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: September 30, 2014
-------------------------
Item 1. Reports to Stockholders
SEMI-ANNUAL REPORT 2014
SUNAMERICA
Income Funds
[PHOTO]
[LOGO]
SEPTEMBER 30, 2014 SEMI-ANNUAL REPORT
SUNAMERICA INCOME FUNDS
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND (SGTAX)
SUNAMERICA GNMA FUND (GNMAX)
SUNAMERICA STRATEGIC BOND FUND (SDIAX)
SUNAMERICA HIGH YIELD BOND FUND (SHNAX)*
--------
* Effective October 1, 2014, the name of the SunAmerica High Yield Bond Fund
changed to the SunAmerica Flexible Credit Fund.
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............................... 61
APPROVAL OF ADVISORY AGREEMENTS............................. 80
SHAREHOLDER LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present this semi-annual update for the SunAmerica Income
Funds for the six months ended September 30, 2014. It was a period wherein
fixed income market performance was primarily driven by economic conditions and
monetary policies of global central banks, both of which diverged as the fiscal
year progressed, as well as by concerns surrounding geopolitical events. For
the semi-annual period overall, the Barclays U.S. Aggregate Bond Index*, a
broad measure of the U.S. fixed income market, returned 2.21%.
As the semi-annual period began, dovish tones across the major central banks,
emerging market economic growth concerns and geopolitical tensions in Ukraine
and the Middle East overshadowed constructive economic releases in advanced
economies, keeping risk appetites suppressed. In turn, global fixed income
markets rallied as expectations of prolonged easy monetary policy and an
improving, albeit below trend, macro environment suppressed volatility. At the
same time, central bank monetary policy diverged. The European Central Bank
("ECB") unveiled a set of unconventional monetary policy measures in an effort
to fight disinflationary forces and rekindle growth in the Eurozone. The
People's Bank of China ("PBOC") also announced a set of stimulus measures. The
Bank of Japan (BoJ) maintained its easy monetary policy framework, while the
Bank of England signaled a possible increase in rates before the end of the
year and the U.S. Federal Reserve (the "Fed") hinted that rate hikes might
start next year. Virtually all of the key fixed income sectors generated
positive absolute returns during the second calendar quarter of 2014, as global
bond yields generally decreased and credit spreads tightened.
Fixed income markets maintained a relatively cautious tone during the third
calendar quarter amid persistent geopolitical tensions and renewed concerns
about global economic growth. The ECB surprised markets by cutting its
benchmark lending and deposit rates further and announcing it would buy
asset-backed securities and covered bonds. The programs are part of the ECB's
broader effort to encourage lending and fend off fears of deflation. China's
central bank joined the ECB in boosting liquidity by injecting funds into its
nation's largest banks in an effort to combat weakening growth. However, the
pro-democracy protests in Hong Kong created new worries for China's economy,
which was already flagging because of the downturn in the real estate market.
Meanwhile, it was reported that Japan's economy contracted by an annualized
7.1% in the second calendar quarter as consumption plummeted after the April
2014 value-added tax increase. The policy-easing moves by the ECB and PBOC
highlighted the divergent paths of the major central banks, as the Bank of
England and the Fed leaned toward tighter policies. Indeed, in the U.S.,
policymakers continued to taper its asset purchases, staying on course to end
its bond-buying program in October 2014, as expected. Fed Chair Janet Yellen
assured the markets that the Fed was in no hurry to raise interest rates,
noting conflicting signals from a wide range of labor market indicators and
inflation that remained below the Fed's 2% target. Ms. Yellen further signaled
that the timing of the first rate hike would be dependent on economic data. The
flight-to-quality rally, combined with expectations for continued easy policy
by major central banks fueled by a weakening global recovery and falling
inflation, led to a decline in global government bond yields but mixed
performance by spread, or non-government bond, sectors, as spread widening
offset falling yields in many cases.
For the semi-annual period overall, U.S. Treasury securities posted positive
returns, with the yield on the 10-year U.S. Treasury having declined
approximately 23 basis points+ to 2.49% by the end of September 2014. That
said, the U.S. Treasury yield curve, or spectrum of maturities, flattened
during the six months ended September 30, 2014, as intermediate-term and
longer-term yields declined and shorter-term maturities edged up. Non-U.S.
Treasury sectors generated mixed performance, though most posted positive
absolute returns. Sovereign emerging markets debt generated the strongest
positive returns within the broad fixed income market. Mortgage-backed
securities and investment grade corporate bonds also outperformed U.S.
Treasuries. Conversely, commercial mortgage-backed securities, asset-backed
securities and high yield corporate bonds underperformed U.S. Treasuries.
Sovereign international bonds was the only major sector in the broad fixed
income market to post negative absolute returns during the semi-annual period.
On the following pages, you will find detailed financial statements and
portfolio information for each of the SunAmerica Income Funds during the
semi-annual period ended September 30, 2014.
2
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 Campion Robert Vanden Assem Christopher Jones
Andrew Doulos Anthony King John Yovanovic
Kara Murphy 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 1/100th of a percentage point.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- SEPTEMBER 30, 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 April 1, 2014 and held until September 30, 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 September 30, 2014" to estimate the expenses you paid on your
account during this period. The "Expenses Paid During the Six Months Ended
September 30, 2014" column and the "Annualized Expense Ratio" column do not
include small account fees that may be charged if your account balance is below
$500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended September 30, 2014" column and the "Annualized
Expense Ratio" column do not include administrative fees that may apply to
qualified retirement plan accounts. See the Trust's prospectus, your retirement
plan document and/or materials from your financial adviser for a full
description of these fees. Had these fees been included, the "Expenses Paid
During the Six Months Ended September 30, 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 each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is
not the Fund's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in these Funds and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds. The "Expenses Paid During the Six Months
Ended September 30, 2014" column and the "Annualized Expense Ratio" column do
not include small account fees that may be charged if your account balance is
below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid
During the Six Months Ended September 30, 2014" column and the "Annualized
Expense Ratio" column do not include administrative fees that may apply to
qualified retirement plan accounts. See the Funds' prospectus, your retirement
plan document and/or materials from your financial adviser for a full
description of these fees. Had these fees been included, the "Expenses Paid
During the Six Months Ended September 30, 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 -- SEPTEMBER 30, 2014 -- (UNAUDITED) (CONTINUED)
ACTUAL HYPOTHETICAL
------------------------------------------ ------------------------------------------
ENDING ACCOUNT
ENDING ACCOUNT EXPENSES PAID VALUE USING EXPENSES PAID
VALUE USING DURING THE A HYPOTHETICAL DURING THE
BEGINNING ACTUAL SIX MONTHS BEGINNING 5% ASSUMED SIX MONTHS
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED ANNUALIZED
AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, AT APRIL 1, SEPTEMBER 30, SEPTEMBER 30, EXPENSE
FUND 2014 2014 2014* 2014 2014 2014* RATIO*
---- ------------- -------------- ------------- ------------- -------------- ------------- ----------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,022.16 $ 5.02 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,019.91 $ 8.30 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C# ................ $1,000.00 $1,019.92 $ 8.30 $1,000.00 $1,016.85 $ 8.29 1.64%
GNMA
Class A#................. $1,000.00 $1,015.23 $ 5.00 $1,000.00 $1,020.10 $ 5.01 0.99%
Class B#................. $1,000.00 $1,011.93 $ 8.27 $1,000.00 $1,016.85 $ 8.29 1.64%
Class C# ................ $1,000.00 $1,012.87 $ 8.28 $1,000.00 $1,016.85 $ 8.29 1.64%
STRATEGIC BOND
Class A.................. $1,000.00 $1,013.80 $ 6.46 $1,000.00 $1,018.65 $ 6.48 1.28%
Class B.................. $1,000.00 $1,010.39 $ 9.83 $1,000.00 $1,015.29 $ 9.85 1.95%
Class C ................. $1,000.00 $1,010.57 $ 9.73 $1,000.00 $1,015.39 $ 9.75 1.93%
HIGH YIELD BOND+
Class A#................. $1,000.00 $ 998.85 $ 6.81 $1,000.00 $1,018.25 $ 6.88 1.36%
Class B#................. $1,000.00 $ 992.85 $10.04 $1,000.00 $1,014.99 $10.15 2.01%
Class C# ................ $1,000.00 $ 995.76 $10.06 $1,000.00 $1,014.99 $10.15 2.01%
--------
* Expenses are equal to each Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 365
days (to reflect the one-half year period). These ratios do not reflect
transaction costs, including sales charges on purchase payments, contingent
deferred sales charges, small account fees and administrative fees, if
applicable to your account. Please refer to your Prospectus, your retirement
plan documents and/or materials from your financial adviser for more
information.
# During the stated period, the investment advisor either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Funds.
As a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended September 30,
2014" and the "Annualized Expense Ratio" would have been higher.
+ See Note 12
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2014 --
(UNAUDITED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $101,814,691 $122,646,659
Repurchase agreements (cost approximates value)............................................... 7,479,000 3,927,000
------------ ------------
Total investments........................................................................... 109,293,691 126,573,659
------------ ------------
Cash.......................................................................................... 755 884
Foreign cash*................................................................................. -- --
Receivable for:
Shares of beneficial interest sold.......................................................... 150,256 140,800
Dividends and interest...................................................................... 556,814 527,142
Investments sold............................................................................ -- --
Prepaid expenses and other assets............................................................. 2,773 2,953
Due from investment adviser for expense reimbursements/fee waivers............................ 89,775 64,208
Unrealized appreciation on forward foreign currency contracts................................. -- --
------------ ------------
Total assets.................................................................................. 110,094,064 127,309,646
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 57,067 151,815
Investments purchased....................................................................... -- --
Investment advisory and management fees..................................................... 59,738 50,229
Distribution and service maintenance fees................................................... 37,877 52,098
Transfer agent fees and expenses............................................................ 25,236 33,134
Trustees' fees and expenses................................................................. 5,239 2,744
Other accrued expenses...................................................................... 62,611 49,921
Dividends payable............................................................................. 7,616 19,168
Due to custodian for foreign cash*............................................................ -- --
Unrealized depreciation on forward foreign currency contracts................................. -- --
Commitments (Note 11)......................................................................... -- --
------------ ------------
Total liabilities............................................................................. 255,384 359,109
------------ ------------
Net assets.................................................................................... $109,838,680 $126,950,537
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 114,856 $ 118,953
Paid-in capital............................................................................... 106,150,072 135,741,629
------------ ------------
106,264,928 135,860,582
Accumulated undistributed net investment income (loss)........................................ (204,396) (1,313,895)
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short and foreign exchange transactions........................... (3,165,484) (9,569,138)
Unrealized appreciation (depreciation) on investments......................................... 6,943,632 1,972,988
Unrealized foreign exchange gain (loss) on other assets and liabilities....................... -- --
------------ ------------
Net assets.................................................................................... $109,838,680 $126,950,537
============ ============
*Cost
Investments (unaffiliated).................................................................. $ 94,871,059 $120,673,671
============ ============
Foreign cash................................................................................ $ -- $ --
============ ============
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND+
------------ ------------
ASSETS:
Investments at value (unaffiliated)*.......................................................... $482,907,193 $ 97,874,017
Repurchase agreements (cost approximates value)............................................... 3,605,000 1,780,000
------------ ------------
Total investments........................................................................... 486,512,193 99,654,017
------------ ------------
Cash.......................................................................................... 2,019,533 329,275
Foreign cash*................................................................................. 471,803 --
Receivable for:
Shares of beneficial interest sold.......................................................... 1,222,320 94,586
Dividends and interest...................................................................... 6,601,947 1,737,735
Investments sold............................................................................ 8,663,877 823,607
Prepaid expenses and other assets............................................................. 4,618 4,608
Due from investment adviser for expense reimbursements/fee waivers............................ -- 78,341
Unrealized appreciation on forward foreign currency contracts................................. -- 30,435
------------ ------------
Total assets.................................................................................. 505,496,291 102,752,604
------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed...................................................... 1,363,942 210,086
Investments purchased....................................................................... 13,687,307 924,543
Investment advisory and management fees..................................................... 259,177 64,344
Distribution and service maintenance fees................................................... 269,965 51,097
Transfer agent fees and expenses............................................................ 98,151 26,267
Trustees' fees and expenses................................................................. 7,030 1,151
Other accrued expenses...................................................................... 99,724 73,939
Dividends payable............................................................................. 236,375 62,901
Due to custodian for foreign cash*............................................................ -- 204,021
Unrealized depreciation on forward foreign currency contracts................................. -- 20,962
Commitments (Note 11)......................................................................... 69,092 --
------------ ------------
Total liabilities............................................................................. 16,090,763 1,639,311
------------ ------------
Net assets.................................................................................... $489,405,528 $101,113,293
============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01.......................................................... $ 1,392,832 $ 288,458
Paid-in capital............................................................................... 546,853,650 161,400,412
------------ ------------
548,246,482 161,688,870
Accumulated undistributed net investment income (loss)........................................ (2,668,041) 640,444
Accumulated undistributed net realized gain (loss) on investments, futures contracts, options
contracts, securities sold short and foreign exchange transactions........................... (49,304,369) (56,029,229)
Unrealized appreciation (depreciation) on investments......................................... (6,820,371) (5,195,170)
Unrealized foreign exchange gain (loss) on other assets and liabilities....................... (48,173) 8,378
------------ ------------
Net assets.................................................................................... $489,405,528 $101,113,293
============ ============
*Cost
Investments (unaffiliated).................................................................. $489,727,564 $103,069,187
============ ============
Foreign cash................................................................................ $ 488,065 $ (203,964)
============ ============
--------
+ See Note 12
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- SEPTEMBER 30, 2014 --
(UNAUDITED) (CONTINUED)
U.S. GOVERNMENT
SECURITIES GNMA
FUND FUND
--------------- -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $99,171,054 $98,419,072
Shares of beneficial interest issued and outstanding........................................... 10,369,572 9,229,612
Net asset value and redemption price per share (excluding any applicable contingent deferred
sales charge)................................................................................. $ 9.56 $ 10.66
Maximum sales charge (4.75% of offering price)................................................. $ 0.48 $ 0.53
----------- -----------
Maximum offering price to public............................................................... $ 10.04 $ 11.19
=========== ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $ 2,967,580 $ 9,204,518
Shares of beneficial interest issued and outstanding........................................... 310,226 860,797
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)........................................................................ $ 9.57 $ 10.69
=========== ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $ 7,700,046 $19,326,947
Shares of beneficial interest issued and outstanding........................................... 805,824 1,804,908
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)........................................................................ $ 9.56 $ 10.71
=========== ===========
STRATEGIC HIGH YIELD
BOND BOND
FUND FUND+
------------ -----------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $255,362,167 $62,611,283
Shares of beneficial interest issued and outstanding........................................... 72,782,950 17,893,437
Net asset value and redemption price per share (excluding any applicable contingent deferred
sales charge)................................................................................. $ 3.51 $ 3.50
Maximum sales charge (4.75% of offering price)................................................. $ 0.18 $ 0.17
------------ -----------
Maximum offering price to public............................................................... $ 3.69 $ 3.67
============ ===========
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $ 43,022,472 $ 9,325,906
Shares of beneficial interest issued and outstanding........................................... 12,264,783 2,661,945
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)........................................................................ $ 3.51 $ 3.50
============ ===========
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets..................................................................................... $191,020,889 $29,176,104
Shares of beneficial interest issued and outstanding........................................... 54,235,453 8,290,381
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)........................................................................ $ 3.52 $ 3.52
============ ===========
--------
+ See Note 12
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2014
- (UNAUDITED)
U.S. GOVERNMENT STRATEGIC
SECURITIES GNMA BOND
FUND FUND FUND
--------------- ---------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ -- $ -- $ 53,028
Interest (unaffiliated)............................................................. 1,396,550 1,497,357 12,340,619
---------- ---------- -----------
Total investment income*........................................................... 1,396,550 1,497,357 12,393,647
---------- ---------- -----------
EXPENSES:
Investment advisory and management fees............................................. 365,049 314,231 1,594,269
Distribution and service maintenance fees:
Class A............................................................................ 178,165 175,681 454,335
Class B............................................................................ 16,046 47,986 228,341
Class C............................................................................ 36,526 106,577 984,438
Transfer agent fees and expenses:
Class A............................................................................ 117,216 112,800 290,694
Class B............................................................................ 4,293 10,369 50,730
Class C............................................................................ 9,316 24,534 218,814
Registration fees:
Class A............................................................................ 12,351 11,342 20,360
Class B............................................................................ 7,362 8,927 8,664
Class C............................................................................ 8,768 9,356 11,381
Custodian and accounting fees....................................................... 14,288 32,106 45,777
Reports to shareholders............................................................. 7,243 9,093 41,362
Audit and tax fees.................................................................. 21,684 22,203 25,875
Legal fees.......................................................................... 5,047 5,382 5,060
Trustees' fees and expenses......................................................... 5,066 3,250 13,805
Interest expense.................................................................... -- -- 197
Other expenses...................................................................... 8,687 9,110 14,038
---------- ---------- -----------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 817,107 902,947 4,008,140
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. (226,936) (152,539) --
---------- ---------- -----------
Net expenses....................................................................... 590,171 750,408 4,008,140
---------- ---------- -----------
Net investment income (loss).......................................................... 806,379 746,949 8,385,507
---------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ 83,386 221,513 6,531,510
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- -- (164,627)
---------- ---------- -----------
Net realized gain (loss) on investments and foreign currencies........................ 83,386 221,513 6,366,883
---------- ---------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 1,500,794 972,358 (8,505,214)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- (58,475)
---------- ---------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... 1,500,794 972,358 (8,563,689)
---------- ---------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 1,584,180 1,193,871 (2,196,806)
---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $2,390,559 $1,940,820 $ 6,188,701
========== ========== ===========
* Net of foreign withholding taxes on interest and dividends of....................... $ -- $ -- $ (6,648)
========== ========== ===========
HIGH YIELD
BOND
FUND+
-----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 66,090
Interest (unaffiliated)............................................................. 3,531,482
-----------
Total investment income*........................................................... 3,597,572
-----------
EXPENSES:
Investment advisory and management fees............................................. 422,522
Distribution and service maintenance fees:
Class A............................................................................ 123,812
Class B............................................................................ 57,266
Class C............................................................................ 152,346
Transfer agent fees and expenses:
Class A............................................................................ 81,006
Class B............................................................................ 13,146
Class C............................................................................ 34,475
Registration fees:
Class A............................................................................ 14,232
Class B............................................................................ 7,843
Class C............................................................................ 8,283
Custodian and accounting fees....................................................... 14,796
Reports to shareholders............................................................. 14,827
Audit and tax fees.................................................................. 32,092
Legal fees.......................................................................... 12,991
Trustees' fees and expenses......................................................... 17,990
Interest expense.................................................................... 72
Other expenses...................................................................... 11,176
-----------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 1,018,875
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. (116,384)
-----------
Net expenses....................................................................... 902,491
-----------
Net investment income (loss).......................................................... 2,695,081
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ 1,385,375
Net realized foreign exchange gain (loss) on other assets and liabilities............. 165,603
-----------
Net realized gain (loss) on investments and foreign currencies........................ 1,550,978
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (4,510,083)
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... 8,053
-----------
Net unrealized gain (loss) on investments and foreign currencies...................... (4,502,030)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... (2,951,052)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ (255,971)
===========
* Net of foreign withholding taxes on interest and dividends of....................... $ (431)
===========
+ See Note 12
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2014 MARCH 31,
(UNAUDITED) 2014
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 806,379 $ 1,678,382
Net realized gain (loss) on investments and foreign currencies......................... 83,386 (2,745,233)
Net unrealized gain (loss) on investments and foreign currencies....................... 1,500,794 (3,524,139)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 2,390,559 (4,590,990)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (837,071) (2,014,439)
Net investment income (Class B)........................................................ (15,930) (46,032)
Net investment income (Class C)........................................................ (36,400) (109,939)
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...................................................... (889,401) (2,170,410)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (9,212,707) (14,422,091)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (7,711,549) (21,183,491)
NET ASSETS:
Beginning of period...................................................................... 117,550,229 138,733,720
------------ ------------
End of period+........................................................................... $109,838,680 $117,550,229
============ ============
+ Includes accumulated undistributed net investment income (loss)........................ $ (204,396) $ (121,374)
============ ============
GNMA FUND
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2014 MARCH 31,
(UNAUDITED) 2014
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 746,949 $ 1,161,588
Net realized gain (loss) on investments and foreign currencies......................... 221,513 (4,802,030)
Net unrealized gain (loss) on investments and foreign currencies....................... 972,358 (4,064,185)
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... 1,940,820 (7,704,627)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,326,784) (2,949,014)
Net investment income (Class B)........................................................ (95,604) (200,563)
Net investment income (Class C)........................................................ (212,032) (528,565)
Net realized gain on securities (Class A).............................................. -- (2,136)
Net realized gain on securities (Class B).............................................. -- (203)
Net realized gain on securities (Class C).............................................. -- (482)
------------ ------------
Total distributions to shareholders...................................................... (1,634,420) (3,680,963)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (7,105,406) (75,497,136)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (6,799,006) (86,882,726)
NET ASSETS:
Beginning of period...................................................................... 133,749,543 220,632,269
------------ ------------
End of period+........................................................................... $126,950,537 $133,749,543
============ ============
+ Includes accumulated undistributed net investment income (loss)........................ $ (1,313,895) $ (426,424)
============ ============
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC BOND FUND
---------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2014 MARCH 31,
(UNAUDITED) 2014
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 8,385,507 $ 21,016,911
Net realized gain (loss) on investments and foreign currencies......................... 6,366,883 (2,449,211)
Net unrealized gain (loss) on investments and foreign currencies....................... (8,563,689) (11,152,263)
------------ -------------
Net increase (decrease) in net assets resulting from operations.......................... 6,188,701 7,415,437
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (5,027,754) (12,243,178)
Net investment income (Class B)........................................................ (731,184) (1,817,175)
Net investment income (Class C)........................................................ (3,178,688) (8,212,267)
Net realized gain on securities (Class A).............................................. -- --
Net realized gain on securities (Class B).............................................. -- --
Net realized gain on securities (Class C).............................................. -- --
------------ -------------
Total distributions to shareholders...................................................... (8,937,626) (22,272,620)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (8,032,687) (149,455,773)
------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (10,781,612) (164,312,956)
NET ASSETS:
Beginning of period...................................................................... 500,187,140 664,500,096
------------ -------------
End of period+........................................................................... $489,405,528 $ 500,187,140
============ =============
+ Includes accumulated undistributed net investment income (loss)........................ $ (2,668,041) $ (2,115,922)
============ =============
HIGH YIELD BOND FUND*
--------------------------
FOR THE
SIX MONTHS
ENDED FOR THE YEAR
SEPTEMBER 30, ENDED
2014 MARCH 31,
(UNAUDITED) 2014
------------- ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)........................................................... $ 2,695,081 $ 5,950,915
Net realized gain (loss) on investments and foreign currencies......................... 1,550,978 (3,941,256)
Net unrealized gain (loss) on investments and foreign currencies....................... (4,502,030) 3,788,039
------------ ------------
Net increase (decrease) in net assets resulting from operations.......................... (255,971) 5,797,698
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)........................................................ (1,707,813) (3,680,417)
Net investment income (Class B)........................................................ (239,689) (569,761)
Net investment income (Class C)........................................................ (637,019) (1,446,220)
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...................................................... (2,584,521) (5,696,398)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS (NOTE 6). (10,492,874) (7,703,026)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (13,333,366) (7,601,726)
NET ASSETS:
Beginning of period...................................................................... 114,446,659 122,048,385
------------ ------------
End of period+........................................................................... $101,113,293 $114,446,659
============ ============
+ Includes accumulated undistributed net investment income (loss)........................ $ 640,444 $ 529,884
============ ============
* See Note 12
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
09/30/14+ 9.43 0.07 0.14 0.21 (0.08) -- (0.08) 9.56 2.22 99,171
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
09/30/14+ 9.43 0.04 0.15 0.19 (0.05) -- (0.05) 9.57 1.99 2,968
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
09/30/14+ 9.42 0.04 0.15 0.19 (0.05) -- (0.05) 9.56 1.99 7,700
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
0.99(6) 1.50(6) 23
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(6) 0.84(6) 23
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
1.64(6) 0.85(6) 23
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14 09/30/14+(6)
-------- -------- -------- -------- -------- ------------
U.S. Government Securities Fund Class A. 0.38% 0.37% 0.39% 0.40% 0.40% 0.37%
U.S. Government Securities Fund Class B. 0.50 0.53 0.60 0.59 0.73 0.85
U.S. Government Securities Fund Class C. 0.44 0.44 0.46 0.45 0.57 0.62
(4)The Fund's performance figure was increased by less than 0.01% from
reimbursements for losses realized from a violation of an investment
restriction.
