 788,996
4.50% due 06/15/2041..................... 410,388 443,791
4.50% due 07/15/2041..................... 312,987 337,892
4.50% due 08/15/2041..................... 351,117 379,503
4.50% due May TBA........................ 4,000,000 4,300,000
5.00% due 03/15/2018..................... 89,007 95,060
5.00% due 04/15/2018..................... 978,546 1,045,036
5.00% due 05/15/2018..................... 1,581,734 1,687,064
5.00% due 08/15/2033..................... 461,054 504,153
5.00% due 09/15/2033..................... 236,907 261,384
5.00% due 10/15/2033..................... 1,365,159 1,506,204
5.00% due 08/15/2035..................... 790,205 870,351
5.00% due 02/15/2037..................... 450,514 492,714
5.00% due 04/15/2037..................... 1,131,460 1,238,242
5.00% due 04/15/2038..................... 1,104,535 1,207,542
5.00% due 05/15/2038..................... 659,711 722,398
5.00% due 01/15/2039..................... 434,873 475,921
5.00% due 02/15/2039..................... 321,672 351,723
5.00% due 03/15/2039..................... 653,834 714,800
5.00% due 04/15/2039..................... 515,258 563,648
5.00% due 08/15/2039..................... 872,952 953,893
5.00% due 10/15/2039..................... 1,996,205 2,184,097
5.00% due 11/15/2039..................... 1,601,019 1,751,002
5.00% due 12/15/2039..................... 1,318,027 1,446,233
5.00% due 04/15/2040..................... 1,644,298 1,803,882
5.00% due 05/15/2040..................... 2,896,311 3,175,675
5.50% due 06/15/2029..................... 1,368 1,514
5.50% due 01/15/2032..................... 9,641 10,729
5.50% due 03/15/2033..................... 155,209 172,802
5.50% due 04/15/2033..................... 302,854 338,046
5.50% due 05/15/2033..................... 314,323 350,531
5.50% due 06/15/2033..................... 112,497 125,515
5.50% due 07/15/2033..................... 1,820 2,030
5.50% due 08/15/2033..................... 3,509 3,914
5.50% due 12/15/2033..................... 20,617 22,853
5.50% due 01/15/2034..................... 97,511 108,467
5.50% due 02/15/2034..................... 78,929 87,375
5.50% due 04/15/2034..................... 62,909 70,401
5.50% due 04/20/2035..................... 930,270 1,045,740
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 06/15/2035..................... $ 75,574 $ 84,240
5.50% due 09/15/2035..................... 784,088 891,964
5.50% due 10/15/2035..................... 694,061 773,824
5.50% due 11/15/2035..................... 9,942 11,083
5.50% due 12/15/2035..................... 17,033 19,051
5.50% due 02/15/2036..................... 149,484 166,039
5.50% due 03/15/2036..................... 47,634 53,053
5.50% due 05/15/2036..................... 30,857 34,327
5.50% due 09/15/2036..................... 62,836 69,607
5.50% due 03/15/2037..................... 72,575 80,247
5.50% due 05/15/2037..................... 32,945 36,455
5.50% due 12/15/2037..................... 124,231 137,677
5.50% due 01/15/2038..................... 62,655 69,436
5.50% due 02/15/2038..................... 449,575 498,044
5.50% due 04/15/2038..................... 230,289 255,204
5.50% due 05/15/2038..................... 547,869 613,981
5.50% due 06/15/2038..................... 257,883 285,520
5.50% due 07/15/2038..................... 235,661 261,840
5.50% due 08/15/2038..................... 222,853 247,664
5.50% due 10/15/2038..................... 119,584 132,516
5.50% due 11/15/2038..................... 46,575 51,588
5.50% due 12/15/2038..................... 183,415 203,344
5.50% due 01/15/2039..................... 96,073 106,497
5.50% due 02/15/2039..................... 200,395 222,600
5.50% due 03/15/2039..................... 114,606 127,560
5.50% due 05/15/2039..................... 32,629 36,162
5.50% due 08/15/2039..................... 176,898 195,861
5.50% due 09/15/2039..................... 234,991 260,333
5.50% due 10/15/2039..................... 75,001 83,043
5.50% due 11/15/2039..................... 2,248 2,492
5.50% due 01/15/2040..................... 32,330 35,815
5.50% due 03/15/2040..................... 433,054 479,859
5.50% due 04/15/2040..................... 111,284 123,097
5.50% due 05/15/2040..................... 81,285 89,890
5.50% due 08/15/2040..................... 369,642 409,253
5.50% due 09/15/2040..................... 134,058 148,245
5.50% due 11/15/2040..................... 123,655 136,751
5.50% due 02/15/2041..................... 117,994 130,585
5.50% due 03/15/2041..................... 33,094 36,621
5.50% due 04/15/2041..................... 89,803 99,299
5.50% due 05/15/2041..................... 29,056 32,160
5.50% due 06/15/2041..................... 161,590 178,731
5.50% due 09/15/2041..................... 8,119 8,978
6.00% due 11/15/2023..................... 1,137 1,271
6.00% due 01/15/2024..................... 1,082 1,211
6.00% due 07/15/2028..................... 1,345 1,505
6.00% due 12/15/2028..................... 20,479 23,560
6.00% due 01/15/2029..................... 162,140 182,291
6.00% due 02/15/2029..................... 94,247 105,714
6.00% due 03/15/2029..................... 101,917 114,079
6.00% due 04/15/2029..................... 101,547 114,144
6.00% due 05/15/2029..................... 17,704 19,829
6.00% due 06/15/2029..................... 37,749 42,828
6.00% due 07/15/2029..................... 11,819 13,223
6.00% due 08/15/2029..................... 6,710 7,511
6.00% due 04/15/2031..................... 4,258 4,772
6.00% due 07/15/2031..................... 13,025 14,596
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 10/15/2031..................... $ 33,282 $ 37,284
6.00% due 11/15/2031..................... 109,181 122,670
6.00% due 12/15/2031..................... 38,845 43,693
6.00% due 01/15/2032..................... 23,252 26,658
6.00% due 02/15/2032..................... 11,337 12,867
6.00% due 07/15/2032..................... 23,737 27,330
6.00% due 09/15/2032..................... 14,348 16,515
6.00% due 10/15/2032..................... 63,934 72,475
6.00% due 11/15/2032..................... 760 851
6.00% due 01/15/2033..................... 47,980 54,202
6.00% due 02/15/2033..................... 72,964 82,580
6.00% due 03/15/2033..................... 40,368 45,830
6.00% due 04/15/2033..................... 113,842 127,916
6.00% due 05/15/2033..................... 48,846 55,608
6.00% due 06/15/2033..................... 7,708 8,871
6.00% due 08/15/2033..................... 56,293 64,310
6.00% due 10/15/2033..................... 12,860 14,510
6.00% due 11/15/2033..................... 12,234 14,088
6.00% due 12/15/2033..................... 128,525 147,046
6.00% due 01/15/2034..................... 66,881 76,956
6.00% due 02/15/2034..................... 78,264 88,751
6.00% due 03/15/2034..................... 22,965 25,719
6.00% due 04/15/2034..................... 98,149 110,836
6.00% due 05/15/2034..................... 5,866 6,569
6.00% due 06/15/2034..................... 55,219 61,842
6.00% due 07/15/2034..................... 64,565 72,729
6.00% due 09/15/2034..................... 38,436 43,594
6.00% due 10/15/2034..................... 27,805 31,140
6.00% due 12/15/2034..................... 28,861 32,323
6.00% due 01/15/2035..................... 14,555 16,475
6.00% due 04/15/2035..................... 25,161 28,936
6.00% due 05/15/2035..................... 5,992 6,710
6.00% due 06/15/2035..................... 27,648 31,355
6.00% due 11/15/2035..................... 2,609 2,922
6.00% due 12/15/2035..................... 53,940 60,537
6.00% due 01/15/2036..................... 37,051 42,357
6.00% due 02/15/2036..................... 46,118 51,843
6.00% due 03/15/2036..................... 24,452 27,996
6.00% due 04/15/2036..................... 51,321 58,652
6.00% due 05/15/2036..................... 126,722 144,402
6.00% due 06/15/2036..................... 55,305 63,539
6.00% due 08/15/2036..................... 3,909 4,494
6.00% due 09/15/2036..................... 26,147 29,352
6.00% due 10/15/2036..................... 37,560 42,736
6.00% due 11/15/2036..................... 44,176 49,491
6.00% due 07/15/2037..................... 8,197 9,218
6.00% due 09/15/2037..................... 5,866 6,569
6.00% due 11/15/2037..................... 9,371 10,495
6.00% due 12/15/2037..................... 11,211 12,546
6.00% due 01/15/2038..................... 1,330 1,514
6.00% due 02/15/2038..................... 8,989 10,231
6.00% due 05/15/2038..................... 20,943 23,437
6.00% due 06/15/2038..................... 13,310 14,910
6.00% due 07/15/2038..................... 36,927 41,329
6.00% due 08/15/2038..................... 4,912 5,503
6.00% due 09/20/2038..................... 3,042,038 3,389,675
6.00% due 10/15/2038..................... 64,056 71,780
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 11/15/2038..................... $ 44,768 $ 50,176
6.00% due 12/15/2038..................... 44,640 49,984
6.00% due 01/15/2039..................... 97,459 109,180
6.00% due 02/15/2039..................... 21,697 24,319
6.00% due 08/15/2039..................... 24,577 27,552
6.00% due 09/15/2039..................... 13,130 14,717
6.00% due 10/15/2039..................... 21,814 24,383
6.00% due 02/15/2040..................... 5,190 5,813
6.00% due 04/15/2040..................... 12,080 13,521
6.00% due 05/15/2040..................... 2,504 2,798
6.50% due 03/15/2028..................... 6,481 7,326
6.50% due 08/15/2028..................... 8,494 9,579
6.50% due 01/15/2029..................... 1,200 1,353
6.50% due 02/15/2029..................... 470 542
6.50% due 03/15/2029..................... 36,033 40,625
6.50% due 04/15/2029..................... 437 497
6.50% due 05/15/2029..................... 3,562 4,105
6.50% due 06/15/2029..................... 13,575 15,634
6.50% due 07/15/2029..................... 849 958
6.50% due 10/15/2029..................... 2,536 2,857
6.50% due 08/15/2031..................... 62,147 70,104
6.50% due 09/15/2031..................... 9,419 10,623
6.50% due 10/15/2031..................... 84,052 96,568
6.50% due 11/15/2031..................... 24,405 27,513
6.50% due 12/15/2031..................... 45,747 51,558
6.50% due 02/15/2032..................... 67,424 76,007
6.50% due 05/15/2032..................... 284,756 321,496
6.50% due 06/15/2032..................... 26,928 30,390
7.00% due 03/15/2023..................... 6,222 6,242
7.00% due 01/20/2024..................... 199 219
7.00% due 03/20/2024..................... 185 204
7.00% due 07/20/2025..................... 702 771
7.00% due 09/15/2025..................... 27,561 30,692
7.00% due 01/20/2029..................... 13,527 15,631
7.00% due 02/20/2029..................... 2,447 2,883
7.00% due 06/20/2029..................... 4,981 5,859
7.00% due 07/20/2029..................... 16,598 19,402
7.00% due 09/20/2029..................... 1,755 2,072
7.00% due 10/20/2029..................... 3,392 4,002
7.00% due 11/20/2029..................... 1,064 1,250
7.00% due 03/20/2030..................... 2,291 2,694
7.00% due 06/20/2030..................... 2,349 2,640
7.00% due 08/20/2030..................... 4,433 4,977
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
-----------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
7.00% due 09/20/2030..................... $ 7,007 $ 7,921
7.00% due 10/20/2030..................... 8,354 9,898
8.00% due 11/15/2026..................... 41,826 47,476
8.00% due 12/15/2029..................... 4,212 4,397
8.00% due 04/15/2030..................... 12,278 14,105
8.00% due 05/15/2030..................... 1,143 1,266
8.00% due 08/15/2030..................... 20,606 23,626
8.50% due 03/15/2017..................... 2,738 2,750
8.50% due 12/15/2022..................... 12,504 12,560
8.50% due 01/15/2023..................... 15,928 16,303
8.50% due 09/15/2024..................... 7,378 8,390
9.00% due 07/15/2016..................... 3,309 3,324
9.00% due 10/15/2016..................... 1,290 1,296
------------
123,952,066
------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
6.30% due 06/01/2018..................... 64,993 68,913
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $133,881,703)...................... 134,905,769
------------
U.S. GOVERNMENT TREASURIES -- 2.2%
UNITED STATES TREASURY NOTES -- 2.2%
2.75% due 02/15/2024
(cost $3,030,000)........................ 3,000,000 3,006,564
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $136,911,703)...................... 137,912,333
------------
REPURCHASE AGREEMENT -- 7.5%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $10,002,000)....................... 10,002,000 10,002,000
------------
TOTAL INVESTMENTS --
(cost $146,913,703)(2)................... 110.6% 147,914,333
Liabilities in excess of other assets....... (10.6) (14,164,790)
----------- ------------
NET ASSETS -- 100.0% $133,749,543
=========== ============
--------
(1) See Note 2 for details of Joint Repurchase Agreement.
(2) See Note 5 for cost of investments on a tax basis.
TBA --Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date. The actual principal and
maturity date will be determined upon settlement date.
22
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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......... $-- $ 10,884,790 $-- $ 10,884,790
Government National Mtg. Assoc... -- 123,952,066 -- 123,952,066
Small Business Administration.... -- 68,913 -- 68,913
U.S. Government Treasuries....... -- 3,006,564 -- 3,006,564
Repurchase Agreement................ -- 10,002,000 -- 10,002,000
--- ------------ --- ------------
Total............................... $-- $147,914,333 $-- $147,914,333
=== ============ === ============
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
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Sovereign.............................. 13.1%
Oil Companies-Exploration & Production. 5.3
United States Treasury Notes........... 5.1
Banks-Commercial....................... 4.6
Diversified Banking Institutions....... 4.0
Federal National Mtg. Assoc............ 2.6
Telephone-Integrated................... 2.6
Pipelines.............................. 2.5
Time Deposits.......................... 2.4
Repurchase Agreements.................. 2.2
Diversified Financial Services......... 1.7
United States Treasury Bonds........... 1.5
Medical-Drugs.......................... 1.3
Oil Companies-Integrated............... 1.3
Federal Home Loan Mtg. Corp............ 1.3
Casino Hotels.......................... 1.3
Electric-Integrated.................... 1.2
Finance-Leasing Companies.............. 1.1
Cable/Satellite TV..................... 1.1
Medical-Hospitals...................... 1.0
Paper & Related Products............... 1.0
Retail-Restaurants..................... 1.0
Independent Power Producers............ 1.0
Coal................................... 1.0
Cellular Telecom....................... 0.9
Building Products-Cement............... 0.9
Diversified Manufacturing Operations... 0.9
Airlines............................... 0.8
Real Estate Investment Trusts.......... 0.8
Insurance-Life/Health.................. 0.8
Commercial Services-Finance............ 0.8
Oil & Gas Drilling..................... 0.8
Steel-Producers........................ 0.7
Telecom Services....................... 0.7
Chemicals-Diversified.................. 0.7
Real Estate Operations & Development... 0.7
Computer Services...................... 0.6
Savings & Loans/Thrifts................ 0.6
Television............................. 0.6
Advertising Services................... 0.6
Publishing-Newspapers.................. 0.6
Diversified Minerals................... 0.6
Enterprise Software/Service............ 0.5
Auto/Truck Parts & Equipment-Original.. 0.5
Petrochemicals......................... 0.5
Finance-Commercial..................... 0.5
Medical Products....................... 0.5
Aerospace/Defense-Equipment............ 0.5
Containers-Metal/Glass................. 0.5
Gold Mining............................ 0.5
Insurance-Multi-line................... 0.5
Oil Refining & Marketing............... 0.4
Alternative Waste Technology........... 0.4
Security Services...................... 0.4
Publishing-Periodicals................. 0.4
Electric-Distribution.................. 0.4
Electronic Components-Semiconductors... 0.4
Rental Auto/Equipment.................. 0.4
Food-Meat Products..................... 0.4
Banks-Special Purpose.................. 0.4
Specified Purpose Acquisitions......... 0.4%
Beverages-Non-alcoholic................ 0.4
Electric-Generation.................... 0.4
Hazardous Waste Disposal............... 0.3
Municipal Bonds & Notes................ 0.3
Music.................................. 0.3
Financial Guarantee Insurance.......... 0.3
Special Purpose Entities............... 0.3
Retail-Regional Department Stores...... 0.3
Computers.............................. 0.3
Food-Retail............................ 0.3
E-Commerce/Services.................... 0.3
Steel Pipe & Tube...................... 0.3
Multimedia............................. 0.3
Consumer Products-Misc................. 0.3
Computer Software...................... 0.3
Retail-Music Store..................... 0.3
Real Estate Management/Services........ 0.3
Containers-Paper/Plastic............... 0.3
Food-Dairy Products.................... 0.3
Brewery................................ 0.3
Marine Services........................ 0.3
Building-Residential/Commercial........ 0.3
Cruise Lines........................... 0.3
Auto-Cars/Light Trucks................. 0.3
Storage/Warehousing.................... 0.3
Transport-Services..................... 0.2
Diversified Operations................. 0.2
Chemicals-Plastics..................... 0.2
SupraNational Banks.................... 0.2
Firearms & Ammunition.................. 0.2
Building & Construction-Misc........... 0.2
Satellite Telecom...................... 0.2
Retail-Pawn Shops...................... 0.2
Shipbuilding........................... 0.2
Travel Services........................ 0.2
Retail-Building Products............... 0.2
Advanced Materials..................... 0.2
Retail-Automobile...................... 0.2
Racetracks............................. 0.2
Office Automation & Equipment.......... 0.2
Office Supplies & Forms................ 0.2
Retail-Drug Store...................... 0.2
Investment Management/Advisor Services. 0.2
Tools-Hand Held........................ 0.2
Medical-Generic Drugs.................. 0.2
Advertising Sales...................... 0.2
Retail-Apparel/Shoe.................... 0.2
Transport-Equipment & Leasing.......... 0.2
Direct Marketing....................... 0.2
Auto-Heavy Duty Trucks................. 0.2
Metal-Iron............................. 0.2
Finance-Auto Loans..................... 0.2
Advertising Agencies................... 0.2
Schools................................ 0.2
Metal-Diversified...................... 0.2
Insurance-Mutual....................... 0.2
Oil-Field Services..................... 0.2
Entertainment Software................. 0.2
Banks-Fiduciary........................ 0.2
Retail-Auto Parts...................... 0.2
Semiconductor Equipment................ 0.2
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Finance-Consumer Loans.............. 0.2%
Finance-Other Services.............. 0.1
Municipal Bonds..................... 0.1
Non-Hazardous Waste Disposal........ 0.1
Theaters............................ 0.1
Regional Authority.................. 0.1
Commercial Services................. 0.1
Sugar............................... 0.1
Distribution/Wholesale.............. 0.1
Steel-Specialty..................... 0.1
Electronics-Military................ 0.1
Machinery-Farming................... 0.1
Food-Misc./Diversified.............. 0.1
Aerospace/Defense................... 0.1
Retail-Major Department Stores...... 0.1
Networking Products................. 0.1
Gambling (Non-Hotel)................ 0.1
Transport-Rail...................... 0.1
Medical-Wholesale Drug Distribution. 0.1
Retail-Discount..................... 0.1
Agricultural Chemicals.............. 0.1
Tennessee Valley Authority.......... 0.1
Chemicals-Specialty................. 0.1
Diagnostic Equipment................ 0.1
Banks-Super Regional................ 0.1
Machinery-General Industrial........ 0.1
-----
100.4%
=====
CREDIT QUALITY ALLOCATION+#
Aaa........ 14.0%
Aa......... 3.7
A.......... 6.4
Baa........ 19.9
Ba......... 16.5
B.......... 20.6
Caa........ 11.5
Ca......... 0.2
Not Rated@. 7.2
-----
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.
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
ASSET BACKED SECURITIES -- 0.9%
DIVERSIFIED FINANCIAL SERVICES -- 0.9%
Avis Budget Rental Car Funding
AESOP LLC
Series 2014-1A, Class A
2.46% due 07/20/2020*......................... $177,000 $ 176,562
Citibank Credit Card Issuance Trust
Series 2014-A2, Class A2
1.02% due 02/22/2019.......................... 126,000 125,361
CKE Restaurant Holdings, Inc.
Series 2013-1A, Class A2
4.47% due 03/20/2043*......................... 65,010 65,666
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-6, Class 1A11
5.25% due 02/25/2026(1)....................... 300,000 306,056
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-12, Class 2A4
5.50% due 05/25/2035(1)....................... 42,768 43,014
Discover Card Execution Note Trust
Series 2007-A1, Class A1
5.65% due 03/16/2020.......................... 330,000 375,907
Dominos Pizza Master Issuer LLC
Series 2012-1A, Class A2
5.22% due 01/25/2042*......................... 101,850 108,951
Fannie Mae Connecticut Avenue
Securities FRS
Series 2013-C01, Class M1
2.15% due 10/25/2023(1)....................... 203,087 206,862
Federal Home Loan Mtg. Corp.,
Structured Agency Credit Risk FRS
Series 2014-DN1, Class M2
2.35% due 02/25/2024(1)....................... 67,000 68,295
Ford Credit Auto Owner Trust
Series 2013-D, Class B
1.54% due 03/15/2019.......................... 60,000 59,856
GS Mtg. Securities Corp. II
Series 2012-GCJ9, Class A2
1.76% due 11/10/2045(2)....................... 468,000 467,493
HLSS Servicer Advance Receivables Trust
Series 2013-T1, Class B2
1.74% due 01/16/2046*......................... 178,000 177,466
JPM-BB Commercial Mtg. Securities Trust
Series 2013-C15, Class A2
2.98% due 11/15/2045(2)....................... 971,000 1,002,235
Morgan Stanley Bank of America Merrill
Lynch Trust
Series 2012-C5, Class A2
1.97% due 08/15/2045(2)....................... 245,843 249,754
RFMSI Trust
Series 2006-S1, Class 1A3
5.75% due 01/25/2036(1)....................... 290,884 299,410
Sonic Capital LLC
Series 2011-1A, Class A2
5.44% due 05/20/2041*......................... 214,725 229,228
TAL Advantage V LLC
Series 2013-2A, Class A
3.55% due 11/20/2038*......................... 77,333 77,622
UBS-Barclays Commercial Mtg. Trust
Series 2012-C2, Class A2
2.11% due 05/10/2063(2)....................... 262,239 265,086
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
WF-RBS Commercial Mtg. Trust
Series 2012-C8, Class A2
1.88% due 08/15/2045(2)................. $ 165,030 $ 166,224
----------
TOTAL ASSET BACKED SECURITIES
(cost $4,491,752)....................... 4,471,048
----------
U.S. CORPORATE BONDS & NOTES -- 48.9%
ADVANCED MATERIALS -- 0.2%
Iracore International Holdings, Inc.
Senior Sec. Notes
9.50% due 06/01/2018*................... 1,025,003 1,089,066
----------
ADVERTISING AGENCIES -- 0.2%
Interpublic Group of Cos., Inc.
Senior Notes
3.75% due 02/15/2023.................... 353,000 343,255
Interpublic Group of Cos., Inc.
Senior Notes
4.20% due 04/15/2024.................... 489,000 490,193
----------
833,448
----------
ADVERTISING SALES -- 0.2%
Lamar Media Corp.
Company Guar. Notes
5.38% due 01/15/2024*................... 900,000 922,500
----------
ADVERTISING SERVICES -- 0.6%
Checkout Holding Corp.
Senior Notes
zero coupon due 11/15/2015*............. 1,220,000 1,040,050
Visant Corp.
Company Guar. Notes
10.00% due 10/01/2017................... 1,831,000 1,824,134
----------
2,864,184
----------
AEROSPACE/DEFENSE -- 0.1%
Boeing Co.
Senior Notes
0.95% due 05/15/2018.................... 490,000 473,705
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.5%
Alliant Techsystems, Inc.
Company Guar. Notes
5.25% due 10/01/2021*................... 1,198,000 1,230,945
Erickson Air-Crane, Inc.
Sec. Notes
8.25% due 05/01/2020*................... 1,162,000 1,220,100
----------
2,451,045
----------
AGRICULTURAL CHEMICALS -- 0.1%
Mosaic Co.
Senior Notes
5.45% due 11/15/2033.................... 316,000 341,643
----------
AIRLINES -- 0.5%
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class A-1
7.20% due 07/02/2020.................... 741,684 803,800
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
AIRLINES (CONTINUED)
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class B
7.63% due 07/02/2016....................... $ 87,951 $ 90,920
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/2017....................... 261,046 271,814
United Airlines Pass Through Trust
Pass Through Certs.
Series 2014-1, Class B
4.75% due 10/11/2023....................... 325,000 326,625
United Airlines Pass Through Trust
Pass Through Certs.
Series 2013-1, Class B
5.38% due 02/15/2023....................... 897,000 926,152
----------
2,419,311
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.4%
ADS Waste Holdings, Inc.
Company Guar. Notes
8.25% due 10/01/2020....................... 1,013,000 1,101,637
Darling International, Inc.
Company Guar. Notes
5.38% due 01/15/2022*...................... 1,066,000 1,095,315
----------
2,196,952
----------
AUTO-CARS/LIGHT TRUCKS -- 0.2%
Daimler Finance North America LLC
Company Guar. Notes
3.88% due 09/15/2021*...................... 780,000 818,636
----------
AUTO-HEAVY DUTY TRUCKS -- 0.2%
Oshkosh Corp.
Company Guar. Notes
5.38% due 03/01/2022*...................... 850,000 864,875
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.3%
Affinia Group, Inc.
Company Guar. Notes
7.75% due 05/01/2021....................... 1,425,000 1,539,000
----------
BANKS-COMMERCIAL -- 1.0%
PNC Bank NA
Senior Notes
1.13% due 01/27/2017....................... 1,309,000 1,304,520
Regions Financial Corp.
Sub. Notes
7.38% due 12/10/2037....................... 837,000 958,617
Union Bank NA
Senior Notes
3.00% due 06/06/2016....................... 1,593,000 1,665,230
Zions Bancorporation
Senior Notes
4.50% due 03/27/2017....................... 433,000 462,265
Zions Bancorporation
Senior Notes
4.50% due 06/13/2023....................... 837,000 835,428
----------
5,226,060
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
BANKS-FIDUCIARY -- 0.2%
RBS Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*....................... $ 775,000 $ 765,480
----------
BANKS-SUPER REGIONAL -- 0.0%
SunTrust Banks, Inc.
Sub. Notes
6.00% due 02/15/2026........................ 38,000 41,638
----------
BREWERY -- 0.3%
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
4.63% due 02/01/2044........................ 352,000 361,150
Anheuser-Busch InBev Worldwide, Inc.
Company Guar. Notes
0.80% due 07/15/2015........................ 1,001,000 1,004,322
----------
1,365,472
----------
BUILDING & CONSTRUCTION-MISC. -- 0.2%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023........................ 1,170,000 1,164,150
----------
BUILDING PRODUCTS-CEMENT -- 0.8%
Cemex Finance LLC
Senior Sec. Notes
6.00% due 04/01/2024*....................... 1,330,000 1,333,325
Headwaters, Inc.
Company Guar. Notes
7.25% due 01/15/2019*....................... 771,000 803,768
Headwaters, Inc.
Sec. Notes
7.63% due 04/01/2019........................ 1,861,000 2,005,227
----------
4,142,320
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.3%
Meritage Homes Corp.
Company Guar. Notes
7.00% due 04/01/2022........................ 1,200,000 1,323,000
----------
CABLE/SATELLITE TV -- 0.8%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.50% due 04/30/2021........................ 1,988,000 2,107,280
DIRECTV Holdings LLC/DIRECTV
Financing Co., Inc.
Company Guar. Notes
4.45% due 04/01/2024........................ 352,000 352,993
TCI Communications, Inc.
Senior Notes
7.13% due 02/15/2028........................ 250,000 315,813
Time Warner Cable, Inc.
Company Guar. Notes
6.55% due 05/01/2037........................ 149,000 173,053
Time Warner Cable, Inc.
Company Guar. Notes
7.30% due 07/01/2038........................ 223,000 278,605
WideOpenWest Finance
LLC/WideOpenWest Capital Corp.
Company Guar. Notes
10.25% due 07/15/2019....................... 825,000 936,375
----------
4,164,119
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CASINO HOTELS -- 1.0%
Caesars Entertainment Operating Co., Inc.
Company Guar. Notes
10.75% due 02/01/2016....................... $ 800,000 $ 668,000
Caesars Entertainment Resort Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020*....................... 1,133,000 1,192,482
Caesars Entertainment Resort Properties LLC
Sec. Notes
11.00% due 10/01/2021*...................... 1,346,000 1,413,300
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*...................... 1,055,000 1,131,487
Seminole Hard Rock Entertainment, Inc./
Seminole Hard Rock International LLC
Company Guar. Notes
5.88% due 05/15/2021*....................... 575,000 579,313
----------
4,984,582
----------
CELLULAR TELECOM -- 0.9%
Sprint Communications, Inc.
Senior Notes
7.00% due 08/15/2020........................ 1,992,000 2,171,280
T-Mobile USA, Inc.
Company Guar. Notes
5.25% due 09/01/2018........................ 345,000 364,838
T-Mobile USA, Inc.
Company Guar. Notes
6.13% due 01/15/2022........................ 675,000 707,062
T-Mobile USA, Inc.
Company Guar. Notes
6.46% due 04/28/2019........................ 611,000 653,770
T-Mobile USA, Inc.
Company Guar. Notes
6.63% due 04/28/2021........................ 659,000 708,425
----------
4,605,375
----------
CHEMICALS-DIVERSIFIED -- 0.5%
Chemtura Corp.
Company Guar. Notes
5.75% due 07/15/2021........................ 1,026,000 1,064,475
Olin Corp.
Senior Notes
5.50% due 08/15/2022........................ 1,355,000 1,385,487
----------
2,449,962
----------
CHEMICALS-PLASTICS -- 0.2%
PolyOne Corp.
Senior Notes
5.25% due 03/15/2023........................ 1,229,000 1,235,145
----------
CHEMICALS-SPECIALTY -- 0.1%
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034........................ 248,000 313,710
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
COAL -- 0.8%
Murray Energy Corp.
Senior Sec. Notes
8.63% due 06/15/2021*................. $1,020,000 $1,073,550
Peabody Energy Corp.
Company Guar. Notes
6.00% due 11/15/2018.................. 1,075,000 1,127,406
SunCoke Energy Partners LP/SunCoke
Energy Partners Finance Corp.
Company Guar. Notes
7.38% due 02/01/2020*................. 1,591,000 1,698,393
----------
3,899,349
----------
COMMERCIAL SERVICES-FINANCE -- 0.8%
Harland Clarke Holdings Corp.
Senior Sec. Notes
6.88% due 03/01/2020*................. 670,000 680,050
Harland Clarke Holdings Corp.
Senior Notes
9.25% due 03/01/2021*................. 1,618,000 1,626,090
Harland Clarke Holdings Corp.
Senior Sec. Notes
9.75% due 08/01/2018*................. 1,345,000 1,476,137
----------
3,782,277
----------
COMPUTER SERVICES -- 0.4%
Compiler Finance Sub, Inc.
Senior Notes
7.00% due 05/01/2021*................. 1,564,000 1,575,730
International Business Machines Corp.
Senior Notes
1.63% due 05/15/2020.................. 623,000 589,476
----------
2,165,206
----------
COMPUTERS -- 0.3%
Hewlett-Packard Co.
Senior Notes
6.00% due 09/15/2041.................. 1,457,000 1,595,524
----------
CONSUMER PRODUCTS-MISC. -- 0.3%
Reynolds Group Issuer, Inc./Reynolds
Group Issuer LLC
Senior Sec. Notes
5.75% due 10/15/2020.................. 1,439,000 1,507,353
----------
CONTAINERS-METAL/GLASS -- 0.5%
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/2026.................. 2,200,000 2,442,000
----------
CONTAINERS-PAPER/PLASTIC -- 0.3%
Consolidated Container Co. LLC/
Consolidated Container Capital, Inc.
Company Guar. Notes
10.13% due 07/15/2020*................ 1,347,000 1,431,188
----------
DIAGNOSTIC EQUIPMENT -- 0.1%
Life Technologies Corp.
Senior Notes
5.00% due 01/15/2021.................. 252,000 280,191
----------
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIRECT MARKETING -- 0.2%
Catalina Marketing Corp.
Company Guar. Notes
11.63% due 10/01/2017*................ $ 850,100 $ 888,355
-----------
DISTRIBUTION/WHOLESALE -- 0.1%
LKQ Corp.
Company Guar. Notes
4.75% due 05/15/2023*................. 620,000 587,450
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.5%
Bank of America Corp.
Senior Notes
4.88% due 04/01/2044.................. 379,000 380,724
Bank of America Corp.
Sub. Notes
5.49% due 03/15/2019.................. 900,000 999,669
Citigroup, Inc.
Sub. Notes
4.05% due 07/30/2022.................. 380,000 381,467
Citigroup, Inc.
Sub. Notes
5.88% due 02/22/2033.................. 1,940,000 2,063,336
Goldman Sachs Group, Inc.
Senior Notes
5.25% due 07/27/2021.................. 1,001,000 1,108,097
Goldman Sachs Group, Inc.
Senior Notes
6.13% due 02/15/2033.................. 518,000 599,980
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037.................. 1,619,000 1,854,595
JPMorgan Chase & Co.
Senior Notes
4.25% due 11/02/2018.................. NZD 750,000 620,670
JPMorgan Chase & Co.
Senior Notes
4.40% due 07/22/2020.................. 1,055,000 1,137,226
Merrill Lynch & Co., Inc.
Sub. Notes
6.11% due 01/29/2037.................. 929,000 1,038,971
Morgan Stanley
Senior Notes
4.75% due 03/22/2017.................. 700,000 763,930
Morgan Stanley
Sub. Notes
4.88% due 11/01/2022.................. 1,215,000 1,276,703
NationsBank Corp.
Sub. Notes
7.25% due 10/15/2025.................. 117,000 138,228
-----------
12,363,596
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
General Electric Capital Corp.
Senior Notes
5.55% due 05/04/2020.................. 875,000 1,008,159
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/2038........................... $ 508,000 $ 598,884
General Electric Capital Corp.
Senior Notes
6.75% due 03/15/2032........................... 527,000 677,581
----------
2,284,624
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.4%
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/2022*.......................... 1,325,000 1,417,750
Textron, Inc.
Senior Notes
4.63% due 09/21/2016........................... 595,000 639,407
----------
2,057,157
----------
E-COMMERCE/SERVICES -- 0.3%
Netflix, Inc.
Senior Notes
5.38% due 02/01/2021........................... 1,215,000 1,275,750
Netflix, Inc.
Senior Notes
5.75% due 03/01/2024*.......................... 300,000 310,500
----------
1,586,250
----------
ELECTRIC-GENERATION -- 0.3%
AES Corp.
Senior Notes
5.50% due 03/15/2024........................... 1,020,000 1,012,350
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs., Series B
9.24% due 07/02/2017........................... 299,035 300,530
----------
1,312,880
----------
ELECTRIC-INTEGRATED -- 0.9%
Dominion Gas Holdings LLC
Senior Notes
4.80% due 11/01/2043*.......................... 252,000 256,967
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033........................... 860,000 945,442
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/2031........................... 456,000 523,787
Georgia Power Co.
Senior Notes
3.00% due 04/15/2016........................... 180,000 187,933
Great Plains Energy, Inc.
Senior Notes
5.29% due 06/15/2022........................... 335,000 371,546
Mirant Mid Atlantic LLC Pass Through Trust
Pass Through Certs., Series B
9.13% due 06/30/2017........................... 346,123 370,351
Monongahela Power Co.
1st Mtg. Notes
5.40% due 12/15/2043*.......................... 242,000 265,400
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-INTEGRATED (CONTINUED)
NiSource Finance Corp.
Company Guar. Notes
5.25% due 02/15/2043....................... $ 444,000 $ 453,494
PPL Capital Funding, Inc.
Company Guar. Notes
5.00% due 03/15/2044....................... 515,000 521,719
Puget Energy, Inc.
Senior Sec. Notes
6.00% due 09/01/2021....................... 376,000 433,211
----------
4,329,850
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Amkor Technology, Inc.
Senior Notes
6.38% due 10/01/2022....................... 1,257,000 1,302,566
Amkor Technology, Inc.
Senior Notes
6.63% due 06/01/2021....................... 152,000 162,260
Intel Corp.
Senior Notes
1.35% due 12/15/2017....................... 496,000 492,640
----------
1,957,466
----------
ELECTRONICS-MILITARY -- 0.1%
L-3 Communications Corp.
Company Guar. Notes
4.95% due 02/15/2021....................... 489,000 523,741
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.5%
BMC Software Finance, Inc.
Senior Notes
8.13% due 07/15/2021*...................... 1,695,000 1,783,987
Epicor Software Corp.
Company Guar. Notes
8.63% due 05/01/2019....................... 840,000 918,750
----------
2,702,737
----------
ENTERTAINMENT SOFTWARE -- 0.2%
Activision Blizzard, Inc.
Company Guar. Notes
5.63% due 09/15/2021*...................... 722,000 772,540
----------
FINANCE-AUTO LOANS -- 0.2%
Ally Financial, Inc.
Company Guar. Notes
3.50% due 01/27/2019....................... 486,000 486,000
Ford Motor Credit Co. LLC
Senior Notes
1.50% due 01/17/2017....................... 360,000 358,928
----------
844,928
----------
FINANCE-COMMERCIAL -- 0.5%
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
6.88% due 04/15/2022*...................... 524,000 527,930
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
7.38% due 04/01/2020*...................... 498,000 522,900
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
FINANCE-COMMERCIAL (CONTINUED)
Jefferies LoanCore LLC/JLC Finance Corp.
Senior Notes
6.88% due 06/01/2020*.............................. $1,428,000 $1,449,420
----------
2,500,250
----------
FINANCE-CONSUMER LOANS -- 0.2%
HSBC Finance Corp.
Sub. Notes
6.68% due 01/15/2021............................... 322,000 375,755
SLM Corp.
Senior Notes
6.13% due 03/25/2024............................... 370,000 369,538
----------
745,293
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+(7)........................... 280,000 28
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+(7)........................... 361,000 36
----------
64
----------
FINANCE-LEASING COMPANIES -- 0.3%
Air Lease Corp.
Senior Notes
4.75% due 03/01/2020............................... 1,605,000 1,701,300
----------
FINANCE-OTHER SERVICES -- 0.0%
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
1.00% due 02/02/2015............................... 229,000 230,235
----------
FIREARMS & AMMUNITION -- 0.2%
FGI Operating Co. LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020............................... 1,115,000 1,186,081
----------
FOOD-MEAT PRODUCTS -- 0.2%
JBS USA LLC/JBS USA Finance, Inc.
Company Guar. Notes
7.25% due 06/01/2021*.............................. 1,036,000 1,100,750
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
Mondelez International, Inc.
Senior Notes
6.50% due 02/09/2040............................... 401,000 504,381
----------
FOOD-RETAIL -- 0.2%
SUPERVALU, Inc.
Senior Notes
6.75% due 06/01/2021............................... 1,168,000 1,184,060
----------
GAMBLING (NON-HOTEL) -- 0.0%
Waterford Gaming LLC
Senior Notes
8.63% due 09/15/2014*(5)(7)........................ 639,988 159,997
----------
GOLD MINING -- 0.1%
Newmont Mining Corp.
Company Guar. Notes
4.88% due 03/15/2042............................... 487,000 394,327
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
GOLD MINING (CONTINUED)
Newmont Mining Corp.
Company Guar. Notes
5.13% due 10/01/2019........................ $ 215,000 $ 228,661
----------
622,988
----------
INDEPENDENT POWER PRODUCERS -- 0.9%
Calpine Corp.
Senior Sec. Notes
6.00% due 01/15/2022*....................... 652,000 684,600
Calpine Corp.
Senior Sec. Notes
7.88% due 01/15/2023*....................... 697,000 780,640
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/2018........................ 1,486,000 1,519,435
NRG Energy, Inc.
Company Guar. Notes
6.25% due 07/15/2022*....................... 662,000 681,860
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/2018........................ 190,000 213,275
NRG Energy, Inc.
Company Guar. Notes
7.63% due 05/15/2019........................ 19,000 19,831
NRG Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2020........................ 430,000 471,925
----------
4,371,566
----------
INSURANCE-LIFE/HEALTH -- 0.5%
American Equity Investment Life Holding Co.
Company Guar. Notes
6.63% due 07/15/2021........................ 1,415,000 1,508,744
Pacific LifeCorp
Senior Notes
6.00% due 02/10/2020*....................... 295,000 336,532
Principal Life Global Funding II
Senior Sec. Notes
1.00% due 12/11/2015*....................... 699,000 699,698
----------
2,544,974
----------
INSURANCE-MULTI-LINE -- 0.4%
Assurant, Inc.
Senior Notes
6.75% due 02/15/2034........................ 946,000 1,074,593
Metropolitan Life Global Funding I
Senior Sec. Notes
2.50% due 09/29/2015*....................... 650,000 667,592
----------
1,742,185
----------
INSURANCE-MUTUAL -- 0.2%
New York Life Global Funding
Sec. Notes
1.65% due 05/15/2017*....................... 779,000 788,998
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.2%
National Financial Partners Corp.
Senior Notes
9.00% due 07/15/2021*.................... $ 887,000 $ 949,090
----------
MACHINERY-FARMING -- 0.1%
CNH Capital LLC
Company Guar. Notes
3.25% due 02/01/2017..................... 504,000 514,080
----------
MARINE SERVICES -- 0.3%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/2019..................... 1,299,000 1,360,703
----------
MEDICAL PRODUCTS -- 0.5%
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/2027..................... 370,000 472,066
Universal Hospital Services, Inc.
Sec. Notes
7.63% due 08/15/2020..................... 1,894,000 2,026,580
----------
2,498,646
----------
MEDICAL-DRUGS -- 0.5%
Endo Finance LLC
Company Guar. Notes
5.75% due 01/15/2022*.................... 742,000 760,550
Endo Health Solutions, Inc.
Company Guar. Notes
7.00% due 07/15/2019..................... 1,825,000 1,966,437
----------
2,726,987
----------
MEDICAL-GENERIC DRUGS -- 0.2%
Mylan, Inc.
Company Guar. Notes
7.88% due 07/15/2020*.................... 827,000 927,046
----------
MEDICAL-HOSPITALS -- 1.0%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/2017..................... 1,055,000 1,120,938
HCA, Inc.
Senior Sec. Notes
3.75% due 03/15/2019..................... 207,000 207,776
HCA, Inc.
Senior Notes
7.50% due 11/15/2095..................... 1,823,000 1,595,125
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019..................... 1,094,000 1,167,845
Tenet Healthcare Corp.
Senior Notes
6.88% due 11/15/2031..................... 1,075,000 967,500
----------
5,059,184
----------
MEDICAL-WHOLESALE DRUG DISTRIBUTION -- 0.1%
McKesson Corp.
Senior Notes
4.88% due 03/15/2044..................... 368,000 373,005
----------
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MULTIMEDIA -- 0.3%
Time Warner Cos., Inc.
Company Guar. Notes
6.95% due 01/15/2028........................ $ 674,000 $ 841,830
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/2033........................ 385,000 530,563
Viacom, Inc.
Senior Notes
5.25% due 04/01/2044........................ 147,000 150,197
----------
1,522,590
----------
MUSIC -- 0.3%
Gibson Brands, Inc.
Senior Sec. Notes
8.88% due 08/01/2018*....................... 750,000 798,750
WMG Acquisition Corp.
Senior Sec. Notes
6.00% due 01/15/2021*....................... 794,000 827,745
----------
1,626,495
----------
NETWORKING PRODUCTS -- 0.1%
Cisco Systems, Inc.
Senior Notes
2.13% due 03/01/2019........................ 453,000 450,973
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.1%
Covanta Holding Corp.
Senior Notes
5.88% due 03/01/2024........................ 726,000 737,461
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.2%
Pitney Bowes, Inc.
Senior Notes
4.63% due 03/15/2024........................ 337,000 334,619
Xerox Corp.
Senior Notes
4.50% due 05/15/2021........................ 696,000 733,457
----------
1,068,076
----------
OFFICE SUPPLIES & FORMS -- 0.2%
ACCO Brands Corp.
Company Guar. Notes
6.75% due 04/30/2020........................ 1,028,000 1,054,985
----------
OIL & GAS DRILLING -- 0.4%
Hercules Offshore, Inc.
Company Guar. Notes
7.50% due 10/01/2021*....................... 900,000 909,000
Rowan Cos., Inc.
Company Guar. Notes
4.88% due 06/01/2022........................ 893,000 923,824
----------
1,832,824
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 4.8%
Alta Mesa Holdings LP/Alta Mesa Finance
Services Corp.
Company Guar. Notes
9.63% due 10/15/2018........................ 1,140,000 1,225,500
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Atlas Energy Holdings Operating Co. LLC/Atlas
Resource Finance Corp.
Company Guar. Notes
7.75% due 01/15/2021............................ $1,271,000 $1,334,550
Chaparral Energy, Inc.
Company Guar. Notes
7.63% due 11/15/2022............................ 526,000 569,395
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2021............................ 635,000 698,500
Continental Resources, Inc.
Company Guar. Notes
4.50% due 04/15/2023............................ 411,000 425,661
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
7.75% due 09/01/2022............................ 1,213,000 1,361,592
EPL Oil & Gas, Inc.
Company Guar. Notes
8.25% due 02/15/2018............................ 1,560,000 1,688,700
EV Energy Partners LP/EV Energy Finance Corp.
Company Guar. Notes
8.00% due 04/15/2019............................ 1,105,000 1,143,675
Halcon Resources Corp.
Company Guar. Notes
9.75% due 07/15/2020............................ 1,914,000 2,062,335
Linn Energy LLC/Linn Energy Finance Corp.
Company Guar. Notes
7.25% due 11/01/2019*........................... 1,792,000 1,868,160
Memorial Production Partners LP/Memorial
Production Finance Corp.
Company Guar. Notes
7.63% due 05/01/2021............................ 740,000 780,700
Midstates Petroleum Co., Inc.
Company Guar. Notes
9.25% due 06/01/2021............................ 1,435,000 1,499,575
Northern Oil and Gas, Inc.
Company Guar. Notes
8.00% due 06/01/2020............................ 1,250,000 1,328,125
Penn Virginia Corp.
Company Guar. Notes
8.50% due 05/01/2020............................ 915,000 1,017,938
Plains Exploration & Production Co.
Company Guar. Notes
6.63% due 05/01/2021............................ 301,000 329,595
Plains Exploration & Production Co.
Company Guar. Notes
6.75% due 02/01/2022............................ 520,000 574,600
Rex Energy Corp.
Company Guar. Notes
8.88% due 12/01/2020............................ 1,368,000 1,511,640
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021............................ 1,410,000 1,441,725
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
SandRidge Energy, Inc.
Company Guar. Notes
7.50% due 02/15/2023.................. $ 620,000 $ 657,200
Stone Energy Corp.
Company Guar. Notes
7.50% due 11/15/2022.................. 995,000 1,077,087
Swift Energy Co.
Company Guar. Notes
7.88% due 03/01/2022.................. 640,000 640,000
Talos Production LLC/Talos
Production Finance, Inc.
Company Guar. Notes
9.75% due 02/15/2018*................. 865,000 906,088
-----------
24,142,341
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
Hess Corp.
Senior Notes
5.60% due 02/15/2041.................. 645,000 708,308
Hess Corp.
Senior Notes
7.88% due 10/01/2029.................. 235,000 308,634
-----------
1,016,942
-----------
OIL REFINING & MARKETING -- 0.4%
Alon Refining Krotz Springs, Inc.
Senior Sec. Notes
13.50% due 10/15/2014................. 260,000 261,300
Calumet Specialty Products Partners
LP/Calumet Finance Corp.
Company Guar. Notes
6.50% due 04/15/2021*................. 892,000 898,690
Reliance Holdings USA, Inc.
Company Guar. Notes
5.40% due 02/14/2022.................. 450,000 471,254
Valero Energy Corp.
Company Guar. Notes
6.63% due 06/15/2037.................. 456,000 548,789
-----------
2,180,033
-----------
OIL-FIELD SERVICES -- 0.2%
Green Field Energy Services, Inc.
Sec. Notes
13.00% due 11/15/2016*(6)(9).......... 1,091,000 76,370
Hiland Partners LP/Hiland Partners
Finance Corp.
Company Guar. Notes
7.25% due 10/01/2020*................. 650,000 706,875
-----------
783,245
-----------
PAPER & RELATED PRODUCTS -- 0.9%
Clearwater Paper Corp.
Company Guar. Notes
4.50% due 02/01/2023.................. 1,245,000 1,198,312
Domtar Corp.
Company Guar. Notes
6.75% due 02/15/2044.................. 399,000 443,256
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
PAPER & RELATED PRODUCTS (CONTINUED)
Georgia-Pacific LLC
Senior Notes
3.73% due 07/15/2023*....................... $1,076,000 $1,068,413
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*....................... 866,000 971,006
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020........................ 1,012,000 1,042,360
----------
4,723,347
----------
PETROCHEMICALS -- 0.2%
PetroLogistics LP/PetroLogistics
Finance Corp.
Company Guar. Notes
6.25% due 04/01/2020........................ 1,184,000 1,186,960
----------
PIPELINES -- 2.5%
Access Midstream Partners LP/ACMP
Finance Corp.
Company Guar. Notes
6.13% due 07/15/2022........................ 1,020,000 1,097,775
Atlas Pipeline Partners LP/Atlas Pipeline
Finance Corp.
Company Guar. Notes
5.88% due 08/01/2023........................ 493,000 486,838
Crestwood Midstream Partners LP/Crestwood
Midstream Finance Corp.
Company Guar. Notes
6.00% due 12/15/2020........................ 840,000 879,900
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
4.70% due 11/01/2042........................ 224,000 199,616
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
5.00% due 10/01/2021........................ 87,000 92,124
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
6.50% due 04/01/2020........................ 1,420,000 1,625,319
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020........................ 1,100,000 1,258,125
Energy Transfer Partners LP
Senior Notes
6.63% due 10/15/2036........................ 736,000 831,267
Genesis Energy LP/Genesis Energy
Finance Corp.
Company Guar. Notes
7.88% due 12/15/2018........................ 805,000 866,381
Kinder Morgan, Inc.
Senior Sec. Notes
5.00% due 02/15/2021*....................... 1,250,000 1,251,767
MarkWest Energy Partners LP/MarkWest
Energy Finance Corp.
Company Guar. Notes
4.50% due 07/15/2023........................ 260,000 250,250
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
MarkWest Energy Partners LP/MarkWest
Energy Finance Corp.