(5)The Fund's performance figure was increased by less than 0.01% from gains on
the disposal of investments in violation of investment restrictions.
(6)Annualized
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
GNMA FUND
---------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSES
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
CLASS A
-------
03/31/10 $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
09/30/14+ 10.64 0.07 0.09 0.16 (0.14) -- (0.14) 10.66 1.52 98,419 0.99(4)
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
09/30/14+ 10.67 0.03 0.10 0.13 (0.11) -- (0.11) 10.69 1.19 9,205 1.64(4)
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
09/30/14+ 10.68 0.03 0.11 0.14 (0.11) -- (0.11) 10.71 1.29 19,327 1.64(4)
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
1.29(4) 24
1.63% 104%
1.89 148
1.14 96
(0.27) 150
0.21 83
0.64(4) 24
1.63% 104%
1.94 148
1.12 96
(0.26) 150
0.18 83
0.64(4) 24
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14 09/30/14+(4)
-------- -------- -------- -------- -------- ------------
GNMA Fund Class A............. 0.15% 0.15% 0.15% 0.18% 0.24% 0.21%
GNMA Fund Class B............. 0.19 0.21 0.22 0.25 0.33 0.36
GNMA Fund Class C............. 0.16 0.17 0.17 0.19 0.27 0.28
(4)Annualized
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
STRATEGIC BOND FUND
-------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENTS BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- ----------
CLASS A
-------
03/31/10 $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
09/30/14+ 3.53 0.07 (0.02) 0.05 (0.07) -- (0.07) 3.51 1.38 255,362 1.28(3)
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
09/30/14+ 3.53 0.05 (0.01) 0.04 (0.06) -- (0.06) 3.51 1.04 43,022 1.95(3)
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
09/30/14+ 3.54 0.05 (0.01) 0.04 (0.06) -- (0.06) 3.52 1.06 191,021 1.93(3)
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
3.65(3) 70
5.44% 157%
4.83 152
4.07 144
3.02 166
3.35 158
2.98(3) 70
5.48% 157%
4.85 152
4.09 144
3.05 166
3.37 158
3.01(3) 70
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Annualized
See Notes to Financial Statements
13
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
HIGH YIELD BOND FUND*
---------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET NET
ASSET (BOTH DIVIDENDS FROM NET ASSET ASSETS, RATIO OF
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF EXPENSE
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD TO AVERAGE
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S) NET ASSETS(3)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- -------------
CLASS A
-------
03/31/10 $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
09/30/14+ 3.59 0.09 (0.09) 0.00 (0.09) -- (0.09) 3.50 (0.12) 62,611 1.36(4)
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
09/30/14+ 3.60 0.08 (0.10) (0.02) (0.08) -- (0.08) 3.50 (0.71) 9,326 2.01(4)
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
09/30/14+ 3.61 0.08 (0.09) (0.01) (0.08) -- (0.08) 3.52 (0.42) 29,176 2.01(4)
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
5.02(4) 25
8.77% 110%
6.84 48
6.19 52
5.16 44
4.75 49
4.38(4) 25
8.70% 110%
6.83 48
6.11 52
5.18 44
4.76 49
4.38(4) 25
--------
+ Unaudited
(1)Calculated based upon average shares outstanding.
(2)Total return is not annualized and does not reflect sales load, but does
include expense reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/10 03/31/11 03/31/12 03/31/13 03/31/14 09/30/14+(4)
-------- -------- -------- -------- -------- ------------
High Yield Bond Fund Class A............ 0.18% 0.16% 0.18% 0.16% 0.17% 0.19%
High Yield Bond Fund Class B............ 0.23 0.21 0.25 0.22 0.25 0.28
High Yield Bond Fund Class C............ 0.18 0.16 0.19 0.16 0.18 0.21
(4)Annualized
* See Note 12
See Notes to Financial Statements
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
United States Treasury Notes.... 28.9%
Government National Mtg. Assoc.. 27.9
United States Treasury Bonds.... 24.4
Federal Farm Credit Bank........ 8.5
Repurchase Agreement............ 6.8
Federal National Mtg. Assoc..... 2.8
Small Business Administration... 0.2
----
99.5%
====
CREDIT QUALITY ALLOCATION+#
Aaa....... 99.8%
Not Rated@ 0.2
-----
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.
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 39.4%
FEDERAL FARM CREDIT BANK -- 8.5%
1.27% due 01/08/2018.................. $2,000,000 $1,995,236
1.79% due 03/12/2019.................. 2,500,000 2,478,470
1.84% due 07/24/2020.................. 5,000,000 4,896,885
----------
9,370,591
----------
FEDERAL NATIONAL MTG. ASSOC. -- 2.8%
2.33% due 01/23/2023.................. 3,200,000 3,075,661
8.00% due 01/01/2023.................. 4,354 4,371
11.00% due 02/01/2015................. 3 3
11.50% due 09/01/2019................. 238 239
----------
3,080,274
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 27.9%
4.50% due 05/15/2018.................. 121,329 126,858
4.50% due 08/15/2018.................. 232,706 244,044
4.50% due 09/15/2018.................. 564,620 593,116
4.50% due 10/15/2018.................. 631,641 663,881
4.50% due 09/15/2033.................. 762,773 833,943
4.50% due 02/15/2039.................. 6,731 7,310
4.50% due 04/15/2039.................. 254,495 276,363
4.50% due 05/15/2039.................. 330,612 359,024
4.50% due 06/15/2039.................. 127,225 138,160
4.50% due 07/15/2039.................. 109,990 119,442
4.50% due 09/15/2039.................. 458,034 497,397
4.50% due 10/15/2039.................. 445,720 484,023
4.50% due 12/15/2039.................. 894,588 971,471
4.50% due 01/15/2040.................. 560,918 609,935
4.50% due 02/15/2040.................. 588,437 641,165
4.50% due 03/15/2040.................. 539,741 586,897
4.50% due 04/15/2040.................. 384,255 418,324
4.50% due 05/15/2040.................. 360,751 392,629
4.50% due 06/15/2040.................. 485,848 528,353
4.50% due 07/15/2040.................. 777,535 846,564
4.50% due 08/15/2040.................. 273,451 297,639
4.50% due 09/15/2040.................. 5,159 5,607
4.50% due 03/15/2041.................. 1,157,468 1,259,563
4.50% due 04/15/2041.................. 129,847 142,676
4.50% due 06/15/2041.................. 817,323 895,028
4.50% due 07/15/2041.................. 30,883 33,534
4.50% due 08/15/2041.................. 726,307 789,326
5.00% due 04/15/2018.................. 564,564 599,392
5.00% due 04/15/2033.................. 4,658 5,130
5.00% due 08/15/2033.................. 434,053 480,111
5.00% due 09/15/2033.................. 209,735 232,970
5.00% due 10/15/2033.................. 131,750 146,288
5.00% due 04/15/2034.................. 5,242 5,798
5.00% due 11/15/2034.................. 51,637 57,121
5.00% due 02/15/2035.................. 4,201 4,646
5.00% due 03/15/2035.................. 100,669 110,854
5.00% due 04/15/2035.................. 14,385 15,912
5.00% due 05/15/2035.................. 448,703 496,206
5.00% due 09/15/2035.................. 162,303 178,933
5.00% due 10/15/2035.................. 26,229 29,005
5.00% due 12/15/2035.................. 14,055 15,540
5.00% due 03/15/2036.................. 264,992 292,790
5.00% due 05/15/2036.................. 243,620 269,455
5.00% due 06/15/2036.................. 155,014 171,071
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.00% due 09/15/2036..................... $ 415,326 $ 459,059
5.00% due 10/15/2036..................... 186,030 204,639
5.00% due 11/15/2036..................... 11,648 12,860
5.00% due 12/15/2036..................... 57,555 63,395
5.00% due 01/15/2037..................... 713,367 788,390
5.00% due 02/15/2037..................... 211,470 232,822
5.00% due 03/15/2037..................... 210,539 231,804
5.00% due 04/15/2037..................... 258,199 284,556
5.00% due 08/15/2038..................... 1,398,238 1,539,051
5.00% due 07/20/2039..................... 2,367,030 2,632,525
5.50% due 11/15/2032..................... 1,752 1,949
5.50% due 03/15/2033..................... 51,673 57,728
5.50% due 04/15/2033..................... 138,223 155,010
5.50% due 05/15/2033..................... 253,428 284,309
5.50% due 06/15/2033..................... 1,241,049 1,389,962
5.50% due 07/15/2033..................... 387,048 433,512
5.50% due 10/15/2033..................... 312,763 351,469
5.50% due 12/15/2033..................... 57,196 64,275
5.50% due 01/15/2034..................... 944,408 1,061,250
5.50% due 02/15/2034..................... 645,620 724,836
6.00% due 01/15/2028..................... 517 584
6.00% due 04/15/2028..................... 278,886 322,402
6.00% due 04/15/2029..................... 9,696 10,940
6.00% due 05/15/2029..................... 9,583 11,115
6.00% due 06/15/2029..................... 1,359 1,534
6.00% due 04/15/2031..................... 6,999 7,998
6.00% due 05/15/2031..................... 11,443 13,273
6.00% due 11/15/2031..................... 54,789 61,968
6.00% due 12/15/2031..................... 3,270 3,691
6.00% due 01/15/2032..................... 27,087 30,570
6.00% due 02/15/2032..................... 4,540 5,176
6.00% due 03/15/2032..................... 1,608 1,825
6.00% due 08/15/2032..................... 78,851 91,461
6.00% due 11/15/2032..................... 12,546 14,418
6.00% due 12/15/2032..................... 4,621 5,216
6.00% due 01/15/2033..................... 7,027 8,010
6.00% due 02/15/2033..................... 5,619 6,420
6.00% due 03/15/2033..................... 23,451 27,194
6.00% due 04/15/2033..................... 115,342 133,043
6.00% due 07/15/2033..................... 47,412 54,844
6.00% due 08/15/2033..................... 485,077 562,446
6.00% due 09/15/2033..................... 92,867 107,664
6.00% due 10/15/2033..................... 365,792 416,789
6.00% due 11/15/2033..................... 12,563 14,179
6.00% due 12/15/2033..................... 220,189 253,863
6.00% due 02/15/2034..................... 26,712 30,144
6.00% due 05/15/2034..................... 8,301 9,418
6.00% due 06/15/2034..................... 12,388 13,981
6.00% due 07/15/2034..................... 285,295 322,146
6.00% due 08/15/2034..................... 37,023 42,899
6.00% due 09/15/2034..................... 122,302 138,502
6.00% due 10/15/2034..................... 187,370 211,455
6.00% due 12/15/2034..................... 137,315 158,345
6.00% due 08/15/2035..................... 64,474 72,759
6.50% due 02/15/2029..................... 3,437 3,915
6.50% due 06/15/2031..................... 6,578 7,458
6.50% due 07/15/2031..................... 7,336 8,321
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.50% due 08/15/2031..................... $ 20,475 $ 23,223
6.50% due 09/15/2031..................... 57,831 65,585
6.50% due 10/15/2031..................... 82,537 97,139
6.50% due 11/15/2031..................... 2,325 2,663
6.50% due 01/15/2032..................... 5,226 5,934
6.50% due 02/15/2032..................... 64,959 75,307
7.00% due 07/15/2023..................... 5,875 6,395
7.00% due 10/15/2023..................... 20,124 20,200
7.00% due 09/15/2025..................... 57,349 64,425
7.00% due 03/20/2029..................... 6,265 7,420
7.00% due 06/20/2029..................... 939 1,113
7.00% due 11/20/2030..................... 16,956 20,217
7.50% due 04/15/2017..................... 731 734
7.50% due 08/15/2023..................... 37,447 39,030
7.50% due 09/15/2023..................... 159,593 167,678
9.00% due 12/15/2016..................... 5,785 5,814
11.00% due 08/20/2015.................... 11 11
11.00% due 09/20/2015.................... 22 23
11.50% due 05/20/2015.................... 106 106
-----------
30,635,878
-----------
SMALL BUSINESS ADMINISTRATION -- 0.2%
6.30% due 06/01/2018..................... 152,777 160,064
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $41,091,299)....................... 43,246,807
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
----------------------------------------------------------------
U.S. GOVERNMENT TREASURIES -- 53.3%
UNITED STATES TREASURY BONDS -- 24.4%
3.38% due 05/15/2044............... $ 5,500,000 $ 5,678,750
3.88% due 08/15/2040............... 1,000,000 1,132,031
4.25% due 11/15/2040............... 8,000,000 9,608,752
4.75% due 02/15/2041............... 8,000,000 10,362,496
------------
26,782,029
------------
UNITED STATES TREASURY NOTES -- 28.9%
1.25% due 10/31/2015............... 2,000,000 2,023,282
1.50% due 07/31/2016............... 16,000,000 16,284,368
2.00% due 02/15/2022............... 5,000,000 4,910,940
2.50% due 05/15/2024............... 7,500,000 7,504,687
3.13% due 05/15/2019............... 1,000,000 1,062,578
------------
31,785,855
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $53,779,760)................. 58,567,884
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $94,871,059)................. 101,814,691
------------
REPURCHASE AGREEMENT -- 6.8%
State Street Bank and Trust Co.
Joint Repurchase Agreement(1)
(cost $7,479,000).................. 7,479,000 7,479,000
------------
TOTAL INVESTMENTS
(cost $102,350,059)(2)............. 99.5% 109,293,691
Other assets less liabilities......... 0.5 544,989
----------- ------------
NET ASSETS -- 100.0% $109,838,680
=========== ============
--------
(1)See Note 2 for details of Joint Repurchase Agreement.
(2)See Note 5 for cost of investments on a tax basis.
17
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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......... $-- $ 9,370,591 $-- $ 9,370,591
Federal National Mtg. Assoc...... -- 3,080,274 -- 3,080,274
Government National Mtg. Assoc... -- 30,635,878 -- 30,635,878
Small Business Administration.... -- 160,064 -- 160,064
U.S. Government Treasuries:
United States Treasury Bonds..... -- 26,782,029 -- 26,782,029
United States Treasury Notes..... -- 31,785,855 -- 31,785,855
Repurchase Agreement................ -- 7,479,000 -- 7,479,000
--- ------------ --- ------------
Total............................... $-- $109,293,691 $-- $109,293,691
=== ============ === ============
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 -- SEPTEMBER 30, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 81.7%
United States Treasury Notes.... 5.9
Federal National Mtg. Assoc..... 5.3
United States Treasury Bonds.... 3.7
Repurchase Agreement............ 3.1
Small Business Administration... 0.0
----
99.7%
====
CREDIT QUALITY ALLOCATION+#
Aaa....... 98.8%
Not Rated@ 1.2
-----
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.
19
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES -- 87.0%
FEDERAL NATIONAL MTG. ASSOC. -- 5.3%
2.25% due 10/30/2024.................. $2,000,000 $1,866,200
2.33% due 01/23/2023.................. 3,000,000 3,075,661
Federal Home Loan Mtg. Corp. REMIC
Series 3906, Class HG
4.00% due 08/15/2026(1)............... 1,740,204 1,844,708
----------
6,786,569
----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 81.7%
3.50% due 11/15/2041.................. 985,298 1,020,144
3.50% due 01/15/2042.................. 362,400 375,233
3.50% due 02/15/2042.................. 358,019 370,667
3.50% due 03/15/2042.................. 927,670 960,495
3.50% due 06/15/2042.................. 4,636,994 4,800,736
3.50% due 07/15/2042.................. 1,712,470 1,772,941
4.00% due 03/15/2039.................. 401,118 426,291
4.00% due 04/15/2039.................. 451,482 479,817
4.00% due 05/15/2039.................. 29,675 31,537
4.00% due 06/15/2039.................. 1,234,705 1,312,193
4.00% due 08/15/2039.................. 106,723 113,421
4.00% due 11/15/2039.................. 18,603 19,770
4.00% due 12/15/2039.................. 573,999 610,022
4.00% due 08/15/2040.................. 523,050 555,888
4.00% due 09/15/2040.................. 877,918 933,053
4.00% due 11/15/2040.................. 700,603 744,922
4.00% due 12/15/2040.................. 1,286,358 1,368,490
4.00% due 01/15/2041.................. 17,231 18,312
4.00% due 02/15/2041.................. 729,643 775,706
4.00% due 03/15/2041.................. 501,473 532,944
4.00% due 04/15/2041.................. 117,626 125,008
4.00% due 06/15/2041.................. 43,434 46,160
4.00% due 07/15/2041.................. 1,142,108 1,213,784
4.00% due 08/15/2041.................. 1,660,440 1,764,646
4.00% due 09/15/2041.................. 3,389,317 3,602,039
4.00% due 10/15/2041.................. 1,836,914 1,952,203
4.00% due 11/15/2041.................. 4,458,827 4,738,669
4.00% due 12/15/2041.................. 1,865,512 1,982,589
4.00% due 01/15/2042.................. 3,406,134 3,624,773
4.00% due 02/15/2042.................. 2,165,187 2,301,527
4.00% due 03/15/2042.................. 580,009 616,410
4.00% due 04/15/2042.................. 113,355 120,470
4.00% due 05/15/2042.................. 107,130 113,854
4.00% due 06/15/2042.................. 1,003,380 1,066,350
4.50% due 05/15/2018.................. 191,975 200,722
4.50% due 08/15/2018.................. 123,581 129,575
4.50% due 09/15/2018.................. 338,555 355,680
4.50% due 10/15/2018.................. 530,118 557,462
4.50% due 08/15/2033.................. 39,933 43,613
4.50% due 09/15/2033.................. 110,927 121,151
4.50% due 10/15/2038.................. 90,045 97,745
4.50% due 12/15/2038.................. 65,298 71,110
4.50% due 02/15/2039.................. 28,209 30,633
4.50% due 03/15/2039.................. 244,474 265,447
4.50% due 04/15/2039.................. 69,277 75,230
4.50% due 05/15/2039.................. 912,229 990,622
4.50% due 06/15/2039.................. 3,478,430 3,777,347
4.50% due 07/15/2039.................. 1,523,171 1,654,069
4.50% due 08/15/2039.................. 111,019 120,560
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 09/15/2039..................... $ 147,224 $ 159,877
4.50% due 10/15/2039..................... 58,494 63,850
4.50% due 11/15/2039..................... 514,091 558,270
4.50% due 12/15/2039..................... 547,193 594,562
4.50% due 01/15/2040..................... 63,513 69,130
4.50% due 02/15/2040..................... 2,291,293 2,493,612
4.50% due 03/15/2040..................... 822,634 893,908
4.50% due 04/15/2040..................... 1,636,524 1,780,895
4.50% due 05/15/2040..................... 297,210 322,805
4.50% due 06/15/2040..................... 559,643 608,857
4.50% due 07/15/2040..................... 311,697 338,918
4.50% due 08/15/2040..................... 29,834 32,466
4.50% due 09/15/2040..................... 368,986 401,498
4.50% due 10/15/2040..................... 32,705 35,598
4.50% due 11/15/2040..................... 342,353 372,547
4.50% due 01/15/2041..................... 446,566 486,014
4.50% due 02/15/2041..................... 485,805 528,306
4.50% due 03/15/2041..................... 2,034,909 2,214,635
4.50% due 04/15/2041..................... 2,667,559 2,901,125
4.50% due 05/15/2041..................... 683,090 742,948
4.50% due 06/15/2041..................... 369,080 401,534
4.50% due 07/15/2041..................... 292,676 317,989
4.50% due 08/15/2041..................... 346,423 376,900
4.50% due 04/20/2044..................... 1,914,092 2,080,232
5.00% due 04/15/2018..................... 600,724 638,383
5.00% due 05/15/2018..................... 810,977 860,768
5.00% due 08/15/2033..................... 425,710 470,675
5.00% due 09/15/2033..................... 128,169 141,128
5.00% due 10/15/2033..................... 1,258,286 1,398,112
5.00% due 08/15/2035..................... 704,490 779,237
5.00% due 02/15/2037..................... 407,795 450,695
5.00% due 04/15/2037..................... 975,923 1,075,524
5.00% due 04/15/2038..................... 955,739 1,051,981
5.00% due 05/15/2038..................... 562,639 619,297
5.00% due 01/15/2039..................... 397,262 439,195
5.00% due 02/15/2039..................... 277,483 306,772
5.00% due 03/15/2039..................... 334,947 368,863
5.00% due 04/15/2039..................... 357,780 394,006
5.00% due 08/15/2039..................... 755,687 835,148
5.00% due 10/15/2039..................... 1,700,580 1,877,651
5.00% due 11/15/2039..................... 1,437,587 1,589,033
5.00% due 12/15/2039..................... 1,172,882 1,296,288
5.00% due 04/15/2040..................... 1,469,168 1,623,648
5.00% due 05/15/2040..................... 2,565,355 2,838,728
5.50% due 06/15/2029..................... 1,270 1,418
5.50% due 03/15/2033..................... 72,553 80,871
5.50% due 04/15/2033..................... 94,067 105,111
5.50% due 05/15/2033..................... 203,080 227,522
5.50% due 06/15/2033..................... 78,531 87,975
5.50% due 07/15/2033..................... 1,443 1,615
5.50% due 08/15/2033..................... 1,724 1,918
5.50% due 12/15/2033..................... 20,145 22,428
5.50% due 01/15/2034..................... 94,017 105,061
5.50% due 02/15/2034..................... 63,928 71,451
5.50% due 04/15/2034..................... 55,062 61,874
5.50% due 04/20/2035..................... 848,861 963,989
5.50% due 09/15/2035..................... 660,440 752,029
20
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 10/15/2035..................... $602,428 $673,942
5.50% due 11/15/2035..................... 8,011 8,921
5.50% due 12/15/2035..................... 13,747 15,331
5.50% due 02/15/2036..................... 139,896 156,245
5.50% due 03/15/2036..................... 41,675 46,652
5.50% due 05/15/2036..................... 24,939 27,842
5.50% due 09/15/2036..................... 61,510 68,380
5.50% due 03/15/2037..................... 71,821 79,753
5.50% due 05/15/2037..................... 24,547 27,288
5.50% due 12/15/2037..................... 87,776 97,578
5.50% due 01/15/2038..................... 57,561 63,975
5.50% due 02/15/2038..................... 388,542 431,832
5.50% due 04/15/2038..................... 198,554 220,681
5.50% due 05/15/2038..................... 454,726 507,429
5.50% due 06/15/2038..................... 197,762 219,801
5.50% due 07/15/2038..................... 199,667 222,840
5.50% due 08/15/2038..................... 177,752 197,847
5.50% due 10/15/2038..................... 101,491 112,802
5.50% due 11/15/2038..................... 42,381 47,105
5.50% due 12/15/2038..................... 144,382 160,483
5.50% due 01/15/2039..................... 84,598 94,152
5.50% due 02/15/2039..................... 188,375 209,951
5.50% due 03/15/2039..................... 78,021 86,755
5.50% due 05/15/2039..................... 28,775 31,996
5.50% due 08/15/2039..................... 153,821 171,033
5.50% due 09/15/2039..................... 186,338 207,194
5.50% due 10/15/2039..................... 58,488 65,035
5.50% due 11/15/2039..................... 1,831 2,036
5.50% due 01/15/2040..................... 32,061 35,656
5.50% due 03/15/2040..................... 371,692 413,351
5.50% due 04/15/2040..................... 88,697 98,966
5.50% due 05/15/2040..................... 71,840 79,845
5.50% due 08/15/2040..................... 343,674 382,136
5.50% due 09/15/2040..................... 89,315 99,214
5.50% due 11/15/2040..................... 122,362 135,964
5.50% due 02/15/2041..................... 113,224 125,895
5.50% due 03/15/2041..................... 32,813 36,480
5.50% due 04/15/2041..................... 89,130 99,088
5.50% due 05/15/2041..................... 16,351 18,157
5.50% due 06/15/2041..................... 113,066 125,711
5.50% due 09/15/2041..................... 8,058 8,953
6.00% due 11/15/2023..................... 1,018 1,148
6.00% due 01/15/2024..................... 1,042 1,176
6.00% due 07/15/2028..................... 1,290 1,455
6.00% due 12/15/2028..................... 19,091 22,142
6.00% due 01/15/2029..................... 154,446 175,426
6.00% due 02/15/2029..................... 87,772 99,524
6.00% due 03/15/2029..................... 96,562 108,974
6.00% due 04/15/2029..................... 95,775 108,391
6.00% due 05/15/2029..................... 17,187 19,393
6.00% due 06/15/2029..................... 35,751 40,868
6.00% due 07/15/2029..................... 10,479 11,821
6.00% due 08/15/2029..................... 6,513 7,350
6.00% due 04/15/2031..................... 2,773 3,129
6.00% due 07/15/2031..................... 12,818 14,467
6.00% due 10/15/2031..................... 32,710 36,918
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 11/15/2031..................... $ 96,119 $ 108,829
6.00% due 12/15/2031..................... 38,207 43,155
6.00% due 01/15/2032..................... 18,029 20,793
6.00% due 02/15/2032..................... 8,148 9,197
6.00% due 07/15/2032..................... 18,944 21,382
6.00% due 09/15/2032..................... 14,074 16,322
6.00% due 10/15/2032..................... 61,456 70,167
6.00% due 11/15/2032..................... 750 846
6.00% due 01/15/2033..................... 47,211 53,742
6.00% due 02/15/2033..................... 66,990 76,683
6.00% due 03/15/2033..................... 37,878 43,397
6.00% due 04/15/2033..................... 104,215 117,865
6.00% due 05/15/2033..................... 47,262 54,375
6.00% due 06/15/2033..................... 6,737 7,708
6.00% due 08/15/2033..................... 47,928 54,873
6.00% due 10/15/2033..................... 12,439 14,128
6.00% due 11/15/2033..................... 10,434 11,938
6.00% due 12/15/2033..................... 121,630 140,279
6.00% due 01/15/2034..................... 59,693 69,131
6.00% due 02/15/2034..................... 74,610 85,900
6.00% due 03/15/2034..................... 22,673 25,589
6.00% due 04/15/2034..................... 96,624 110,985
6.00% due 05/15/2034..................... 5,756 6,495
6.00% due 06/15/2034..................... 54,547 61,562
6.00% due 07/15/2034..................... 63,599 72,482
6.00% due 09/15/2034..................... 36,483 41,659
6.00% due 10/15/2034..................... 27,414 31,484
6.00% due 12/15/2034..................... 28,515 32,179
6.00% due 01/15/2035..................... 14,359 16,398
6.00% due 04/15/2035..................... 21,547 24,950
6.00% due 05/15/2035..................... 5,908 6,667
6.00% due 06/15/2035..................... 27,275 31,310
6.00% due 11/15/2035..................... 2,579 2,910
6.00% due 12/15/2035..................... 52,368 59,306
6.00% due 01/15/2036..................... 35,605 41,151
6.00% due 02/15/2036..................... 36,081 40,736
6.00% due 03/15/2036..................... 21,186 24,265
6.00% due 04/15/2036..................... 32,520 36,929
6.00% due 05/15/2036..................... 106,883 121,971
6.00% due 06/15/2036..................... 44,110 50,791
6.00% due 08/15/2036..................... 3,449 3,933
6.00% due 09/15/2036..................... 25,156 28,380
6.00% due 10/15/2036..................... 32,537 37,402
6.00% due 11/15/2036..................... 43,664 49,260
6.00% due 07/15/2037..................... 8,119 9,185
6.00% due 09/15/2037..................... 4,868 5,491
6.00% due 11/15/2037..................... 7,222 8,146
6.00% due 12/15/2037..................... 10,055 11,336
6.00% due 01/15/2038..................... 1,152 1,299
6.00% due 02/15/2038..................... 7,031 8,061
6.00% due 05/15/2038..................... 10,454 11,790
6.00% due 06/15/2038..................... 11,119 12,540
6.00% due 07/15/2038..................... 32,700 36,879
6.00% due 08/15/2038..................... 4,092 4,615
6.00% due 09/20/2038..................... 2,520,299 2,842,945
6.00% due 10/15/2038..................... 54,039 60,945
21
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 11/15/2038..................... $ 37,301 $ 42,078
6.00% due 12/15/2038..................... 35,970 40,568
6.00% due 01/15/2039..................... 45,026 50,791
6.00% due 02/15/2039..................... 18,110 20,428
6.00% due 08/15/2039..................... 20,316 22,917
6.00% due 09/15/2039..................... 10,596 11,952
6.00% due 10/15/2039..................... 16,402 18,486
6.00% due 02/15/2040..................... 3,032 3,421
6.00% due 04/15/2040..................... 8,393 9,473
6.50% due 03/15/2028..................... 5,873 6,786
6.50% due 08/15/2028..................... 8,312 9,423
6.50% due 01/15/2029..................... 1,174 1,355
6.50% due 02/15/2029..................... 410 465
6.50% due 03/15/2029..................... 34,879 39,798
6.50% due 04/15/2029..................... 427 488
6.50% due 05/15/2029..................... 3,257 3,792
6.50% due 06/15/2029..................... 12,522 14,450
6.50% due 07/15/2029..................... 831 942
6.50% due 10/15/2029..................... 2,440 2,767
6.50% due 08/15/2031..................... 60,050 68,078
6.50% due 09/15/2031..................... 9,279 10,531
6.50% due 10/15/2031..................... 82,537 97,139
6.50% due 11/15/2031..................... 23,835 27,255
6.50% due 12/15/2031..................... 38,096 43,188
6.50% due 02/15/2032..................... 65,577 74,343
6.50% due 05/15/2032..................... 202,791 230,328
6.50% due 06/15/2032..................... 26,259 29,922
7.00% due 03/15/2023..................... 4,638 4,654
7.00% due 01/20/2024..................... 165 183
7.00% due 03/20/2024..................... 176 194
7.00% due 07/20/2025..................... 673 735
7.00% due 09/15/2025..................... 24,905 27,978
7.00% due 01/20/2029..................... 12,492 14,670
7.00% due 02/20/2029..................... 2,283 2,704
7.00% due 06/20/2029..................... 4,657 5,518
7.00% due 07/20/2029..................... 15,407 18,222
7.00% due 09/20/2029..................... 1,626 1,928
7.00% due 10/20/2029..................... 3,148 3,732
7.00% due 11/20/2029..................... 976 1,156
7.00% due 03/20/2030..................... 1,970 2,246
7.00% due 06/20/2030..................... 2,029 2,312
7.00% due 08/20/2030..................... 4,345 4,961
7.00% due 09/20/2030..................... 6,161 7,189
7.00% due 10/20/2030..................... 7,680 9,085
8.00% due 11/15/2026..................... 40,508 45,824
8.00% due 12/15/2029..................... 3,921 4,053
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 2)
---------------------------------------------------------------------
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
8.00% due 04/15/2030..................... $ 12,070 $ 14,035
8.00% due 05/15/2030..................... 321 326
8.00% due 08/15/2030..................... 20,190 23,219
8.50% due 03/15/2017..................... 2,302 2,312
8.50% due 12/15/2022..................... 11,999 12,058
8.50% due 01/15/2023..................... 15,311 15,609
8.50% due 09/15/2024..................... 7,126 8,140
9.00% due 07/15/2016..................... 2,605 2,618
9.00% due 10/15/2016..................... 857 861
Government National Mtg. Assoc. REMIC
Series 2010-104, Class NG
3.00% due 07/20/2038(1).................... 1,630,461 1,681,998
------------
103,655,797
------------
SMALL BUSINESS ADMINISTRATION -- 0.0%
6.30% due 06/01/2018...................... 50,926 53,355
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $108,718,397)...................... 110,495,721
------------
U.S. GOVERNMENT TREASURIES -- 9.6%
UNITED STATES TREASURY BONDS -- 3.7%
3.38% due 05/15/2044...................... 4,500,000 4,646,250
------------
UNITED STATES TREASURY NOTES -- 5.9%
2.50% due 05/15/2024...................... 7,500,000 7,504,688
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $11,955,274)....................... 12,150,938
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $120,673,671)...................... 122,646,659
------------
REPURCHASE AGREEMENT -- 3.1%
State Street Bank and Trust Co.
Joint Repurchase Agreement(2)
(cost $3,927,000)........................ 3,927,000 3,927,000
------------
TOTAL INVESTMENTS
(cost $124,600,671)(3)................... 99.7% 126,573,659
Other assets less liabilities............... 0.3 376,878
---------- ------------
NET ASSETS -- 100.0% $126,950,537
========== ============
--------
(1)Collateralized Mortgage Obligation
(2)See Note 2 for details of Joint Repurchase Agreement.
(3)See Note 5 for cost of investments on a tax basis.
REMIC --Real Estate Mortgage Investment Conduit
22
SUNAMERICA GNMA FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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 National Mtg. Assoc...... $-- $ 6,786,569 $-- $ 6,786,569
Government National Mtg. Assoc... -- 103,655,797 -- 103,655,797
Small Business Administration.... -- 53,355 -- 53,355
U.S. Government Treasuries:
United States Treasury Bonds..... -- 4,646,250 -- 4,646,250
United States Treasury Notes..... -- 7,504,688 -- 7,504,688
Repurchase Agreement................ -- 3,927,000 -- 3,927,000
--- ------------ --- ------------
Total............................... $-- $126,573,659 $-- $126,573,659
=== ============ === ============
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 -- SEPTEMBER 30, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Sovereign.............................. 13.3%
United States Treasury Notes........... 7.7
Oil Companies-Exploration & Production. 6.5
Banks-Commercial....................... 5.3
Diversified Banking Institutions....... 4.2
Federal National Mtg. Assoc............ 2.4
Telephone-Integrated................... 2.3
Pipelines.............................. 2.2
Diversified Financial Services......... 1.6
Medical-Hospitals...................... 1.5
Electric-Integrated.................... 1.4
Medical-Drugs.......................... 1.3
Time Deposits.......................... 1.2
Casino Hotels.......................... 1.1
United States Treasury Bonds........... 1.1
Federal Home Loan Mtg. Corp............ 1.1
Cable/Satellite TV..................... 1.1
Telecom Services....................... 1.0
Real Estate Investment Trusts.......... 1.0
Insurance-Life/Health.................. 1.0
Finance-Leasing Companies.............. 0.9
Oil Companies-Integrated............... 0.9
Paper & Related Products............... 0.9
Airlines............................... 0.9
Independent Power Producers............ 0.8
Coal................................... 0.8
Diversified Manufacturing Operations... 0.8
Repurchase Agreement................... 0.7
Building Products-Cement............... 0.7
Food-Meat Products..................... 0.7
Publishing-Periodicals................. 0.7
Computer Services...................... 0.7
Savings & Loans/Thrifts................ 0.7
Real Estate Operations & Development... 0.7
Steel-Producers........................ 0.7
Cellular Telecom....................... 0.6
Oil & Gas Drilling..................... 0.6
Insurance-Multi-line................... 0.6
Auto-Heavy Duty Trucks................. 0.6
Retail-Restaurants..................... 0.6
Banks-Special Purpose.................. 0.6
Diversified Minerals................... 0.6
Machinery-Farming...................... 0.5
Municipal Bonds........................ 0.5
Containers-Metal/Glass................. 0.5
Banks-Super Regional................... 0.5
Auto-Cars/Light Trucks................. 0.5
Commercial Services-Finance............ 0.5
Finance-Other Services................. 0.5
Chemicals-Specialty.................... 0.5
Publishing-Newspapers.................. 0.5
Containers-Paper/Plastic............... 0.5
Hazardous Waste Disposal............... 0.4
Electric-Distribution.................. 0.4
Oil-Field Services..................... 0.4
Gold Mining............................ 0.4
Electric-Generation.................... 0.4
Finance-Auto Loans..................... 0.4
Finance-Consumer Loans................. 0.4
Specified Purpose Acquisitions......... 0.4
Steel Pipe & Tube............................ 0.4%
Petrochemicals............................... 0.4
Food-Dairy Products.......................... 0.4
Real Estate Management/Services.............. 0.4
Building-Residential/Commercial.............. 0.4
Enterprise Software/Service.................. 0.4
Aerospace/Defense............................ 0.3
Financial Guarantee Insurance................ 0.3
Advertising Services......................... 0.3
Special Purpose Entities..................... 0.3
Retail-Music Store........................... 0.3
Medical Labs & Testing Services.............. 0.3
Security Services............................ 0.3
Food-Wholesale/Distribution.................. 0.3
Transport-Rail............................... 0.3
Medical Products............................. 0.3
Retail-Regional Department Stores............ 0.3
Auto/Truck Parts & Equipment-Original........ 0.3
Computer Software............................ 0.3
Cruise Lines................................. 0.3
Semiconductor Equipment...................... 0.3
Diversified Operations....................... 0.3
Storage/Warehousing.......................... 0.3
E-Commerce/Services.......................... 0.3
Television................................... 0.3
Oil Refining & Marketing..................... 0.2
Metal-Aluminum............................... 0.2
Chemicals-Plastics........................... 0.2
SupraNational Banks.......................... 0.2
Finance-Commercial........................... 0.2
Printing-Commercial.......................... 0.2
Shipbuilding................................. 0.2
Firearms & Ammunition........................ 0.2
Retail-Automobile............................ 0.2
Medical-Generic Drugs........................ 0.2
Medical-HMO.................................. 0.2
Alternative Waste Technology................. 0.2
Retail-Appliances............................ 0.2
Metal-Iron................................... 0.2
Brewery...................................... 0.2
Retail-Drug Store............................ 0.2
Investment Management/Advisor Services....... 0.2
Tools-Hand Held.............................. 0.2
Retail-Apparel/Shoe.......................... 0.2
Beverages-Non-alcoholic...................... 0.2
Insurance Brokers............................ 0.2
Schools...................................... 0.2
Office Supplies & Forms...................... 0.2
Office Automation & Equipment................ 0.2
Semiconductor Components-Integrated Circuits. 0.2
Metal-Diversified............................ 0.2
Mining Services.............................. 0.2
Insurance-Mutual............................. 0.2
Computers.................................... 0.2
Banks-Fiduciary.............................. 0.2
Closed-End Funds............................. 0.2
Wire & Cable Products........................ 0.1
Advertising Sales............................ 0.1
Transport-Equipment & Leasing................ 0.1
Distribution/Wholesale....................... 0.1
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- SEPTEMBER 30, 2014 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Dialysis Centers..................... 0.1%
Travel Services...................... 0.1
Chemicals-Diversified................ 0.1
Regional Authority................... 0.1
Building Products-Wood............... 0.1
Advertising Agencies................. 0.1
Sugar................................ 0.1
Multimedia........................... 0.1
Transport-Services................... 0.1
Metal-Copper......................... 0.1
Food-Misc./Diversified............... 0.1
Electronic Components-Semiconductors. 0.1
Retail-Major Department Stores....... 0.1
Music................................ 0.1
Retail-Discount...................... 0.1
Networking Products.................. 0.1
Retail-Mail Order.................... 0.1
Apparel Manufacturers................ 0.1
Beverages-Wine/Spirits............... 0.1
Wireless Equipment................... 0.1
Tennessee Valley Authority........... 0.1
Agricultural Chemicals............... 0.1
Banks-Money Center................... 0.1
Building-Heavy Construction.......... 0.1
----
99.4%
====
CREDIT QUALITY+#
Aaa........ 15.8%
Aa......... 3.8
A.......... 9.4
Baa........ 17.8
Ba......... 18.1
B.......... 19.0
Caa........ 9.3
Ca......... 0.1
Not Rated@. 6.7
-----
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 -- SEPTEMBER 30, 2014 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 0.9%
DIVERSIFIED FINANCIAL SERVICES -- 0.9%
AmeriCredit Automobile Receivables Trust
Series 2014-2, Class C
2.18% due 06/08/2020............................... $ 71,000 $ 70,300
Applebee's/IHOP Funding LLC
Series 2014-1, Class A2
4.28% due 09/05/2044*.............................. 58,000 57,449
Avis Budget Rental Car Funding AESOP LLC
Series 2014-1A, Class A
2.46% due 07/20/2020*.............................. 67,000 66,972
Citibank Credit Card Issuance Trust
Series 2014-A2, Class A2
1.02% due 02/22/2019............................... 126,000 125,465
Citibank Credit Card Issuance Trust
Series 2014-A8, Class A8
1.73% due 04/09/2020............................... 100,000 99,902
CKE Restaurant Holdings, Inc.
Series 2013-1A, Class A2
4.47% due 03/20/2043*.............................. 15,640 15,785
CLI Funding V LLC
Series 2014-1A, Class A
3.29% due 06/18/2029*.............................. 118,740 118,260
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-6, Class 1A11
5.25% due 02/25/2026(1)............................ 258,760 263,197
Credit Suisse Mtg. Trust
Series 2014-USA, Class A2
3.95% due 09/15/2037*(2)........................... 116,000 119,847
Discover Card Execution Note Trust
Series 2007-A1, Class A1
5.65% due 03/16/2020............................... 330,000 368,542
Domino's Pizza Master Issuer LLC
Series 2012-1A, Class A2
5.22% due 01/25/2042*.............................. 101,456 107,154
Ford Credit Auto Owner Trust
Series 2013-D, Class B
1.54% due 03/15/2019............................... 60,000 59,899
Ford Credit Floorplan Master Owner Trust
Series 2014-4, Class A1
1.40% due 08/15/2019............................... 114,000 113,410
GS Mtg. Securities Corp. II
Series 2012-GCJ9, Class A2
1.76% due 11/10/2045(2)............................ 468,000 467,987
JPM-BB Commercial Mtg. Securities Trust
Series 2013-C15, Class A2
2.98% due 11/15/2045(2)............................ 971,000 997,549
Morgan Stanley Bank of America Merrill Lynch Trust
Series 2012-C5, Class A2
1.97% due 08/15/2045(2)............................ 245,843 248,073
Nissan Auto Lease Trust
Series 2014-A, Class A4
1.04% due 10/15/2019............................... 100,000 100,120
NRP Mtg. Trust VRS
Series 2013-1, Class A1
3.25% due 07/25/2043*(1)........................... 155,008 152,025
RFMSI Trust
Series 2006-S1, Class 1A3
5.75% due 01/25/2036(1)............................ 279,249 287,220
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
Sierra Timeshare Receivables Funding LLC
Series 2014-2A, Class A
2.05% due 06/20/2031*........................ $ 91,081 $ 90,508
TAL Advantage V LLC
Series 2013-2A, Class A
3.55% due 11/20/2038*........................ 73,333 74,101
UBS-Barclays Commercial Mtg. Trust
Series 2012-C2, Class A2
2.11% due 05/10/2063(2)...................... 262,239 265,696
WF-RBS Commercial Mtg. Trust
Series 2012-C8, Class A2
1.88% due 08/15/2045(2)...................... 165,030 166,173
----------
TOTAL ASSET BACKED SECURITIES
(cost $4,473,359)............................ 4,435,634
----------
U.S. CORPORATE BONDS & NOTES -- 46.8%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
3.75% due 02/15/2023......................... 353,000 350,040
Interpublic Group of Cos., Inc.
Senior Notes
4.20% due 04/15/2024......................... 248,000 250,370
----------
600,410
----------
ADVERTISING SALES -- 0.1%
CBS Outdoor Americas Capital LLC/CBS Outdoor
Americas Capital Corp.
Company Guar. Notes
5.88% due 03/15/2025*........................ 296,000 297,480
Lamar Media Corp.