Company Guar. Notes
6.50% due 08/15/2021............................... $ 614,000 $ 663,120
Sabine Pass Liquefaction LLC
Senior Sec. Notes
5.63% due 04/15/2023............................... 575,000 572,125
Sabine Pass Liquefaction LLC
Senior Sec. Notes
6.25% due 03/15/2022*.............................. 511,000 532,718
Southern Star Central Corp.
Senior Notes
6.75% due 03/01/2016............................... 650,000 650,812
Tesoro Logistics LP/Tesoro Logistics Finance Corp.
Company Guar. Notes
6.13% due 10/15/2021............................... 926,000 981,560
Williams Partners LP
Senior Notes
5.40% due 03/04/2044............................... 295,000 302,708
-----------
12,542,405
-----------
PUBLISHING-NEWSPAPERS -- 0.6%
Gannett Co., Inc.
Company Guar. Notes
5.13% due 07/15/2020*.............................. 532,000 546,630
Lee Enterprises, Inc.
Senior Sec. Notes
9.50% due 03/15/2022*.............................. 777,000 800,310
McClatchy Co.
Senior Sec. Notes
9.00% due 12/15/2022............................... 1,275,000 1,483,781
-----------
2,830,721
-----------
PUBLISHING-PERIODICALS -- 0.4%
Expo Event Transco, Inc.
Senior Notes
9.00% due 06/15/2021*.............................. 2,100,000 2,136,750
-----------
RACETRACKS -- 0.2%
GLP Capital LP/GLP Financing II, Inc.
Company Guar. Notes
4.88% due 11/01/2020*.............................. 1,048,000 1,075,510
-----------
REAL ESTATE INVESTMENT TRUSTS -- 0.7%
Corrections Corp of America
Company Guar. Notes
4.13% due 04/01/2020............................... 1,300,000 1,283,750
Omega Healthcare Investors, Inc.
Senior Notes
4.95% due 04/01/2024*.............................. 474,000 463,939
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.88% due 03/15/2024............................... 1,552,000 1,629,600
UDR, Inc.
Company Guar. Notes
3.70% due 10/01/2020............................... 258,000 261,871
-----------
3,639,160
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
REAL ESTATE MANAGEMENT/SERVICES -- 0.3%
Kennedy-Wilson, Inc.
Company Guar. Notes
8.75% due 04/01/2019................. $1,340,000 $1,463,950
----------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(5)(7).......... 3,285,000 124
----------
RENTAL AUTO/EQUIPMENT -- 0.4%
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022................. 639,000 702,900
NES Rentals Holdings, Inc.
Sec. Notes
7.88% due 05/01/2018*................ 1,111,000 1,188,770
----------
1,891,670
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/2021................. 820,000 921,475
----------
RETAIL-AUTO PARTS -- 0.2%
Advance Auto Parts, Inc.
Company Guar. Notes
4.50% due 12/01/2023................. 734,000 751,862
----------
RETAIL-AUTOMOBILE -- 0.2%
AutoNation, Inc.
Company Guar. Notes
5.50% due 02/01/2020................. 995,000 1,079,575
----------
RETAIL-BUILDING PRODUCTS -- 0.2%
Building Materials Holding Corp.
Senior Sec. Notes
9.00% due 09/15/2018*................ 1,023,000 1,127,858
----------
RETAIL-DISCOUNT -- 0.1%
Dollar General Corp.
Senior Notes
3.25% due 04/15/2023................. 383,000 361,554
----------
RETAIL-DRUG STORE -- 0.2%
CVS Pass-Through Trust
Pass Through Certs.
4.70% due 01/10/2036*................ 282,767 292,664
CVS Pass-Through Trust
Pass Through Certs.
5.77% due 01/10/2033*................ 231,309 252,237
CVS Pass-Through Trust
Pass Through Certs.
5.93% due 01/10/2034*................ 364,338 405,513
----------
950,414
----------
RETAIL-MUSIC STORE -- 0.3%
Guitar Center, Inc.
Senior Sec. Notes
6.50% due 04/15/2019*................ 800,000 795,000
Guitar Center, Inc.
Company Guar. Notes
9.63% due 04/15/2020*................ 675,000 669,938
----------
1,464,938
----------
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-PAWN SHOPS -- 0.2%
Cash America International, Inc.
Company Guar. Notes
5.75% due 05/15/2018..................... $1,175,000 $1,157,375
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.3%
Bon-Ton Department Stores, Inc.
Sec. Notes
8.00% due 06/15/2021..................... 1,670,000 1,613,638
----------
RETAIL-RESTAURANTS -- 0.9%
Dave & Buster's, Inc.
Company Guar. Notes
11.00% due 06/01/2018.................... 1,095,000 1,171,650
Landry's, Inc.
Senior Notes
9.38% due 05/01/2020*.................... 1,213,000 1,335,816
PF Chang's China Bistro, Inc.
Company Guar. Notes
10.25% due 06/30/2020*................... 2,032,000 2,138,680
----------
4,646,146
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(5)(7)(11)(12)..... 100,000 0
----------
SAVINGS & LOANS/THRIFTS -- 0.6%
Astoria Financial Corp.
Senior Notes
5.00% due 06/19/2017..................... 718,000 773,717
First Niagara Financial Group, Inc.
Senior Notes
6.75% due 03/19/2020..................... 1,234,000 1,413,678
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021..................... 814,000 931,773
----------
3,119,168
----------
SCHOOLS -- 0.2%
Northwestern University
Bonds
4.20% due 12/01/2047..................... 386,000 373,234
President and Fellows of Harvard College
Bonds
3.62% due 10/01/2037..................... 191,000 173,569
University of Pennsylvania
Senior Notes
4.67% due 09/01/2112..................... 292,000 275,505
----------
822,308
----------
SECURITY SERVICES -- 0.2%
ADT Corp.
Senior Notes
3.50% due 07/15/2022..................... 568,000 499,283
ADT Corp.
Senior Notes
6.25% due 10/15/2021*.................... 462,000 474,705
----------
973,988
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT -- 0.2%
Entegris, Inc.
Company Guar. Notes
6.00% due 04/01/2022*....................... $ 193,000 $ 197,343
Magnachip Semiconductor Corp.
Senior Notes
6.63% due 07/15/2021........................ 553,000 550,235
----------
747,578
----------
SHIPBUILDING -- 0.2%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021........................ 1,043,000 1,151,211
----------
SPECIAL PURPOSE ENTITIES -- 0.2%
MassMutual Global Funding II
Senior Sec. Notes
2.00% due 04/05/2017*....................... 856,000 873,634
MassMutual Global Funding II
Senior Sec. Notes
2.50% due 10/17/2022*....................... 345,000 321,558
----------
1,195,192
----------
SPECIFIED PURPOSE ACQUISITIONS -- 0.4%
Opal Acquisition, Inc.
Senior Notes
8.88% due 12/15/2021*....................... 1,825,000 1,834,125
----------
STEEL PIPE & TUBE -- 0.3%
JMC Steel Group, Inc.
Senior Notes
8.25% due 03/15/2018*....................... 1,490,000 1,523,525
----------
STEEL-PRODUCERS -- 0.3%
AK Steel Corp.
Company Guar. Notes
8.38% due 04/01/2022........................ 874,000 878,370
Ryerson, Inc./Joseph T. Ryerson & Son, Inc.
Senior Sec. Notes
9.00% due 10/15/2017........................ 800,000 863,000
----------
1,741,370
----------
STEEL-SPECIALTY -- 0.1%
Allegheny Technologies, Inc.
Senior Notes
5.95% due 01/15/2021........................ 539,000 568,916
----------
STORAGE/WAREHOUSING -- 0.3%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/2020........................ 1,165,000 1,294,606
----------
TELEPHONE-INTEGRATED -- 1.9%
CenturyLink, Inc.
Senior Notes
5.80% due 03/15/2022........................ 1,171,000 1,197,347
Cincinnati Bell, Inc.
Company Guar. Notes
8.38% due 10/15/2020........................ 997,000 1,091,715
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/2018........................ 1,000,000 1,167,500
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Frontier Communications Corp.
Senior Notes
9.25% due 07/01/2021.................. $ 549,000 $ 650,565
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/2032.................. 1,110,000 1,221,000
Verizon Communications, Inc.
Senior Notes
4.50% due 09/15/2020.................. 712,000 773,263
Verizon Communications, Inc.
Senior Notes
6.40% due 09/15/2033.................. 1,340,000 1,590,911
Verizon Communications, Inc.
Senior Notes
6.55% due 09/15/2043.................. 607,000 738,680
Windstream Corp.
Company Guar. Notes
6.38% due 08/01/2023.................. 1,051,000 1,024,725
------------
9,455,706
------------
TELEVISION -- 0.6%
CBS Corp.
Company Guar. Notes
4.85% due 07/01/2042.................. 179,000 172,430
Gray Television, Inc.
Company Guar. Notes
7.50% due 10/01/2020.................. 1,095,000 1,188,075
Sinclair Television Group, Inc.
Company Guar. Notes
6.38% due 11/01/2021.................. 1,330,000 1,383,200
------------
2,743,705
------------
THEATERS -- 0.1%
Regal Entertainment Group
Senior Notes
5.75% due 06/15/2023.................. 682,000 692,230
------------
TRANSPORT-EQUIPMENT & LEASING -- 0.2%
Jurassic Holdings III, Inc.
Sec. Notes
6.88% due 02/15/2021*................. 887,000 913,610
------------
TRANSPORT-SERVICES -- 0.1%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.................. 675,000 715,500
------------
TRAVEL SERVICES -- 0.2%
Sabre GLBL, Inc.
Senior Sec. Notes
8.50% due 05/15/2019*................. 1,029,000 1,137,045
------------
WIRELESS EQUIPMENT -- 0.0%
Motorola Solutions, Inc.
Senior Notes
6.63% due 11/15/2037.................. 11,445 12,034
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $241,369,445)................... 244,325,117
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES -- 17.6%
AIRLINES -- 0.3%
Air Canada
Senior Sec. Notes
6.75% due 10/01/2019*................. $ 1,549,000 $1,669,047
----------
AUTO-CARS/LIGHT TRUCKS -- 0.1%
Volkswagen International Finance NV
Company Guar. Notes
2.13% due 11/20/2018*................. 489,000 488,855
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.2%
Schaeffler Finance BV
Senior Sec. Notes
4.75% due 05/15/2021*................. 1,125,000 1,150,313
----------
BANKS-COMMERCIAL -- 3.4%
Abbey National Treasury Services PLC
Company Guar. Notes
1.38% due 03/13/2017.................. 584,000 584,774
Akbank TAS
Senior Notes
7.50% due 02/05/2018*................. TRY 2,385,000 957,143
Banco ABC Brasil SA
Senior Notes
8.50% due 03/28/2016*................. BRL 3,100,000 1,243,279
Banco de Bogota SA
Senior Notes
5.00% due 01/15/2017*................. 260,000 275,925
Banco de Credito del Peru
Senior Notes
5.38% due 09/16/2020.................. 400,000 423,500
Bangkok Bank PCL
Senior Notes
3.88% due 09/27/2022.................. 315,000 302,436
Bank of Nova Scotia
Senior Notes
2.05% due 10/30/2018.................. 488,000 486,271
Bank of Tokyo-Mitsubishi UFJ, Ltd
Senior Notes
2.30% due 03/10/2019*................. 618,000 615,948
Banque Federative du Credit Mutuel SA
Senior Notes
2.50% due 10/29/2018*................. 503,000 502,746
BPCE SA
Sub. Notes
5.15% due 07/21/2024*................. 409,000 406,889
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA
Senior Notes
2.25% due 01/14/2019.................. 310,000 309,137
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA
Senior Notes
2.63% due 05/29/2018.................. NOK 5,000,000 836,192
Credit Suisse AG
Sub. Notes
5.40% due 01/14/2020.................. 528,000 587,904
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
Credit Suisse AG
Sub. Notes
6.50% due 08/08/2023*................. $ 315,000 $ 345,713
ICICI Bank, Ltd.
Senior Notes
5.75% due 11/16/2020.................. 400,000 425,233
ING Bank NV
Senior Notes
4.00% due 03/15/2016*................. 1,461,000 1,544,200
Intesa Sanpaolo SpA
Bank Guar. Notes
5.25% due 01/12/2024.................. 780,000 801,288
Malayan Banking Bhd VRS
Sub. Notes
3.25% due 09/20/2022.................. 500,000 497,695
National Australia Bank, Ltd.
Senior Notes
1.60% due 08/07/2015.................. 719,000 728,902
National Bank of Canada
Bank Guar. Notes
1.45% due 11/07/2017.................. 1,040,000 1,026,706
PKO Finance AB
Senior Notes
4.63% due 09/26/2022*................. 700,000 705,250
RHB Bank Bhd
Senior Notes
3.25% due 05/11/2017.................. 425,000 435,485
Sberbank of Russia Via SB Capital SA
Senior Notes
6.13% due 02/07/2022.................. 500,000 515,000
Standard Chartered PLC
Sub. Notes
5.20% due 01/26/2024*................. 457,000 469,182
Standard Chartered PLC
Sub. Notes
5.70% due 03/26/2044*................. 1,037,000 1,027,252
Sumitomo Mitsui Financial Group, Inc.
Sub. Notes
4.44% due 04/02/2024*................. 773,000 773,718
Turkiye Halk Bankasi AS
Senior Notes
3.88% due 02/05/2020*................. 355,000 324,825
-----------
17,152,593
-----------
BANKS-SPECIAL PURPOSE -- 0.4%
Burgan Finance No. 1 Jersey, Ltd.
Bank Guar. Notes
7.88% due 09/29/2020.................. 305,000 355,356
Development Bank of Kazakhstan JSC
Senior Notes
4.13% due 12/10/2022*................. 600,000 541,500
Kreditanstalt fuer Wiederaufbau
Government Guar. Notes
3.75% due 09/25/2015.................. NOK 5,500,000 942,778
-----------
1,839,634
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------
BEVERAGES-NON-ALCOHOLIC -- 0.4%
Coca-Cola Femsa SAB de CV
Company Guar. Notes
2.38% due 11/26/2018............ $ 892,000 $ 891,108
Coca-Cola Femsa SAB de CV
Company Guar. Notes
5.25% due 11/26/2043............ 859,000 914,640
----------
1,805,748
----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Cemex SAB de CV
Senior Sec. Notes
5.88% due 03/25/2019*........... 500,000 518,125
----------
CABLE/SATELLITE TV -- 0.3%
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/2018*........... 1,200,000 1,306,500
----------
CASINO HOTELS -- 0.2%
Wynn Macau, Ltd.
Senior Notes
5.25% due 10/15/2021*........... 1,051,000 1,069,393
----------
CELLULAR TELECOM -- 0.0%
Mobile Telesystems OJSC via MTS
International Funding, Ltd.
Senior Notes
5.00% due 05/30/2023............ 250,000 231,250
----------
CHEMICALS-DIVERSIFIED -- 0.2%
NOVA Chemicals Corp.
Senior Notes
5.25% due 08/01/2023*........... 1,051,000 1,124,570
----------
COAL -- 0.2%
Indo Energy Finance BV
Senior Sec. Notes
7.00% due 05/07/2018............ 200,000 194,500
Indo Energy Finance II BV
Senior Sec. Notes
6.38% due 01/24/2023*........... 450,000 357,750
PT Adaro Indonesia
Company Guar. Notes
7.63% due 10/22/2019............ 350,000 371,875
----------
924,125
----------
COMMERCIAL SERVICES -- 0.1%
Global A&T Electronics, Ltd.
Senior Sec. Notes
10.00% due 02/01/2019*.......... 760,000 621,300
----------
CRUISE LINES -- 0.3%
Royal Caribbean Cruises, Ltd.
Senior Notes
5.25% due 11/15/2022............ 1,286,000 1,318,150
----------
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS -- 0.6%
HSBC Holdings PLC
Sub. Notes
5.25% due 03/14/2044...................... $ 601,000 $ 607,705
Royal Bank of Scotland Group PLC
Sub. Notes
6.00% due 12/19/2023...................... 639,000 654,306
Royal Bank of Scotland Group PLC
Sub. Notes
6.10% due 06/10/2023...................... 430,000 446,348
Royal Bank of Scotland Group PLC
Senior Notes
6.40% due 10/21/2019...................... 842,000 970,533
UBS AG
Sub. Notes
7.63% due 08/17/2022...................... 294,000 344,828
----------
3,023,720
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.2%
Hyundai Capital Services, Inc.
Senior Notes
6.00% due 05/05/2015*..................... 833,000 877,610
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.5%
Bombardier, Inc.
Senior Notes
6.13% due 01/15/2023*..................... 873,000 881,730
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
2.88% due 01/15/2019*..................... 613,000 611,178
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
5.75% due 06/15/2043*..................... 701,000 774,764
----------
2,267,672
----------
DIVERSIFIED MINERALS -- 0.6%
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.00% due 04/01/2017*..................... 825,000 868,312
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.88% due 04/01/2022*..................... 1,250,000 1,346,875
Volcan Cia Minera SAA
Company Guar. Notes
5.38% due 02/02/2022*..................... 610,000 581,025
----------
2,796,212
----------
DIVERSIFIED OPERATIONS -- 0.2%
KOC Holding AS
Senior Notes
3.50% due 04/24/2020*..................... 650,000 591,500
Tenedora Nemak SA de CV
Senior Notes
5.50% due 02/28/2023*..................... 650,000 660,562
----------
1,252,062
----------
ELECTRIC-GENERATION -- 0.1%
Comision Federal de Electricidad
Senior Notes
4.88% due 05/26/2021...................... 400,000 417,000
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
ELECTRIC-INTEGRATED -- 0.2%
E.CL SA
Senior Notes
5.63% due 01/15/2021................. $ 550,000 $ 587,628
Electricite de France
Senior Notes
6.00% due 01/22/2114*................ 236,000 247,657
Empresas Publicas de Medellin ESP
Senior Notes
8.38% due 02/01/2021................. COP 266,000,000 140,626
----------
975,911
----------
FINANCE-LEASING COMPANIES -- 0.8%
Aircastle, Ltd.
Senior Notes
4.63% due 12/15/2018................. 243,000 248,771
Aircastle, Ltd.
Senior Notes
6.25% due 12/01/2019................. 1,800,000 1,944,000
Fly Leasing, Ltd.
Company Guar. Notes
6.75% due 12/15/2020................. 675,000 705,375
Milestone Aviation Group, Ltd.
Senior Notes
8.63% due 12/15/2017*................ 1,047,000 1,124,216
----------
4,022,362
----------
FOOD-MEAT PRODUCTS -- 0.2%
BRF SA
Senior Notes
3.95% due 05/22/2023*................ 200,000 178,500
BRF SA
Senior Notes
7.75% due 05/22/2018*................ BRL 1,000,000 362,935
ESAL GmbH
Company Guar. Notes
6.25% due 02/05/2023*................ 260,000 245,700
----------
787,135
----------
FOOD-RETAIL -- 0.1%
Cencosud SA
Company Guar. Notes
4.88% due 01/20/2023................. 425,000 411,110
----------
GAS-TRANSPORTATION -- 0.0%
Transportadora de Gas del Peru SA
Senior Notes
4.25% due 04/30/2028*................ 200,000 182,000
----------
GOLD MINING -- 0.4%
AuRico Gold, Inc.
Sec. Notes
7.75% due 04/01/2020*................ 496,000 492,280
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/2020................. 450,000 389,250
Kinross Gold Corp.
Company Guar. Notes
5.95% due 03/15/2024*................ 643,000 644,175
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
GOLD MINING (CONTINUED)
Polyus Gold International, Ltd.
Company Guar. Notes
5.63% due 04/29/2020*....................... $ 250,000 $ 233,750
----------
1,759,455
----------
HAZARDOUS WASTE DISPOSAL -- 0.3%
Tervita Corp.
Senior Sec. Notes
8.00% due 11/15/2018*....................... 1,050,000 1,060,500
Tervita Corp.
Company Guar. Notes
9.75% due 11/01/2019*....................... 700,000 679,000
----------
1,739,500
----------
INDEPENDENT POWER PRODUCERS -- 0.1%
PT Perusahaan Listrik Negara
Senior Notes
5.50% due 11/22/2021*....................... 500,000 505,000
----------
INSURANCE-LIFE/HEALTH -- 0.1%
AIA Group, Ltd.
Senior Notes
2.25% due 03/11/2019*....................... 272,000 268,838
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.1%
Emeco Pty, Ltd.
Senior Sec. Notes
9.88% due 03/15/2019*....................... 253,000 259,958
----------
MEDICAL-DRUGS -- 0.4%
Grifols Worldwide Operations, Ltd.
Senior Notes
5.25% due 04/01/2022*....................... 600,000 613,500
Takeda Pharmaceutical Co., Ltd.
Senior Notes
1.63% due 03/17/2017*....................... 989,000 997,459
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
5.63% due 12/01/2021*....................... 562,000 590,100
----------
2,201,059
----------
METAL-DIVERSIFIED -- 0.2%
Vedanta Resources PLC
Senior Notes
7.13% due 05/31/2023*....................... 370,000 369,075
Vedanta Resources PLC
Senior Notes
8.25% due 06/07/2021........................ 400,000 424,000
----------
793,075
----------
METAL-IRON -- 0.2%
Samarco Mineracao SA
Senior Notes
4.13% due 11/01/2022*....................... 470,000 432,400
Vale SA
Senior Notes
5.63% due 09/11/2042........................ 462,000 432,161
----------
864,561
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
MUNICIPAL BONDS -- 0.1%
City of Kyiv Via Kyiv Finance PLC
Senior Notes
9.38% due 07/11/2016*....................... $ 870,000 $ 739,500
----------
OIL & GAS DRILLING -- 0.4%
Pacific Drilling SA
Senior Sec. Notes
5.38% due 06/01/2020*....................... 1,050,000 1,042,125
Transocean, Inc.
Company Guar. Notes
6.38% due 12/15/2021........................ 450,000 505,779
Transocean, Inc.
Company Guar. Notes
7.50% due 04/15/2031........................ 280,000 323,238
----------
1,871,142
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.4%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031........................ 566,000 720,665
MIE Holdings Corp.
Company Guar. Notes
9.75% due 05/12/2016........................ 400,000 421,000
Novatek OAO via Novatek Finance, Ltd.
Senior Notes
4.42% due 12/13/2022........................ 450,000 395,438
PT Pertamina Persero
Senior Notes
4.88% due 05/03/2022*....................... 720,000 692,100
----------
2,229,203
----------
OIL COMPANIES-INTEGRATED -- 1.1%
BP Capital Markets PLC
Company Guar. Notes
1.38% due 11/06/2017........................ 425,000 423,312
BP Capital Markets PLC
Company Guar. Notes
2.25% due 11/01/2016........................ 511,000 527,319
Husky Energy, Inc.
Senior Notes
4.00% due 04/15/2024........................ 353,000 358,993
Pacific Rubiales Energy Corp.
Company Guar. Notes
5.13% due 03/28/2023........................ 500,000 486,250
Petrobras Global Finance BV
Company Guar. Notes
7.25% due 03/17/2044........................ 365,000 374,682
Petrobras International Finance Co.
Company Guar. Notes
5.38% due 01/27/2021........................ 400,000 404,528
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/2027........................ 350,000 185,500
Petroleos de Venezuela SA
Company Guar. Notes
8.50% due 11/02/2017........................ 900,000 753,750
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-INTEGRATED (CONTINUED)
Petroleos Mexicanos
Company Guar. Notes
5.50% due 06/27/2044....................... $542,000 $ 523,030
Petroleos Mexicanos
Company Guar. Notes
6.38% due 01/23/2045*...................... 355,000 382,956
Petronas Capital, Ltd.
Company Guar. Notes
5.25% due 08/12/2019....................... 600,000 674,828
Rosneft Oil Co via Rosneft
International Finance, Ltd.
Senior Notes
4.20% due 03/06/2022*...................... 200,000 176,750
Sibur Securities, Ltd.
Company Guar. Notes
3.91% due 01/31/2018*...................... 310,000 284,425
----------
5,556,323
----------
OIL REFINING & MARKETING -- 0.0%
Thai Oil PCL
Senior Notes
3.63% due 01/23/2023*...................... 200,000 185,804
----------
PAPER & RELATED PRODUCTS -- 0.1%
Inversiones CMPC SA
Company Guar. Notes
4.50% due 04/25/2022....................... 500,000 489,913
----------
PETROCHEMICALS -- 0.3%
Alpek SA de CV
Company Guar. Notes
5.38% due 08/08/2023*...................... 400,000 413,000
Braskem Finance, Ltd.
Company Guar. Notes
5.75% due 04/15/2021....................... 400,000 399,500
Mexichem SAB de CV
Company Guar. Notes
6.75% due 09/19/2042*...................... 559,000 549,217
----------
1,361,717
----------
PIPELINES -- 0.0%
Transportadora de Gas Internacional SA ESP
Senior Notes
5.70% due 03/20/2022*...................... 200,000 208,000
----------
REAL ESTATE INVESTMENT TRUSTS -- 0.1%
Trust F/1401
Senior Notes
5.25% due 12/15/2024*...................... 400,000 399,000
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.7%
Agile Property Holdings, Ltd.
Company Guar. Notes
9.88% due 03/20/2017....................... 350,000 364,875
China Overseas Finance Cayman II, Ltd.
Company Guar. Notes
5.50% due 11/10/2020....................... 300,000 309,155
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
REAL ESTATE OPERATIONS & DEVELOPMENT (CONTINUED)
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.25% due 04/04/2021*......................... $ 200,000 $ 186,600
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.50% due 01/10/2023*......................... 200,000 186,000
Country Garden Holdings Co., Ltd.
Company Guar. Notes
11.13% due 02/23/2018......................... 410,000 443,313
Kaisa Group Holdings, Ltd.