Company Guar. Notes
5.38% due 01/15/2024*........................ 400,000 401,000
----------
698,480
----------
ADVERTISING SERVICES -- 0.2%
Visant Corp.
Company Guar. Notes
10.00% due 10/01/2017........................ 1,301,000 1,161,143
----------
AEROSPACE/DEFENSE -- 0.2%
BAE Systems Holdings, Inc.
Company Guar. Notes
3.80% due 10/07/2024*........................ 428,000 426,729
BAE Systems Holdings, Inc.
Company Guar. Notes
4.75% due 10/07/2044*........................ 308,000 306,389
Boeing Co.
Senior Notes
0.95% due 05/15/2018......................... 490,000 476,951
----------
1,210,069
----------
AGRICULTURAL CHEMICALS -- 0.1%
Monsanto Co.
Senior Notes
4.70% due 07/15/2064......................... 328,000 326,457
----------
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
AIRLINES -- 0.7%
Allegiant Travel Co.
Company Guar. Notes
5.50% due 07/15/2019.................. $ 882,000 $ 899,640
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class A-1
7.20% due 07/02/2020.................. 629,259 659,148
Atlas Air, Inc.
Pass Through Certs.
Series 1999-1, Class B
7.63% due 07/02/2016.................. 72,710 73,800
Atlas Air, Inc.
Pass Through Certs.
Series 2000-1, Class B
9.06% due 07/02/2017.................. 232,838 247,391
United Airlines Pass Through Trust
Pass Through Certs.
Series 2014-2, Class B
4.63% due 03/03/2024.................. 750,000 746,250
United Airlines Pass Through Trust
Pass Through Certs.
Series 2013-1, Class B
5.38% due 02/15/2023.................. 550,000 570,625
----------
3,196,854
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.2%
ADS Waste Holdings, Inc.
Company Guar. Notes
8.25% due 10/01/2020.................. 1,013,000 1,056,053
----------
APPAREL MANUFACTURERS -- 0.1%
Quiksilver, Inc./QS Wholesale, Inc.
Company Guar. Notes
10.00% due 08/01/2020................. 747,000 440,730
----------
AUTO-CARS/LIGHT TRUCKS -- 0.5%
American Honda Finance Corp.
Notes
1.20% due 07/14/2017.................. 619,000 616,660
Daimler Finance North America LLC
Company Guar. Notes
1.38% due 08/01/2017*................. 796,000 792,291
Daimler Finance North America LLC
Company Guar. Notes
2.63% due 09/15/2016*................. 939,000 966,487
----------
2,375,438
----------
AUTO-HEAVY DUTY TRUCKS -- 0.6%
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/2022*................. 1,325,000 1,422,719
Oshkosh Corp.
Company Guar. Notes
5.38% due 03/01/2022.................. 850,000 854,250
PACCAR Financial Corp.
Senior Notes
2.20% due 09/15/2019.................. 683,000 682,301
----------
2,959,270
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.3%
Affinia Group, Inc.
Company Guar. Notes
7.75% due 05/01/2021....................... $1,425,000 $1,464,188
----------
BANKS-COMMERCIAL -- 1.0%
Fifth Third Bank
Senior Notes
2.88% due 10/01/2021....................... 641,000 630,991
MUFG Union Bank NA
Senior Notes
3.00% due 06/06/2016....................... 1,593,000 1,645,717
PNC Bank NA
Senior Notes
1.13% due 01/27/2017....................... 1,309,000 1,305,157
Regions Financial Corp.
Sub. Notes
7.38% due 12/10/2037....................... 837,000 1,060,680
Zions Bancorporation
Senior Notes
4.50% due 06/13/2023....................... 61,000 63,867
----------
4,706,412
----------
BANKS-FIDUCIARY -- 0.2%
Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*...................... 775,000 776,157
----------
BANKS-SUPER REGIONAL -- 0.3%
Comerica, Inc.
Senior Notes
2.13% due 05/23/2019....................... 291,000 288,415
Wells Fargo & Co
Senior Notes
1.40% due 09/08/2017....................... 1,317,000 1,313,091
----------
1,601,506
----------
BREWERY -- 0.2%
Anheuser-Busch InBev Worldwide, Inc.
Company Guar. Notes
0.80% due 07/15/2015....................... 1,001,000 1,003,946
----------
BUILDING PRODUCTS-CEMENT -- 0.6%
Cemex Finance LLC
Senior Sec. Notes
6.00% due 04/01/2024*...................... 1,105,000 1,101,906
Headwaters, Inc.
Sec. Notes
7.63% due 04/01/2019....................... 1,861,000 1,940,092
----------
3,041,998
----------
BUILDING PRODUCTS-WOOD -- 0.1%
Masco Corp.
Senior Notes
5.95% due 03/15/2022....................... 559,000 610,708
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.4%
Meritage Homes Corp.
Company Guar. Notes
7.00% due 04/01/2022....................... 1,200,000 1,296,000
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING-RESIDENTIAL/COMMERCIAL (CONTINUED)
William Lyons Homes, Inc.
Company Guar. Notes
7.00% due 08/15/2022*............................ $ 461,000 $ 466,763
----------
1,762,763
----------
CABLE/SATELLITE TV -- 0.9%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.50% due 04/30/2021............................. 1,988,000 2,072,490
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc.
Company Guar. Notes
6.35% due 03/15/2040............................. 387,000 450,963
DISH DBS Corp.
Company Guar. Notes
5.00% due 03/15/2023............................. 674,000 646,619
Time Warner Cable, Inc.
Company Guar. Notes
4.50% due 09/15/2042............................. 324,000 319,720
Time Warner Cable, Inc.
Company Guar. Notes
6.55% due 05/01/2037............................. 149,000 187,964
Time Warner Cable, Inc.
Company Guar. Notes
7.30% due 07/01/2038............................. 393,000 534,443
----------
4,212,199
----------
CASINO HOTELS -- 0.9%
Caesars Entertainment Operating Co., Inc.
Company Guar. Notes
10.75% due 02/01/2016............................ 800,000 280,000
Caesars Entertainment Resort Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020*............................ 1,133,000 1,116,005
Caesars Entertainment Resort Properties LLC
Sec. Notes
11.00% due 10/01/2021*........................... 721,000 675,937
Caesars Growth Properties Holdings LLC/Caesars
Growth Properties Finance, Inc.
Sec. Notes
9.38% due 05/01/2022*............................ 948,000 829,500
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*........................... 1,055,000 1,113,025
Seminole Hard Rock Entertainment, Inc./Seminole
Hard Rock International LLC
Company Guar. Notes
5.88% due 05/15/2021*............................ 575,000 554,875
----------
4,569,342
----------
CELLULAR TELECOM -- 0.5%
Sprint Communications, Inc.
Senior Notes
7.00% due 08/15/2020............................. 1,199,000 1,249,957
T-Mobile USA, Inc.
Company Guar. Notes
6.38% due 03/01/2025............................. 400,000 399,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
CELLULAR TELECOM (CONTINUED)
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2024...................... $ 900,000 $ 911,250
----------
2,560,207
----------
CHEMICALS-DIVERSIFIED -- 0.1%
Dow Chemical Co.
Senior Notes
4.25% due 10/01/2034...................... 648,000 623,932
----------
CHEMICALS-PLASTICS -- 0.2%
PolyOne Corp.
Senior Notes
5.25% due 03/15/2023...................... 1,229,000 1,192,130
----------
CHEMICALS-SPECIALTY -- 0.5%
Chemtura Corp.
Company Guar. Notes
5.75% due 07/15/2021...................... 1,026,000 1,015,740
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034...................... 248,000 324,486
WR Grace & Co.
Company Guar. Notes
5.13% due 10/01/2021*..................... 500,000 508,125
WR Grace & Co.
Company Guar. Notes
5.63% due 10/01/2024*..................... 398,000 407,950
----------
2,256,301
----------
CLOSED-END FUNDS -- 0.2%
Drawbridge Special Opportunities Fund LP/
Drawbridge Special Opportunities Finance
Senior Notes
5.00% due 08/01/2021*..................... 740,000 732,600
----------
COAL -- 0.7%
Murray Energy Corp.
Senior Sec. Notes
8.63% due 06/15/2021*..................... 1,529,000 1,582,515
Peabody Energy Corp.
Company Guar. Notes
6.50% due 09/15/2020...................... 1,050,000 981,750
SunCoke Energy Partners LP/SunCoke Energy
Partners Finance Corp.
Company Guar. Notes
7.38% due 02/01/2020*..................... 891,000 935,550
----------
3,499,815
----------
COMMERCIAL SERVICES-FINANCE -- 0.5%
Harland Clarke Holdings Corp.
Senior Sec. Notes
6.88% due 03/01/2020*..................... 670,000 683,400
Harland Clarke Holdings Corp.
Senior Notes
9.25% due 03/01/2021*..................... 1,618,000 1,638,225
----------
2,321,625
----------
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
COMPUTER SERVICES -- 0.5%
Compiler Finance Sub, Inc.
Senior Notes
7.00% due 05/01/2021*....................... $1,564,000 $1,477,980
Sungard Availability Services Capital, Inc.
Company Guar. Notes
8.75% due 04/01/2022*....................... 1,000,000 745,000
----------
2,222,980
----------
COMPUTERS -- 0.2%
Hewlett-Packard Co.
Senior Notes
6.00% due 09/15/2041........................ 683,000 778,599
----------
CONTAINERS-METAL/GLASS -- 0.5%
Ball Corp.
Company Guar. Notes
5.00% due 03/15/2022........................ 464,000 466,320
Crown Cork & Seal Co., Inc.
Senior Notes
7.38% due 12/15/2026........................ 1,750,000 1,925,000
----------
2,391,320
----------
CONTAINERS-PAPER/PLASTIC -- 0.5%
Consolidated Container Co. LLC/Consolidated
Container Capital, Inc.
Company Guar. Notes
10.13% due 07/15/2020*...................... 1,347,000 1,266,180
Packaging Corp. of America
Senior Notes
3.65% due 09/15/2024........................ 335,000 329,011
PaperWorks Industries, Inc.
Senior Sec. Notes
9.50% due 08/15/2019*....................... 598,000 608,465
----------
2,203,656
----------
DIALYSIS CENTERS -- 0.1%
DaVita HealthCare Partners, Inc.
Company Guar. Notes
5.13% due 07/15/2024........................ 679,000 667,118
----------
DISTRIBUTION/WHOLESALE -- 0.1%
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022........................ 639,000 682,133
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.1%
Bank of America Corp.
Senior Notes
2.60% due 01/15/2019........................ 772,000 770,496
Bank of America Corp.
Sub. Notes
4.20% due 08/26/2024........................ 528,000 523,434
Citigroup, Inc.
Sub. Notes
5.88% due 02/22/2033........................ 1,940,000 2,176,422
Goldman Sachs Group, Inc.
Senior Notes
4.80% due 07/08/2044........................ 324,000 325,800
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Goldman Sachs Group, Inc.
Senior Notes
5.25% due 07/27/2021...................... $ 1,001,000 $ 1,109,711
Goldman Sachs Group, Inc.
Senior Notes
6.13% due 02/15/2033...................... 518,000 619,941
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037...................... 495,000 590,925
JPMorgan Chase & Co.
Senior Notes
3.25% due 09/23/2022...................... 630,000 620,079
JPMorgan Chase & Co.
Senior Notes
4.25% due 11/02/2018...................... NZD 750,000 573,120
Merrill Lynch & Co., Inc.
Sub. Notes
6.11% due 01/29/2037...................... 612,000 700,522
Morgan Stanley
Sub. Notes
4.10% due 05/22/2023...................... 1,215,000 1,211,644
Morgan Stanley
Sub. Notes
4.35% due 09/08/2026...................... 301,000 295,828
Morgan Stanley
Senior Notes
4.75% due 03/22/2017...................... 700,000 752,228
NationsBank Corp.
Sub. Notes
7.25% due 10/15/2025...................... 117,000 143,502
-----------
10,413,652
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.5%
General Electric Capital Corp.
Senior Notes
1.50% due 07/12/2016...................... 817,000 826,922
General Electric Capital Corp.
Senior Notes
5.88% due 01/14/2038...................... 844,000 1,018,004
USAA Capital Corp.
Senior Notes
2.13% due 06/03/2019*..................... 720,000 718,816
-----------
2,563,742
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.6%
General Electric Co.
Senior Notes
2.70% due 10/09/2022...................... 532,000 517,816
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
5.75% due 06/15/2043...................... 1,314,000 1,552,361
Textron, Inc.
Senior Notes
4.63% due 09/21/2016...................... 595,000 633,278
Trinity Industries, Inc.
Company Guar. Notes
4.55% due 10/01/2024...................... 343,000 343,600
-----------
3,047,055
-----------
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
E-COMMERCE/SERVICES -- 0.3%
Netflix, Inc.
Senior Notes
5.38% due 02/01/2021........................... $1,215,000 $1,239,300
----------
ELECTRIC-GENERATION -- 0.3%
AES Corp.
Senior Notes
5.50% due 03/15/2024........................... 1,020,000 991,950
Reliant Energy Mid-Atlantic Power Holdings LLC
Pass Through Certs.
9.24% due 07/02/2017........................... 221,677 236,640
----------
1,228,590
----------
ELECTRIC-INTEGRATED -- 1.0%
Dominion Gas Holdings LLC
Senior Notes
4.80% due 11/01/2043........................... 252,000 269,337
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033........................... 860,000 972,528
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/2031........................... 456,000 539,077
FirstEnergy Transmission LLC
Senior Notes
5.45% due 07/15/2044*.......................... 487,000 493,078
Georgia Power Co.
Senior Notes
3.00% due 04/15/2016........................... 180,000 186,143
Mirant Mid Atlantic LLC Pass Through Trust
Pass Through Certs., Series B
9.13% due 06/30/2017........................... 259,392 276,901
NiSource Finance Corp.
Company Guar. Notes
4.80% due 02/15/2044........................... 323,000 328,614
NiSource Finance Corp.
Company Guar. Notes
5.25% due 02/15/2043........................... 444,000 478,497
Southern California Edison Co.
1st. Mtg. Bonds
1.13% due 05/01/2017........................... 628,000 625,795
Southern Co.
Senior Notes
1.30% due 08/15/2017........................... 528,000 525,432
----------
4,695,402
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.1%
Intel Corp.
Senior Notes
1.35% due 12/15/2017........................... 496,000 494,393
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.4%
BMC Software Finance, Inc.
Senior Notes
8.13% due 07/15/2021*.......................... 895,000 859,200
Epicor Software Corp.
Company Guar. Notes
8.63% due 05/01/2019........................... 840,000 888,300
----------
1,747,500
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
FINANCE-AUTO LOANS -- 0.4%
Ally Financial, Inc.
Company Guar. Notes
3.50% due 01/27/2019....................... $ 486,000 $ 472,635
Ally Financial, Inc.
Senior Notes
5.13% due 09/30/2024....................... 485,000 475,300
Ford Motor Credit Co. LLC
Senior Notes
1.50% due 01/17/2017....................... 360,000 359,402
General Motors Acceptance Corp.
Senior Notes
8.00% due 11/01/2031....................... 477,000 593,865
----------
1,901,202
----------
FINANCE-COMMERCIAL -- 0.2%
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
6.88% due 04/15/2022*...................... 524,000 516,140
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
7.38% due 04/01/2020*...................... 498,000 509,205
Jefferies LoanCore LLC/JLC Finance Corp.
Senior Notes
6.88% due 06/01/2020*...................... 115,000 111,263
----------
1,136,608
----------
FINANCE-CONSUMER LOANS -- 0.4%
Enova International, Inc.
Company Guar. Notes
9.75% due 06/01/2021*...................... 1,378,000 1,378,000
Synchrony Financial
Senior Notes
3.75% due 08/15/2021....................... 220,000 221,987
Synchrony Financial
Senior Notes
4.25% due 08/15/2024....................... 289,000 289,037
----------
1,889,024
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+(3)................... 280,000 28
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+(3)................... 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 -- 0.4%
Cogent Communications Finance, Inc.
Company Guar. Notes
5.63% due 04/15/2021*...................... 795,000 783,075
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-OTHER SERVICES (CONTINUED)
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
1.10% due 01/27/2017............................... $ 967,000 $ 965,441
----------
1,748,516
----------
FIREARMS & AMMUNITION -- 0.2%
FGI Operating Co. LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020............................... 1,115,000 1,087,125
----------
FOOD-DAIRY PRODUCTS -- 0.1%
WhiteWave Foods Co.
Company Guar. Notes
5.38% due 10/01/2022............................... 350,000 353,500
----------
FOOD-MEAT PRODUCTS -- 0.5%
Darling Ingredients, Inc.
Company Guar. Notes
5.38% due 01/15/2022............................... 1,066,000 1,073,995
JBS USA LLC/JBS USA Finance, Inc.
Senior Notes
5.88% due 07/15/2024*.............................. 333,000 319,680
JBS USA LLC/JBS USA Finance, Inc.
Company Guar. Notes
7.25% due 06/01/2021*.............................. 836,000 877,800
Tyson Foods, Inc.
Company Guar. Notes
5.15% due 08/15/2044............................... 234,000 242,142
----------
2,513,617
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
Mondelez International, Inc.
Senior Notes
6.50% due 02/09/2040............................... 401,000 502,783
----------
FOOD-WHOLESALE/DISTRIBUTION -- 0.3%
C&S Group Enterprises LLC
Senior Sec. Notes
5.38% due 07/15/2022*.............................. 631,000 599,450
Sysco Corp.
Company Guar. Notes
3.50% due 10/02/2024............................... 440,000 441,208
Sysco Corp.
Company Guar. Notes
4.35% due 10/02/2034............................... 194,000 196,820
Sysco Corp.
Company Guar. Notes
4.50% due 10/02/2044............................... 323,000 325,360
----------
1,562,838
----------
GAMBLING (NON-HOTEL) -- 0.0%
Waterford Gaming LLC/Waterford Gaming Financial Corp.
Senior Notes
8.63% due 09/15/2014*+(3)(4)(7).................... 572,929 115,846
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS -- 0.7%
Calpine Corp.
Senior Sec. Notes
6.00% due 01/15/2022*.......................... $ 652,000 $ 689,490
Calpine Corp.
Senior Sec. Notes
7.88% due 01/15/2023*.......................... 697,000 759,730
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/2018........................... 1,153,000 1,199,120
NRG Energy, Inc.
Company Guar. Notes
6.25% due 07/15/2022*.......................... 662,000 678,964
NRG Energy, Inc.
Company Guar. Notes
7.63% due 01/15/2018........................... 190,000 209,000
----------
3,536,304
----------
INSURANCE BROKERS -- 0.2%
USI, Inc.
Senior Notes
7.75% due 01/15/2021*.......................... 900,000 895,500
----------
INSURANCE-LIFE/HEALTH -- 0.7%
American Equity Investment Life Holding Co.
Senior Notes
6.63% due 07/15/2021........................... 1,415,000 1,485,750
Pacific LifeCorp
Senior Notes
6.00% due 02/10/2020*.......................... 295,000 335,939
Pricoa Global Funding I
Sec. Notes
1.35% due 08/18/2017*.......................... 644,000 640,770
Principal Life Global Funding II
Senior Sec. Notes
1.00% due 12/11/2015*.......................... 699,000 701,993
Teachers Insurance & Annuity Assoc. of America
Sub. Notes
4.90% due 09/15/2044*.......................... 325,000 331,215
----------
3,495,667
----------
INSURANCE-MULTI-LINE -- 0.5%
Assurant, Inc.
Senior Notes
6.75% due 02/15/2034........................... 946,000 1,136,029
Metropolitan Life Global Funding I
Senior Sec. Notes
2.50% due 09/29/2015*.......................... 650,000 662,780
Onex York Acquisition Corp.
Company Guar. Notes
8.50% due 10/01/2022*.......................... 650,000 645,937
----------
2,444,746
----------
INSURANCE-MUTUAL -- 0.2%
New York Life Global Funding
Sec. Notes
1.65% due 05/15/2017*.......................... 779,000 785,912
----------
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.2%
National Financial Partners Corp.
Senior Notes
9.00% due 07/15/2021*................. $ 887,000 $ 946,873
----------
MACHINERY-FARMING -- 0.5%
CNH Industrial Capital LLC
Company Guar. Notes
3.25% due 02/01/2017.................. 504,000 496,440
John Deere Capital Corp.
Senior Notes
1.13% due 06/12/2017.................. 1,191,000 1,184,754
John Deere Capital Corp.
Senior Notes
1.55% due 12/15/2017.................. 876,000 877,512
----------
2,558,706
----------
MEDICAL LABS & TESTING SERVICES -- 0.3%
Roche Holdings, Inc.
Company Guar. Notes
1.35% due 09/29/2017*................. 900,000 898,325
Roche Holdings, Inc.
Company Guar. Notes
2.25% due 09/30/2019*................. 705,000 702,096
----------
1,600,421
----------
MEDICAL PRODUCTS -- 0.3%
Becton Dickinson and Co.
Senior Notes
7.00% due 08/01/2027.................. 370,000 478,003
Universal Hospital Services, Inc.
Sec. Notes
7.63% due 08/15/2020.................. 1,094,000 1,028,360
----------
1,506,363
----------
MEDICAL-DRUGS -- 0.5%
Endo Finance LLC
Company Guar. Notes
5.75% due 01/15/2022*................. 1,677,000 1,656,037
Forest Laboratories, Inc.
Senior Notes
4.88% due 02/15/2021*................. 861,000 918,498
----------
2,574,535
----------
MEDICAL-GENERIC DRUGS -- 0.2%
Mylan, Inc.
Company Guar. Notes
7.88% due 07/15/2020*................. 827,000 902,078
----------
MEDICAL-HMO -- 0.2%
Centene Corp.
Senior Notes
4.75% due 05/15/2022.................. 1,055,000 1,057,638
----------
MEDICAL-HOSPITALS -- 1.3%
Capella Healthcare, Inc.
Company Guar. Notes
9.25% due 07/01/2017.................. 1,055,000 1,097,859
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
MEDICAL-HOSPITALS (CONTINUED)
HCA, Inc.
Company Guar. Notes
5.88% due 05/01/2023................ $ 625,000 $ 639,063
HCA, Inc.
Company Guar. Notes
7.50% due 11/15/2095................ 1,823,000 1,713,620
Tenet Healthcare Corp.
Senior Sec. Notes
4.75% due 06/01/2020................ 655,000 650,087
Tenet Healthcare Corp.
Senior Notes
5.00% due 03/01/2019*............... 688,000 679,400
Tenet Healthcare Corp.
Senior Sec. Notes
6.00% due 10/01/2020................ 607,000 641,903
Tenet Healthcare Corp.
Senior Notes
6.88% due 11/15/2031................ 1,075,000 1,037,375
----------
6,459,307
----------
METAL PROCESSORS & FABRICATION -- 0.0%
Timken Co.
Senior Notes
3.88% due 09/01/2024*............... 234,000 230,339
----------
METAL-ALUMINUM -- 0.2%
Alcoa, Inc.
Senior Notes
5.13% due 10/01/2024................ 1,192,000 1,193,548
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(3)(4)......... 3,285,000 124
----------
1,193,672
----------
MULTIMEDIA -- 0.1%
Time Warner Entertainment Co. LP
Company Guar. Notes
8.38% due 07/15/2033................ 385,000 568,695
----------
MUSIC -- 0.1%
Gibson Brands, Inc.
Senior Sec. Notes
8.88% due 08/01/2018*............... 490,000 478,975
----------
NETWORKING PRODUCTS -- 0.1%
Cisco Systems, Inc.
Senior Notes
2.13% due 03/01/2019................ 453,000 452,772
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.2%
Pitney Bowes, Inc.
Senior Notes
4.63% due 03/15/2024................ 820,000 831,200
----------
OFFICE SUPPLIES & FORMS -- 0.2%
ACCO Brands Corp.
Company Guar. Notes
6.75% due 04/30/2020................ 810,000 838,350
----------
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL & GAS DRILLING -- 0.1%
Summit Midstream Holdings LLC/Summit
Midstream Finance Corp.
Company Guar. Notes
5.50% due 08/15/2022............................ $ 416,000 $ 407,680
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 5.4%
Alta Mesa Holdings LP/Alta Mesa Finance
Services Corp.
Company Guar. Notes
9.63% due 10/15/2018............................ 1,140,000 1,179,900
American Energy-Permian Basin LLC/AEPB
Finance Corp.
Senior Notes
7.13% due 11/01/2020*........................... 302,000 276,330
American Energy-Permian Basin LLC/AEPB
Finance Corp.
Senior Notes
7.38% due 11/01/2021*........................... 422,000 386,130
Anadarko Petroleum Corp.
Senior Notes
6.45% due 09/15/2036............................ 868,000 1,057,760
Atlas Energy Holdings Operating Co. LLC/Atlas
Resource Finance Corp.
Company Guar. Notes
7.75% due 01/15/2021............................ 1,271,000 1,251,935
Berry Petroleum Co. LLC
Senior Notes
6.38% due 09/15/2022............................ 403,000 390,910
Chaparral Energy, Inc.
Company Guar. Notes
7.63% due 11/15/2022............................ 526,000 539,150
Chaparral Energy, Inc.
Company Guar. Notes
8.25% due 09/01/2021............................ 635,000 679,450
Energy XXI Gulf Coast, Inc.
Company Guar. Notes
6.88% due 03/15/2024*........................... 576,000 541,440
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
7.75% due 09/01/2022............................ 1,213,000 1,282,747
EPL Oil & Gas, Inc.
Company Guar. Notes
8.25% due 02/15/2018............................ 1,560,000 1,595,100
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............................ 2,269,000 2,308,707
Hess Corp.
Senior Notes
5.60% due 02/15/2041............................ 645,000 726,468
Hess Corp.
Senior Notes
7.88% due 10/01/2029............................ 235,000 319,016
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
5.00% due 12/01/2024*.......................... $ 977,000 $ 940,362
Legacy Reserves LP/Legacy Reserves
Finance Corp.
Company Guar. Notes
6.63% due 12/01/2021*.......................... 1,444,000 1,415,120
Memorial Production Partners LP/Memorial
Production Finance Corp.
Company Guar. Notes
7.63% due 05/01/2021........................... 740,000 736,300
Midstates Petroleum Co., Inc.
Company Guar. Notes
9.25% due 06/01/2021........................... 906,000 892,410
Northern Oil and Gas, Inc.
Senior Notes
8.00% due 06/01/2020........................... 1,250,000 1,268,750
Penn Virginia Corp.
Company Guar. Notes
8.50% due 05/01/2020........................... 915,000 960,750
Rex Energy Corp.
Company Guar. Notes
6.25% due 08/01/2022*.......................... 1,235,000 1,191,775
Rex Energy Corp.
Company Guar. Notes
8.88% due 12/01/2020........................... 259,000 278,425
Rice Energy, Inc.
Company Guar. Notes
6.25% due 05/01/2022*.......................... 1,000,000 975,000
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021........................... 1,410,000 1,374,750
Sanchez Energy Corp.
Company Guar. Notes
6.13% due 01/15/2023*.......................... 939,000 929,892
SandRidge Energy, Inc.
Company Guar. Notes
7.50% due 02/15/2023........................... 620,000 602,175
Swift Energy Co.
Company Guar. Notes
7.88% due 03/01/2022........................... 640,000 640,000
Triangle USA Petroleum Corp.
Senior Notes
6.75% due 07/15/2022*.......................... 484,000 472,505
-----------
26,356,932
-----------
OIL REFINING & MARKETING -- 0.2%
Calumet Specialty Products Partners LP/Calumet
Finance Corp.
Company Guar. Notes
6.50% due 04/15/2021*.......................... 646,000 613,700
Reliance Holdings USA, Inc.
Company Guar. Notes
5.40% due 02/14/2022........................... 450,000 491,234
-----------
1,104,934
-----------
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL-FIELD SERVICES -- 0.4%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.................................... $ 675,000 $ 700,312
Freeport-McMoran Oil & Gas LLC/ FCX Oil & Gas, Inc.
Company Guar. Notes
6.63% due 05/01/2021.................................... 196,000 214,620
Freeport-McMoran Oil & Gas LLC/ FCX Oil & Gas, Inc.
Company Guar. Notes
6.75% due 02/01/2022.................................... 338,000 374,335
Hiland Partners LP/Hiland Partners Finance Corp.
Company Guar. Notes
7.25% due 10/01/2020*................................... 650,000 689,000
----------
1,978,267
----------
PAPER & RELATED PRODUCTS -- 0.7%
Domtar Corp.
Company Guar. Notes
6.75% due 02/15/2044.................................... 651,000 709,551
Georgia-Pacific LLC
Senior Notes
3.73% due 07/15/2023*................................... 1,076,000 1,104,055
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*................................... 866,000 978,568
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020.................................... 620,000 637,050
----------
3,429,224
----------
PIPELINES -- 2.1%
Access Midstream Partners LP/ACMP Finance Corp.
Company Guar. Notes
6.13% due 07/15/2022.................................... 1,020,000 1,086,300
Atlas Pipeline Partners LP/Atlas Pipeline Finance Corp.
Company Guar. Notes
5.88% due 08/01/2023.................................... 493,000 481,908
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
4.70% due 11/01/2042.................................... 224,000 198,681
El Paso Pipeline Partners Operating Co. LLC
Company Guar. Notes
6.50% due 04/01/2020.................................... 1,156,000 1,322,978
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020.................................... 1,100,000 1,223,750
Energy Transfer Partners LP
Senior Notes
6.63% due 10/15/2036.................................... 736,000 851,941
Genesis Energy LP
Company Guar. Notes
5.63% due 06/15/2024.................................... 715,000 688,187
Kinder Morgan, Inc.
Senior Notes
5.00% due 02/15/2021*................................... 589,000 614,032
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------------
PIPELINES (CONTINUED)
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
4.50% due 07/15/2023............................... $ 260,000 $ 252,200
MarkWest Energy Partners LP/MarkWest Energy
Finance Corp.
Company Guar. Notes
6.50% due 08/15/2021............................... 614,000 646,235
Plains All American Pipeline LP/PAA Finance Corp.
Senior Notes
3.60% due 11/01/2024............................... 420,000 412,201
Rose Rock Midstream LP/Rose Rock Finance Corp.
Company Guar. Notes
5.63% due 07/15/2022*.............................. 461,000 456,390
Sabine Pass Liquefaction LLC
Senior Sec. Notes
5.63% due 04/15/2023............................... 575,000 580,750
Sabine Pass Liquefaction LLC
Senior Sec. Notes
6.25% due 03/15/2022*.............................. 511,000 537,828
Tesoro Logistics LP/Tesoro Logistics Finance Corp.
Company Guar. Notes
6.13% due 10/15/2021............................... 926,000 956,095
-----------
10,309,476
-----------
PRINTING-COMMERCIAL -- 0.2%
Quad/Graphics, Inc.
Company Guar. Notes
7.00% due 05/01/2022*.............................. 1,175,000 1,135,344
-----------
PUBLISHING-NEWSPAPERS -- 0.5%
Gannett Co., Inc.
Company Guar. Notes
5.13% due 07/15/2020............................... 532,000 533,330
Lee Enterprises, Inc.
Senior Sec. Notes
9.50% due 03/15/2022*.............................. 777,000 786,712
McClatchy Co.
Senior Sec. Notes
9.00% due 12/15/2022............................... 825,000 891,000
-----------
2,211,042
-----------
PUBLISHING-PERIODICALS -- 0.7%
Expo Event Transco, Inc.
Senior Notes
9.00% due 06/15/2021*.............................. 2,100,000 2,163,000
Time, Inc.
Company Guar. Notes
5.75% due 04/15/2022*.............................. 1,130,000 1,081,975
-----------
3,244,975
-----------
REAL ESTATE INVESTMENT TRUSTS -- 0.9%
CTR Partnership LP/CareTrust Capital Corp.
Company Guar. Notes
5.88% due 06/01/2021*.............................. 1,200,000 1,200,000
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
GEO Group, Inc.
Company Guar. Notes
5.13% due 04/01/2023................... $ 959,000 $ 923,037
iStar Financial, Inc.
Senior Notes
5.00% due 07/01/2019................... 230,000 221,375
Omega Healthcare Investors, Inc.
Company Guar. Notes
4.95% due 04/01/2024*.................. 474,000 482,295
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.88% due 03/15/2024................... 1,552,000 1,617,960
----------
4,444,667
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.4%
American Campus Communities Operating
Partnership LP
Company Guar. Notes
4.13% due 07/01/2024................... 342,000 342,985
Kennedy-Wilson, Inc.
Company Guar. Notes
8.75% due 04/01/2019................... 1,340,000 1,423,750
----------
1,766,735
----------
RETAIL-APPAREL/SHOE -- 0.2%
Limited Brands, Inc.
Company Guar. Notes
6.63% due 04/01/2021................... 820,000 902,000
----------
RETAIL-APPLIANCES -- 0.2%
Conn's, Inc.
Senior Notes
7.25% due 07/15/2022*.................. 1,236,000 1,052,145
----------
RETAIL-AUTOMOBILE -- 0.2%
AutoNation, Inc.
Company Guar. Notes
5.50% due 02/01/2020................... 995,000 1,084,550
----------
RETAIL-DISCOUNT -- 0.1%
Dollar General Corp.
Company Guar. Notes
4.13% due 07/15/2017................... 440,000 459,532
----------
RETAIL-DRUG STORE -- 0.2%
CVS Pass-Through Trust
Pass Through Certs.
4.70% due 01/10/2036*.................. 279,009 296,008
CVS Pass-Through Trust
Pass Through Certs.
5.77% due 01/10/2033*.................. 227,859 257,562
CVS Pass-Through Trust
Pass Through Certs.
5.93% due 01/10/2034*.................. 359,432 416,855
----------
970,425
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
RETAIL-MAIL ORDER -- 0.1%
QVC, Inc.
Senior Sec. Notes
5.45% due 08/15/2034*.................... $ 456,000 $ 447,883
----------
RETAIL-MUSIC STORE -- 0.3%
Guitar Center, Inc.
Senior Sec. Notes
6.50% due 04/15/2019*.................... 575,000 517,500
Guitar Center, Inc.
Company Guar. Notes
9.63% due 04/15/2020*.................... 1,412,000 1,083,710
----------
1,601,210
----------
RETAIL-REGIONAL DEPARTMENT STORES -- 0.3%
Bon-Ton Department Stores, Inc.
Sec. Notes
8.00% due 06/15/2021..................... 1,670,000 1,494,650
----------
RETAIL-RESTAURANTS -- 0.5%
Landry's, Inc.
Senior Notes
9.38% due 05/01/2020*.................... 863,000 912,623
PF Chang's China Bistro, Inc.
Company Guar. Notes
10.25% due 06/30/2020*................... 1,635,000 1,622,737
----------
2,535,360
----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(3)(4)(6)(7)....... 100,000 0
----------
SAVINGS & LOANS/THRIFTS -- 0.7%
Astoria Financial Corp.
Senior Notes
5.00% due 06/19/2017..................... 718,000 770,881
First Niagara Financial Group, Inc.
Senior Notes
6.75% due 03/19/2020..................... 1,307,000 1,490,635
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021..................... 814,000 938,786
----------
3,200,302
----------
SCHOOLS -- 0.2%
Northwestern University
Notes
4.20% due 12/01/2047..................... 386,000 396,611
President and Fellows of Harvard College
Notes
3.62% due 10/01/2037..................... 191,000 184,190
University of Pennsylvania
Senior Notes
4.67% due 09/01/2112..................... 292,000 296,367
----------
877,168
----------
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
SECURITY SERVICES -- 0.1%
ADT Corp.
Senior Notes
3.50% due 07/15/2022.................. $ 568,000 $ 491,320
----------
SEMICONDUCTOR EQUIPMENT -- 0.3%
Entegris, Inc.
Company Guar. Notes
6.00% due 04/01/2022*................. 774,000 785,610
Magnachip Semiconductor Corp.
Senior Notes
6.63% due 07/15/2021.................. 553,000 508,760
----------
1,294,370
----------
SHIPBUILDING -- 0.2%
Huntington Ingalls Industries, Inc.
Company Guar. Notes
7.13% due 03/15/2021.................. 1,043,000 1,123,833
----------
SPECIAL PURPOSE ENTITIES -- 0.2%
MassMutual Global Funding II
Senior Sec. Notes
2.00% due 04/05/2017*................. 856,000 868,945
MassMutual Global Funding II
Senior Sec. Notes
2.50% due 10/17/2022*................. 345,000 331,852
----------
1,200,797
----------
SPECIFIED PURPOSE ACQUISITIONS -- 0.4%
Opal Acquisition, Inc.
Senior Notes
8.88% due 12/15/2021*................. 1,825,000 1,884,313
----------
STEEL PIPE & TUBE -- 0.4%
JMC Steel Group, Inc.
Senior Notes
8.25% due 03/15/2018*................. 840,000 848,400
Valmont Industries, Inc.
Company Guar. Notes
5.00% due 10/01/2044.................. 433,000 424,794
Valmont Industries, Inc.
Company Guar. Notes
5.25% due 10/01/2054.................. 619,000 604,402
----------
1,877,596
----------
STEEL-PRODUCERS -- 0.4%
AK Steel Corp.
Company Guar. Notes
8.38% due 04/01/2022.................. 874,000 874,000
Steel Dynamics, Inc.
Company Guar. Notes
5.13% due 10/01/2021*................. 829,000 841,435
----------
1,715,435
----------
STORAGE/WAREHOUSING -- 0.3%
Mobile Mini, Inc.
Company Guar. Notes
7.88% due 12/01/2020.................. 1,165,000 1,246,550
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------
TELECOM SERVICES -- 0.2%
Consolidated Communications, Inc.
Company Guar. Notes
6.50% due 10/01/2022*.............. $ 832,000 $ 827,840
----------
TELEPHONE-INTEGRATED -- 1.7%
AT&T, Inc.
Senior Notes
4.35% due 06/15/2045............... 341,000 313,431
CenturyLink, Inc.
Senior Notes
5.80% due 03/15/2022............... 431,000 441,775
Cincinnati Bell, Inc.
Company Guar. Notes
8.38% due 10/15/2020............... 997,000 1,051,835
Frontier Communications Corp.
Senior Notes
6.88% due 01/15/2025............... 878,000 867,025
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/2018............... 1,000,000 1,117,500
Frontier Communications Corp.
Senior Notes
9.25% due 07/01/2021............... 549,000 627,233
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/2032............... 1,110,000 1,211,287
Verizon Communications, Inc.
Senior Notes
4.15% due 03/15/2024............... 437,000 451,223
Verizon Communications, Inc.
Senior Notes
4.50% due 09/15/2020............... 712,000 770,280
Verizon Communications, Inc.
Senior Notes
4.86% due 08/21/2046*.............. 759,000 761,149
Verizon Communications, Inc.
Senior Notes
6.40% due 09/15/2033............... 731,000 890,517
----------
8,503,255
----------
TELEVISION -- 0.2%
Sinclair Television Group, Inc.
Company Guar. Notes
6.38% due 11/01/2021............... 880,000 899,800
----------
TRANSPORT-EQUIPMENT & LEASING -- 0.1%
Jurassic Holdings III, Inc.
Sec. Notes
6.88% due 02/15/2021*.............. 694,000 694,000
----------
TRANSPORT-RAIL -- 0.2%
Florida East Coast Holdings Corp.
Senior Sec. Notes
6.75% due 05/01/2019*.............. 1,091,000 1,112,820
----------
TRAVEL SERVICES -- 0.1%
Sabre GLBL, Inc.
Senior Sec. Notes
8.50% due 05/15/2019*.............. 617,000 660,190
----------
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
WIRE & CABLE PRODUCTS -- 0.1%
Anixter, Inc.
Company Guar. Notes
5.13% due 10/01/2021................. $ 735,000 $ 725,813
------------
WIRELESS EQUIPMENT -- 0.1%
Motorola Solutions, Inc.
Senior Notes
5.50% due 09/01/2044................. 396,000 391,711
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $231,994,318).................. 228,870,793
------------
FOREIGN CORPORATE BONDS & NOTES -- 18.3%
ADVERTISING SERVICES -- 0.1%
WPP Finance
Company Guar. Notes
3.75% due 09/19/2024................. 481,000 474,391
------------
AIRLINES -- 0.2%
Air Canada
Senior Sec. Notes
6.75% due 10/01/2019*................ 940,000 998,750
------------
BANKS-COMMERCIAL -- 4.0%
Abbey National Treasury Services PLC
Company Guar. Notes
1.38% due 03/13/2017................. 584,000 583,876
Akbank TAS
Senior Notes
7.50% due 02/05/2018*................ TRY 2,385,000 931,979
Banco ABC Brasil SA
Senior Notes
8.50% due 03/28/2016*................ BRL 3,100,000 1,209,478
Banco de Bogota SA
Senior Notes
5.00% due 01/15/2017*................ 260,000 273,000
Banco de Credito del Peru
Senior Notes
5.38% due 09/16/2020................. 400,000 431,000
Banco Santander SA
Jr. Sub Notes
6.25% due 09/11/2021(8).............. EUR 300,000 360,310
Bangkok Bank PCL
Senior Notes
3.88% due 09/27/2022................. 315,000 316,876
Bank of Tokyo-Mitsubishi UFJ, Ltd.
Senior Notes
1.55% due 09/09/2016*................ 629,000 635,184
BPCE SA
Sub. Notes
4.50% due 03/15/2025*................ 643,000 623,280
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA
Senior Notes
2.25% due 01/14/2019................. 310,000 311,283
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA
Senior Notes
2.63% due 05/29/2018................. NOK 5,000,000 798,008
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
BANKS-COMMERCIAL (CONTINUED)
Credit Suisse New York
Senior Notes
1.38% due 05/26/2017.................... $1,221,000 $1,214,095
Credit Suisse New York
Sub. Notes
5.40% due 01/14/2020.................... 528,000 588,945
DBS Group Holdings, Ltd.
Senior Notes
2.25% due 07/16/2019*................... 1,382,000 1,367,807
Hana Bank
Sub. Notes
4.38% due 09/30/2024*................... 200,000 200,810
ICICI Bank, Ltd.
Senior Notes
5.75% due 11/16/2020.................... 400,000 442,952
ING Bank NV
Senior Notes
4.00% due 03/15/2016*................... 1,461,000 1,524,828
Intesa Sanpaolo SpA
Sub. Notes
5.02% due 06/26/2024*................... 969,000 944,132
Kookmin Bank
Senior Notes
1.63% due 07/14/2017*................... 1,588,000 1,576,095
Macquarie Bank, Ltd.
Senior Notes
2.60% due 06/24/2019*................... 308,000 307,750
Malayan Banking Bhd VRS
Sub. Notes
3.25% due 09/20/2022.................... 500,000 504,184
National Australia Bank, Ltd.
Senior Notes
2.75% due 03/09/2017.................... 723,000 749,019
National Bank of Canada
Company Guar. Notes
1.45% due 11/07/2017.................... 1,040,000 1,033,005
Oversea-Chinese Banking Corp., Ltd. VRS
Sub. Notes
4.00% due 10/15/2024*................... 200,000 202,017
PKO Finance AB
Senior Notes
4.63% due 09/26/2022*................... 700,000 727,125
Sberbank of Russia Via SB Capital SA
Senior Notes
6.13% due 02/07/2022.................... 200,000 199,500
Siam Commercial Bank PCL
Senior Notes
3.50% due 04/07/2019*................... 200,000 203,900
Standard Chartered PLC
Sub. Notes
5.70% due 03/26/2044*................... 437,000 461,813
Turkiye Halk Bankasi AS
Senior Notes
3.88% due 02/05/2020*................... 355,000 334,942
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
Zenith Bank PLC
Senior Notes
6.25% due 04/22/2019*.............. $ 300,000 $ 300,000
-----------
19,357,193
-----------
BANKS-MONEY CENTER -- 0.1%
Mizuho Bank, Ltd.
Company Guar. Notes
2.45% due 04/16/2019*.............. 275,000 274,391
-----------
BANKS-SPECIAL PURPOSE -- 0.6%
Burgan Finance No. 1 Jersey, Ltd.
Company Guar. Notes
7.88% due 09/29/2020............... 305,000 347,700
Development Bank of Kazakhstan JSC
Senior Notes
4.13% due 12/10/2022*.............. 600,000 567,000
Export-Import Bank of China
Senior Notes
2.50% due 07/31/2019*.............. 1,029,000 1,018,675
Kreditanstalt fuer Wiederaufbau
Government Guar. Notes
3.75% due 09/25/2015............... NOK 5,500,000 873,756
-----------
2,807,131
-----------
BEVERAGES-NON-ALCOHOLIC -- 0.2%
Coca-Cola Femsa SAB de CV
Company Guar. Notes
2.38% due 11/26/2018............... 892,000 895,795
-----------
BEVERAGES-WINE/SPIRITS -- 0.1%
Pernod Ricard SA
Senior Notes
2.00% due 06/22/2020............... EUR 300,000 394,605
-----------
BUILDING & CONSTRUCTION-MISC. -- 0.0%
OAS Finance, Ltd.