Company Guar. Notes
10.25% due 01/08/2020......................... 500,000 480,625
Mattamy Group Corp.
Senior Notes
6.50% due 11/15/2020*......................... 1,325,000 1,341,562
Shimao Property Holdings, Ltd.
Company Guar. Notes
6.63% due 01/14/2020.......................... 200,000 190,000
----------
3,502,130
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
LS Finance 2022, Ltd.
Company Guar. Notes
4.25% due 10/16/2022.......................... 500,000 469,638
----------
RETAIL-RESTAURANTS -- 0.1%
Arcos Dorados Holdings, Inc.
Company Guar. Notes
6.63% due 09/27/2023*......................... 325,000 333,125
----------
SATELLITE TELECOM -- 0.2%
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021.......................... 1,105,000 1,163,013
----------
SECURITY SERVICES -- 0.2%
Garda World Security Corp.
Company Guar. Notes
7.25% due 11/15/2021*......................... 1,111,000 1,185,993
----------
SOVEREIGN -- 0.2%
Perusahaan Penerbit SBSN
Senior Notes
3.30% due 11/21/2022*......................... 950,000 851,437
Republic of Angola Via Northern Lights III BV
Senior Notes
7.00% due 08/16/2019.......................... 250,000 273,438
----------
1,124,875
----------
SPECIAL PURPOSE ENTITIES -- 0.1%
Hellas Telecommunications
Luxembourg II FRS
Sub. Notes
6.03% due 01/15/2015*+(5)(6)(7)(15)........... 1,330,000 0
MAF Global Securities, Ltd.
Company Guar. Notes
5.25% due 07/05/2019.......................... 400,000 430,580
----------
430,580
----------
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
STEEL-PRODUCERS -- 0.4%
ArcelorMittal
Senior Notes
6.75% due 02/25/2022.................... $ 943,000 $1,034,943
ArcelorMittal
Senior Notes
7.25% due 03/01/2041.................... 695,000 697,606
Severstal OAO Via Steel Capital SA
Senior Notes
5.90% due 10/17/2022*................... 200,000 187,996
Severstal OAO Via Steel Capital SA
Senior Notes
5.90% due 10/17/2022.................... 200,000 187,996
----------
2,108,541
----------
SUGAR -- 0.1%
Cosan Luxembourg SA
Company Guar. Notes
9.50% due 03/14/2018*................... BRL 1,590,000 602,644
----------
SUPRANATIONAL BANKS -- 0.2%
International Bank for Reconstruction &
Development
Senior Notes
3.63% due 02/20/2018.................... NZD 750,000 624,845
North American Development Bank
Senior Notes
2.30% due 10/10/2018.................... 584,000 577,120
----------
1,201,965
----------
TELECOM SERVICES -- 0.6%
Altice Financing SA
Senior Sec. Notes
6.50% due 01/15/2022*................... 918,000 968,490
UPCB Finance III, Ltd.
Senior Sec. Notes
6.63% due 07/01/2020*................... 900,000 963,000
Wind Acquisition Holdings Finance SA
Senior Sec. Notes
12.25% due 07/15/2017*(10)(13).......... 1,141,597 1,195,823
----------
3,127,313
----------
TELEPHONE-INTEGRATED -- 0.5%
Oi SA
Senior Notes
9.75% due 09/15/2016*................... BRL 575,000 228,707
Telecom Italia Capital SA
Company Guar. Notes
7.18% due 06/18/2019.................... 855,000 980,044
Telecom Italia Capital SA
Company Guar. Notes
7.72% due 06/04/2038.................... 410,000 438,700
Telefonica Chile SA
Senior Notes
3.88% due 10/12/2022.................... 700,000 663,379
----------
2,310,830
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
TRANSPORT-RAIL -- 0.1%
Russian Railways via RZD Capital PLC
Senior Notes
5.70% due 04/05/2022................. $400,000 $ 391,000
-----------
TRANSPORT-SERVICES -- 0.1%
Transnet SOC, Ltd.
Senior Notes
4.00% due 07/26/2022*................ 600,000 551,706
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $91,022,638)................... 88,167,798
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 13.2%
ELECTRIC-DISTRIBUTION -- 0.1%
Hydro-Quebec
Government Guar. Notes
1.38% due 06/19/2017................. 527,000 528,918
-----------
REGIONAL AUTHORITY -- 0.1%
Province of British Columbia
Senior Notes
2.85% due 06/15/2015................. 612,000 630,764
-----------
SOVEREIGN -- 12.9%
Arab Republic of Egypt
Senior Notes
5.75% due 04/29/2020................. 330,000 338,250
Arab Republic of Egypt
Senior Notes
6.88% due 04/30/2040................. 380,000 342,000
Bolivarian Republic of Venezuela
Senior Notes
9.00% due 05/07/2023................. 370,000 274,725
Bolivarian Republic of Venezuela
Senior Notes
9.38% due 01/13/2034................. 278,000 203,913
Bolivarian Republic of Venezuela
Senior Notes
11.75% due 10/21/2026................ 560,000 477,400
Bolivarian Republic of Venezuela
Senior Notes
11.95% due 08/05/2031................ 555,000 471,750
Commonwealth of Jamaica
Senior Notes
8.00% due 06/24/2019................. 160,000 166,400
Commonwealth of Jamaica
Senior Notes
8.00% due 03/15/2039................. 250,000 227,500
Commonwealth of the Bahamas
Senior Notes
5.75% due 01/16/2024*................ 240,000 241,320
Dominican Republic
Senior Notes
5.88% due 04/18/2024*................ 370,000 367,225
Dominican Republic
Senior Notes
5.88% due 04/18/2024................. 380,000 377,150
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Dominican Republic
Senior Notes
6.60% due 01/28/2024*......... $ 260,000 $ 266,500
Dominican Republic
Senior Notes
8.63% due 04/20/2027.......... 600,000 669,600
Federation of Malaysia
Senior Notes
3.31% due 10/31/2017.......... MYR 7,100,000 2,154,384
Federation of Malaysia
Senior Notes
3.48% due 03/15/2023.......... MYR 2,150,000 627,282
Federative Republic of Brazil
Senior Notes
2.63% due 01/05/2023.......... 602,000 532,770
Federative Republic of Brazil
Senior Notes
4.25% due 01/07/2025.......... 282,000 272,835
Federative Republic of Brazil
Senior Notes
4.88% due 01/22/2021.......... 120,000 127,560
Gabonese Republic
Bonds
6.38% due 12/12/2024*......... 1,140,000 1,205,550
Gabonese Republic
Bonds
6.38% due 12/12/2024.......... 770,000 814,275
Gabonese Republic
Bonds
8.20% due 12/12/2017.......... 614,000 699,960
Government of Canada
Senior Notes
0.88% due 02/14/2017.......... 527,000 526,715
Government of Canada
Bonds
5.75% due 06/01/2029.......... CAD 1,560,000 1,934,880
Government of New Zealand
Senior Notes
6.00% due 04/15/2015.......... NZD 3,030,000 2,699,979
Kingdom of Bahrain
Senior Notes
6.13% due 08/01/2023*......... 821,000 892,837
Kingdom of Morocco
Senior Notes
4.25% due 12/11/2022*......... 598,000 580,060
Kingdom of Norway
Bonds
3.75% due 05/25/2021.......... NOK 7,620,000 1,367,930
Kingdom of Spain
Senior Notes
4.40% due 10/31/2023*......... EUR 600,000 909,604
Lebanese Republic
Senior Notes
4.00% due 12/31/2017.......... 426,000 421,740
Lebanese Republic
Senior Notes
8.25% due 04/12/2021.......... 350,000 393,313
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
SOVEREIGN (CONTINUED)
Oriental Republic of Uruguay
Senior Notes
4.50% due 08/14/2024........... $ 323,000 $ 331,075
Plurinational State of Bolivia
Senior Notes
4.88% due 10/29/2022........... 364,000 360,360
Plurinational State of Bolivia
Senior Notes
5.95% due 08/22/2023*.......... 280,000 292,600
Republic of Argentina
Senior Notes
2.50% due 12/31/2038(3)........ 1,144,761 480,800
Republic of Argentina
Senior Notes
8.28% due 12/31/2033........... 1,200,145 948,778
Republic of Argentina
Senior Notes
8.75% due 06/02/2017........... 35,000 32,550
Republic of Austria
Senior Notes
4.15% due 03/15/2037*.......... EUR 310,000 539,767
Republic of Belize
Senior Notes
5.00% due 02/20/2038(3)........ 414,000 288,248
Republic of Colombia
Senior Notes
2.63% due 03/15/2023........... 200,000 180,000
Republic of Colombia
Senior Notes
4.00% due 02/26/2024........... 576,000 570,240
Republic of Colombia
Senior Notes
4.38% due 07/12/2021........... 1,140,000 1,185,600
Republic of Croatia
Senior Notes
5.50% due 04/04/2023*.......... 426,000 430,473
Republic of Croatia
Senior Notes
6.25% due 04/27/2017........... 930,000 998,587
Republic of Croatia
Senior Notes
6.38% due 03/24/2021........... 200,000 215,500
Republic of El Salvador
Senior Notes
7.63% due 02/01/2041........... 290,000 282,750
Republic of Ghana
Notes
7.88% due 08/07/2023*.......... 473,000 433,978
Republic of Honduras
Senior Notes
7.50% due 03/15/2024........... 350,000 348,250
Republic of Honduras
Senior Notes
8.75% due 12/16/2020*.......... 400,000 438,000
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Hungary
Senior Notes
4.00% due 03/25/2019..... $ 929,000 $ 922,497
Republic of Hungary
Senior Notes
5.38% due 03/25/2024..... 330,000 330,660
Republic of Hungary
Senior Notes
5.75% due 11/22/2023..... 970,000 1,001,525
Republic of Hungary
Senior Notes
7.63% due 03/29/2041..... 732,000 843,630
Republic of Indonesia
Senior Notes
5.25% due 01/17/2042..... 500,000 453,126
Republic of Indonesia
Senior Notes
5.88% due 01/15/2024*.... 430,000 461,712
Republic of Indonesia
Senior Notes
6.63% due 02/17/2037..... 117,000 124,020
Republic of Indonesia
Senior Notes
6.75% due 01/15/2044*.... 740,000 809,375
Republic of Ireland
Bonds
4.50% due 04/18/2020..... EUR 850,000 1,333,561
Republic of Italy
Bonds
5.00% due 03/01/2022..... EUR 960,000 1,520,134
Republic of Ivory Coast
Senior Notes
5.75% due 12/31/2032(3).. 700,000 656,250
Republic of Lithuania
Senior Notes
5.13% due 09/14/2017..... 200,000 218,486
Republic of Lithuania
Senior Notes
6.75% due 01/15/2015..... 429,000 447,447
Republic of Panama
Senior Notes
4.30% due 04/29/2053..... 430,000 352,063
Republic of Peru
Senior Notes
7.13% due 03/30/2019..... 135,000 162,844
Republic of Peru
Senior Notes
8.20% due 08/12/2026..... PEN 2,700,000 1,106,392
Republic of Peru
Senior Notes
8.38% due 05/03/2016..... 384,000 438,720
Republic of Poland
Senior Notes
3.00% due 03/17/2023..... 1,137,000 1,063,095
Republic of Poland
Senior Notes
3.88% due 07/16/2015..... 133,000 138,320
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Poland
Bonds
4.00% due 10/25/2023.......... PLN 5,100,000 $1,656,260
Republic of Poland
Senior Notes
5.00% due 03/23/2022.......... 400,000 436,500
Republic of Poland
Senior Notes
5.00% due 03/23/2022.......... 225,000 245,531
Republic of Poland
Senior Notes
5.13% due 04/21/2021.......... 50,000 55,213
Republic of Poland
Bonds
5.25% due 10/25/2020.......... PLN 3,750,000 1,334,042
Republic of Slovenia
Bonds
4.13% due 02/18/2019*......... 400,000 413,600
Republic of Slovenia
Senior Notes
4.75% due 05/10/2018*......... 430,000 459,571
Republic of Slovenia
Bonds
5.85% due 05/10/2023*......... 440,000 479,600
Republic of South Africa
Senior Notes
4.67% due 01/17/2024.......... 878,000 869,220
Republic of South Africa
Senior Notes
5.88% due 09/16/2025.......... 250,000 268,750
Republic of South Africa
Senior Notes
6.25% due 03/08/2041.......... 282,000 309,143
Republic of Sri Lanka
Senior Notes
5.88% due 07/25/2022*......... 200,000 201,000
Republic of the Philippines
Senior Notes
4.00% due 01/15/2021.......... 930,000 977,662
Republic of the Philippines
Senior Notes
6.50% due 01/20/2020.......... 325,000 385,531
Republic of the Philippines
Senior Notes
8.38% due 06/17/2019.......... 100,000 126,875
Republic of the Philippines
Senior Notes
9.38% due 01/18/2017.......... 285,000 346,560
Republic of the Philippines
Senior Notes
10.63% due 03/16/2025......... 341,000 530,681
Republic of Trinidad & Tobago
Notes
4.38% due 01/16/2024*......... 300,000 313,800
Republic of Turkey
Senior Notes
3.25% due 03/23/2023.......... 240,000 209,880
Republic of Turkey
Bonds
4.88% due 04/16/2043.......... 330,000 280,500
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Turkey
Bonds
6.00% due 01/14/2041..... $ 850,000 $ 835,125
Republic of Turkey
Senior Notes
6.63% due 02/17/2045..... 700,000 737,625
Republic of Ukraine
Senior Notes
7.80% due 11/28/2022..... 596,000 552,045
Republic of Zambia
Notes
5.38% due 09/20/2022..... 410,000 350,038
Russian Federation
Senior Notes
3.50% due 01/16/2019*.... 400,000 396,000
Russian Federation
Senior Notes
3.63% due 04/29/2015..... 300,000 305,625
Russian Federation
Senior Notes
4.88% due 09/16/2023*.... 600,000 593,250
Russian Federation
Senior Notes
5.88% due 09/16/2043*.... 600,000 589,500
Russian Federation
Senior Notes
7.50% due 03/31/2030(3).. 472,650 537,639
Slovak Republic
Senior Notes
4.38% due 05/21/2022..... 610,000 646,368
United Kingdom
Gilt Bonds
1.75% due 09/07/2022..... GBP 1,600,000 2,497,551
United Kingdom
Gilt Bonds
4.75% due 03/07/2020..... GBP 1,420,000 2,720,302
United Mexican States
Senior Notes
2.75% due 04/22/2023..... EUR 200,000 273,463
United Mexican States
Senior Notes
3.50% due 01/21/2021..... 444,000 449,550
United Mexican States
Senior Notes
3.63% due 03/15/2022..... 230,000 230,230
United Mexican States
Senior Notes
4.75% due 03/08/2044..... 788,000 748,600
United Mexican States
Senior Notes
5.63% due 01/15/2017..... 430,000 478,375
United Mexican States
Senior Notes
5.75% due 10/12/2110..... 444,000 436,230
-----------
64,604,255
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
TELEPHONE-INTEGRATED -- 0.1%
Empresa de Telecomunicaciones de Bogota
Senior Notes
7.00% due 01/17/2023*................... COP 640,000,000 $ 290,475
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(cost $65,953,685)...................... 66,054,412
-----------
U.S. GOVERNMENT AGENCIES -- 4.0%
FEDERAL HOME LOAN MTG. CORP. -- 1.3%
2.50% due 01/01/2028.................... 437,466 437,867
3.00% due 08/01/2043.................... 1,291,942 1,247,295
3.50% due 03/01/2042.................... 534,408 537,498
3.50% due 04/01/2042.................... 547,574 550,741
3.50% due 09/01/2043.................... 581,049 584,661
4.00% due 09/01/2040.................... 460,060 477,417
4.50% due 02/01/2020.................... 25,289 26,747
4.50% due 08/01/2020.................... 45,921 48,585
4.50% due 01/01/2039.................... 57,221 60,949
5.00% due 02/01/2034.................... 58,176 63,389
5.00% due 05/01/2034.................... 70,414 77,602
5.00% due 03/01/2039.................... 138,049 149,977
5.00% due 07/01/2040.................... 423,954 460,915
5.50% due 05/01/2037.................... 169,009 186,288
6.00% due 03/01/2040.................... 142,265 158,002
6.50% due 05/01/2029.................... 1,726 1,936
6.50% due 02/01/2035.................... 46,738 52,326
6.50% due 11/01/2037.................... 626,327 711,687
Federal Home Loan Mtg. Corp. REMIC
Series 41, Class F
10.00% due 05/15/2020(1)................ 1,024 1,062
Series 1103, Class N IO
11.57% due 06/15/2021(1)(14)............ 1,195 219
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
6.64% due 09/15/2039(1)(14)............. 3,907,226 659,629
-----------
6,494,792
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 2.6%
3.00% due 10/01/2027.................... 460,470 473,847
3.00% due 11/01/2027.................... 558,901 574,783
3.00% due 03/01/2042.................... 80,663 77,956
3.00% due 12/01/2042.................... 207,712 200,742
3.00% due 05/01/2043.................... 1,158,893 1,120,001
3.50% due 08/01/2027.................... 297,258 311,868
3.50% due 10/01/2028.................... 72,245 75,861
3.50% due 03/01/2043.................... 90,145 90,762
3.50% due 08/01/2043.................... 1,186,025 1,194,049
3.50% due April TBA..................... 500,000 502,969
4.00% due 11/01/2025.................... 367,982 391,188
4.00% due 04/01/2039.................... 299,709 311,505
4.00% due 06/01/2039.................... 577,029 602,287
4.00% due 09/01/2040.................... 853,591 887,357
4.00% due 10/01/2040.................... 621,853 646,447
4.00% due 11/01/2041.................... 477,359 496,240
4.50% due 06/01/2019.................... 58,039 61,515
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 11/01/2022.................. $ 121,122 $ 128,581
4.50% due 06/01/2023.................. 56,855 60,331
4.50% due 01/01/2039.................. 647,762 690,555
4.50% due 07/01/2040.................. 1,109,032 1,190,167
4.50% due 08/01/2040.................. 818,606 876,813
5.00% due 06/01/2019.................. 39,228 41,973
5.00% due 01/01/2023.................. 25,556 27,537
5.00% due 03/01/2034.................. 53,353 58,141
5.00% due 05/01/2035.................. 33,363 36,310
5.00% due 05/01/2040.................. 213,475 233,342
5.00% due 07/01/2040.................. 548,792 598,783
5.50% due 06/01/2038.................. 86,725 95,813
6.00% due 02/01/2032.................. 5,627 6,257
6.00% due 05/01/2034.................. 4,011 4,511
6.00% due 10/01/2034.................. 23,412 26,060
6.00% due 10/01/2037.................. 49,058 54,552
6.50% due 02/01/2035.................. 30,270 34,027
6.50% due 09/01/2037.................. 166,455 187,221
6.50% due 10/01/2037.................. 114,449 128,892
6.50% due 10/01/2038.................. 352,580 396,379
6.50% due 02/01/2039.................. 59,600 67,181
7.50% due 01/01/2030.................. 1,560 1,621
8.00% due 11/01/2028.................. 6,928 7,830
13.00% due 11/15/2015................. 7 7
Federal National Mtg. Assoc. REMIC
Series 2011-117, Class MA
2.00% due 08/25/2040(1)............... 176,316 174,172
Series 1989-2, Class D
8.80% due 01/25/2019(1)............... 10,160 11,235
-----------
13,157,668
-----------
TENNESSEE VALLEY AUTHORITY -- 0.1%
1.75% due 10/15/2018.................. 335,000 334,251
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $19,195,389).................... 19,986,711
-----------
U.S. GOVERNMENT TREASURIES -- 6.6%
UNITED STATES TREASURY BONDS -- 1.5%
3.13% due 02/15/2043.................. 400 368
3.63% due 08/15/2043.................. 3,300,000 3,340,221
3.75% due 11/15/2043.................. 4,000,000 4,141,248
-----------
7,481,837
-----------
UNITED STATES TREASURY NOTES -- 5.1%
0.08% due 01/31/2016 FRS.............. 1,940,000 1,938,918
0.13% due 04/15/2018 TIPS(8).......... 1,300,163 1,330,026
0.25% due 10/31/2015.................. 217,000 216,949
0.38% due 01/31/2016.................. 3,500,000 3,501,092
0.75% due 10/31/2017.................. 131,000 128,881
1.00% due 03/31/2017.................. 4,648,000 4,659,620
1.50% due 07/31/2016.................. 1,000,000 1,021,172
1.50% due 01/31/2019.................. 3,300,000 3,271,125
1.50% due 02/28/2019.................. 1,344,000 1,330,560
2.00% due 01/31/2016.................. 1,290,000 1,328,499
2.13% due 01/31/2021.................. 3,300,000 3,267,772
2.75% due 11/15/2023.................. 3,300,000 3,314,952
-----------
25,309,566
-----------
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES** (NOTE 2)
----------------------------------------------------------------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $32,813,276).......................... $32,791,403
-----------
LOANS(7)(16)(17) -- 1.5%
CASINO HOTELS -- 0.1%
Twin River Management Group, Inc.
BTL-B
5.25% due 09/27/2018........................ $ 270,233 273,105
-----------
COMPUTER SERVICES -- 0.2%
Sungard Availability Services Capital, Inc.
BTL-B
1.00% due 03/31/2019........................ 1,081,081 1,082,771
-----------
COMPUTER SOFTWARE -- 0.3%
Vertafore, Inc. FRS
BTL-1st Lien
4.25% due 10/03/2019........................ 1,460,927 1,468,689
-----------
ELECTRIC-DISTRIBUTION -- 0.3%
Cedar Bay Generating Company LP
BTL
6.25% due 04/15/2020........................ 1,508,127 1,515,668
-----------
GAMBLING (NON-HOTEL) -- 0.1%
Northfield Park Assoc. LLC
BTL-1st Lien
9.00% due 10/23/2018........................ 261,844 266,426
-----------
MEDICAL-DRUGS -- 0.4%
Auxilium Pharmaceuticals, Inc.
BTL-B
6.25% due 04/26/2017........................ 2,016,278 2,046,522
-----------
MEDICAL-HOSPITALS -- 0.0%
Ardent Health Services, Inc.
BTL-B
6.75% due 03/15/2018........................ 237,000 238,185
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.1%
Sabine Oil & Gas, LLC
BTL
8.75% due 12/31/2018........................ 647,315 658,238
-----------
TOTAL LOANS
(cost $7,455,231)........................... 7,549,604
-----------
MUNICIPAL BONDS & NOTES -- 0.3%
Ohio State University
Revenue Bonds
Series A
4.80% due 06/01/2111........................ 616,000 594,711
Port Authority of New York & New Jersey
Revenue Bonds
Series 174
4.46% due 10/01/2062........................ 725,000 679,028
Port Authority of New York & New Jersey
Revenue Bonds
Series 168
4.93% due 10/01/2051........................ 353,000 362,023
-----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,687,948)........................... 1,635,762
-----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
COMMON STOCKS -- 0.0%
TELEVISION -- 0.0%
ION Media Networks, Inc.+(5)(7)(18)
(cost $7)............................. 655 $ 182,090
----------
PREFERRED SECURITIES -- 0.5%
BANKS-COMMERCIAL -- 0.1%
Zions Bancorporation FRS
Series G 6.30%........................ 21,275 529,748
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
Citigroup, Inc. FRS
Series J
7.13%................................. 31,375 828,300
----------
ELECTRIC-INTEGRATED -- 0.1%
Entergy Louisiana LLC
4.70%................................. 12,300 250,305
----------
SOVEREIGN AGENCY -- 0.0%
Federal Home Loan Mtg. Corp.FRS
Series Z
8.38%................................. 11,300 124,300
----------
TELECOM SERVICES -- 0.1%
Qwest Corp.
6.13%................................. 23,325 513,850
----------
TELEPHONE-INTEGRATED -- 0.1%
Verizon Communications, Inc.+
5.90%................................. 12,570 313,747
----------
TOTAL PREFERRED SECURITIES
(cost $2,695,522)..................... 2,560,250
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 2.3%
BANKS-COMMERCIAL -- 0.1%
Zions Bancorporation FRS
Series I
5.80% due 06/15/2023(4)............... $ 481,000 448,533
----------
BANKS-SUPER REGIONAL -- 0.1%
Wells Fargo Capital X
5.95% due 12/01/2086.................. 223,000 223,000
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.8%
BAC Capital Trust XIII FRS
Series F
4.00% due 05/07/2014(4)............... 1,070,000 823,900
Credit Suisse Group AG VRS
7.50% due 12/11/2023*(4).............. 505,000 548,556
JPMorgan Chase & Co. FRS
Series Q
5.15% due 05/01/2023(4)............... 1,227,000 1,150,313
JPMorgan Chase & Co.
6.13% due 04/30/2024(4)............... 1,216,000 1,196,916
JPMorgan Chase & Co. FRS
Series 1
7.90% due 04/30/2018(4)............... 304,000 343,520
JPMorgan Chase Capital XXIII FRS
1.24% due 05/15/2077.................. 140,000 106,400
----------
4,169,605
----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES -- 0.1%
General Electric Capital Corp. FRS
Series C
5.25% due 06/15/2023(4).................... $ 500,000 $ 486,350
------------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings Capital Trust VII
Escrow Security
5.86% due 11/30/2056+(7)................... 222,000 22
------------
FINANCE-OTHER SERVICES -- 0.1%
National Rural Utilities Cooperative
Finance Corp. FRS
4.75% due 04/30/2043....................... 547,000 516,915
------------
FINANCIAL GUARANTEE INSURANCE -- 0.3%
Assured Guaranty Municipal
Holdings, Inc. FRS
6.40% due 12/15/2066*...................... 1,880,000 1,626,200
------------
FOOD-DAIRY PRODUCTS -- 0.3%
Land O' Lakes Capital Trust I
7.45% due 03/15/2028*...................... 1,450,000 1,413,750
------------
INSURANCE-LIFE/HEALTH -- 0.2%
Prudential Financial, Inc. FRS
5.63% due 06/15/2043....................... 1,038,000 1,058,760
------------
INSURANCE-MULTI-LINE -- 0.1%
MetLife, Inc.