Company Guar. Notes
8.00% due 07/02/2021*.............. 200,000 192,000
-----------
BUILDING PRODUCTS-CEMENT -- 0.1%
Cemex SAB de CV
Senior Sec. Notes
5.88% due 03/25/2019*.............. 500,000 502,500
-----------
BUILDING-HEAVY CONSTRUCTION -- 0.1%
Empresas ICA SAB de CV
Company Guar. Notes
8.88% due 05/29/2024*.............. 225,000 231,188
-----------
CABLE/SATELLITE TV -- 0.2%
Numericable Group SA
Senior Sec. Notes
6.00% due 05/15/2022*.............. 1,055,000 1,062,912
-----------
CASINO HOTELS -- 0.2%
Wynn Macau, Ltd.
Senior Notes
5.25% due 10/15/2021*.............. 1,051,000 1,014,215
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------
CELLULAR TELECOM -- 0.1%
America Movil SAB de CV
Jr. Sub. Notes
5.13% due 09/06/2073.................. EUR 300,000 $ 408,660
Mobile Telesystems OJSC via MTS
International Funding, Ltd.
Senior Notes
5.00% due 05/30/2023.................. 250,000 214,375
----------
623,035
----------
COAL -- 0.1%
Indo Energy Finance BV
Senior Sec. Notes
7.00% due 05/07/2018.................. 200,000 190,000
PT Adaro Indonesia
Company Guar. Notes
7.63% due 10/22/2019.................. 350,000 364,350
----------
554,350
----------
CRUISE LINES -- 0.3%
Royal Caribbean Cruises, Ltd.
Senior Notes
5.25% due 11/15/2022.................. 1,286,000 1,298,860
----------
DIVERSIFIED BANKING INSTITUTIONS -- 0.9%
Barclays PLC
Sub. Notes
4.38% due 09/11/2024.................. 613,000 594,095
Credit Suisse Group AG VRS
Jr. Sub Notes
6.25% due 12/18/2024*(8).............. 570,000 551,475
Deutsche Bank AG
Senior Notes
1.35% due 05/30/2017.................. 1,161,000 1,153,055
Royal Bank of Scotland Group PLC
Sub. Notes
6.10% due 06/10/2023.................. 430,000 454,035
UBS AG
Senior Notes
1.38% due 08/14/2017.................. 987,000 979,192
UBS AG
Sub. Notes
5.13% due 05/15/2024.................. 447,000 435,825
UBS AG
Sub. Notes
7.63% due 08/17/2022.................. 294,000 341,556
----------
4,509,233
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.2%
Hyundai Capital Services, Inc.
Senior Notes
6.00% due 05/05/2015*................. 833,000 858,190
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.2%
Bombardier, Inc.
Senior Notes
6.13% due 01/15/2023*................. 946,000 947,182
----------
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED MINERALS -- 0.6%
Anglo American Capital PLC
Company Guar. Notes
4.13% due 04/15/2021*..................... $ 401,000 $ 402,433
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.88% due 04/01/2022*..................... 1,750,000 1,780,625
Volcan Cia Minera SAA
Company Guar. Notes
5.38% due 02/02/2022*..................... 610,000 603,900
----------
2,786,958
----------
DIVERSIFIED OPERATIONS -- 0.3%
KOC Holding AS
Senior Notes
3.50% due 04/24/2020*..................... 650,000 615,116
Tenedora Nemak SA de CV
Senior Notes
5.50% due 02/28/2023*..................... 650,000 666,250
----------
1,281,366
----------
ELECTRIC-DISTRIBUTION -- 0.0%
State Grid Overseas Investment 2014, Ltd.
Company Guar. Notes
4.13% due 05/07/2024*..................... 200,000 205,053
----------
ELECTRIC-GENERATION -- 0.1%
Comision Federal de Electricidad
Senior Notes
4.88% due 05/26/2021...................... 400,000 424,200
Electricite de France SA
Senior Notes
6.00% due 01/22/2114*..................... 236,000 267,674
----------
691,874
----------
ELECTRIC-INTEGRATED -- 0.2%
E.CL SA
Senior Notes
5.63% due 01/15/2021...................... 550,000 602,279
Empresas Publicas de Medellin ESP
Senior Notes
8.38% due 02/01/2021...................... COP 266,000,000 138,334
----------
740,613
----------
FINANCE-LEASING COMPANIES -- 0.6%
AerCap Ireland Capital Ltd./AerCap Global
Aviation Trust
Company Guar. Notes
3.75% due 05/15/2019*..................... 503,000 487,910
Aircastle, Ltd.
Senior Notes
6.25% due 12/01/2019...................... 1,800,000 1,894,500
Fly Leasing, Ltd.
Senior Notes
6.75% due 12/15/2020...................... 675,000 702,000
----------
3,084,410
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOOD-MEAT PRODUCTS -- 0.2%
BRF SA
Senior Notes
3.95% due 05/22/2023*................ $ 200,000 $ 188,190
BRF SA
Senior Notes
7.75% due 05/22/2018*................ BRL 1,000,000 357,471
ESAL GmbH
Company Guar. Notes
6.25% due 02/05/2023*................ 260,000 252,200
----------
797,861
----------
GAS-TRANSPORTATION -- 0.0%
Transportadora de Gas del Peru SA
Senior Notes
4.25% due 04/30/2028*................ 200,000 189,500
----------
GOLD MINING -- 0.4%
AuRico Gold, Inc.
Sec. Notes
7.75% due 04/01/2020*................ 766,000 766,000
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/2020................. 450,000 400,500
Goldcorp, Inc.
Senior Notes
5.45% due 06/09/2044................. 337,000 349,688
Kinross Gold Corp.
Company Guar. Notes
5.95% due 03/15/2024*................ 175,000 178,006
Polyus Gold International, Ltd.
Company Guar. Notes
5.63% due 04/29/2020*................ 250,000 240,000
----------
1,934,194
----------
HAZARDOUS WASTE DISPOSAL -- 0.4%
Tervita Corp.
Senior Sec. Notes
8.00% due 11/15/2018*................ 1,487,000 1,498,152
Tervita Corp.
Company Guar. Notes
9.75% due 11/01/2019*................ 700,000 675,500
----------
2,173,652
----------
INDEPENDENT POWER PRODUCERS -- 0.1%
PT Perusahaan Listrik Negara
Senior Notes
5.50% due 11/22/2021*................ 500,000 521,250
----------
INSURANCE-LIFE/HEALTH -- 0.1%
AIA Group, Ltd.
Senior Notes
2.25% due 03/11/2019*................ 272,000 269,559
----------
MEDICAL-DRUGS -- 0.4%
Grifols Worldwide Operations, Ltd.
Senior Notes
5.25% due 04/01/2022*................ 600,000 592,500
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-DRUGS (CONTINUED)
Takeda Pharmaceutical Co., Ltd.
Senior Notes
1.63% due 03/17/2017*....................... $ 989,000 $ 993,465
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
5.63% due 12/01/2021*....................... 562,000 559,893
----------
2,145,858
----------
MEDICAL-GENERIC DRUGS -- 0.0%
Actavis Funding SCS
Company Guar. Notes
4.85% due 06/15/2044*....................... 173,000 162,532
----------
METAL-COPPER -- 0.1%
First Quantum Minerals, Ltd.
Company Guar. Notes
7.25% due 05/15/2022*....................... 537,000 549,083
----------
METAL-DIVERSIFIED -- 0.2%
Vedanta Resources PLC
Senior Notes
7.13% due 05/31/2023*....................... 370,000 379,712
Vedanta Resources PLC
Senior Notes
8.25% due 06/07/2021........................ 400,000 441,000
----------
820,712
----------
METAL-IRON -- 0.2%
Samarco Mineracao SA
Senior Notes
4.13% due 11/01/2022*....................... 470,000 437,664
Samarco Mineracao SA
Senior Notes
5.38% due 09/26/2024*....................... 357,000 352,609
Vale SA
Senior Notes
5.63% due 09/11/2042........................ 231,000 226,015
----------
1,016,288
----------
MINING SERVICES -- 0.2%
Consolidated Minerals, Ltd.
Senior Sec. Notes
8.00% due 05/15/2020*....................... 974,000 818,160
----------
MUNICIPAL BONDS -- 0.1%
City of Kyiv Via Kyiv Finance PLC
Senior Notes
9.38% due 07/11/2016*....................... 870,000 657,024
----------
OIL & GAS DRILLING -- 0.5%
Ensco PLC
Senior Notes
4.50% due 10/01/2024........................ 251,000 251,845
Ensco PLC
Senior Notes
5.75% due 10/01/2044........................ 258,000 261,549
Pacific Drilling SA
Senior Sec. Notes
5.38% due 06/01/2020*....................... 1,050,000 960,750
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
OIL & GAS DRILLING (CONTINUED)
Transocean, Inc.
Company Guar. Notes
3.80% due 10/15/2022.......................... $443,000 $ 406,581
Transocean, Inc.
Company Guar. Notes
6.38% due 12/15/2021.......................... 450,000 478,661
Transocean, Inc.
Company Guar. Notes
7.50% due 04/15/2031.......................... 280,000 292,759
----------
2,652,145
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.9%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031.......................... 566,000 766,548
Baytex Energy Corp.
Company Guar. Notes
5.13% due 06/01/2021*......................... 675,000 658,125
MEG Energy Corp.
Company Guar. Notes
6.38% due 01/30/2023*......................... 744,000 750,510
MIE Holdings Corp.
Company Guar. Notes
7.50% due 04/25/2019*......................... 220,000 224,400
PT Pertamina Persero
Senior Notes
4.88% due 05/03/2022*......................... 720,000 720,720
Sinopec Group Overseas Development 2014, Ltd.
Company Guar. Notes
4.38% due 04/10/2024*......................... 300,000 307,927
Talisman Energy, Inc.
Senior Notes
5.50% due 05/15/2042.......................... 361,000 367,476
Teine Energy, Ltd.
Senior Notes
6.88% due 09/30/2022*......................... 540,000 529,875
----------
4,325,581
----------
OIL COMPANIES-INTEGRATED -- 0.9%
BP Capital Markets PLC
Company Guar. Notes
1.38% due 11/06/2017.......................... 425,000 422,077
BP Capital Markets PLC
Company Guar. Notes
2.25% due 11/01/2016.......................... 511,000 524,146
Ecopetrol SA
Senior Notes
4.13% due 01/16/2025.......................... 170,000 164,475
Pacific Rubiales Energy Corp.
Company Guar. Notes
5.13% due 03/28/2023.......................... 500,000 477,650
Petrobras Global Finance BV
Company Guar. Notes
7.25% due 03/17/2044.......................... 240,000 259,354
Petrobras International Finance Co.
Company Guar. Notes
5.38% due 01/27/2021.......................... 400,000 404,328
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-INTEGRATED (CONTINUED)
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/2027.................................... $350,000 $ 173,600
Petroleos de Venezuela SA
Company Guar. Notes
8.50% due 11/02/2017.................................... 900,000 708,750
Petroleos Mexicanos
Company Guar. Notes
5.50% due 06/27/2044.................................... 542,000 552,948
Petroleos Mexicanos
Company Guar. Notes
6.38% due 01/23/2045*................................... 355,000 401,434
Petronas Capital, Ltd.
Company Guar. Notes
5.25% due 08/12/2019.................................... 300,000 335,430
Rosneft Oil Co. via Rosneft International Finance, Ltd.
Senior Notes
4.20% due 03/06/2022*................................... 200,000 171,000
----------
4,595,192
----------
OIL REFINING & MARKETING -- 0.0%
Thai Oil PCL
Senior Notes
3.63% due 01/23/2023*................................... 200,000 192,844
----------
PAPER & RELATED PRODUCTS -- 0.2%
Celulosa Arauco y Constitucion SA
Notes
4.50% due 08/01/2024*................................... 200,000 194,930
Inversiones CMPC SA
Company Guar. Notes
4.50% due 04/25/2022.................................... 500,000 494,118
Klabin Finance SA
Company Guar. Notes
5.25% due 07/16/2024*................................... 200,000 195,560
----------
884,608
----------
PETROCHEMICALS -- 0.4%
Alpek SAB de CV
Company Guar. Notes
5.38% due 08/08/2023*................................... 400,000 414,000
Braskem Finance, Ltd.
Company Guar. Notes
5.75% due 04/15/2021.................................... 400,000 409,200
Mexichem SAB de CV
Company Guar. Notes
5.88% due 09/17/2044*................................... 440,000 427,900
Mexichem SAB de CV
Company Guar. Notes
6.75% due 09/19/2042*................................... 559,000 598,409
----------
1,849,509
----------
PIPELINES -- 0.1%
Transportadora de Gas Internacional SA ESP
Senior Notes
5.70% due 03/20/2022*................................... 400,000 421,000
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 0.1%
Trust F/1401
Senior Notes
5.25% due 12/15/2024*........................... $ 400,000 $ 416,000
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.7%
China Overseas Finance Cayman VI, Ltd.
Company Guar. Notes
4.25% due 05/08/2019............................ 300,000 303,992
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.25% due 04/04/2021*........................... 200,000 196,500
Country Garden Holdings Co., Ltd.
Company Guar. Notes
7.50% due 01/10/2023*........................... 200,000 191,500
Country Garden Holdings Co., Ltd.
Company Guar. Notes
11.13% due 02/23/2018........................... 410,000 442,308
Kaisa Group Holdings, Ltd.
Company Guar. Notes
10.25% due 01/08/2020........................... 500,000 517,500
Mattamy Group Corp.
Senior Notes
6.50% due 11/15/2020*........................... 1,325,000 1,321,688
Shimao Property Holdings, Ltd.
Company Guar. Notes
6.63% due 01/14/2020............................ 200,000 199,000
----------
3,172,488
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
LS Finance 2022, Ltd.
Company Guar. Notes
4.25% due 10/16/2022............................ 500,000 488,732
----------
RETAIL-RESTAURANTS -- 0.1%
Arcos Dorados Holdings, Inc.
Company Guar. Notes
6.63% due 09/27/2023*........................... 325,000 322,563
----------
SECURITY SERVICES -- 0.2%
Garda World Security Corp.
Company Guar. Notes
7.25% due 11/15/2021*........................... 1,111,000 1,105,445
----------
SPECIAL PURPOSE ENTITIES -- 0.1%
Hellas Telecommunications Luxembourg II SCA FRS
Sub. Notes
6.03% due 01/15/2015*+(3)(4)(9)(10)............. 1,330,000 0
MAF Global Securities, Ltd.
Company Guar. Notes
5.25% due 07/05/2019............................ 400,000 433,000
----------
433,000
----------
STEEL-PRODUCERS -- 0.3%
ArcelorMittal
Senior Notes
6.75% due 02/25/2022............................ 943,000 1,012,546
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
STEEL-PRODUCERS (CONTINUED)
Severstal OAO Via Steel Capital SA
Senior Notes
5.90% due 10/17/2022.................... $200,000 $ 191,500
Severstal OAO Via Steel Capital SA
Senior Notes
5.90% due 10/17/2022*................... 200,000 191,500
----------
1,395,546
----------
STEEL-SPECIALTY -- 0.0%
GTL Trade Finance, Inc.
Company Guar. Notes
7.25% due 04/16/2044*................... 200,000 203,000
----------
SUGAR -- 0.1%
Cosan Luxembourg SA
Company Guar. Notes
9.50% due 03/14/2018*................... BRL 1,590,000 581,371
----------
SUPRANATIONAL BANKS -- 0.2%
International Bank for Reconstruction & Development
Senior Notes
3.63% due 02/20/2018.................... NZD 750,000 573,319
North American Development Bank
Senior Notes
2.30% due 10/10/2018.................... 584,000 589,322
----------
1,162,641
----------
TELECOM SERVICES -- 0.7%
Altice Financing SA
Senior Sec. Notes
6.50% due 01/15/2022*................... 918,000 940,950
Altice SA
Senior Sec. Notes
7.75% due 05/15/2022*................... 1,661,000 1,714,982
UPCB Finance III, Ltd.
Senior Sec. Notes
6.63% due 07/01/2020*................... 900,000 940,590
----------
3,596,522
----------
TELEPHONE-INTEGRATED -- 0.6%
Empresa de Telecomunicaciones de Bogota
Senior Notes
7.00% due 01/17/2023*................... COP 640,000,000 295,475
Oi SA
Senior Notes
9.75% due 09/15/2016*................... BRL 575,000 213,956
Telecom Italia Capital SA
Company Guar. Notes
7.18% due 06/18/2019.................... 463,000 523,190
Telecom Italia Capital SA
Company Guar. Notes
7.72% due 06/04/2038.................... 848,000 954,000
Telefonica Chile SA
Senior Notes
3.88% due 10/12/2022.................... 700,000 688,493
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
TELEPHONE-INTEGRATED (CONTINUED)
Virgin Media Finance PLC
Senior Notes
6.00% due 10/15/2024*................ $324,000 $ 324,405
-----------
2,999,519
-----------
TRANSPORT-RAIL -- 0.1%
Russian Railways via RZD Capital PLC
Senior Notes
5.70% due 04/05/2022................. 400,000 396,108
-----------
TRANSPORT-SERVICES -- 0.1%
Transnet SOC, Ltd.