6.40% due 12/15/2066....................... 533,000 562,315
------------
TOOLS-HAND HELD -- 0.2%
Stanley Black & Decker, Inc. FRS
5.75% due 12/15/2053....................... 865,000 927,712
------------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $10,729,681)......................... 11,433,162
------------
WARRANTS+ -- 0.0%
OIL-FIELD SERVICES -- 0.0%
Green Field Energy Services, Inc.
Expires 11/15/2021*
(cost $57,960)............................. 2,031 20
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $477,472,534)........................ 479,157,377
------------
SHORT-TERM INVESTMENT SECURITIES -- 2.4%
TIME DEPOSITS -- 2.4%
Euro Time Deposit with State Street
Bank and Trust Co.
0.01% due 04/01/2014
(cost $11,950,000)......................... $11,950,000 11,950,000
------------
REPURCHASE AGREEMENT -- 2.2%
State Street Bank and Trust Co.
Joint Repurchase Agreement(19)
(cost $10,984,000)......................... 10,984,000 10,984,000
------------
TOTAL INVESTMENTS
(cost $500,406,534)(20).................... 100.4% 502,091,377
Liabilities in excess of other assets......... (0.4) (1,904,237)
----------- ------------
NET ASSETS 100.0% $500,187,140
=========== ============
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (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 March 31, 2014, the aggregate value of
these securities was $138,308,874 representing 27.7% 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)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(4)Perpetual maturity - maturity date reflects the next call date.
(5)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(6)Security in default of interest.
(7)Illiquid security. At March 31, 2014, the aggregate value of these
securities was $7,891,901 representing 1.6% of net assets.
(8)Principal amount of security is adjusted for inflation.
(9)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)Security in default of interest and principal at maturity.
(12)Company has filed for Chapter 7 bankruptcy.
(13)Security currently paying interest/dividends in the form of additional
securities.
(14)Interest Only
(15)Company has filed for bankruptcy protection in country of issuance.
(16)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.
(17)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.
(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 addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of March 31, 2014 the SunAmerica
Strategic Bond held the following restricted securities:
PRINCIPAL VALUE % OF
ACQUISITION AMOUNT/ ACQUISITION PER NET
NAME DATE SHARES COST VALUE SHARE ASSETS
---- ----------- --------- ----------- -------- ------- ------
ION Media
Networks, Inc.
Common Stock... 03/05/2014 655 $7 $182,090 $278.00 0.04%
(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 Securities
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at March 31, 2014 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
MYR --Malaysian Ringgit
NOK --Norwegian Krone
NZD --New Zealand Dollar
PEN --Peruvian Nuevo Sol
PLN --Polish Zloty
TRY --Turkish Lira
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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................. $ -- $ 4,471,048 $ -- $ 4,471,048
U.S. Corporate Bonds & Notes:
Electric-Generation.................... -- 1,012,350 300,530 1,312,880
Gambling (Non-Hotel)................... -- -- 159,997 159,997
Recycling.............................. -- -- 124 124
Rubber/Plastic Products................ -- -- 0 0
Other Industries*...................... -- 242,852,116 -- 242,852,116
Foreign Corporate Bonds & Notes:
Special Purpose Entities............... -- 430,580 0 430,580
Other Industries*...................... -- 87,737,218 -- 87,737,218
Foreign Government Obligations:
Sovereign.............................. -- 64,604,255 -- 64,604,255
Other Foreign Government Obligations*.. -- 1,450,157 -- 1,450,157
U.S. Government Agencies................ -- 19,986,711 -- 19,986,711
U.S. Government Treasuries:
United States Treasury Bonds........... -- 7,481,837 -- 7,481,837
United States Treasury Notes........... -- 25,309,566 -- 25,309,566
Loans................................... -- 7,549,604 -- 7,549,604
Municipal Bond & Notes.................. -- 1,635,762 -- 1,635,762
Common Stocks........................... -- -- 182,090 182,090
Preferred Securities.................... 2,560,250 -- -- 2,560,250
Preferred Securities/Capital Securities. -- 11,433,162 -- 11,433,162
Warrants -- 20 -- 20
Short-Term Investment Securities:
Time Deposits........................... -- 11,950,000 -- 11,950,000
Repurchase Agreement...................... -- 10,984,000 -- 10,984,000
---------- ------------ -------- ------------
Total..................................... $2,560,250 $498,888,386 $642,741 $502,091,377
========== ============ ======== ============
--------
* Sum of all other industries or government obligations 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
obligation 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
48
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2014
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Cellular Telecom....................... 6.6%
Oil Companies-Exploration & Production. 5.9
Cable/Satellite TV..................... 5.3
Medical-Hospitals...................... 5.0
Diversified Banking Institutions....... 4.5
Repurchase Agreements.................. 3.5
Building-Residential/Commercial........ 3.3
Data Processing/Management............. 2.9
Telephone-Integrated................... 2.7
Telecom Services....................... 2.6
Satellite Telecom...................... 2.4
Food-Misc./Diversified................. 2.1
Electric-Integrated.................... 2.1
Television............................. 2.0
Building & Construction Products-Misc.. 1.7
Pipelines.............................. 1.7
Chemicals-Diversified.................. 1.7
Medical-Drugs.......................... 1.6
Finance-Consumer Loans................. 1.4
Publishing-Newspapers.................. 1.4
Entertainment Software................. 1.2
Steel-Producers........................ 1.2
Finance-Other Services................. 1.2
Retail-Propane Distribution............ 1.1
Auto-Cars/Light Trucks................. 1.1
Telecommunication Equipment............ 1.1
Metal Processors & Fabrication......... 1.1
Investment Management/Advisor Services. 1.1
Banks-Commercial....................... 1.0
Insurance-Multi-line................... 1.0
Funeral Services & Related Items....... 1.0
Medical Products....................... 0.9
Theaters............................... 0.9
Chemicals-Plastics..................... 0.9
Electronic Components-Semiconductors... 0.9
Medical Information Systems............ 0.8
Enterprise Software/Service............ 0.8
Banks-Mortgage......................... 0.8
Retail-Leisure Products................ 0.8
Aerospace/Defense-Equipment............ 0.8
Commercial Services.................... 0.8
Real Estate Management/Services........ 0.8
Insurance-Property/Casualty............ 0.7
Computer Services...................... 0.7
Diversified Manufacturing Operations... 0.7
Engineering/R&D Services............... 0.6
Chemicals-Specialty.................... 0.6
Radio.................................. 0.6
Medical-HMO............................ 0.6
Retail-Discount........................ 0.6
Retail-Home Furnishings................ 0.6
Applications Software.................. 0.6
Diagnostic Kits........................ 0.6
Machinery-General Industrial........... 0.5
Semiconductor Equipment................ 0.5
Retail-Restaurants..................... 0.5
Office Automation & Equipment.......... 0.5
Coal................................... 0.4
Oil & Gas Drilling..................... 0.4
Containers-Paper/Plastic............... 0.4
Multimedia................................. 0.4%
Gambling (Non-Hotel)....................... 0.4
Web Hosting/Design......................... 0.4
Retail-Regional Department Stores.......... 0.4
Diversified Financial Services............. 0.4
Shipbuilding............................... 0.3
Rental Auto/Equipment...................... 0.3
Racetracks................................. 0.3
Building Products-Cement................... 0.3
Non-Hazardous Waste Disposal............... 0.3
Retail-Mail Order.......................... 0.3
Diversified Operations/Commercial Services. 0.3
Casino Hotels.............................. 0.2
Medical-Biomedical/Gene.................... 0.2
Internet Connectivity Services............. 0.2
Banks-Money Center......................... 0.2
Casino Services............................ 0.2
Gold Mining................................ 0.2
Agricultural Operations.................... 0.2
Beverages-Wine/Spirits..................... 0.1
Distribution/Wholesale..................... 0.1
Independent Power Producers................ 0.1
Electric-Generation........................ 0.1
Building & Construction-Misc............... 0.1
Paper & Related Products................... 0.1
E-Commerce/Services........................ 0.1
----
98.0%
====
CREDIT QUALITY ALLOCATION+#
Baa........ 0.4%
Ba......... 29.7
B.......... 40.1
Caa........ 21.4
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.
49
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 0.6%
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.1%
M/I Homes, Inc.
Company Guar. Notes
3.00% due 03/01/2018.................. $116,000 $ 123,830
----------
MEDICAL-BIOMEDICAL/GENE -- 0.2%
Cubist Pharmaceuticals, Inc.
Senior Notes
1.88% due 09/01/2020*................. 155,000 186,969
Exelixis, Inc.
Senior Sub. Notes
4.25% due 08/15/2019.................. 80,000 71,950
----------
258,919
----------
MEDICAL-DRUGS -- 0.0%
Savient Pharmaceuticals, Inc.
Senior Notes
4.75% due 02/01/2018(1)(2)............ 745,000 7,450
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.3%
Cobalt International Energy, Inc.
Senior Notes
2.63% due 12/01/2019.................. 385,000 362,622
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $1,169,449)..................... 752,821
----------
U.S. CORPORATE BONDS & NOTES -- 70.5%
AEROSPACE/DEFENSE-EQUIPMENT -- 0.8%
B/E Aerospace, Inc.
Senior Notes
6.88% due 10/01/2020.................. 815,000 894,463
----------
AGRICULTURAL OPERATIONS -- 0.2%
American Rock Salt Co., LLC/
American Rock Capital Corp.
Sec. Notes
8.25% due 05/01/2018*................. 191,000 199,118
----------
APPLICATIONS SOFTWARE -- 0.6%
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/2019................. 550,000 637,313
----------
AUTO-CARS/LIGHT TRUCKS -- 1.1%
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.00% due 06/15/2019*................. 465,000 509,175
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.25% due 06/15/2021*................. 685,000 774,906
----------
1,284,081
----------
BANKS-COMMERCIAL -- 1.0%
CIT Group, Inc.
Senior Notes
5.25% due 03/15/2018.................. 406,000 436,450
CIT Group, Inc.
Senior Notes
5.38% due 05/15/2020.................. 275,000 294,937
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
BANKS-COMMERCIAL (CONTINUED)
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*.......................... $ 430,000 $ 463,325
----------
1,194,712
----------
BANKS-MORTGAGE -- 0.8%
Provident Funding Associates LP/
PFG Finance Corp.
Company Guar. Notes
6.75% due 06/15/2021*.......................... 925,000 925,000
----------
BEVERAGES-WINE/SPIRITS -- 0.1%
Constellation Brands, Inc.
Company Guar. Notes
4.25% due 05/01/2023........................... 145,000 141,738
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 1.7%
Associated Materials LLC/AMH New Finance, Inc.
Senior Sec. Notes
9.13% due 11/01/2017........................... 205,000 215,762
Nortek, Inc.
Company Guar. Notes
8.50% due 04/15/2021........................... 560,000 625,800
Ply Gem Industries, Inc.
Company Guar. Notes
6.50% due 02/01/2022*.......................... 1,105,000 1,116,050
----------
1,957,612
----------
BUILDING & CONSTRUCTION-MISC. -- 0.1%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023........................... 85,000 84,575
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 3.2%
K Hovnanian Enterprises, Inc.
Company Guar. Notes
7.00% due 01/15/2019*.......................... 430,000 440,750
K Hovnanian Enterprises, Inc.
Sec. Notes
9.13% due 11/15/2020*.......................... 341,000 382,772
KB Home
Company Guar. Notes
7.00% due 12/15/2021........................... 200,000 215,250
KB Home
Company Guar. Notes
7.50% due 09/15/2022........................... 345,000 377,775
KB Home
Company Guar. Notes
8.00% due 03/15/2020........................... 931,000 1,056,685
Lennar Corp.
Company Guar. Notes
4.75% due 11/15/2022(3)........................ 890,000 865,525
Pulte Group, Inc.
Company Guar. Notes
6.38% due 05/15/2033........................... 135,000 132,300
50
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 14, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-RESIDENTIAL/COMMERCIAL (CONTINUED)
Ryland Group, Inc.
Company Guar. Notes
5.38% due 10/01/2022.......................... $ 175,000 $ 173,688
----------
3,644,745
----------
CABLE/SATELLITE TV -- 3.9%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022.......................... 165,000 162,937
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.63% due 01/31/2022.......................... 580,000 619,875
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.38% due 06/01/2020.......................... 365,000 399,219
DISH DBS Corp.
Company Guar. Notes
5.00% due 03/15/2023.......................... 520,000 523,900
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021.......................... 1,820,000 2,038,400
DISH DBS Corp.
Company Guar. Notes
7.88% due 09/01/2019.......................... 160,000 189,200
Harron Communications LP/Harron Finance Corp.
Senior Notes
9.13% due 04/01/2020*......................... 485,000 548,050
----------
4,481,581
----------
CASINO HOTELS -- 0.2%
Wynn Las Vegas LLC/Wynn Las Vegas
Capital Corp.
1st. Mtg. Notes
5.38% due 03/15/2022.......................... 270,000 281,813
----------
CELLULAR TELECOM -- 6.6%
MetroPCS Wireless, Inc.
Company Guar. Notes
6.63% due 11/15/2020.......................... 645,000 688,537
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021*......................... 1,255,000 1,367,950
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023*......................... 1,170,000 1,287,000
Sprint Nextel Corp.
Company Guar. Notes
7.00% due 03/01/2020*......................... 395,000 455,237
Sprint Nextel Corp.
Company Guar. Notes
9.00% due 11/15/2018*......................... 910,000 1,112,475
Syniverse Holdings, Inc.
Company Guar. Notes
9.13% due 01/15/2019.......................... 1,000,000 1,087,500
T-Mobile USA, Inc.
Company Guar. Notes
5.25% due 09/01/2018.......................... 65,000 68,738
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CELLULAR TELECOM (CONTINUED)
T-Mobile USA, Inc.
Company Guar. Notes
6.13% due 01/15/2022....................... $ 85,000 $ 89,038
T-Mobile USA, Inc.
Company Guar. Notes
6.46% due 04/28/2019....................... 450,000 481,500
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2024....................... 125,000 130,937
T-Mobile USA, Inc.
Company Guar. Notes
6.63% due 04/28/2021....................... 185,000 198,875
T-Mobile USA, Inc.
Company Guar. Notes
6.73% due 04/28/2022....................... 520,000 557,050
T-Mobile USA, Inc.
Company Guar. Notes
6.84% due 04/28/2023....................... 70,000 75,075
----------
7,599,912
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Momentive Performance Materials, Inc.
Senior Sec. Notes
8.88% due 10/15/2020(14)................... 275,000 298,375
----------
CHEMICALS-PLASTICS -- 0.9%
Hexion US Finance Corp.
Senior Sec. Notes
6.63% due 04/15/2020....................... 230,000 238,050
Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC
Senior Sec. Notes
8.88% due 02/01/2018....................... 390,000 405,600
Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC
Sec. Notes
9.00% due 11/15/2020....................... 355,000 351,450
----------
995,100
----------
CHEMICALS-SPECIALTY -- 0.6%
Ferro Corp.
Senior Notes
7.88% due 08/15/2018....................... 675,000 712,125
----------
COMMERCIAL SERVICES -- 0.8%
ServiceMaster Co.
Company Guar. Notes
7.00% due 08/15/2020....................... 825,000 873,469
----------
COMPUTER SERVICES -- 0.7%
SunGard Data Systems, Inc.
Company Guar. Notes
6.63% due 11/01/2019....................... 355,000 375,412
SunGard Data Systems, Inc.
Company Guar. Notes
7.38% due 11/15/2018....................... 156,000 165,360
51
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
COMPUTER SERVICES (CONTINUED)
SunGard Data Systems, Inc.
Company Guar. Notes
7.63% due 11/15/2020............................. $ 275,000 $ 301,469
----------
842,241
----------
CONTAINERS-PAPER/PLASTIC -- 0.4%
BOE Intermediate Holding Corp.
Senior Notes
9.00% due 11/01/2017*(4)(15)..................... 444,337 484,327
----------
DATA PROCESSING/MANAGEMENT -- 2.9%
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*............................ 715,000 768,625
First Data Corp.
Sec. Notes
8.25% due 01/15/2021*............................ 1,844,000 2,000,740
First Data Corp.
Sec. Notes
8.75% due 01/15/2022*(4)......................... 285,000 311,362
First Data Holdings, Inc.
Senior Notes
14.50% due 09/24/2019*(4)(15).................... 282,941 265,965
----------
3,346,692
----------
DIAGNOSTIC KITS -- 0.6%
Alere, Inc.
Company Guar. Notes
6.50% due 06/15/2020............................. 600,000 630,000
----------
DISTRIBUTION/WHOLESALE -- 0.1%
American Builders & Contractors Supply Co., Inc.
Senior Notes
5.63% due 04/15/2021*............................ 115,000 119,025
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.3%
GMAC LLC
Sub. Notes
8.00% due 12/31/2018............................. 270,000 321,975
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.4%
Community Choice Financial, Inc.
Senior Sec. Notes
10.75% due 05/01/2019............................ 490,000 414,050
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.7%
JM Huber Corp.
Senior Notes
9.88% due 11/01/2019*............................ 675,000 776,250
----------
E-COMMERCE/SERVICES -- 0.1%
IAC/InterActiveCorp.
Company Guar. Notes
4.75% due 12/15/2022............................. 59,000 57,746
----------
ELECTRIC-GENERATION -- 0.1%
AES Corp.
Senior Notes
8.00% due 10/15/2017............................. 86,000 101,803
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
ELECTRIC-INTEGRATED -- 0.9%
DPL, Inc.
Senior Notes
7.25% due 10/15/2021......................... $ 775,000 $ 800,187
Texas Competitive Electric Holdings Co. LLC/
TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/2020*+(14)(16).............. 295,000 226,413
----------
1,026,600
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.5%
Freescale Semiconductor, Inc.
Senior Sec. Notes
6.00% due 01/15/2022*........................ 325,000 344,906
Freescale Semiconductor, Inc.
Company Guar. Notes
8.05% due 02/01/2020......................... 157,000 172,504
----------
517,410
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.8%
Infor US, Inc.
Company Guar. Notes
9.38% due 04/01/2019......................... 426,000 479,782
Infor US, Inc.
Company Guar. Notes
11.50% due 07/15/2018........................ 394,000 456,055
----------
935,837
----------
ENTERTAINMENT SOFTWARE -- 1.2%
Activision Blizzard, Inc.
Company Guar. Notes
5.63% due 09/15/2021*........................ 1,325,000 1,417,750
----------
FINANCE-CONSUMER LOANS -- 1.4%
SLM Corp.
Senior Notes
8.00% due 03/25/2020......................... 211,000 242,914
SLM Corp.
Senior Notes
8.45% due 06/15/2018......................... 279,000 328,522
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
8.50% due 09/15/2018*........................ 985,000 1,078,575
----------
1,650,011
----------
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......................... 610,000 574,925
----------
1,348,775
----------
FOOD-MISC./DIVERSIFIED -- 1.4%
ARAMARK Corp.
Company Guar. Notes
5.75% due 03/15/2020......................... 985,000 1,040,406
52
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 14, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FOOD-MISC./DIVERSIFIED (CONTINUED)
Pinnacle Foods Finance LLC/
Pinnacle Foods Finance Corp.
Company Guar. Notes
4.88% due 05/01/2021................ $565,000 $ 552,288
----------
1,592,694
----------
FUNERAL SERVICES & RELATED ITEMS -- 1.0%
Service Corp. International
Senior Notes
5.38% due 01/15/2022*............... 180,000 182,250
Service Corp. International
Senior Notes
7.63% due 10/01/2018................ 802,000 925,307
----------
1,107,557
----------
GAMBLING (NON-HOTEL) -- 0.4%
Isle of Capri Casinos, Inc.
Company Guar. Notes
8.88% due 06/15/2020................ 395,000 429,069
----------
INTERNET CONNECTIVITY SERVICES -- 0.2%
Zayo Group LLC/Zayo Capital, Inc.
Senior Sec. Notes
8.13% due 01/01/2020................ 135,000 148,163
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
10.13% due 07/01/2020............... 95,000 110,200
----------
258,363
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 1.1%
Nuveen Investments, Inc.
Senior Notes
9.13% due 10/15/2017*............... 775,000 819,562
Nuveen Investments, Inc.
Senior Notes
9.50% due 10/15/2020*............... 400,000 426,000
----------
1,245,562
----------
MEDICAL INFORMATION SYSTEMS -- 0.8%
IMS Health, Inc.
Senior Notes
12.50% due 03/01/2018*.............. 840,000 957,600
----------
MEDICAL PRODUCTS -- 0.9%
Biomet, Inc.
Company Guar. Notes
6.50% due 08/01/2020................ 275,000 296,175
Biomet, Inc.
Company Guar. Notes
6.50% due 10/01/2020................ 745,000 791,562
----------
1,087,737
----------
MEDICAL-DRUGS -- 1.6%
Pinnacle Merger Sub, Inc.
Senior Notes
9.50% due 10/01/2023*............... 701,000 771,976
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
MEDICAL-DRUGS (CONTINUED)
Salix Pharmaceuticals, Ltd.
Company Guar. Notes
6.00% due 01/15/2021*.............. $ 990,000 $1,056,825
----------
1,828,801
----------
MEDICAL-HMO -- 0.6%
MPH Acquisition Holdings LLC
Company Guar. Notes
6.63% due 04/01/2022*.............. 395,000 405,369
WellCare Health Plans, Inc.
Senior Notes
5.75% due 11/15/2020............... 270,000 283,500
----------
688,869
----------
MEDICAL-HOSPITALS -- 5.0%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/15/2018............... 405,000 425,250
CHS/Community Health Systems, Inc.
Company Guar. Notes
6.88% due 02/01/2022*.............. 1,130,000 1,180,850
HCA Holdings, Inc.
Senior Notes
6.25% due 02/15/2021............... 360,000 385,380
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020............... 2,030,000 2,273,600
HCA, Inc.
Senior Notes
7.50% due 11/15/2095............... 380,000 332,500
Tenet Healthcare Corp.
Senior Notes
5.00% due 03/01/2019*.............. 415,000 414,481
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022............... 605,000 676,088
----------
5,688,149
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.3%
Casella Waste Systems, Inc.
Company Guar. Notes
7.75% due 02/15/2019............... 320,000 332,000
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.5%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
8.50% due 04/01/2019............... 491,000 537,645
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 4.7%
Antero Resources Finance Corp.
Company Guar. Notes
5.38% due 11/01/2021*.............. 130,000 131,950
Antero Resources Finance Corp.
Company Guar. Notes
6.00% due 12/01/2020............... 350,000 372,313
Antero Resources Finance Corp.
Company Guar. Notes
7.25% due 08/01/2019............... 202,000 215,635
53
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Bonanza Creek Energy, Inc.
Company Guar. Notes
6.75% due 04/15/2021............................ $425,000 $ 453,687
Diamondback Energy, Inc.
Company Guar. Notes
7.63% due 10/01/2021*........................... 570,000 615,600
Endeavour International Corp.
Senior Sec. Notes
12.00% due 03/01/2018........................... 805,000 782,862
EP Energy LLC/Everest Acquisition Finance, Inc.
Senior Sec. Notes
6.88% due 05/01/2019............................ 50,000 54,000
Everest Acquisition LLC
Senior Notes
9.38% due 05/01/2020............................ 964,000 1,114,625
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/2020............................ 355,000 383,400
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021............................ 365,000 373,213
Rosetta Resources, Inc.
Company Guar. Notes
5.88% due 06/01/2022............................ 430,000 439,675
Rosetta Resources, Inc.
Company Guar. Notes
9.50% due 04/15/2018............................ 475,000 499,344
----------
5,436,304
----------
PIPELINES -- 1.7%
El Paso LLC
Senior Sec. Notes
6.50% due 09/15/2020............................ 545,000 598,023
El Paso LLC
Senior Sec. Notes
7.00% due 06/15/2017............................ 300,000 338,501
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020............................ 571,000 653,081
Kinder Morgan Finance Co. LLC
Senior Sec. Notes
6.00% due 01/15/2018*........................... 310,000 335,575
----------
1,925,180
----------
PUBLISHING-NEWSPAPERS -- 0.9%
Gannett Co., Inc.
Company Guar. Notes
5.13% due 10/15/2019*........................... 990,000 1,035,787
----------
RACETRACKS -- 0.3%
GLP Capital LP/GLP Financing II, Inc.
Company Guar. Notes
4.88% due 11/01/2020*........................... 345,000 354,056
----------
RADIO -- 0.6%
Sirius XM Radio, Inc.
Senior Notes
4.25% due 05/15/2020*........................... 175,000 171,063
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
RADIO (CONTINUED)
Sirius XM Radio, Inc.
Senior Notes
4.63% due 05/15/2023*.......................... $ 490,000 $461,825
Sirius XM Radio, Inc.
Company Guar. Notes
5.25% due 08/15/2022*.......................... 70,000 72,100
--------
704,988
--------
REAL ESTATE MANAGEMENT/SERVICES -- 0.8%
CBRE Services, Inc.
Company Guar. Notes
5.00% due 03/15/2023........................... 590,000 590,738
Kennedy-Wilson, Inc.
Company Guar. Notes
5.88% due 04/01/2024........................... 275,000 275,000
--------
865,738
--------
RECYCLING -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(5)(6).................... 2,145,000 81
--------
RENTAL AUTO/EQUIPMENT -- 0.3%
Hertz Corp.
Company Guar. Notes
5.88% due 10/15/2020........................... 215,000 229,244
Hertz Corp.
Company Guar. Notes
6.25% due 10/15/2022........................... 140,000 149,800
--------
379,044
--------
RETAIL-DISCOUNT -- 0.6%
99 Cents Only Stores
Company Guar. Notes
11.00% due 12/15/2019.......................... 595,000 676,813
--------
RETAIL-HOME FURNISHINGS -- 0.6%
GRD Holdings III Corp.
Senior Sec. Notes
10.75% due 06/01/2019*......................... 585,000 643,500
--------
RETAIL-LEISURE PRODUCTS -- 0.8%
Party City Holdings, Inc.
Company Guar. Notes
8.88% due 08/01/2020........................... 210,000 233,887
PC Nextco Holdings LLC/PC Nextco Finance, Inc.
Senior Notes
8.75% due 08/15/2019*(4)....................... 640,000 661,600
--------
895,487
--------
RETAIL-PROPANE DISTRIBUTION -- 1.1%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020........................... 240,000 259,800
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022........................... 425,000 464,312
54
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-PROPANE DISTRIBUTION (CONTINUED)
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.50% due 05/01/2021................... $442,000 $ 462,995
Ferrellgas LP/Ferrellgas Finance Corp.
Senior Notes
6.75% due 01/15/2022*.................. 110,000 114,675
----------
1,301,782
----------
RETAIL-RESTAURANTS -- 0.5%
CEC Entertainment, Inc.
Senior Notes
8.00% due 02/15/2022*.................. 550,000 569,250
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(5)(6)(7)(8)..... 550,000 0
----------
SATELLITE TELECOM -- 0.5%
DigitalGlobe, Inc.
Company Guar. Notes
5.25% due 02/01/2021................... 575,000 567,813
----------
SEMICONDUCTOR EQUIPMENT -- 0.5%
Entegris, Inc.
Company Guar. Notes
6.00% due 04/01/2022*.................. 580,000 593,050
----------
SHIPBUILDING -- 0.3%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021................... 361,000 398,454
----------
STEEL-PRODUCERS -- 1.2%
AK Steel Corp.
Company Guar. Notes
7.63% due 05/15/2020................... 550,000 548,625
AK Steel Corp.
Company Guar. Notes
8.38% due 04/01/2022................... 345,000 346,725
United States Steel Corp.
Senior Notes
7.38% due 04/01/2020................... 461,000 503,642
----------
1,398,992
----------
TELECOM SERVICES -- 0.1%
Level 3 Communications, Inc.
Senior Notes
8.88% due 06/01/2019................... 90,000 98,888
----------
TELECOMMUNICATION EQUIPMENT -- 1.1%
Alcatel-Lucent USA, Inc.
Senior Notes
6.45% due 03/15/2029................... 580,000 553,900
Alcatel-Lucent USA, Inc.
Senior Notes
6.50% due 01/15/2028................... 160,000 152,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT (CONTINUED)
Alcatel-Lucent USA, Inc.
Company Guar. Notes
6.75% due 11/15/2020*................ $ 525,000 $ 555,187
----------
1,261,087
----------
TELEPHONE-INTEGRATED -- 2.2%
Level 3 Financing, Inc.
Company Guar. Notes
6.13% due 01/15/2021*................ 105,000 110,775
Level 3 Financing, Inc.
Company Guar. Notes
7.00% due 06/01/2020................. 149,000 161,479
Level 3 Financing, Inc.
Company Guar. Notes
8.13% due 07/01/2019................. 66,000 72,435
Level 3 Financing, Inc.
Company Guar. Notes
8.63% due 07/15/2020................. 1,075,000 1,205,344
Windstream Corp.
Company Guar. Notes
6.38% due 08/01/2023................. 145,000 141,375
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/2020................. 805,000 863,362
----------
2,554,770
----------
TELEVISION -- 1.4%
Gray Television, Inc.
Company Guar. Notes
7.50% due 10/01/2020................. 1,045,000 1,133,825
Univision Communications, Inc.
Senior Sec. Notes
6.75% due 09/15/2022*................ 470,000 519,937
----------
1,653,762
----------
THEATERS -- 0.9%
AMC Entertainment, Inc.
Company Guar. Notes
9.75% due 12/01/2020................. 520,000 599,300
Cinemark USA, Inc.
Company Guar. Notes
4.88% due 06/01/2023................. 235,000 225,894
Cinemark USA, Inc.
Company Guar. Notes
5.13% due 12/15/2022................. 105,000 105,000
Regal Entertainment Group
Senior Notes
5.75% due 02/01/2025................. 78,000 76,245
----------
1,006,439
----------
WEB HOSTING/DESIGN -- 0.4%
Equinix, Inc.
Senior Notes
4.88% due 04/01/2020................. 35,000 35,788
55
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
WEB HOSTING/DESIGN (CONTINUED)
Equinix, Inc.
Senior Notes
7.00% due 07/15/2021.................. $ 350,000 $ 390,250
-----------
426,038
-----------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $79,560,017).................... 80,697,573
-----------
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)....................... 240,000 343,350
-----------
FOREIGN CORPORATE BONDS & NOTES -- 10.4%
CABLE/SATELLITE TV -- 1.4%
Columbus International, Inc.
Company Guar. Notes
7.38% due 03/30/2021*................. 225,000 231,469
Nara Cable Funding, Ltd.
Senior Sec. Notes
8.88% due 12/01/2018*................. 490,000 533,487
Unitymedia Hessen GmbH & Co. KG
Senior Sec. Notes
5.50% due 01/15/2023*................. 780,000 795,600
-----------
1,560,556
-----------
CHEMICALS-DIVERSIFIED -- 1.4%
INEOS Finance PLC
Senior Sec. Notes
7.50% due 05/01/2020*................. 210,000 230,475
INEOS Group Holdings SA
Company Guar. Notes
6.13% due 08/15/2018*................. 1,305,000 1,353,937
-----------
1,584,412
-----------
CONTAINERS-METAL/GLASS -- 0.0%
Ardagh Packaging Finance PLC/
Ardagh MP Holdings USA, Inc.
Senior Notes
7.00% due 11/15/2020*................. 51,176 53,863
-----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.3%
UBS AG
Sub. Notes
7.63% due 08/17/2022.................. 320,000 375,324
-----------
ELECTRIC-INTEGRATED -- 0.3%
EDP Finance BV
Senior Notes
5.25% due 01/14/2021*................. 290,000 299,135
-----------
ENGINEERING/R&D SERVICES -- 0.6%
Abengoa Finance SAU
Company Guar. Notes
6.00% due 03/31/2021*................. EUR 230,000 320,820
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
ENGINEERING/R&D SERVICES (CONTINUED)
Abengoa Finance SAU
Company Guar. Notes
7.75% due 02/01/2020*....................... $ 395,000 $ 426,600
----------
747,420
----------
GOLD MINING -- 0.2%
AuRico Gold, Inc.
Sec. Notes
7.75% due 04/01/2020*....................... 205,000 203,463
----------
OIL & GAS DRILLING -- 0.4%
Seadrill, Ltd.
Senior Notes
6.13% due 09/15/2017*....................... 495,000 516,038
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.9%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/2017........................ 640,000 691,200
Tullow Oil PLC
Company Guar. Notes
6.00% due 11/01/2020*....................... 375,000 380,625
----------
1,071,825
----------
SATELLITE TELECOM -- 1.5%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019........................ 695,000 747,125
Intelsat Luxembourg SA
Company Guar. Notes
6.75% due 06/01/2018*....................... 85,000 89,888
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021*....................... 805,000 847,262
----------
1,684,275
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications Luxembourg II FRS
Sub. Notes
6.03% due 01/15/2015*+(2)(5)(6)(9).......... 1,025,000 0
----------
TELECOM SERVICES -- 2.5%
Altice Financing SA
Senior Sec. Notes
7.88% due 12/15/2019*....................... 350,000 382,375
Altice Finco SA
Senior Sec. Notes
9.88% due 12/15/2020*....................... 455,000 518,700
UPCB Finance VI, Ltd.
Senior Sec. Notes
6.88% due 01/15/2022*....................... 650,000 708,500
Wind Acquisition Finance SA
Senior Sec. Notes
7.25% due 02/15/2018*....................... 640,000 675,200
Wind Acquisition Finance SA
Sec. Notes
11.75% due 07/15/2017*...................... 510,000 537,412
----------
2,822,187
----------
56
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED -- 0.5%
Softbank Corp.
Company Guar. Notes
4.50% due 04/15/2020*....................... $ 545,000 $ 542,275
-----------
TELEVISION -- 0.4%
Videotron, Ltd.
Company Guar. Notes
5.00% due 07/15/2022........................ 405,000 406,013
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $12,372,664).......................... 11,866,786
-----------
LOANS -- 5.6%(5)(10)(11)
BEVERAGES-NON-ALCOHOLIC -- 0.0%
Le-Natures, Inc.
Escrow Loan
9.36% due 03/01/2011+(6).................... 1,200,000 0
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
Escrow Loan
12.25% due 08/15/2013+(6)................... 2,037,810 0
-----------
COAL -- 0.4%
Arch Coal, Inc.
BTL-B
6.25% due 05/16/2018........................ 525,646 519,239
-----------
DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES -- 0.3%
Pacific Industrial Services
BTL
5.00% due 10/02/2018........................ 298,500 303,164
-----------
ELECTRIC-INTEGRATED -- 0.9%
Texas Competitive Electric Holdings Co. LLC
BTL
4.74% due 10/10/2017+(14)(16)............... 1,372,835 993,589
-----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
BTL
5.00% due 01/15/2021........................ 432,825 437,963
-----------
INDEPENDENT POWER PRODUCERS -- 0.1%
Calpine Corp.
BTL
4.00% due 10/31/2020........................ 109,725 110,205
-----------
INSURANCE-PROPERTY/CASUALTY -- 0.7%
Asurion LLC
BTL
4.25% due 07/08/2020........................ 481,363 479,958
Asurion LLC
BTL
5.00% due 05/24/2019........................ 179,538 179,987
Asurion LLC
BTL
8.50% due 03/03/2021........................ 200,000 206,958
-----------
866,903
-----------
MACHINERY-GENERAL INDUSTRIAL -- 0.5%
Gardner Denver, Inc.
BTL
4.25% due 07/30/2020........................ 636,800 637,318
-----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
METAL PROCESSORS & FABRICATION -- 1.1%
Crosby Worldwide, Ltd.
BTL
4.00% due 11/23/2020........................ $463,838 $ 463,258
Rexnord LLC
BTL
4.00% due 08/21/2020........................ 791,025 793,371
----------
1,256,629
----------
PUBLISHING-NEWSPAPERS -- 0.5%
Tribune Co.
BTL
4.00% due 12/27/2020........................ 608,475 609,236
----------
RETAIL-MAIL ORDER -- 0.3%
Lands End, Inc.
BTL-B
4.25% due 01/31/2021........................ 310,000 308,450
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.4%
Neiman Marcus Group, Inc.
BTL
4.25% due 10/25/2020........................ 418,950 422,691
----------
TOTAL LOANS
(cost $7,756,779)........................... 6,465,387
----------
COMMON STOCKS -- 0.8%
FOOD-MISC./DIVERSIFIED -- 0.7%
Wornick Co.+(5)(6)........................... 7,270 818,020
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(5)(6)..... 19,388 0
----------
PAPER & RELATED PRODUCTS -- 0.1%
Caraustar Industries, Inc.+(5)(6)............ 73 80,701
----------
TOTAL COMMON STOCKS
(cost $1,119,187)........................... 898,721
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.2%
CASINO SERVICES -- 0.2%
Herbst Gaming, Inc.(5)(12)
(cost $232,720)............................. 23,439 246,109
----------
CONVERTIBLE PREFERRED SECURITY -- 0.4%
SATELLITE TELECOM -- 0.4%
Intelsat SA
Series A
5.75%
(cost $403,928)............................. 7,644 410,101
----------
PREFERRED SECURITIES -- 1.3%
DIVERSIFIED BANKING INSTITUTIONS -- 1.1%
GMAC Capital Trust I FRS
Series 2
8.13%....................................... 46,500 1,269,450
----------
INSURANCE-MULTI-LINE -- 0.2%
Hartford Financial Services Group, Inc. FRS
7.88%....................................... 8,000 236,960
----------
TOTAL PREFERRED SECURITIES
(cost $1,391,987)........................... 1,506,410
----------
57
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 4.2%
BANKS-MONEY CENTER -- 0.2%
BBVA International Preferred SAU FRS
5.92% due 04/18/2017(13).................... $255,000 $ 253,725
------------
DIVERSIFIED BANKING INSTITUTIONS -- 2.8%
Barclays PLC VRS
8.25% due 12/15/2018(13).................... 795,000 834,750
Credit Agricole SA VRS
7.88% due 01/23/2024*(13)................... 215,000 227,094
Credit Suisse Group AG VRS
7.50% due 12/11/2023*(13)................... 305,000 331,306
Royal Bank of Scotland Group PLC FRS
6.99% due 10/05/2017*(13)................... 605,000 653,400
Societe Generale SA VRS
7.88% due 12/18/2023*(13)................... 820,000 852,800
Societe Generale SA VRS
8.25% due 11/29/2018(13).................... 275,000 296,312
------------
3,195,662
------------
INSURANCE-MULTI-LINE -- 0.8%
Hartford Financial Services Group, Inc. FRS
8.13% due 06/15/2038........................ 560,000 657,300
Voya Financial, Inc. FRS
5.65% due 05/15/2053........................ 255,000 253,470
------------
910,770
------------
MULTIMEDIA -- 0.4%
NBCUniversal Enterprise, Inc.
5.25% due 03/19/2021*(13)................... 445,000 449,450
------------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $4,535,990)........................... 4,809,607
------------
WARRANTS+ -- 0.2%
TELEVISION -- 0.2%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)(5)(6)(12).............. 332 92,296
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)(5)(6)(12).............. 328 91,184
------------
TOTAL WARRANTS
(cost $0)................................... 183,480
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $108,865,432)......................... 108,180,345
------------
REPURCHASE AGREEMENTS -- 3.5%
Bank of America Securities LLC
Joint Repurchase Agreement(17).............. 845,000 845,000
Barclays Capital PLC
Joint Repurchase Agreement(17).............. 990,000 990,000
BNP Paribas SA
Joint Repurchase Agreement(17).............. 655,000 655,000
Deutsche Bank AG
Joint Repurchase Agreement(17).............. 655,000 655,000
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
UBS Securities LLC
Joint Repurchase Agreement(17). $845,000 $ 845,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $3,990,000).............. 3,990,000
------------
TOTAL INVESTMENTS
(cost $112,855,432)(18)........ 98.0% 112,170,345
Other assets less liabilities..... 2.0 2,276,314
-------- ------------
NET ASSETS 100.0% $114,446,659
======== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At March 31, 2014, the aggregate value of
these securities was $42,884,732 representing 37.5% 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)Company has filed for Chapter 11 bankruptcy protection.
(2)Security in default of interest.
(3)"Step-up" security where the rate increases ("steps-up") at a predetermined
rate. Rate shown reflects the increased rate.
(4)PIK ("Payment-in-Kind") security -- Income may be paid in additional
securities or cash at the discretion of the issuer.
(5)Illiquid security. At March 31, 2014, the aggregate value of these
securities was $7,793,778 representing 6.8% of net assets.
(6)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(7)Security in default of interest and principal at maturity.
(8)Company has filed for Chapter 7 bankruptcy.
(9)Company has filed for bankruptcy protection in country of issuance.
(10)The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major 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.
(11)Senior loans in the Fund are generally subject to mandatory and/or optional
prepayment. Because of these mandatory prepayment conditions and because
there may be significant economic incentives for a borrower to prepay,
prepayments may occur. As a result, the actual remaining maturity may be
substantially less than the stated maturities shown.
58
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
(12)Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except in
exempt transactions or in a public offering registered under the 1933 Act.
The Fund has no right to demand registration of these securities. The risk
of investing in certain restricted securities is greater than the risk of
investing in the securities of widely held, publicly traded companies. To
the extent applicable, lack of a secondary market and resale restrictions
may result in the inability of a Fund to sell a security at a fair price
and may substantially delay the sale of the security. In addition, certain
restricted securities may exhibit greater price volatility than securities
for which secondary markets exist. As of March 31, 2014, 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 $246,109 $ 10.50 0.22%
ION Media
Networks, Inc.
Expires
12/18/2016
(strike price
$0.01)
Warrants........... 03/01/2011 332 0 92,296 278.00 0.08
ION Media
Networks, Inc.
Expires
12/18/2016
(strike price
$0.01)
Warrants........... 11/11/2010 327 0
03/01/2011 1 0
------ --------
328 0 91,184 278.00 0.08
-------- ----
$429,589 0.38%
======== ====
(13)Perpetual maturity -- maturity date reflects the next call date.
(14)Subsequent to March 31, 2014, the company has filed for Chapter 11
bankruptcy protection.
(15)Security currently paying interest/dividends in the form of additional
securities.
(16)Subsequent to March 31, 2014, security is in default of interest.
(17)See Note 2 for details of Joint Repurchase Agreements.
(18)See Note 5 for cost of investments on a tax basis.
BTL -- BankTerm Loan
FRS -- FloatingRate Securities
VRS -- VariableRate Securities
The rates shown on FRS and VRS are the current interest rates at March 31, 2014
and unless noted otherwise, the dates shown are the original maturity dates.
EUR -- Euro
59
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (CONTINUED)
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT IN EXCHANGE DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY TO DELIVER FOR DATE APPRECIATION DEPRECIATION
--------------------
Bank of America N.A. EUR 230,000 USD 317,169 04/24/2014 $325 $--
==== ===
EUR --Euro
USD --United States Dollar
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2014 (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............................... $ -- $ 752,821 $ --
U.S. Corporate Bonds & Notes:
Cellular Telecom....................................... -- 7,599,912 --
Medical-Hospitals...................................... -- 5,688,149 --
Recycling.............................................. -- -- 81
Rubber/Plastic Products................................ -- -- 0
Other Industries*...................................... -- 67,409,431 --
Foreign Convertible Bonds & Notes....................... -- 343,350 --
Foreign Corporate Bonds & Notes:
Special Purpose Entity................................. -- -- 0
Other Industries*...................................... -- 11,866,786 --
Loans:
Beverages-Non-alcoholic................................ -- -- 0
Building-Residential/Commercial........................ -- -- 0
Other Industries*...................................... -- 6,465,387 --
Common Stocks........................................... -- -- 898,721
Membership Interest Certificates........................ -- 246,109 --
Convertible Preferred Securities........................ 410,101 -- --
Preferred Securities.................................... 1,506,410 -- --
Preferred Securities/Capital Securities................. -- 4,809,607 --
Warrants................................................ -- -- 183,480
Repurchase Agreements..................................... -- 3,990,000 --
Other Financial Instruments:@
Open Forward Foreign Currency Contracts -- Appreciation. -- 325 --
---------- ------------ ----------
Total..................................................... $1,916,511 $109,171,877 $1,082,282
========== ============ ==========
TOTAL
- ------------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes............................... $ 752,821
U.S. Corporate Bonds & Notes:
Cellular Telecom....................................... 7,599,912
Medical-Hospitals...................................... 5,688,149
Recycling.............................................. 81
Rubber/Plastic Products................................ 0
Other Industries*...................................... 67,409,431
Foreign Convertible Bonds & Notes....................... 343,350
Foreign Corporate Bonds & Notes:
Special Purpose Entity................................. 0
Other Industries*...................................... 11,866,786
Loans:
Beverages-Non-alcoholic................................ 0
Building-Residential/Commercial........................ 0
Other Industries*...................................... 6,465,387
Common Stocks........................................... 898,721
Membership Interest Certificates........................ 246,109
Convertible Preferred Securities........................ 410,101
Preferred Securities.................................... 1,506,410
Preferred Securities/Capital Securities................. 4,809,607
Warrants................................................ 183,480
Repurchase Agreements..................................... 3,990,000
Other Financial Instruments:@
Open Forward Foreign Currency Contracts -- Appreciation. 325
------------
Total..................................................... $112,170,670
============
--------
* 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 transfers between Levels during the reporting
period.
60
SUNAMERICA HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2014 -- (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 SECURITIES/
BONDS & NOTES BONDS & NOTES LOANS STOCKS CAPITAL SECURITIES WARRANTS
-------------- ----------------- ----------- ----------- --------------------- --------
Balance as of 03/31/2013............. $ 81 $ 0 $ 0 $ 2,411,510 $ 0 $181,800
Accrued discounts.................... -- 5,362 -- -- -- --
Accrued premiums..................... -- -- -- -- -- --
Realized gain........................ -- -- 2,400 765,298 -- --
Realized loss........................ (237,875) (4,550,437) (1,024,370) (476,575) -- (3,365)
Change in unrealized appreciation(1). 238,268 4,558,439 1,154,067 536,852 -- 28,949
Change in unrealized depreciation(1). -- (5,362) -- (1,349,673) -- (23,904)
Net purchases........................ -- -- -- -- -- --
Net sales............................ (393) (8,002) (132,097) (988,691) (0) --
Transfers in of Level 3.............. -- -- -- -- -- --
Transfers out of Level 3............. -- -- -- -- -- --
--------- ----------- ----------- ----------- --- --------
Balance as of 03/31/2014............. $ 81 $ 0 $ 0 $ 898,721 $-- $183,480
========= =========== =========== =========== === ========
(1)The total change in unrealized appreciation (depreciation) attributable to
level 3 investments still held at March 31, 2014 includes:
U.S. CORPORATE FOREIGN CORPORATE COMMON
BONDS & NOTES BONDS & NOTES LOANS STOCKS WARRANTS
-------------- ----------------- ----- ----------- --------
$393 $(5,362) $-- $(1,322,701) $1,680
==== ======= === =========== ======
At the end of the reporting period, Level 3 investments in securities were not
considered a material portion of the Fund.
See Notes to Financial Statements
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014
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, LLC (the "Adviser" or "SunAmerica") (formerly
SunAmerica Asset Management Corp.*), 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
--------
* Effective upon the close of business December 31, 2013, SunAmerica Asset
Management Corp. was reorganized as a Delaware limited liability company and
its name concurrently changed to SunAmerica Asset Management, LLC.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
maintenance and service fee payments under the distribution plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act") except that Class B and Class C shares are subject to higher
distribution fees.
INDEMNIFICATIONS: The Trust's organizational documents provide current and
former officers and trustees with a limited indemnification against
liabilities arising out of the performance of their duties to the Trust. In
addition, pursuant to Indemnification Agreements between the Trust and each
of the current trustees who is not an "interested person," as defined in
Section 2(a)(19) of the 1940 Act, of the Trust (collectively, the
"Disinterested Trustees"), the Trust provides the Disinterested Trustees
with a limited indemnification against liabilities arising out of the
performance of their duties to the Trust, whether such liabilities are
asserted during or after their service as trustees. In addition, in the
normal course of business the Trust enters into contracts that contain the
obligation to indemnify others. The Trust's maximum exposure under these
arrangements is unknown. Currently, however, the Trust expects the risk of
loss to be remote.
Note 2. Significant Accounting Policies
The preparation of financial statements in accordance with U.S. generally
accepted accounting principles ("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 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 their 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 is 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 March 31,
2014 are reported on a schedule following the Portfolio of Investments.
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (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, debentures, other long-term debt securities, and short term debt
securities with maturities in excess of 60 days, are valued at evaluated bid
prices obtained for the day of valuation from a Board-approved pricing
service, and are generally categorized as Level 2. The pricing service 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 price is unavailable from a
Board-approved pricing service, 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 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
policies 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 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.
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
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 or to enhance return. During the
year ended March 31, 2014, 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 March 31, 2014, 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 such
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
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 derivative
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 Financial Statements. The
Funds do not offset derivative assets and derivative liabilities that are
subject to netting arrangements in the Statements of Assets and Liabilities.
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
The following tables represent the value of derivatives held as of March 31,
2014, 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 year ending March 31, 2014. For a
detailed presentation of derivatives held as of March 31, 2014, please refer
to the Portfolio of Investments.
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 $325 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) ON (DEPRECIATION)
ON DERIVATIVES 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 $7,173 $1,952
====== ======
--------
(1)The Fund's derivative contracts held during the period ended March 31, 2014,
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 $243,967.
As of March 31, 2014, 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. The
repurchase agreements held by a Fund as of March 31, 2014, are also subject
to master netting agreements but are not included in the following tables.
See the Portfolio of Investments and Notes to the Financial Statements for
more information about a Fund's holdings in repurchase agreements.
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 AND LIABILITIES AND LIABILITIES
----------- ---------------------- --------------------- -
ASSETS:
DESCRIPTION:
Derivatives:
Foreign exchange contracts..................................... $ 325 $-- $325
----------- --- ---- -
Total derivatives, subject to a master netting arrangement or
similar arrangement............................................ $ 325 $-- $325
=========== === ==== =
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND LIABILITIES
-------------------------------------
NET AMOUNT OF
ASSETS IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL NET
LIABILITIES INSTRUMENTS@ RECEIVED@ AMOUNT#
COUNTERPARTY: ----------------- ------------- ------------ -------
Bank of America, N.A.. $ 325 $ -- $ -- $325
==== === === ====
--------
@ 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.