Senior Notes
4.00% due 07/26/2022*................ 600,000 564,870
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $93,527,875)................... 89,600,552
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 13.5%
ELECTRIC-DISTRIBUTION -- 0.1%
Hydro-Quebec
Government Guar. Notes
1.38% due 06/19/2017................. 527,000 529,873
-----------
REGIONAL AUTHORITY -- 0.1%
Province of British Columbia
Senior Notes
2.85% due 06/15/2015................. 612,000 623,175
-----------
SOVEREIGN -- 13.3%
Arab Republic of Egypt
Senior Notes
6.88% due 04/30/2040................. 380,000 378,100
Bolivarian Republic of Venezuela
Senior Notes
9.00% due 05/07/2023................. 370,000 249,750
Bolivarian Republic of Venezuela
Senior Notes
9.38% due 01/13/2034................. 278,000 183,480
Bolivarian Republic of Venezuela
Senior Notes
11.75% due 10/21/2026................ 560,000 432,880
Bolivarian Republic of Venezuela
Senior Notes
11.95% due 08/05/2031................ 555,000 425,963
Bolivarian Republic of Venezuela
Senior Notes
12.75% due 08/23/2022................ 790,000 657,675
Commonwealth of Jamaica
Senior Notes
8.00% due 06/24/2019................. 160,000 172,000
Commonwealth of Jamaica
Senior Notes
8.00% due 03/15/2039................. 250,000 243,750
Commonwealth of the Bahamas
Senior Notes
5.75% due 01/16/2024*................ 240,000 252,600
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Dominican Republic
Senior Notes
5.88% due 04/18/2024*......... $ 370,000 $ 381,100
Dominican Republic
Senior Notes
5.88% due 04/18/2024.......... 380,000 391,400
Dominican Republic
Senior Notes
6.60% due 01/28/2024*......... 260,000 278,850
Dominican Republic
Senior Notes
8.63% due 04/20/2027.......... 600,000 726,000
Federation of Malaysia
Senior Notes
3.48% due 03/15/2023.......... MYR 2,150,000 636,743
Federative Republic of Brazil
Senior Notes
5.00% due 01/27/2045.......... 833,000 783,020
Gabonese Republic
Bonds
8.20% due 12/12/2017.......... 614,000 692,285
Government of Canada
Senior Notes
0.88% due 02/14/2017.......... 527,000 526,160
Government of Canada
Bonds
5.75% due 06/01/2029.......... CAD 1,560,000 1,963,891
Government of Malaysia
Senior Notes
3.31% due 10/31/2017.......... MYR 7,100,000 2,148,156
Government of New Zealand
Senior Notes
6.00% due 04/15/2015.......... NZD 3,030,000 2,396,166
Islamic Republic of Pakistan
Senior Notes
8.25% due 04/15/2024.......... 750,000 750,000
Kingdom of Bahrain
Bonds
6.00% due 09/19/2044*......... 710,000 715,325
Kingdom of Bahrain
Senior Notes
6.13% due 08/01/2023*......... 821,000 917,467
Kingdom of Morocco
Senior Notes
4.25% due 12/11/2022.......... 400,000 397,080
Kingdom of Morocco
Senior Notes
4.25% due 12/11/2022*......... 598,000 593,635
Kingdom of Norway
Bonds
3.75% due 05/25/2021.......... NOK 7,620,000 1,316,775
Kingdom of Spain
Senior Notes
4.40% due 10/31/2023*......... EUR 2,180,000 3,312,208
Lebanese Republic
Senior Notes
4.00% due 12/31/2017.......... 372,750 370,886
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------
SOVEREIGN (CONTINUED)
Lebanese Republic
Senior Notes
6.60% due 11/27/2026........... $ 750,000 $765,000
Lebanese Republic
Senior Notes
8.25% due 04/12/2021........... 350,000 402,080
Oriental Republic of Uruguay
Senior Notes
4.50% due 08/14/2024........... 323,000 338,343
Perusahaan Penerbit SBSN
Senior Notes
3.30% due 11/21/2022*.......... 950,000 874,000
Plurinational State of Bolivia
Senior Notes
5.95% due 08/22/2023*.......... 280,000 299,600
Republic of Austria
Senior Notes
4.15% due 03/15/2037*.......... EUR 310,000 554,370
Republic of Colombia
Senior Notes
2.63% due 03/15/2023........... 200,000 184,000
Republic of Costa Rica
Senior Notes
4.25% due 01/26/2023........... 830,000 765,675
Republic of Costa Rica
Senior Notes
7.00% due 04/04/2044*.......... 500,000 502,500
Republic of Croatia
Senior Notes
5.50% due 04/04/2023*.......... 426,000 438,780
Republic of Croatia
Senior Notes
6.38% due 03/24/2021........... 200,000 217,000
Republic of El Salvador
Senior Notes
5.88% due 01/30/2025........... 800,000 786,000
Republic of El Salvador
Notes
6.38% due 01/18/2027*.......... 300,000 300,000
Republic of El Salvador
Senior Notes
7.63% due 02/01/2041........... 740,000 778,850
Republic of Ghana
Notes
7.88% due 08/07/2023*.......... 473,000 474,183
Republic of Guatemala
Senior Notes
4.88% due 02/13/2028........... 400,000 407,000
Republic of Guatemala
Senior Notes
5.75% due 06/06/2022........... 700,000 771,750
Republic of Hungary
Senior Notes
4.00% due 03/25/2019........... 350,000 357,000
Republic of Hungary
Senior Notes
5.38% due 03/25/2024........... 330,000 348,150
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Hungary
Senior Notes
5.75% due 11/22/2023.... $ 970,000 $1,051,237
Republic of Hungary
Senior Notes
7.63% due 03/29/2041.... 732,000 933,300
Republic of Indonesia
Senior Notes
5.25% due 01/17/2042.... 500,000 481,875
Republic of Indonesia
Senior Notes
5.88% due 01/15/2024*... 430,000 474,075
Republic of Indonesia
Senior Notes
6.63% due 02/17/2037.... 117,000 132,210
Republic of Italy
Bonds
5.00% due 03/01/2022.... EUR 960,000 1,477,296
Republic of Latvia
Senior Notes
5.25% due 06/16/2021.... 700,000 777,434
Republic of Lithuania
Senior Notes
5.13% due 09/14/2017.... 200,000 218,750
Republic of Lithuania
Senior Notes
6.75% due 01/15/2015.... 429,000 436,237
Republic of Lithuania
Senior Notes
7.38% due 02/11/2020.... 600,000 723,000
Republic of Panama
Senior Notes
4.30% due 04/29/2053.... 430,000 370,875
Republic of Panama
Senior Notes
5.20% due 01/30/2020.... 670,000 737,000
Republic of Panama
Senior Notes
6.70% due 01/26/2036.... 670,000 822,425
Republic of Paraguay
Notes
6.10% due 08/11/2044*... 260,000 274,300
Republic of Peru
Senior Notes
7.13% due 03/30/2019.... 135,000 160,650
Republic of Peru
Senior Notes
8.20% due 08/12/2026.... PEN 2,700,000 1,111,415
Republic of Peru
Senior Notes
8.38% due 05/03/2016.... 384,000 425,664
Republic of Poland
Bonds
4.00% due 10/25/2023.... PLN 7,200,000 2,347,549
Republic of Poland
Senior Notes
5.00% due 03/23/2022.... 625,000 686,719
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
SOVEREIGN (CONTINUED)
Republic of Poland
Senior Notes
5.13% due 04/21/2021.......... $ 50,000 $ 55,673
Republic of Poland
Bonds
5.25% due 10/25/2020.......... PLN 3,750,000 1,301,634
Republic of Portugal
Notes
5.13% due 10/15/2024*......... 641,000 664,089
Republic of Serbia
Senior Notes
5.25% due 11/21/2017.......... 720,000 739,800
Republic of Serbia
Senior Notes
7.25% due 09/28/2021.......... 650,000 725,159
Republic of South Africa
Senior Notes
4.67% due 01/17/2024.......... 878,000 884,585
Republic of South Africa
Senior Notes
5.38% due 07/24/2044.......... 330,000 327,525
Republic of South Africa
Senior Notes
5.88% due 09/16/2025.......... 600,000 660,000
Republic of South Africa
Senior Notes
6.25% due 03/08/2041.......... 682,000 773,217
Republic of Sri Lanka
Senior Notes
5.88% due 07/25/2022*......... 200,000 206,000
Republic of the Philippines
Senior Notes
4.00% due 01/15/2021.......... 330,000 347,738
Republic of the Philippines
Senior Notes
6.50% due 01/20/2020.......... 325,000 383,094
Republic of the Philippines
Senior Notes
8.38% due 06/17/2019.......... 100,000 125,250
Republic of the Philippines
Senior Notes
10.63% due 03/16/2025......... 341,000 535,370
Republic of Trinidad & Tobago
Notes
4.38% due 01/16/2024*......... 300,000 324,750
Republic of Turkey
Senior Notes
3.25% due 03/23/2023.......... 240,000 216,000
Republic of Turkey
Senior Notes
4.88% due 04/16/2043.......... 330,000 297,660
Republic of Turkey
Senior Notes
6.00% due 01/14/2041.......... 850,000 879,750
Republic of Turkey
Notes
6.63% due 02/17/2045.......... 700,000 783,125
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Turkey
Bonds
9.50% due 01/12/2022.............. TRY 1,600,000 $ 695,087
Republic of Ukraine
Senior Notes
7.80% due 11/28/2022.............. 596,000 509,699
Republic of Venezuela
Senior Notes
7.00% due 12/01/2018.............. 450,000 318,375
Republic of Zambia
Notes
5.38% due 09/20/2022.............. 410,000 389,500
Russian Federation
Senior Notes
5.88% due 09/16/2043*............. 600,000 612,000
Russian Federation
Senior Notes
7.50% due 03/31/2030(5)........... 451,950 506,288
Slovak Republic
Senior Notes
4.38% due 05/21/2022.............. 610,000 650,266
United Kingdom Gilt Treasury
Bonds
4.75% due 03/07/2020.............. GBP 1,420,000 2,647,016
United Mexican States
Senior Notes
2.75% due 04/22/2023.............. EUR 200,000 264,862
United Mexican States
Senior Notes
3.50% due 01/21/2021.............. 444,000 449,952
United Mexican States
Senior Notes
4.75% due 03/08/2044.............. 592,000 587,560
United Mexican States
Senior Notes
5.63% due 01/15/2017.............. 430,000 469,345
United Mexican States
Bonds
10.00% due 12/05/2024............. MXN 10,700,000 1,028,703
-----------
64,858,709
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(cost $67,000,303)................ 66,011,757
-----------
U.S. GOVERNMENT AGENCIES -- 3.6%
FEDERAL HOME LOAN MTG. CORP. -- 1.1%
1.86% due 02/01/2037 FRS.......... 33,046 34,838
2.50% due 01/01/2028.............. 402,773 406,869
2.50% due 04/01/2028.............. 128,415 129,959
3.00% due 08/01/2043.............. 1,255,154 1,240,974
3.50% due 03/01/2042.............. 509,470 520,637
3.50% due 04/01/2042.............. 521,284 532,710
3.50% due 09/01/2043.............. 559,722 573,265
4.00% due 09/01/2040.............. 420,089 442,876
4.50% due 02/01/2020.............. 19,112 20,165
4.50% due 08/01/2020.............. 41,950 44,272
4.50% due 01/01/2039.............. 48,952 52,820
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
FEDERAL HOME LOAN MTG. CORP. (CONTINUED)
4.50% due 12/01/2039........................... $ 23,716 $ 25,590
5.00% due 02/01/2034........................... 51,128 56,475
5.00% due 05/01/2034........................... 64,045 71,430
5.00% due 03/01/2039........................... 132,591 145,913
5.00% due 07/01/2040........................... 390,776 432,271
5.50% due 05/01/2037........................... 146,326 162,925
6.00% due 03/01/2040........................... 114,856 129,528
6.50% due 02/01/2035........................... 41,554 47,272
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
6.65% due 09/15/2039(1)(11).................... 1,161,917 190,267
Series 41, Class F
10.00% due 05/15/2020(1)....................... 486 497
Series 1103, Class N
11.57% due 06/15/2021(1)(11)................... 1,038 170
Series 3964, Class MD
2.00% due 01/15/2041........................... 20,504 19,874
Federal Home Loan Mtg. Corp. Structured Agency
Credit Risk FRS
Series 2014-DN2, Class M2
1.80% due 04/25/2024(1)........................ 75,000 72,842
----------
5,354,439
----------
FEDERAL NATIONAL MTG. ASSOC. -- 2.4%
2.13% due 05/01/2037 FRS....................... 62,885 66,877
3.00% due 10/01/2027........................... 445,715 460,457
3.00% due 11/01/2027........................... 511,503 528,650
3.00% due 03/01/2042........................... 78,110 77,229
3.00% due 12/01/2042........................... 204,441 202,526
3.00% due 05/01/2043........................... 1,116,635 1,102,711
3.00% due December TBA......................... 650,000 640,758
3.50% due 08/01/2026........................... 213,886 225,253
3.50% due 08/01/2027........................... 261,774 275,795
3.50% due 10/01/2028........................... 68,403 72,228
3.50% due 02/01/2043........................... 178,709 183,787
3.50% due October TBA.......................... 1,229,000 1,256,172
3.52% due 10/01/2040 FRS....................... 75,197 80,387
4.00% due 11/01/2025........................... 318,679 340,308
4.00% due 04/01/2039........................... 272,897 287,982
4.00% due 06/01/2039........................... 538,716 571,982
4.00% due 09/01/2040........................... 488,619 515,628
4.00% due 10/01/2040........................... 559,174 590,084
4.00% due 11/01/2041........................... 449,702 474,561
4.00% due 12/01/2043........................... 15,273 16,198
4.00% due October TBA.......................... 192,000 202,332
4.50% due 06/01/2019........................... 47,191 49,925
4.50% due 11/01/2022........................... 103,072 109,712
4.50% due 06/01/2023........................... 48,317 51,927
4.50% due 01/01/2039........................... 555,066 599,208
4.50% due October TBA.......................... 1,120,000 1,208,375
5.00% due 06/01/2019........................... 34,449 36,714
5.00% due 01/01/2023........................... 23,390 25,294
5.00% due 03/01/2034........................... 48,640 53,793
5.00% due 05/01/2035........................... 28,823 31,872
5.00% due 05/01/2040........................... 198,279 219,682
5.00% due 07/01/2040........................... 500,470 552,819
5.50% due 06/01/2038........................... 72,566 81,367
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
U.S. GOVERNMENT AGENCIES (CONTINUED)
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
6.00% due 02/01/2032......................... $ 5,541 $ 6,257
6.00% due 05/01/2034......................... 3,737 4,257
6.00% due 10/01/2034......................... 22,974 25,938
6.00% due 10/01/2037......................... 48,611 54,884
6.50% due 10/01/2038......................... 185,873 211,636
7.50% due 01/01/2030......................... 1,520 1,577
8.00% due 11/01/2028......................... 6,323 7,210
Fannie Mae Connecticut Avenue Securities FRS
Series 2014-C02 2M1
1.10% due 05/25/2014(1)...................... 103,990 102,461
Series 2014-C01, Class M1
1.75% due 01/25/2024(1)...................... 61,172 61,269
Series 2013-C01, Class M1
2.15% due 10/25/2024(1)...................... 186,398 188,381
Federal National Mtg. Assoc., REMIC
Series 2011-117, Class MA
2.00% due 08/25/2040(1)...................... 162,250 161,294
Series 1989-2, Class D
8.80% due 01/25/2019(1)...................... 8,873 9,722
-----------
12,027,479
-----------
TENNESSEE VALLEY AUTHORITY -- 0.1%
1.75% due 10/15/2018......................... 335,000 335,287
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $17,330,688)........................... 17,717,205
-----------
U.S. GOVERNMENT TREASURIES -- 8.8%
UNITED STATES TREASURY BONDS -- 1.1%
3.38% due 05/15/2044......................... 951,000 981,908
3.63% due 02/15/2044......................... 2,335,000 2,523,259
4.50% due 02/15/2036......................... 1,650,000 2,036,461
-----------
5,541,628
-----------
UNITED STATES TREASURY NOTES -- 7.7%
0.07% due 01/31/2016 FRS..................... 1,940,000 1,940,394
0.13% due 04/15/2018 TIPS(12)................ 1,324,424 1,334,978
0.25% due 05/31/2015......................... 3,632,000 3,636,540
0.25% due 10/31/2015......................... 217,000 217,237
0.38% due 01/31/2016......................... 1,500,000 1,502,168
0.38% due 02/15/2016......................... 2,300,000 2,302,875
0.63% due 05/31/2017......................... 2,936,000 2,910,539
0.63% due 09/30/2017......................... 1,954,000 1,925,300
1.00% due 08/31/2016......................... 2,126,000 2,143,274
1.50% due 07/31/2016......................... 10,650,000 10,839,282
1.63% due 04/30/2019......................... 8,000,000 7,970,000
2.38% due 08/15/2024......................... 959,000 947,912
-----------
37,670,499
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $43,309,008)........................... 43,212,127
-----------
LOANS(13)(14) -- 1.9%
AEROSPACE/DEFENSE -- 0.1%
SI Organization, Inc. FRS
BTL-Delayed Draw
due 07/15/2015(16)........................... 69,092 69,322
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
AEROSPACE/DEFENSE (CONTINUED)
SI Organization, Inc. FRS
BTL
5.75% due 11/23/2019............................ $ 521,027 $ 522,763
----------
592,085
----------
COMPUTER SERVICES -- 0.2%
Sungard Availability Services Capital, Inc. FRS
BTL
6.00% due 03/31/2019............................ 1,075,676 990,518
----------
COMPUTER SOFTWARE -- 0.3%
Vertafore, Inc. FRS
BTL-1st Lien
4.25% due 10/03/2019............................ 1,454,340 1,440,524
----------
ELECTRIC-DISTRIBUTION -- 0.3%
Cedar Bay Generating Co. LP FRS
BTL
6.25% due 04/23/2020............................ 1,394,472 1,394,472
----------
MEDICAL-DRUGS -- 0.4%
Auxilium Pharmaceuticals, Inc. FRS
BTL
6.25% due 04/26/2017............................ 1,967,344 1,967,344
----------
MEDICAL-HOSPITALS -- 0.2%
Ardent Medical Services, Inc. FRS
BTL
6.75% due 07/02/2018............................ 1,144,346 1,145,062
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.2%
American Energy-Marcellus LLC FRS
BTL-2nd Lien
8.50% due 07/09/2021............................ 199,129 197,386
Sabine Oil & Gas LLC FRS
BTL
8.75% due 12/31/2018............................ 647,315 645,697
----------
843,083
----------
SEMICONDUCTOR COMPONENTS-INTEGRATED CIRCUITS -- 0.2%
SunEdison Semiconductor, Inc. FRS
BTL
6.50% due 05/22/2019............................ 834,146 829,454
----------
TOTAL LOANS
(cost $9,277,958)............................... 9,202,542
----------
MUNICIPAL BONDS & NOTES -- 0.4%
Ohio State University
Revenue Bonds
Series A
4.80% due 06/01/2111............................ 616,000 639,876
Port Authority of New York & New Jersey
Revenue Bonds
Series 174
4.46% due 10/01/2062............................ 353,000 387,665
Port Authority of New York & New Jersey
Revenue Bonds
Series 168
4.93% due 10/01/2051............................ 725,000 722,781
----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,687,980)............................... 1,750,322
----------
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
COMMON STOCKS -- 0.1%
POWER CONVERTER/SUPPLY EQUIPMENT -- 0.0%
TPT Acquisition, Inc.+(3)(4)........... 10,910 $ 163,650
----------
TELEVISION -- 0.1%
ION Media Networks, Inc.+(3)(4)........ 655 326,190
----------
TOTAL COMMON STOCKS
(cost $163,656)....................... 489,840
----------
PREFERRED SECURITIES -- 0.4%
DIVERSIFIED BANKING INSTITUTIONS -- 0.2%
Citigroup, Inc.
Series J
7.13%................................. 31,375 838,654
----------
ELECTRIC-INTEGRATED -- 0.1%
Entergy Louisiana LLC
4.70%................................. 12,300 268,386
----------
SOVEREIGN AGENCY -- 0.0%
Federal Home Loan Mtg. Corp. FRS
Series Z
8.38%................................. 11,300 116,390
----------
TELECOM SERVICES -- 0.1%
Qwest Corp.
6.13%................................. 23,325 541,606
----------
TOTAL PREFERRED SECURITIES
(cost $1,849,397)..................... 1,765,036
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 2.8%
BANKS-COMMERCIAL -- 0.3%
Nordea Bank AB
Jr. Sub. Notes
5.50% due 09/23/2019*(8).............. $ 607,000 596,377
Nordea Bank AB
Jr. Sub. Notes
6.13% due 09/23/2024*(8).............. 316,000 309,680
Zions Bancorporation FRS
Series I
5.80% due 06/15/2023(8)............... 481,000 459,355
----------
1,365,412
----------
BANKS-SUPER REGIONAL -- 0.2%
Fifth Third Bancorp FRS
Series J
4.90% due 09/30/2019(8)............... 560,000 548,016
Wells Fargo Capital X
5.95% due 12/01/2086.................. 223,000 229,133
----------
777,149
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.0%
BAC Capital Trust XIII FRS
Series F
4.00% due 11/21/2014(8)............... 1,070,000 872,050
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Credit Agricole SA
6.63% due 09/23/2019*(8)...................... $ 524,000 $ 499,648
Credit Suisse Group AG VRS
7.50% due 12/11/2023*(8)...................... 505,000 530,250
JPMorgan Chase & Co. FRS
Series V
5.00% due 07/01/2019(8)....................... 444,000 432,811
JPMorgan Chase & Co. FRS
Series U
6.13% due 04/30/2024(8)....................... 1,197,000 1,184,431
JPMorgan Chase & Co. FRS
Series 1
7.90% due 04/30/2018(8)....................... 654,000 707,955
Societe Generale SA VRS
6.00% due 01/27/2020*(8)...................... 915,000 838,049
------------
5,065,194
------------
ELECTRIC-INTEGRATED -- 0.1%
Dominion Resources, Inc. FRS
1.00% due 10/01/2054.......................... 315,000 318,601
------------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings Capital Trust VII
Escrow Security
5.86% due 10/30/2014+(3)...................... 222,000 22
------------
FINANCE-OTHER SERVICES -- 0.1%
National Rural Utilities Cooperative Finance
Corp. FRS
4.75% due 04/30/2043.......................... 547,000 540,846
------------
FINANCIAL GUARANTEE INSURANCE -- 0.3%
Assured Guaranty Municipal Holdings, Inc. FRS
Company Guar. Notes
6.40% due 12/15/2066*......................... 1,880,000 1,673,200
------------
FOOD-DAIRY PRODUCTS -- 0.3%
Land O'Lakes Capital Trust I
7.45% due 03/15/2028*......................... 1,450,000 1,493,500
------------
INSURANCE-LIFE/HEALTH -- 0.2%
Prudential Financial, Inc. FRS
5.63% due 06/15/2043.......................... 1,038,000 1,081,804
------------
INSURANCE-MULTI-LINE -- 0.1%
MetLife, Inc.
6.40% due 12/15/2066.......................... 533,000 594,295
------------
TOOLS-HAND HELD -- 0.2%
Stanley Black & Decker, Inc. FRS
5.75% due 12/15/2053.......................... 865,000 936,362
------------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $13,108,022)............................ 13,846,385
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $483,722,564)........................... 476,902,193
------------
47
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 1.2%
TIME DEPOSITS -- 1.2%
Euro Time Deposit with State Street
Bank and Trust Co.
0.01% due 11/03/2014
(cost $6,005,000)................... $6,005,000 $ 6,005,000
------------
REPURCHASE AGREEMENT -- 0.7%
State Street Bank and Trust Co.
Joint Repurchase Agreement(15)
(cost $3,605,000)................... 3,605,000 3,605,000
------------
TOTAL INVESTMENTS --
(cost $493,332,564)(17)............. 99.4% 486,512,193
Other assets less liabilities.......... 0.6 2,893,335
---------- ------------
NET ASSETS -- 100.0% $489,405,528
========== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At September 30, 2014,
the aggregate value of these securities was $150,447,552 representing
30.7% 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) Illiquid security. At September 30, 2014, the aggregate value of these
securities was $605,896 representing 0.1% of net assets.
(4) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(5) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(6) Company has filed for Chapter 7 bankruptcy.
(7) Security in default of interest and principal at maturity.
(8) Perpetual maturity--maturity date reflects the next call date.
(9) Security in default of interest.
(10) Company has filed for bankruptcy protection in the country of issuance.
(11) Interest Only
(12) Principal amount of security is adjusted for inflation.
(13) 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.
(14) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior
loans are generally considered to be restrictive in that the Fund is
ordinarily contractually obligated to receive approval from the Agent Bank
and/or borrower prior to the disposition of a senior loan.
(15) See Note 2 for details of Joint Repurchase Agreement.
(16) All or a portion of this holding is subject to unfunded loan commitments.
Interest rate will be determined at the time of funding. See Note 11.
(17) 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 the FRS and VRS are the current rates at September 30, 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
MXN --Mexican Peso
MYR --Malaysian Ringgit
NOK --Norwegian Krone
NZD --New Zealand Dollar
PEN --Peruvian Nuevo Sol
PLN --Polish Zloty
TRY --Turkish Lira
48
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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.................. $ -- $ 4,435,634 $ -- $ 4,435,634
U.S. Corporate Bonds & Notes:
Electric-Generation..................... -- 991,950 236,640 1,228,590
Gambling (Non-Hotel).................... -- -- 115,846 115,846
Metal-Aluminum.......................... -- 1,193,548 124 1,193,672
Oil Companies-Exploration & Production.. -- 26,356,932 -- 26,356,932
Rubber/Plastic Products................. -- -- 0 0
Other Industries*....................... -- 199,975,753 -- 199,975,753
Foreign Corporate Bonds & Notes:
Special Purpose Entities................ -- 433,000 0 433,000
Other Industries*....................... -- 89,167,552 -- 89,167,552
Foreign Government Obligations:
Sovereign............................... -- 64,858,709 -- 64,858,709
Other Foreign Government Obligations*... -- 1,153,048 -- 1,153,048
U.S. Government Agencies................. -- 17,717,205 -- 17,717,205
U.S. Government Treasuries:
United States Treasury Bonds............ -- 5,541,628 -- 5,541,628
United States Treasury Notes............ -- 37,670,499 -- 37,670,499
Loans.................................... -- 9,202,542 -- 9,202,542
Municipal Bonds & Notes.................. -- 1,750,322 -- 1,750,322
Common Stocks............................ -- -- 489,840 489,840
Preferred Securities..................... 1,765,036 -- -- 1,765,036
Preferred Securities/Capital Securities.. -- 13,846,385 -- 13,846,385
Short-Term Investment Securities:
Time Deposits............................ -- 6,005,000 -- 6,005,000
Repurchase Agreement....................... -- 3,605,000 -- 3,605,000
---------- ------------ -------- ------------
Total...................................... $1,765,036 $483,904,707 $842,450 $486,512,193
========== ============ ======== ============
--------
* 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 transfers between Levels during the reporting
period.
At the beginning and end of the reporting period, Level 3 investments in
securities were not considered a material portion of the Fund.