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
MORTGAGE-BACKED DOLLAR ROLLS: During the year ended March 31, 2014, 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
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 year ended March 31, 2014, the GNMA
Fund and the Strategic Bond Fund had realized gains (losses) from
mortgage-backed dollar rolls of $(2,629,375) and $(123,703) 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 year ended March 31, 2014, the GNMA Fund
and Strategic Bond Fund purchased and/or sold when-issued securities.
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.
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
In a repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Funds' custodian takes
possession of the collateral pledged for investments in such repurchase
agreements ("repo" or collectively "repos"). The underlying collateral is
valued daily on a mark to market basis, plus accrued interest to ensure that
the value, at the time the agreement is entered into, is equal to at least
102% of the repurchase price, including accrued interest. In the event of
default of the obligation to repurchase, the Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If
the seller defaults and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or
limited.
As of March 31, 2014, 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. 0.66% $845,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated March 31, 2014, bearing interest at a
rate of 0.04% per annum, with a principal amount of $128,945,000, a
repurchase price of $128,945,143 and a maturity date of April 1, 2014. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT MARKET VALUE
------------------ -------- ---------- ----------- ------------
U.S. Treasury Notes. 1.88% 09/30/2017 $43,024,000 $44,047,971
U.S. Treasury Notes. 4.13 05/15/2015 83,784,000 88,803,499
As of March 31, 2014, the following Fund held an undivided interest in the
joint repurchase agreement with Barclays Capital PLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.66% $990,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital PLC, dated March 31, 2014, bearing interest at a rate of
0.06% per annum, with a principal amount of $150,220,000, a repurchase price
of $150,220,250, and a maturity date of April 1, 2014. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT MARKET VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 1.25% 11/30/2018 $155,330,000 $153,226,832
As of March 31, 2014, the following Fund held an undivided interest in the
joint repurchase agreement with BNP Paribas SA:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.66% $655,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated March 31, 2014, bearing interest at a rate of
0.05% per annum, with a principal amount of $99,945,000, a repurchase price
of $99,945,139, and a maturity date of April 1, 2014. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT MARKET VALUE
------------------ -------- ---------- ----------- ------------
U.S. Treasury Notes. 1.88% 06/30/2015 $99,512,000 $102,084,590
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
As of March 31, 2014, the following Fund held an undivided interest in the
joint repurchase agreement with Deutsche Bank AG:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.66% $655,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated March 31, 2014, bearing interest at a rate of
0.04% per annum, with a principal amount of $99,945,000, a repurchase price
of $99,945,111, and a maturity date of April 1, 2014. The repurchase
agreement is collateralized by the following:
INTEREST PRINCIPAL
TYPE OF COLLATERAL RATE MATURITY DATE AMOUNT MARKET VALUE
------------------ -------- ------------- ----------- ------------
U.S. Treasury Notes. 2.00% 04/30/2016 $98,176,000 $102,068,678
As of March 31, 2014, the following Funds held an undivided interest in the
joint repurchase agreement with State Street Bank and Trust Co.:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- -----------
U.S. Government Securities. 10.78% $21,151,000
GNMA....................... 5.10 10,002,000
Strategic Bond............. 5.60 10,984,000
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 March 31, 2014, bearing interest at a
rate of 0.00% per annum, with a principal amount of $196,232,000, a
repurchase price of $196,232,000, and a maturity date of April 1, 2014. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT MARKET VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Bills. 0.11% 03/05/2015 $ 50,000,000 $ 49,950,000
U.S. Treasury Notes. 0.75 06/15/2014 10,000,000 10,037,500
U.S. Treasury Notes. 0.75 12/31/2017 3,175,000 3,115,469
U.S. Treasury Notes. 2.00 02/28/2021 139,790,000 137,055,009
As of March 31, 2014, the following Fund held an undivided interest in the
joint repurchase agreement with UBS Securities LLC:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond. 0.66% $845,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
UBS Securities LLC, dated March 31, 2014, bearing interest at a rate of
0.04% per annum, with a principal amount of $128,900,000, a repurchase price
of $128,900,143, and a maturity date of April 1, 2014. The repurchase
agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT MARKET VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 1.38% 09/30/2018 $ 22,355,600 $ 22,148,587
U.S. Treasury Notes. 2.13 08/31/2020 110,000,000 109,919,700
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.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (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
2010 - 2012 or expected to be taken in each Fund's 2013 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 2010.
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 year. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
year.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the 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.
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
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
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 on or after January 1, 2013 and interim periods
within those annual periods. 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 generally accepted accounting principles, litigation, or acquired Fund
fees and expenses, brokerage commissions and other transactional expenses
relating to the purchase and sale of portfolio securities, interest, taxes
and governmental fees, and other expenses not incurred in the ordinary
course of a Fund's business. The contractual fee waivers and expense
reimbursements will continue indefinitely, subject to termination by the
Trustees, including a majority of the Disinterested Trustees.
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
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 period ended March 31, 2014, pursuant to the contractual and
voluntary expense limitations in the above tables SunAmerica has waived
and/or reimbursed expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities. $179,558
GNMA....................... 4,153
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A. $288,050
U.S. Government Securities Class B. 22,943
U.S. Government Securities Class C. 39,432
GNMA Class A....................... 301,462
GNMA Class B....................... 38,339
GNMA Class C....................... 86,483
High Yield Bond Class A............ 122,515
High Yield Bond Class B............ 31,069
High Yield Bond Class C............ 58,289
At March 31, 2014, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment and expire during the time period indicated
are as follows:
OTHER EXPENSES REIMBURSED
----------------------------------
FUND MARCH 31, 2015 MARCH 31, 2016
---- -------------- --------------
U.S. Government Securities......... $202,369 $179,558
CLASS SPECIFIC EXPENSES REIMBURSED
----------------------------------
FUND MARCH 31, 2015 MARCH 31, 2016
---- -------------- --------------
U.S. Government Securities Class A. $297,796 $288,050
U.S. Government Securities Class B. 21,636 22,943
U.S. Government Securities Class C. 42,702 39,432
GNMA Class A....................... 394,834 301,462
GNMA Class B....................... 37,793 38,339
GNMA Class C....................... 115,143 86,483
The Trust, on behalf of each Fund, has entered into a Distribution Agreement
with AIG Capital Services, Inc.* ("ACS" or "Distributor"), an affiliate of
the Adviser. Each Fund has adopted a Distribution Plan on behalf of each
Class in accordance with
--------
*Effective February 28, 2014, SunAmerica Capital Services, Inc. changed its
name to AIG Capital Services, Inc.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
the provisions of Rule 12b-1 under the 1940 Act (each a "Plan" and
collectively the "Plans"), hereinafter referred to as the "Class A Plan,"
the "Class B Plan" and the "Class C Plan." In adopting the Class A Plan, the
Class B Plan and the Class C Plan, the Trustees determined that there was a
reasonable likelihood that each such Plan would benefit the Trust and the
shareholders of the respective class. The sales charge and distribution fees
of a particular class will not be used to subsidize the sale of shares of
any other class.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated for include
fees paid to broker-dealers that have sold Fund shares, commissions, and
other expenses such as those incurred for sales literature, prospectus
printing and distribution and compensation to wholesalers. It is possible
that in any given year the amount paid to the Distributor under the Class A
Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution
costs as described above. The Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the year ended March 31,
2014, ACS received fees (see the Statements of Operations) based upon the
aforementioned rates.
ACS receives sales charges on each Fund's Class A shares, portions of which
are reallowed to affiliated broker-dealers and non-affiliated
broker-dealers. ACS 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. ACS has advised the Funds that for the year
ended March 31, 2014, 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. $ 21,967 $ 11,851 $ 6,600 $ -- $15,210 $ 1,241
GNMA....................... 96,276 63,103 16,962 7,080 45,419 4,161
Strategic Bond............. 442,902 242,629 124,788 58,365 83,894 33,290
High Yield Bond............ 56,054 18,133 28,335 1,007 22,811 2,341
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the year ended March 31, 2014, 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 MARCH 31, 2014
---- -------- --------------
US Government Securities Class A. $243,965 $19,070
US Government Securities Class B. 8,662 650
US Government Securities Class C. 20,427 1,377
GNMA Class A..................... 276,869 19,126
GNMA Class B..................... 25,950 1,857
GNMA Class C..................... 70,235 4,379
Strategic Bond Class A........... 636,323 47,709
Strategic Bond Class B........... 111,591 8,743
Strategic Bond Class C........... 503,768 37,154
High Yield Bond Class A.......... 155,992 12,787
High Yield Bond Class B.......... 27,567 2,479
High Yield Bond Class C.......... 70,128 5,727
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
At March 31, 2014, 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 12%
Focused Multi-Asset Strategy Portfolio 14
Pershing LLC 9
GNMA....................... Pershing LLC 54
Strategic Bond............. Pershing LLC 10
High Yield Bond............ Pershing LLC 17
Note 4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the year ended March 31, 2014 were as follows:
U.S. GOVERNMENT STRATEGIC HIGH YIELD
SECURITIES FUND GNMA FUND BOND FUND BOND FUND
--------------- ------------ ------------ -----------
Purchases (excluding U.S. government securities). $ -- $ -- $750,548,247 $54,713,600
Sales (excluding U.S. government securities)..... -- -- 879,280,480 59,590,735
Purchases of U.S. government securities.......... 131,067,860 154,462,790 126,403,402 --
Sales of U.S. government securities.............. 146,206,592 240,635,994 144,394,643 --
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, 2014 FOR THE YEAR ENDED MARCH 31, 2014
---------------------------------------- ---------------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
FUND INCOME LOSS CARRYOVER (DEPRECIATION)* INCOME CAPITAL GAINS
---- ---------- -------------- --------------- ----------- -------------
U.S. Government Securities. $ 194,926 $ (2,753,760) $ 5,012,118 $ 2,170,410 $ --
GNMA....................... 100,752 (9,521,720) 448,347 3,678,280 2,683
Strategic Bond............. 192,227 (55,353,177) (518,154) 22,272,620 --
High Yield Bond............ 1,110,674 (52,968,979) (1,084,308) 5,696,398 --
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2013
---------------------------------
ORDINARY LONG-TERM
FUND INCOME CAPITAL GAINS
---- ----------- -------------
U.S. Government Securities. $ 4,398,492 $ --
GNMA....................... 6,729,729 871,615
Strategic Bond............. 22,960,807 --
High Yield Bond............ 6,906,431 --
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
As of March 31, 2014, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwads, which expire in the year indicated,
which are available to offset future capital gains, if any:
CAPITAL LOSS CARRYFORWARD+ UNLIMITED+
--------------------------------- ---------------------
FUND 2016 2017 2018 ST LT
---- ---------- ---------- ----------- ---------- ----------
U.S. Government Securities. $ -- $ -- $ -- $2,479,219 $ 274,541
GNMA....................... -- -- -- 8,089,337 1,432,383
Strategic Bond............. -- -- 52,812,990 2,540,187 --
High Yield Bond............ 2,261,431 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.
The Funds indicated below utilized capital loss carryforwards, which offset
net realized taxable gains in the year ended March 31, 2014:
CAPITAL LOSS
CARRYFORWARD
FUND UTILIZED
---- ------------
U.S. Government Securities. $ --
GNMA....................... --
Strategic Bond............. --
High Yield Bond............ 113,016
Under the current law, capital losses realized after October 31 and late
year ordinary losses may be deferred and treated as occurring on the first
day of the following year. For the fiscal year ended March 31, 2014, the
Funds elected to defer late year ordinary losses and post October capital
losses as follows:
DEFERRED DEFERRED
DEFERRED POST-OCTOBER POST-OCTOBER
LATE YEAR SHORT-TERM LONG-TERM
FUND ORDINARY LOSS CAPITAL LOSS CAPITAL LOSS
---- ------------- ------------ ------------
U.S. Government Securities. $-- $276,569 $ 94,298
GNMA....................... -- -- 234,125
Strategic Bond............. -- -- --
High Yield Bond............ -- 102,804 4,508,423
For the period ended March 31, 2014, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net paydown adjustments, amortization of discount/premium, treatment
of litigation payments and treatment of foreign currency to the components
of net assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
FUND INCOME (LOSS) GAIN (LOSS) PAID-IN
---- -------------- ------------- -------
U.S. Government Securities. $ 322,585 $ (322,585) $ --
GNMA....................... 2,537,254 (2,537,254) --
Strategic Bond............. 258,031 (258,031) --
High Yield Bond............ 219,860 (315,260) 95,400
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
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 STRATEGIC HIGH YIELD
SECURITIES FUND GNMA FUND BOND FUND BOND FUND
--------------- ------------ ------------ ------------
Cost.......................................... $111,675,960 $147,465,986 $502,619,833 $113,254,653
============ ============ ============ ============
Appreciation.................................. 5,477,531 2,284,704 12,932,216 5,553,011
Depreciation.................................. (465,413) (1,836,357) (13,460,672) (6,637,319)
------------ ------------ ------------ ------------
Unrealized appreciation (depreciation) -- net. $ 5,012,118 $ 448,347 $ (528,456) $ (1,084,308)
============ ============ ============ ============
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
U.S GOVERNMENT SECURITIES FUND
------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2014 MARCH 31, 2013
------------------------ ------------------------ --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold(1)(2)....... 2,997,405 $ 28,749,556 3,921,197 $ 39,447,474 103,345 $ 976,258 127,429 $ 1,295,234
Reinvested dividends.... 187,267 1,783,073 328,546 3,322,601 3,649 34,823 9,726 98,256
Shares redeemed(1)(2)... (4,154,046) (39,601,661) (3,733,737) (37,849,010) (209,133) (1,985,784) (135,820) (1,372,818)
---------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease). (969,374) $ (9,069,032) 516,006 $ 4,921,065 (102,139) $ (974,703) 1,335 $ 20,672
========== ============ ========== ============ ======== =========== ======== ===========
U.S GOVERNMENT SECURITIES FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold............. 82,491 $ 790,305 420,100 $ 4,283,867
Reinvested dividends.... 9,214 87,861 28,048 283,084
Shares redeemed......... (551,933) (5,256,522) (673,224) (6,807,829)
---------- ------------ ---------- ------------
Net increase (decrease). (460,228) $ (4,378,356) (225,076) $ (2,240,878)
========== ============ ========== ============
GNMA FUND
--------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2014 MARCH 31, 2013
------------------------ -------------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Shares sold(3)(4)....... 1,757,439 $ 19,039,758 5,416,785 $ 62,579,052 117,880 $ 1,282,581 282,061 $ 3,259,259
Reinvested dividends.... 249,100 2,678,268 380,593 4,365,435 15,009 161,599 19,598 225,123
Shares redeemed(3)(4)... (6,604,175) (71,061,403) (13,849,327) (159,070,338) (486,265) (5,247,432) (371,142) (4,278,192)
---------- ------------ ----------- ------------- -------- ----------- -------- -----------
Net increase (decrease). (4,597,636) $(49,343,377) (8,051,949) $ (92,125,851) (353,376) $(3,803,252) (69,483) $ (793,810)
========== ============ =========== ============= ======== =========== ======== ===========
GNMA FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold............. 240,934 $ 2,645,994 1,048,290 $ 12,116,850
Reinvested dividends.... 38,032 410,705 80,372 924,664
Shares redeemed......... (2,340,241) (25,407,206) (2,502,463) (28,716,232)
---------- ------------ ----------- -------------
Net increase (decrease). (2,061,275) $(22,350,507) (1,373,801) $ (15,674,718)
========== ============ =========== =============
--------
(1)For the year ended March 31, 2014, includes automatic conversion of 20,154
shares of Class B shares in the amount of $193,287 to 20,162 shares of Class
A shares in the amount of $193,287.
(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 year ended March 31, 2014, includes automatic conversion of 39,836
shares of Class B shares in the amount of $431,678 to 39,945 shares of Class
A shares in the amount of $431,678.
(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.
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (CONTINUED)
STRATEGIC BOND FUND
----------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------------ --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2014 MARCH 31, 2013
-------------------------- -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Shares sold(1)(2)... 20,037,364 $ 70,574,479 39,698,118 $ 141,997,626 1,561,817 $ 5,483,865 3,254,487 $ 11,593,612
Reinvested dividends 2,812,086 9,825,626 2,550,049 9,085,201 392,316 1,370,206 302,081 1,075,790
Shares
redeemed(1)(2)..... (44,018,941) (153,795,261) (35,270,059) (125,154,964) (4,581,464) (15,981,270) (2,823,364) (10,038,084)
----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease)......... (21,169,491) $ (73,395,156) 6,978,108 $ 25,927,863 (2,627,331) $ (9,127,199) 733,204 $ 2,631,318
=========== ============= =========== ============= ========== ============ ========== ============
STRATEGIC BOND FUND
------------------------------------------------------
CLASS C
------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
Shares sold......... 6,034,013 $ 21,399,391 14,476,888 $ 51,811,193
Reinvested dividends 1,500,983 5,264,874 1,475,837 5,280,489
Shares redeemed..... (26,746,922) (93,597,683) (13,406,963) (47,878,110)
----------- ------------- ----------- -------------
Net increase
(decrease)......... (19,211,926) $ (66,933,418) 2,545,762 $ 9,213,572
=========== ============= =========== =============
HIGH YIELD BOND FUND
-----------------------------------------------------------------------------------------------------
CLASS A CLASS B
--------------------------------------------------- ------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013 MARCH 31, 2014 MARCH 31, 2013
------------------------ ------------------------- ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------ ---------- ----------- ---------- -----------
Shares sold(3)(4)....... 6,980,643 $ 24,808,319 9,122,794 $ 31,448,594 985,464 $ 3,523,721 1,546,059 $ 5,378,068
Reinvested dividends.... 752,185 2,657,899 819,177 2,850,296 114,254 404,144 125,945 439,400
Shares redeemed(3)(4)... (8,798,049) (30,951,768) (13,173,287) (45,652,403) (1,346,048) (4,747,328) (1,157,337) (4,051,421)
---------- ------------ ----------- ------------ ---------- ----------- ---------- -----------
Net increase (decrease). (1,065,221) $ (3,485,550) (3,231,316) $(11,353,513) (246,330) $ (819,463) 514,667 $ 1,766,047
========== ============ =========== ============ ========== =========== ========== ===========
HIGH YIELD BOND FUND
---------------------------------------------------
CLASS C
---------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2014 MARCH 31, 2013
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------
Shares sold............. 1,029,564 $ 3,674,020 1,161,535 $ 4,046,891
Reinvested dividends.... 291,589 1,035,927 342,771 1,199,593
Shares redeemed......... (2,287,139) (8,107,960) (2,817,449) (9,874,909)
---------- ------------ ----------- ------------
Net increase (decrease). (965,986) $ (3,398,013) (1,313,143) $ (4,628,425)
========== ============ =========== ============
--------
(1)For the year ended March 31, 2014, includes automatic conversion of 363,338
shares of Class B shares in the amount of $1,270,299 to 363,264 shares of
Class A shares in the amount of $1,270,299.
(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 year ended March 31, 2014, includes automatic conversion of 151,815
shares of Class B shares in the amount of $540,697 to 151,909 shares of
Class A shares in the amount of $540,697.
(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.
78
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (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 year ended March 31, 2014, the
following Funds had borrowings:
DAYS INTEREST AVERAGE DEBT WEIGHTED AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ------------ ----------------
GNMA............ 1 $446 $11,378,000 1.41%
Strategic Bond.. 6 131 579,382 1.35
High Yield Bond. 7 144 531,956 1.40
At March 31, 2014, there were no borrowings outstanding.
Note 8. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating Funds to borrow money
from and lend money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the year
ended March 31, 2014, 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 Trustee of any of the adopting
SunAmerica mutual funds (the "Adopting Funds") or has attained the age of 60
while a Trustee and completed five (5) consecutive years of service as a
Trustee of any Adopting Fund (an "Eligible Trustee/Director"). Pursuant to
the Retirement Plan, an Eligible Trustee may receive benefits upon (i) his
or her death or disability while a Trustee or (ii) the termination of his or
her tenure as a Trustee, other than removal for cause from each of the
Adopting Funds with respect to which he or she is an Eligible Trustee.
As of each of the first 10 birthdays after becoming a Participant and on
which he or she is both a Trustee and Participant, each Eligible Trustee
will be credited with an amount equal to 50% of his or her regular fees
(excluding committee fees) for services as a Disinterested Trustee of each
Adopting Fund for the calendar year in which such birthday occurs. In
addition, an amount equal to 8.50% of any amounts credited under the
preceding statement during prior years is added to each Eligible Trustee's
account. The rights of any Participant to benefits under the Retirement Plan
shall be an unsecured claim against the assets of the Adopting Funds. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to 15 annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
Effective December 3, 2008, the Retirement Plan was amended to, among other
things, (1) freeze the Retirement Plan as to future accruals for active
Participants as of December 31, 2008, (2) prohibit Disinterested Trustees
from first becoming participants in the Retirement Plan after December 31,
2008 and (3) permit active Participants to elect to receive a distribution
of their entire Retirement Plan account balance in 2009. The freeze on
future accruals does not apply to Participants that have commenced receiving
benefits under the Retirement Plan on or before December 31, 2008.
79
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2014 -- (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 MARCH 31, 2014
- -----------------------------------------------
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
FUND LIABILITY EXPENSE PAYMENTS
---- --------------- --------------- ---------------
U.S. Government Securities. $3,386 $ 56 $3,514
GNMA....................... 2,039 119 2,043
Strategic Bond............. 2,441 268 2,338
High Yield Bond............ 1,521 53 1,554
Note 10. Investment Concentration Note
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, and 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 March 31, 2014,
the Funds had 42.0% and 100.9%, respectively, of their net assets invested
in such securities.
80
SUNAMERICA INCOME FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Income Funds:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the four
funds constituting SunAmerica Income Funds (the "Trust'') at March 31, 2014,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at March 31, 2014 by correspondence with the custodian, transfer
agent, and brokers, and the application of alternative auditing procedures
where securities purchased had not been received, provide a reasonable basis
for our opinion.
PricewaterhouseCoopers LLP
Houston, Texas
May 28, 2014
81
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2014 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers who oversee operations of the Funds and other investment companies
within the Fund Complex.
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ----------- -------------- ------------------------------ ------------ -----------------------------
DISINTERESTED
TRUSTEES
Dr. Judith L. Craven Trustee 2001-present Retired. 78 Director, Sysco Corporation
Age: 68 (1996 to present); Director,
Luby's Inc. (1998 to
present).
William F. Devin Trustee 2001-present Retired. 78 None
Age: 75
Richard W. Grant Trustee; 2011-present Retired. Prior to that, 29 None
Age: 68 Chairman Attorney and Partner at
of the Morgan Lewis and Bockius
Board (1989 to 2011).
Stephen J. Gutman Trustee 1985-present Vice President and 29 None
Age: 70 Associate Broker, Corcoran
Group (real estate) (2003 to
present); President and
Managing Member, Beau-
Brummell Soho LLC
(licensing of menswear
specialty retailing and other
activities) (1995 to 2009);
President, SJG Marketing,
Inc. (2009 to present).
William J. Shea Trustee 2004-present Executive Chairman, 29 Director, Boston Private
Age: 66 Caliber ID, Inc. (formerly Financial Holdings (2004 to
Lucid, Inc.) (medical present); Chairman,
devices) (2007 to present); Demoullas Supermarkets
Managing Partner, DLB (1999 to present).
Capital, LLC (private
equity) (2006 to 2007).
82
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
------------------- ----------- -------------- ----------------------------- ------------ --------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1995 to President, CEO and 139 None
Age: 60 present Director, SunAmerica,
(1995 to present); Director,
AIG Capital Services, Inc.
("ACS") (1993 to present);
Chairman, Advisor Group,
Inc. (2004 to present).
OFFICERS
John T. Genoy President 2007 to Chief Financial Officer, N/A N/A
Age: 45 present SunAmerica (2002 to
present); Senior Vice
President, SunAmerica
(2003 to present); Chief
Operating Officer,
SunAmerica (2006 to
present).
Gregory R. Kingston Vice 2002 to Vice President, SunAmerica N/A N/A
Age: 48 President present (2001 to present).
and
Treasurer*
Gregory N. Bressler Secretary 2005 to Senior Vice President and N/A N/A
Age: 48 present General Counsel,
SunAmerica (2005 to
present).
Timothy Pettee Vice 2004 to Chief Investment Strategist, N/A N/A
Age: 56 President present SunAmerica (2003 to
present).
James Nichols Vice 2006 to Director, President and N/A N/A
Age: 48 President present CEO, ACS (2006 to
present); Senior Vice
President, SunAmerica
(2002 to present).
--------
* Effective May 20, 2014, Mr. Kingston was elected Treasurer of the Trust,
replacing Donna M. Handel.
83
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ------------- -------------- ----------------------------- ------------ --------------------
Katherine Stoner Chief June 2011 Vice President, SunAmerica N/A N/A
Age: 57 Compliance to present Asset Management, LLC
Officer (May 2011 to present); Vice
("CCO") President, The Variable
Annuity Life Insurance
Company ("VALIC") and
Western National Life
Insurance Company
("WNL") (2006 to present);
Deputy General Counsel
and Secretary, VALIC and
WNL (2007 to present);
Vice President, VALIC
Financial Advisors, Inc. and
VALIC Retirement Services
Company (2010 to present).
Nori L. Gabert Vice 2002 to Vice President and Deputy N/A N/A
Age: 60 President present General Counsel,
and SunAmerica (2005 to
Assistant present).
Secretary
Kathleen D. Fuentes Chief Legal 2013 to Vice President and Deputy N/A N/A
Age: 45 Officer and present General Counsel,
Assistant SunAmerica (2006 to
Secretary present).
Matthew J. Hackethal Anti- 2006 to Chief Compliance Officer, N/A N/A
Age: 42 Money present SunAmerica (2006 to
Laundering present).
Compliance
Officer
--------
* The business address for each Trustee and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1)The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the investment adviser. The "Fund
Complex" includes the Trust (4 funds), SunAmerica Equity Funds (2 funds),
SunAmerica Series, Inc. (6 portfolios), SunAmerica Money Market Funds, Inc.
(1 fund); Anchor Series Trust (8 portfolios), SunAmerica Senior Floating
Rate Fund, Inc. (1 fund), SunAmerica Series Trust (40 portfolios), VALIC
Company I (34 portfolios), VALIC Company II (15 portfolios), Seasons Series
Trust (21 portfolios) and SunAmerica Specialty Series (7 portfolios).
(2)Trusteeships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies regulated under the 1940 Act.
84
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2014 -- (UNAUDITED)
(CONTINUED)
(3)Mr. Harbeck is an "interested person" of the Funds, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
(4)Trustees serve until their successors are duly elected and qualified,
subject to the Trustees' retirement plan as discussed in Note 9 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
85
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- MARCH 31, 2014 -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon each Fund's income and distributions for the taxable
year ended March 31, 2014. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calendar year ending December 31, 2014. The information necessary to
complete your income tax returns will be included with your Form 1099-DIV which
will be sent to shareholders in early 2015.
For the year ended March 31, 2014, the Funds paid the following long-term
capital gains dividends along with percentage of ordinary income dividends that
qualified for the 70% dividends received deduction for corporations:
NET QUALIFYING % FOR THE
LONG-TERM 70% DIVIDENDS
CAPITAL GAINS RECEIVED DEDUCTION
------------- --------------------
U.S. Government Securities Fund Class A. $ -- -- %
U.S. Government Securities Fund Class B. -- --
U.S. Government Securities Fund Class C. -- --
GNMA Fund Class A....................... 0.0002 --
GNMA Fund Class B....................... 0.0002 --
GNMA Fund Class C....................... 0.0002 --
Strategic Bond Fund Class A............. -- 0.53
Strategic Bond Fund Class B............. -- 0.53
Strategic Bond Fund Class C............. -- 0.53
High Yield Bond Fund Class A............ -- 2.39
High Yield Bond Fund Class B............ -- 2.39
High Yield Bond Fund Class C............ -- 2.39
For the year ended March 31, 2014, certain dividends paid by the Strategic Bond
Fund and High Yield Bond Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the
distributions paid during the fiscal year, the following represents the maximum
amount that may be considered qualified dividend income:
AMOUNT
--------
Strategic Bond Fund.. $119,379
High Yield Bond Fund. 156,126
86
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited)
As required by the Securities and Exchange Commission, the graphs on the
following pages compare the performance of a $10,000 investment in the
SunAmerica Income Funds' portfolios to a similar investment in an index. Please
note that "inception", as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Income Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
87
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
The SunAmerica U.S. Government Securities Fund Class A shares returned -3.11%
(before maximum sales charge) for the 12-month period ended March 31, 2014. The
Fund trailed its benchmark, the Bank of America Merrill Lynch ("BofA ML") U.S.
Treasury Master Index/*/, which returned -1.53% during the same period.
Sector allocation and individual security selection decisions overall
contributed positively to the Fund's results during the annual period. Having
an allocation to mortgage-backed securities particularly helped, as
mortgage-backed securities, which are not components of the BofA ML U.S.
Treasury Master Index, outperformed U.S. Treasuries during the annual period.
Duration positioning within the U.S. Treasury sector also boosted relative
results. The Fund held a longer duration position than the BofA ML U.S.
Treasury Master Index through the second quarter of 2013, which hindered
relative results, but we steadily reduced the position during the remainder of
the annual period. As interest rates rose overall on economic data and the
potential unwinding of Fed stimulus, this shift in positioning helped. By the
end of March 2014, the Fund's duration was shorter than that of the BofA ML
U.S. Treasury Master Index by a little more than one-third of a year.
Such positive contributors, however, were not enough to offset the detracting
effect of duration positioning in the mortgage-backed securities sector or of
yield curve positioning within the government securities sector. The Fund had a
long duration within the mortgage-backed securities sector for most of the
annual period, which hindered results, as rates rose. The Fund's 6.9% average
position in cash and cash equivalents also detracted from performance.
During the second half of the annual period, we increased the Fund's weightings
in U.S. government-related securities and cash and reduced its allocations to
mortgage-backed securities and U.S. Treasuries. With these changes, at the end
of the annual period, the Fund had approximately 40% of its total net assets
invested in U.S. Treasuries, 29% in GNMAs, 13% in other government-related
securities and 18% in cash and cash equivalents. The cash position was held
primarily in repurchase agreements. The Fund maintained a shorter duration than
that of the BofA ML U.S. Treasury Master Index at the end of the annual period.
--------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares. Interest rates and bond prices
typically move inversely to each other; therefore, as with any bond fund, the
value of your investment in this Fund may go up or down in response to changes
in interest rates.
*The Bank of America Merrill Lynch (BofA ML) U.S. Treasury Master Index tracks
the performance of U.S. dollar denominated sovereign debt publicly issued by
the U.S. government in its domestic market. Indices are not managed and an
investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
88
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in U.S. Government Securities Fund
Class A shares would have increased to $13,031. The same amount invested in
securities mirroring the performance of the BofA Merrill Lynch U.S. Treasury
Master Index would be valued at $14,873.
U.S. GOVERNMENT SECURITIES FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -7.68% -3.11% -7.64% -3.84% -4.79% -3.84%
--------------------------------------------------------------------------
5 Year Return 0.83% 9.40% 0.79% 5.91% 1.15% 5.91%
--------------------------------------------------------------------------
10 Year Return 2.68% 36.80% 2.64% 29.75% 2.51% 28.09%
--------------------------------------------------------------------------
Since Inception* 4.47% 157.38% 5.30% 326.00% 3.80% 73.82%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/1/93; Class B: 03/3/86; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class B and Class C shares have been deducted, as applicable.
For the 12-month period ending March 31, 2014, the SunAmerica U.S. Government
Securities Fund Class A returned -7.68%, compared to -1.53% for the BofA
Merrill Lynch U.S. Treasury Master Index. (The performance table and graph do
not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.safunds.com.
** The BofA Merrill Lynch U.S. Treasury Master Index tracks the performance of
U.S. dollar denominated sovereign debt publicly issued by the U.S.
government in its domestic market. Indices are not managed and an investor
cannot invest directly into an index.
89
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA GNMA FUND
The SunAmerica GNMA Fund Class A shares returned -3.22% (before maximum sales
charge) for the 12-month period ended March 31, 2014. The Fund underperformed
its benchmark, the Bank of America Merrill Lynch ("BofA ML") Mortgages GNMA
Master Index/*/, which returned -0.08% during the same period.
Detracting most from the Fund's results during the annual period was its yield
curve positioning in the GNMA and U.S. Treasury securities sectors. Duration
positioning in U.S. Treasury securities also hindered results, as the Fund had
a long duration within this sector for most of the annual period when interest
rates generally rose. The Fund's 3.6% average position in cash and cash
equivalents also detracted from performance.
Contributing positively to the Fund's results relative to its benchmark index
was individual security selection and duration positioning within the GNMA
sector. The Fund held a longer duration position than the BofA ML Mortgages
GNMA Master Index through the first half of the annual period, but steadily
reduced the position during the latter half. As interest rates rose overall on
economic data and the potential unwinding of Fed stimulus, this shift in
positioning helped. By the end of the annual period, the Fund's duration was
shorter than that of the BofA ML Mortgages GNMA Master Index by a little more
than three-fourths of a year.
Since mid-2013, we increased the Fund's weightings in GNMAs and cash and
reduced its allocations to U.S. Treasuries. With these changes, at the end of
the annual period, the Fund had approximately 93% of its total net assets
invested in GNMAs, with the remainder in U.S. Treasuries, other
government-related securities, cash and cash equivalents. The Fund maintained a
shorter duration than that of its benchmark index at the end of the annual
period.
--------
Past performance is no guarantee of future results.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares. Interest rates and bond prices
typically move inversely to each other. Therefore, as with any bond fund, the
value of your investment in this Fund may go up or down in response to changes
in interest rates.
*The Bank of America Merrill Lynch (BofA ML) Mortgages GNMA Master Index is a
subset of the Bank of America Merrill Lynch U.S. Mortgage Backed Securities
Index including all securities issued by Ginnie Mae except for interest-only
fixed rate mortgage pools and hybrids. The Bank of America Merrill Lynch U.S.
Mortgage Backed Securities Index tracks the performance of U.S. dollar
denominated fixed rate and hybrid residential mortgage pass-through securities
publicly issued by U.S. agencies in the U.S. domestic market. Indices are not
managed and an investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
90
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in GNMA Fund Class A shares would
have increased to $13,481. The same amount invested in securities mirroring the
performance of the BofA Merrill Lynch Mortgages GNMA Master Index would be
valued at $15,836.
GNMA FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -7.80% -3.22% -7.61% -3.83% -4.85% -3.91%
--------------------------------------------------------------------------
5 Year Return 1.24% 11.66% 1.23% 8.10% 1.57% 8.10%
--------------------------------------------------------------------------
10 Year Return 3.03% 41.56% 2.87% 32.67% 2.87% 32.66%
--------------------------------------------------------------------------
Since Inception* 5.00% 185.16% 6.53% 608.12% 4.11% 81.73%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/11/93; Class B: 04/25/83; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class B and Class C shares have been deducted, as applicable.
For the 12-month period ending March 31, 2014, the SunAmerica GNMA Fund Class A
returned -7.80%, compared to -0.08% for the BofA Merrill Lynch Mortgages GNMA
Master Index. (The performance table and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.safunds.com.
** The BofA Merrill Lynch Mortgages GNMA Master Index is a subset of the BofA
Merrill Lynch U.S. Mortgage Backed Securities Index including all securities
issued by Ginnie Mae except for interest-only fixed rate mortgage pools and
hybrids. The BofA Merrill Lynch U.S. Mortgage Backed Securities Index tracks
the performance of U.S. dollar denominated fixed rate and hybrid residential
mortgage pass-through securities publicly issued by U.S. agencies in the
U.S. domestic market. Indices are not managed and an investor cannot invest
directly into an index.
91
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA STRATEGIC BOND FUND
The SunAmerica Strategic Bond Fund Class A shares returned 2.34% (before
maximum sales charge) for the 12-month period ended March 31, 2014. The Fund
outperformed its benchmark, the Barclays U.S. Aggregate Bond Index/*/, which
returned -0.10% during the same annual period.
The Fund's outperformance relative to its benchmark can be attributed primarily
to sector selection during the annual period, especially its allocations to
spread, or non-U.S. Treasury, sectors. In general, the monetary policies of the
Federal Reserve (the "Fed") and other central banks globally served to support
the performance of spread sectors and dampen volatility during the annual
period. In addition, reasonable fundamentals and relatively attractive
valuations, especially in lower rated investments, drew investors into these
spread sectors. In the high yield corporate bond sector, for example,
expectations of low default rates going forward and attractive yields, notable
in today's low rate environment, provided solid support to the sector. In turn,
the Fund's allocation to high yield corporate bonds provided a strong boost to
its relative results during the annual period. An allocation to investment
grade corporate bonds proved a positive contributor to the Fund's performance
as well, as this sector bounced back strongly from second quarter 2013 weakness
as the annual period progressed. These positive contributors more than offset
exposure to emerging market bonds, which detracted. The Fed's quantitative
easing program initially led to a strong rally in emerging markets debt.
However, this rally was cut short and reversed following discussion of the
tapering of this program. Thus, while other spread sectors bounced back after
the initial spring 2013 sell-off, emerging markets were more broadly and
lastingly impacted. Moreover, fears of slower economic growth in key emerging
market countries tempered the sector's performance.
Security selection, always a key and integral part of our investment process,
was a strong positive driver of the Fund's returns relative to the Barclays
U.S. Aggregate Bond Index during the annual period. Overall, security selection
was most effective within the high yield corporate bond and emerging market
bond sectors. In the high yield corporate bond sector, top performing
individual securities during the annual period included wireless carrier
Cricket Communications, integrated payment solutions provider Harland Clarke
Holdings and diversified business incubator Innovation Ventures. In the
emerging market bond sector, investments in Argentina and Hungary proved to be
the strongest positive contributors. Weak performers for the Fund included
positions in oilfield services company Green Field Energy Services,
telecommunication services firm Telecom Italia Capital-Global, gambling
operator Waterford Gaming and security services provider ADT.
While the Fund remained U.S.-centric, portions of the Fund were allocated to
non-U.S. dollar denominated sovereign and emerging market bonds, which meant
country exposure had an impact on results during the annual period. Fears of
the withdrawal of monetary stimulus coupled with slowing economic growth proved
especially challenging for countries more dependent on commodities. Conversely,
countries seen as on the path to economic recovery proved positive contributors
to the Fund's performance. Certain bond positions in South Africa, Australia
and Turkey detracted from relative results, while exposure to bonds in Poland
and the United Kingdom added value overall.
The Fund's strategy does not employ duration as a major driver of returns.
Nevertheless, the Fund does take a tilt toward duration with respect to its
benchmark. During the annual period, the Fund held a duration position that was
marginally longer than that of the Barclays U.S. Aggregate Bond Index. This
positioning proved to have a modestly negative impact on performance, as
interest rates moved higher throughout the annual period.
During the annual period, we increased the Fund's allocation to the corporate
sector, both investment grade and high yield. In investment grade, an
overweight in financials was maintained given what we considered to be the
attractiveness of the industry and reduced event risk. In high yield, an
underweight in BB-rated securities and an overweight in the energy industry
were key themes. We reduced the Fund's exposure to sovereign debt and
mortgage-backed securities during the annual period. We reduced the Fund's
allocation to sovereign debt because a lower commitment to emerging markets
debt was enacted. An already underweight allocation to mortgage-backed
securities was made more underweight given our view that the sector's
valuations had become rich, as driven by Fed activity and lack of supply.
With these changes, the Fund ended the annual period on March 31, 2014 most
overweight relative to the Barclays U.S. Aggregate Bond Index to corporate
bonds. Within the credit sector, the Fund was overweight to industrials,
financials and utilities. To a far more modest degree, the Fund was also
overweight relative to its benchmark index in sovereign debt. On the same date,
the Fund was
92
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
underweight relative to the Barclays U.S. Aggregate Bond Index in U.S.
Treasuries, mortgage-backed securities, agency securities, supranationals and
commercial mortgage-backed securities. The Fund had neutral weightings relative
to its benchmark index in asset-backed securities and covered bonds at the end
of the annual period.
--------
Past performance is no guarantee of future results.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates. High-yield bonds tend
to have lower interest rate risk than higher-quality bonds of similar maturity
but carry greater credit and default risk. Investing internationally involves
special risks, such as currency fluctuations and economic and political
instability.
*The Barclays U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly
into an index.
Securities listed may or may not be a part of current Fund construction.
93
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares
would have increased to $17,639. The same amount invested in securities
mirroring the performance of the Barclays U.S. Aggregate Bond Index would be
valued at $15,475.
STRATEGIC BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -2.53% 2.34% -1.99% 1.95% 0.71% 1.69%
--------------------------------------------------------------------------
5 Year Return 9.89% 68.50% 9.99% 62.97% 10.27% 63.04%
--------------------------------------------------------------------------
10 Year Return 5.84% 85.18% 5.76% 75.07% 5.64% 73.05%
--------------------------------------------------------------------------
Since Inception* 6.58% 285.33% 6.94% 282.43% 6.55% 255.38%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class B and Class C shares have been deducted, as applicable.
For the 12-month period ending March 31, 2014, the SunAmerica Strategic Bond
Fund Class A returned -2.53%, compared to -0.10% for the Barclays U.S.
Aggregate Bond Index. (The performance table and graph do not reflect the
deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.safunds.com.
** The Barclays U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index.
94
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA HIGH YIELD BOND FUND
The SunAmerica High Yield Bond Fund Class A shares gained 5.60% (before maximum
sales charge) for the 12-month period ended March 31, 2014. The Fund posted
solid absolute gains but underperformed its benchmark, the Citigroup High Yield
Market Index/*/, which returned 7.38% during the same annual period.
In the first months of the annual period, the U.S. high yield bond market
suffered its first quarterly loss since the third quarter of 2011, as investors
in higher-yielding securities drove a sell-off after the Federal Reserve (the
"Fed") surprised markets with its earlier-than-expected plan to taper asset
purchases. Still, high yield bonds managed to outperform duration-equivalent
U.S. Treasuries during the second quarter of 2013. For the last nine months of
the annual period, high yield bonds more significantly outperformed
duration-equivalent U.S. Treasuries.
The technical, or supply/demand, backdrop was mixed but overall positive.
Following net inflows in April and May 2013, investor demand turned sharply
negative in June, with mutual fund outflows of $12.2 billion. New issuance
slowed markedly, with $77.4 billion priced following a record $101.3 billion in
the first quarter. During the last nine months of the annual period, investor
flows were positive but fluctuated with expectations of Fed policy and U.S.
government budget debate. The new issue market was generally busy, bringing
total issuance for the last nine months of the annual period to $221.9 billion.
Fundamentals also remained strong. The trailing 12-month par-weighted default
rate ended March 2014 at 0.61%, according to JPMorgan, well below its long-term
average. Also, while acknowledging a pickup toward the end of the annual period
in shareholder-friendly actions such as mergers and acquisitions and leveraged
buyouts, issuers had meaningfully strengthened their balance sheets and
liquidity positions since the 2008 credit crisis, and proceeds from new
issuance were used mainly to refinance existing debt. The sector's average
yield at the end of the annual period compared favorably to other fixed income
sectors.
Amidst the broadly supportive but somewhat volatile macro backdrop, the Fund
maintained a slightly defensive positioning throughout the annual period, with
a bias toward higher quality, lower yielding securities, as we believed this
positioning was prudent given the risk/reward tradeoffs in the credit cycle.
This positioning, however, combined with a small cash position, detracted from
the Fund's results, as the high yield bond market rallied substantially during
the annual period, with lower quality bonds outperforming higher quality bonds.
Sector allocation also detracted from the Fund's results relative to its
benchmark index during the annual period. Overweight allocations to the
comparatively weak wireless and financial services industries weighed on the
Fund's relative performance. A residual cash position in a rising market
further detracted. Only partially offsetting these detractors was the positive
impact of the Fund's overweight allocation to the comparatively strong
technology industry and its underweight allocation to the lagging gaming
industry.
Security selection detracted from the Fund's performance during the annual
period as well, albeit more modestly. Weak security selection in the paper and
media-non-cable industries more than offset effective security selection in the
financial services, wireless, utilities and chemicals industries. Detracting
from the Fund's relative results during the annual period were positions in
Caraustar Industries, a recycled paperboard and packaging solutions company;
NII Holdings, a mobile communications provider for business customers in Latin
America; Savient Pharmaceuticals, a broadly diversified pharmaceuticals
company; and Cobalt International Energy, an oil-focused exploration and
production company. Not owning certain securities in radio station owner and
operator Clear Channel Media and Entertainment, which performed well, also
hurt. Among the greatest individual contributors to the Fund's relative returns
during the annual period were holdings in wireless and wireline communications
operator Sprint Nextel; semiconductor device manufacturer Micron Technology and
title lending business Titlemax. Having an underweight position in the
securities of casino resort operator Caesars Entertainment, which lagged the
Citigroup High Yield Market Index, also boosted relative results.
During the annual period, we shifted to a significantly overweight position in
the wireless industry, as we believed recent consolidation in the industry
could improve its dynamics. In particular, we added to the Fund's position in
Sprint Nextel. We also exited a position in retailer JC Penney during the
annual period. We had been hopeful JC Penney would be able to quickly undo the
damage it had done to its operations under its former chief executive officer.
However, when shoppers proved more difficult to recapture, the risks of our
investment no longer seemed to justify maintaining the position.
95
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
As of March 31, 2014, the Fund maintained its slightly defensive positioning.
The Fund was overweight relative to the Citigroup High Yield Market Index in
the financial institutions, wireless and media cable industries and was
underweight its benchmark index in the energy and utilities industries at the
end of the annual period.
--------
Past performance is no guarantee of future results.
High-yield bonds tend to have lower interest-rate risk than higher-quality
bonds of similar maturity but carry greater credit and default risk. Interest
rates and bond prices typically move inversely to each other; therefore, as
with any bond fund, the value of an investment in this Fund may go up or down
in response to changes in interest rates.
*The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
Securities listed may or may not be a part of current Fund construction.
96
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in High Yield Bond Fund Class A
shares would have increased to $17,433. The same amount invested in securities
mirroring the performance of the Citigroup High Yield Market Index would be
valued at $22,316.
HIGH YIELD BOND FUND
Class A Class B Class C
------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 0.55% 5.60% 1.21% 5.21% 3.92% 4.92%
--------------------------------------------------------------------------
5 Year Return 14.38% 105.83% 14.53% 99.08% 14.73% 98.83%
--------------------------------------------------------------------------
10 Year Return 5.72% 82.99% 5.69% 73.92% 5.55% 71.65%
--------------------------------------------------------------------------
Since Inception* 5.19% 128.96% 5.15% 116.82% 5.17% 98.64%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class B and Class C shares have been deducted, as applicable.
For the 12-month period ending March 31, 2014, the SunAmerica High Yield Bond
Fund Class A returned 0.55%, compared to 7.38% for the Citigroup High Yield
Market Index. (The performance table and graph do not reflect the deduction of
taxes that a shareholder would pay on fund distributions or the redemption of
fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.safunds.com.
** The Citigroup High Yield Market Index is a broad-based, unmanaged index of
high-yield securities. Indices are not managed and an investor cannot invest
directly into an index.
97
[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
James Nichols, Vice Fund's portfolio, third fiscal quarters
President which is available in on Form N-Q. The
Timothy Pettee, Vice the Trust's Statement Trust's Forms N-Q are
President of Additional available on the
Katherine Stoner, Vice Information, may be U.S. Securities and
President and Chief ob-tained without Exchange Commis-sion
Compliance Officer charge upon request, website at
Gregory N. Bressler, by calling (800) www.sec.gov. You can
Secretary 858-8850. The also review and obtain
Nori L. Gabert, Vice in-formation is also copies of the Forms
President and available from the N-Q at the U.S.
Assistant Secretary EDGAR database on the Securities and
Kathleen Fuentes, Chief U.S. Secu-rities and Exchange Commission
Legal Officer and Exchange Commission's Public Refer-ence Room
Assistant Secretary website at in Washington DC
Gregory R. Kingston, http://www.sec.gov. (information on the
Vice President and operation of the
Treasurer DELIVERY OF Public Reference Room
John E. Smith Jr., SHAREHOLDER DOCUMENTS may be ob-tained by
Assistant Treasurer The Funds have adopted calling
Matthew J. Hackethal, a policy that allows 1-800-SEC-0330).
Anti-Money Laundering them to send only one
Compliance Officer copy of a Fund's PROXY VOTING RECORD ON
prospectus, proxy SUNAMERICA INCOME FUNDS
INVESTMENT ADVISER material, annual Information regarding
SunAmerica Asset report and semi-annual how the Funds voted
Management, LLC report (the proxies relating to
Harborside Financial "shareholder securities held in the
Center documents") to Funds during the most
3200 Plaza 5 shareholders with recent twelve month
Jersey City, NJ multiple accounts period ended June 30
07311-4992 residing at the same is available, once
"household." This filed with the U.S.
DISTRIBUTOR practice is called Securities and
AIG Capital Services, householding and Exchange Commission,
Inc. reduces Fund expenses, without charge, upon
Harborside Financial which benefits you and request, by calling
Center other shareholders. (800) 858-8850 or on
3200 Plaza 5 Unless the Funds the U.S. Securities
Jersey City, NJ receive instructions and Exchange
07311-4992 to the con-trary, you Commission's website
will only receive one at http://www.sec.gov.
SHAREHOLDER SERVICING copy of the
AGENT shareholder documents. This report is
SunAmerica Fund The Funds will submitted solely for
Services, Inc. continue to household the general
Harborside Financial the share-holder information of
Center documents shareholders of the
3200 Plaza 5 indefinitely, until we Funds. Distribution of
Jersey City, NJ are instructed this report to persons
07311-4992 otherwise. If you do other than
not wish to shareholders of the
CUSTODIAN AND TRANSFER participate in Funds is authorized
AGENT householding please only in con-nection
State Street Bank and contact Shareholder with a currently
Trust Company Services at (800) effective pro-spectus,
P.O. Box 5607 858-8850 ext. 6010 or setting forth details
Boston, MA 02110 send a written request of the Funds, which
with your name, the must precede or
name of your fund(s) accom-pany this report.
and your account
number(s) to
SunAmerica Mutual
Funds c/o BFDS, P.O.
Box 219186, Kansas
City MO, 64121-9186.
We will resume
individual mailings
for your account
within thirty (30)
days of receipt of
your request.
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO WWW.SAFUNDS.COM
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.safunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
DISTRIBUTED BY:
AIG CAPITAL SERVICES, INC.
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
INANN - 3/14
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
The SunAmerica Income Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2014, there were no reportable amendments,
waivers or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(b) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2013 2014
(a) Audit Fees ....................$ 166,506 $ 171,504
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 64,173 $ 57,040
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2013 2014
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2013 and 2014 were $117,763 and $103,022, respectively.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-----------------------
John T. Genoy
President
Date: June 6, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-----------------------
John T. Genoy
President
Date: June 6, 2014
By: /s/ Gregory R. Kingston
-----------------------
Gregory R. Kingston
Treasurer
Date: June 6, 2014