See Notes to Financial Statements
49
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO PROFILE -- SEPTEMBER 30, 2014 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Cellular Telecom....................... 7.3%
Medical-Hospitals...................... 6.5
Oil Companies-Exploration & Production. 6.4
Cable/Satellite TV..................... 5.8
Diversified Banking Institutions....... 4.6
Building-Residential/Commercial........ 3.2
Data Processing/Management............. 3.2
Steel-Producers........................ 2.9
Telephone-Integrated................... 2.8
Electric-Integrated.................... 2.4
Satellite Telecom...................... 2.3
Medical-Drugs.......................... 2.2
Auto-Cars/Light Trucks................. 2.0
Publishing-Newspapers.................. 2.0
Telecom Services....................... 1.9
Repurchase Agreements.................. 1.8
Entertainment Software................. 1.7
Enterprise Software/Service............ 1.7
Food-Misc./Diversified................. 1.6
Chemicals-Diversified.................. 1.5
Electronic Components-Semiconductors... 1.5
Machinery-General Industrial........... 1.4
Television............................. 1.4
Telecommunication Equipment............ 1.4
Finance-Other Services................. 1.3
Pipelines.............................. 1.3
Banks-Mortgage......................... 1.2
Insurance-Property/Casualty............ 1.1
Medical Products....................... 1.1
Building Products-Cement............... 1.0
Retail-Leisure Products................ 0.9
Insurance-Multi-line................... 0.8
Building & Construction-Misc........... 0.8
Office Automation & Equipment.......... 0.8
Printing-Commercial.................... 0.8
Computer Services...................... 0.8
Applications Software.................. 0.8
Diversified Manufacturing Operations... 0.7
Advertising Services................... 0.7
Building & Construction Products-Misc.. 0.7
Oil & Gas Drilling..................... 0.7
Containers-Metal/Glass................. 0.7
Medical-HMO............................ 0.7
Retail-Discount........................ 0.6
Retail-Home Furnishings................ 0.6
Chemicals-Plastics..................... 0.6
Diagnostic Kits........................ 0.6
Finance-Consumer Loans................. 0.6
Diversified Minerals................... 0.6
Semiconductor Equipment................ 0.6
Theaters............................... 0.6
Commercial Services.................... 0.6
Medical-Outpatient/Home Medical........ 0.6
Soap & Cleaning Preparation............ 0.5
Coal................................... 0.5
Multimedia............................. 0.5
Banks-Commercial....................... 0.4
Metal Processors & Fabrication......... 0.4
Engineering/R&D Services............... 0.4
Retail-Major Department Stores......... 0.4
Retail-Arts & Crafts................... 0.4%
Investment Management/Advisor Services. 0.4
Retail-Restaurants..................... 0.3
Non-Hazardous Waste Disposal........... 0.3
E-Commerce/Products.................... 0.3
Independent Power Producers............ 0.3
Internet Connectivity Services......... 0.2
Physicians Practice Management......... 0.2
Medical-Biomedical/Gene................ 0.2
Radio.................................. 0.2
Casino Services........................ 0.1
Distribution/Wholesale................. 0.1
Retail-Propane Distribution............ 0.1
----
98.6%
====
CREDIT QUALITY ALLOCATION+#
Baa.......... 0.5%
Ba........... 30.3
B............ 41.9
Caa.......... 20.5
Not Rated(1). 6.8
-----
100.0%
=====
--------
* Calculated as a percentage of net assets
+ Source: Moody's
# Calculated as a percentage of total debt issues, excluding short-term
securities.
(1)Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
@ See Note 12
50
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------
CONVERTIBLE BONDS & NOTES -- 0.9%
APPLICATIONS SOFTWARE -- 0.3%
Verint Systems, Inc.
Senior Notes
1.50% due 06/01/2021.................. $257,000 $ 278,684
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.1%
M/I Homes, Inc.
Company Guar. Notes
3.00% due 03/01/2018.................. 116,000 116,798
----------
MEDICAL-BIOMEDICAL/GENE -- 0.2%
Cubist Pharmaceuticals, Inc.
Senior Notes
1.88% due 09/01/2020.................. 155,000 172,438
----------
MEDICAL-DRUGS -- 0.0%
Savient Pharmaceuticals, Inc.
Escrow Notes
4.75% due 02/01/2018+(1)(2)........... 745,000 0
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.3%
Cobalt International Energy, Inc.
Senior Notes
2.63% due 12/01/2019.................. 385,000 318,828
----------
TOTAL CONVERTIBLE BONDS & NOTES
(cost $1,356,033)..................... 886,748
----------
U.S. CORPORATE BONDS & NOTES -- 71.4%
ADVERTISING SERVICES -- 0.7%
Getty Images, Inc.
Senior Notes
7.00% due 10/15/2020*................. 780,000 575,250
inVentiv Health, Inc.
Senior Sec. Notes
9.00% due 01/15/2018*................. 165,000 171,187
----------
746,437
----------
APPLICATIONS SOFTWARE -- 0.5%
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/2019................. 420,000 467,250
----------
AUTO-CARS/LIGHT TRUCKS -- 2.0%
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.00% due 06/15/2019.................. 465,000 493,481
Chrysler Group LLC/CG Co-Issuer, Inc.
Sec. Notes
8.25% due 06/15/2021.................. 685,000 746,650
General Motors Co.
Senior Notes
4.88% due 10/02/2023.................. 665,000 703,238
General Motors Co.
Senior Notes
6.25% due 10/02/2043.................. 90,000 105,300
----------
2,048,669
----------
BANKS-COMMERCIAL -- 0.4%
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*................. 430,000 449,888
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------------------
BANKS-MORTGAGE -- 1.2%
Provident Funding Associates LP/PFG
Finance Corp.
Company Guar. Notes
6.75% due 06/15/2021*.......................... $1,205,000 $1,192,950
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.7%
Associated Materials LLC/AMH New Finance, Inc.
Senior Sec. Notes
9.13% due 11/01/2017........................... 205,000 200,900
Nortek, Inc.
Company Guar. Notes
8.50% due 04/15/2021........................... 480,000 516,000
----------
716,900
----------
BUILDING & CONSTRUCTION-MISC. -- 0.8%
Ply Gem Industries Inc.
Company Guar. Notes
6.50% due 02/01/2022........................... 900,000 855,000
----------
BUILDING PRODUCTS-CEMENT -- 0.5%
Cemex Finance LLC
Senior Sec. Notes
6.00% due 04/01/2024*.......................... 490,000 488,628
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 3.1%
K Hovnanian Enterprises, Inc.
Company Guar. Notes
7.00% due 01/15/2019*.......................... 430,000 421,400
K Hovnanian Enterprises, Inc.
Sec. Notes
9.13% due 11/15/2020*.......................... 341,000 369,132
KB Home
Company Guar. Notes
7.50% due 09/15/2022........................... 345,000 369,150
KB Home
Company Guar. Notes
8.00% due 03/15/2020........................... 931,000 1,024,100
Lennar Corp.
Company Guar. Notes
4.75% due 11/15/2022(3)........................ 890,000 861,075
Pulte Group, Inc.
Company Guar. Notes
6.38% due 05/15/2033........................... 135,000 134,663
----------
3,179,520
----------
CABLE/SATELLITE TV -- 5.0%
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.13% due 02/15/2023........................... 25,000 24,000
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022........................... 185,000 181,069
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.75% due 09/01/2023........................... 125,000 124,375
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
6.63% due 01/31/2022........................... 580,000 609,000
51
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CABLE/SATELLITE TV (CONTINUED)
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
7.38% due 06/01/2020.......................... $ 365,000 $ 385,987
Cequel Communications Holdings I LLC/Cequel
Capital Corp.
Senior Notes
5.13% due 12/15/2021*......................... 570,000 545,775
DISH DBS Corp.
Company Guar. Notes
5.00% due 03/15/2023.......................... 520,000 498,875
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021.......................... 1,820,000 1,956,500
DISH DBS Corp.
Company Guar. Notes
7.88% due 09/01/2019.......................... 160,000 180,800
Harron Communications LP/Harron Finance Corp.
Senior Notes
9.13% due 04/01/2020*......................... 485,000 528,650
----------
5,035,031
----------
CELLULAR TELECOM -- 7.3%
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021*......................... 1,255,000 1,306,769
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023*......................... 1,050,000 1,113,000
Sprint Communications
Company Guar. Notes
7.00% due 03/01/2020*......................... 395,000 432,031
Sprint Communications
Company Guar. Notes
9.00% due 11/15/2018*......................... 910,000 1,051,050
Syniverse Holdings, Inc.
Company Guar. Notes
9.13% due 01/15/2019.......................... 1,000,000 1,050,000
T-Mobile USA, Inc.
Company Guar. Notes
5.25% due 09/01/2018.......................... 65,000 66,950
T-Mobile USA, Inc.
Company Guar. Notes
6.13% due 01/15/2022.......................... 85,000 85,425
T-Mobile USA, Inc.
Company Guar. Notes
6.46% due 04/28/2019.......................... 450,000 467,438
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2024.......................... 125,000 126,563
T-Mobile USA, Inc.
Company Guar. Notes
6.63% due 11/15/2020.......................... 645,000 662,737
T-Mobile USA, Inc.
Company Guar. Notes
6.73% due 04/28/2022.......................... 955,000 976,487
----------
7,338,450
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------------
CHEMICALS-PLASTICS -- 0.6%
Hexion US Finance Corp.
Senior Sec. Notes
6.63% due 04/15/2020............................. $ 230,000 $ 231,150
Hexion US Finance Corp./Hexion Nova Scotia
Finance ULC
Senior Sec. Notes
8.88% due 02/01/2018............................. 390,000 397,313
----------
628,463
----------
COMMERCIAL SERVICES -- 0.6%
ServiceMaster Co.
Company Guar. Notes
7.00% due 08/15/2020............................. 536,000 557,440
----------
COMPUTER SERVICES -- 0.8%
SunGard Data Systems, Inc.
Company Guar. Notes
6.63% due 11/01/2019............................. 355,000 355,000
SunGard Data Systems, Inc.
Company Guar. Notes
7.38% due 11/15/2018............................. 156,000 160,680
SunGard Data Systems, Inc.
Company Guar. Notes
7.63% due 11/15/2020............................. 275,000 287,375
----------
803,055
----------
DATA PROCESSING/MANAGEMENT -- 3.2%
Audatex North America, Inc.
Company Guar. Notes
6.00% due 06/15/2021*............................ 815,000 835,375
First Data Corp.
Senior Sec. Notes
7.38% due 06/15/2019*............................ 715,000 752,609
First Data Corp.
Sec. Notes
8.25% due 01/15/2021*............................ 1,189,000 1,260,340
First Data Corp.
Sec. Notes
8.75% due 01/15/2022*(4)......................... 285,000 302,100
First Data Holdings, Inc.
Senior Notes
14.50% due 09/24/2019*(4)(5)..................... 122,624 128,755
----------
3,279,179
----------
DIAGNOSTIC KITS -- 0.6%
Alere, Inc.
Company Guar. Notes
6.50% due 06/15/2020............................. 600,000 597,000
----------
DISTRIBUTION/WHOLESALE -- 0.1%
American Builders & Contractors Supply Co., Inc.
Senior Notes
5.63% due 04/15/2021*............................ 115,000 112,700
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.7%
JM Huber Corp.
Senior Notes
9.88% due 11/01/2019*............................ 675,000 756,000
----------
52
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-INTEGRATED -- 1.4%
DPL, Inc.
Senior Notes
7.25% due 10/15/2021......................... $ 935,000 $ 965,387
GenOn Americas Generation LLC
Senior Notes
9.13% due 05/01/2031......................... 265,000 242,475
Texas Competitive Electric Holdings Co. LLC/
TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/2020*(6)(7)................. 295,000 247,063
----------
1,454,925
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 1.1%
Freescale Semiconductor, Inc.
Senior Sec. Notes
6.00% due 01/15/2022*........................ 1,065,000 1,080,975
----------
ENTERPRISE SOFTWARE/SERVICE -- 1.7%
Infor Software Parent LLC/Infor Software
Parent, Inc.
Company Guar. Notes
7.13% due 05/01/2021*(4)..................... 835,000 826,650
Infor US, Inc.
Company Guar. Notes
9.38% due 04/01/2019......................... 426,000 460,080
Infor US, Inc.
Company Guar. Notes
11.50% due 07/15/2018........................ 394,000 437,340
----------
1,724,070
----------
ENTERTAINMENT SOFTWARE -- 1.7%
Activision Blizzard, Inc.
Company Guar. Notes
5.63% due 09/15/2021*........................ 1,600,000 1,664,000
Activision Blizzard, Inc.
Company Guar. Notes
6.13% due 09/15/2023*........................ 75,000 79,687
----------
1,743,687
----------
FINANCE-CONSUMER LOANS -- 0.6%
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
8.50% due 09/15/2018*........................ 600,000 597,000
----------
FINANCE-OTHER SERVICES -- 1.3%
Nationstar Mtg. LLC/Nationstar Capital Corp.
Company Guar. Notes
6.50% due 08/01/2018......................... 770,000 768,075
Nationstar Mtg. LLC/Nationstar Capital Corp.
Company Guar. Notes
6.50% due 07/01/2021......................... 610,000 581,025
----------
1,349,100
----------
FOOD-MISC./DIVERSIFIED -- 1.0%
Aramark Services, Inc.
Company Guar. Notes
5.75% due 03/15/2020......................... 985,000 1,009,625
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-----------------------------------------------------------
INDEPENDENT POWER PRODUCERS -- 0.2%
Dynegy, Inc.
Company Guar. Notes
5.88% due 06/01/2023............... $ 195,000 $ 181,838
----------
INTERNET CONNECTIVITY SERVICES -- 0.2%
Zayo Group LLC/Zayo Capital, Inc.
Senior Sec. Notes
8.13% due 01/01/2020............... 135,000 144,787
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
10.13% due 07/01/2020.............. 95,000 107,113
----------
251,900
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.4%
Nuveen Investments, Inc.
Senior Notes
9.13% due 10/15/2017*.............. 350,000 374,500
----------
MEDICAL PRODUCTS -- 1.1%
Biomet, Inc.
Company Guar. Notes
6.50% due 08/01/2020............... 275,000 291,500
Biomet, Inc.
Company Guar. Notes
6.50% due 10/01/2020............... 745,000 782,250
----------
1,073,750
----------
MEDICAL-DRUGS -- 2.2%
Pinnacle Merger Sub, Inc.
Senior Notes
9.50% due 10/01/2023*.............. 701,000 764,090
Salix Pharmaceuticals, Ltd.
Company Guar. Notes
6.00% due 01/15/2021*.............. 1,365,000 1,477,612
----------
2,241,702
----------
MEDICAL-HMO -- 0.7%
MPH Acquisition Holdings LLC
Company Guar. Notes
6.63% due 04/01/2022*.............. 395,000 398,950
WellCare Health Plans, Inc.
Senior Notes
5.75% due 11/15/2020............... 270,000 274,725
----------
673,675
----------
MEDICAL-HOSPITALS -- 6.5%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/15/2018............... 405,000 416,138
CHS/Community Health Systems, Inc.
Company Guar. Notes
6.88% due 02/01/2022*.............. 1,865,000 1,939,600
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020............... 2,030,000 2,217,775
HCA, Inc.
Company Guar. Notes
7.50% due 11/15/2095............... 380,000 357,200
53
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
------------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HOSPITALS (CONTINUED)
Tenet Healthcare Corp.
Senior Notes
5.00% due 03/01/2019*........................... $ 760,000 $ 750,500
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022............................ 775,000 850,562
----------
6,531,775
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.3%
Amsurg Corp.
Company Guar. Notes
5.63% due 07/15/2022*........................... 305,000 301,950
----------
METAL-ALUMINUM -- 0.0%
Aleris International, Inc.
Escrow Notes
9.00% due 12/15/2014+(1)(2)..................... 2,145,000 81
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.3%
Casella Waste Systems, Inc.
Company Guar. Notes
7.75% due 02/15/2019............................ 320,000 320,800
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.8%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
6.00% due 08/15/2022............................ 410,000 425,375
CDW LLC/CDW Finance Corp.
Company Guar. Notes
8.50% due 04/01/2019............................ 401,000 425,060
----------
850,435
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 4.4%
Antero Resources Finance Corp.
Company Guar. Notes
5.38% due 11/01/2021............................ 130,000 129,350
Antero Resources Finance Corp.
Company Guar. Notes
6.00% due 12/01/2020............................ 350,000 357,000
Bonanza Creek Energy, Inc.
Company Guar. Notes
6.75% due 04/15/2021............................ 425,000 437,750
Concho Resources, Inc.
Company Guar. Notes
5.50% due 10/01/2022............................ 250,000 257,500
Diamondback Energy, Inc.
Company Guar. Notes
7.63% due 10/01/2021*........................... 570,000 614,175
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
9.38% due 05/01/2020............................ 964,000 1,050,760
Range Resources Corp.
Company Guar. Notes
5.00% due 08/15/2022............................ 70,000 71,575
Range Resources Corp.
Company Guar. Notes
6.75% due 08/01/2020............................ 355,000 373,638
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Rosetta Resources, Inc.
Company Guar. Notes
5.63% due 05/01/2021...... $365,000 $ 355,875
Rosetta Resources, Inc.
Company Guar. Notes
5.88% due 06/01/2022...... 430,000 428,387
WPX Energy, Inc.
Senior Notes
5.25% due 09/15/2024...... 270,000 261,900
WPX Energy, Inc.
Senior Notes
6.00% due 01/15/2022...... 91,000 93,821
----------
4,431,731
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.2%
Envision Healthcare Corp.
Company Guar. Notes
5.13% due 07/01/2022*..... 245,000 241,325
----------
PIPELINES -- 1.3%
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020...... 571,000 635,237
Kinder Morgan, Inc.
Senior Notes
6.50% due 09/15/2020...... 430,000 483,750
Kinder Morgan, Inc.
Senior Notes
7.00% due 06/15/2017...... 180,000 198,450
----------
1,317,437
----------
PRINTING-COMMERCIAL -- 0.8%
Quad/Graphics, Inc.
Company Guar. Notes
7.00% due 05/01/2022*..... 835,000 806,819
----------
PUBLISHING-NEWSPAPERS -- 1.4%
Gannett Co., Inc.
Company Guar. Notes
4.88% due 09/15/2021*..... 325,000 314,437
Gannett Co., Inc.
Company Guar. Notes
5.13% due 10/15/2019*..... 990,000 999,900
Gannett Co., Inc.
Company Guar. Notes
5.50% due 09/15/2024*..... 60,000 59,100
----------
1,373,437
----------
RADIO -- 0.2%
Sirius XM Radio, Inc.
Senior Notes
4.25% due 05/15/2020*..... 175,000 167,563
----------
RETAIL-ARTS & CRAFTS -- 0.4%
Michaels Stores, Inc.
Company Guar. Notes
5.88% due 12/15/2020*..... 405,000 402,975
----------
54
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------------------------
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-DISCOUNT -- 0.6%
99 Cents Only Stores
Company Guar. Notes
11.00% due 12/15/2019.......................... $595,000 $645,575
--------
RETAIL-HOME FURNISHINGS -- 0.6%
GRD Holdings III Corp.
Senior Sec. Notes
10.75% due 06/01/2019*......................... 585,000 644,963
--------
RETAIL-LEISURE PRODUCTS -- 0.9%
Party City Holdings, Inc.
Company Guar. Notes
8.88% due 08/01/2020........................... 210,000 226,800
PC Nextco Holdings LLC/PC Nextco Finance, Inc.
Senior Notes
8.75% due 08/15/2019(4)........................ 640,000 643,200
--------
870,000
--------
RETAIL-PROPANE DISTRIBUTION -- 0.1%
AmeriGas Finance LLC/AmeriGas Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020........................... 65,000 67,600
--------
RETAIL-RESTAURANTS -- 0.3%
CEC Entertainment, Inc.
Senior Notes
8.00% due 02/15/2022*.......................... 350,000 327,250
--------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(1)(2)(8)(9)............. 550,000 0
--------
SATELLITE TELECOM -- 0.5%
DigitalGlobe, Inc.
Company Guar. Notes
5.25% due 02/01/2021*.......................... 490,000 470,400
--------
SEMICONDUCTOR EQUIPMENT -- 0.6%
Entegris, Inc.
Company Guar. Notes
6.00% due 04/01/2022*.......................... 580,000 588,700
--------
SOAP & CLEANING PREPARATION -- 0.5%
Sun Products Corp.
Senior Notes
7.75% due 03/15/2021*.......................... 670,000 512,550
--------
STEEL-PRODUCERS -- 2.7%
AK Steel Corp.
Company Guar. Notes
7.63% due 05/15/2020........................... 725,000 715,937
AK Steel Corp.
Company Guar. Notes
7.63% due 10/01/2021........................... 445,000 431,650
AK Steel Corp.
Company Guar. Notes
8.38% due 04/01/2022........................... 345,000 345,000
Steel Dynamics, Inc.
Company Guar. Notes
5.13% due 10/01/2021*.......................... 230,000 233,450
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
--------------------------------------------------
STEEL-PRODUCERS (CONTINUED)
Steel Dynamics, Inc.
Company Guar. Notes
5.50% due 10/01/2024*..... $255,000 $ 256,275
United States Steel Corp.
Senior Notes
7.38% due 04/01/2020...... 681,000 755,910
-----------
2,738,222
-----------
TELECOM SERVICES -- 0.6%
Level 3 Escrow II, Inc.
Company Guar. Notes
5.38% due 08/15/2022*..... 575,000 566,375
-----------
TELECOMMUNICATION EQUIPMENT -- 1.4%
Alcatel-Lucent USA, Inc.
Senior Notes
6.45% due 03/15/2029...... 940,000 885,950
Alcatel-Lucent USA, Inc.
Senior Notes
6.50% due 01/15/2028...... 160,000 150,800
Alcatel-Lucent USA, Inc.
Company Guar. Notes
6.75% due 11/15/2020*..... 325,000 329,875
-----------
1,366,625
-----------
TELEPHONE-INTEGRATED -- 2.3%
Level 3 Financing, Inc.
Company Guar. Notes
6.13% due 01/15/2021*..... 330,000 339,900
Level 3 Financing, Inc.
Company Guar. Notes
7.00% due 06/01/2020...... 149,000 157,009
Level 3 Financing, Inc.
Company Guar. Notes
8.63% due 07/15/2020...... 945,000 1,022,962
Windstream Corp.
Company Guar. Notes
7.75% due 10/15/2020...... 805,000 847,263
-----------
2,367,134
-----------
TELEVISION -- 0.7%
Gray Television, Inc.
Company Guar. Notes
7.50% due 10/01/2020...... 670,000 685,075
-----------
THEATERS -- 0.6%
AMC Entertainment, Inc.
Company Guar. Notes
9.75% due 12/01/2020...... 520,000 572,650
-----------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $74,303,216)........ 72,178,754
-----------
FOREIGN CORPORATE BONDS & NOTES -- 10.5%
BUILDING PRODUCTS-CEMENT -- 0.5%
Cemex SAB De CV
Senior Sec. Notes
5.70% due 01/11/2025*..... 510,000 491,385
-----------
55
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
CABLE/SATELLITE TV -- 0.8%
Unitymedia Hessen GmbH & Co. KG
Senior Sec. Notes
5.50% due 01/15/2023*........................ $ 780,000 $ 787,800
----------
CHEMICALS-DIVERSIFIED -- 1.5%
INEOS Group Holdings SA
Company Guar. Notes
5.88% due 02/15/2019*........................ 225,000 221,625
INEOS Group Holdings SA
Company Guar. Notes
6.13% due 08/15/2018*........................ 1,305,000 1,301,737
----------
1,523,362
----------
CONTAINERS-METAL/GLASS -- 0.7%
Ardagh Finance Holdings SA
Senior Notes
8.63% due 06/15/2019*(4)..................... 280,000 281,400
Ardagh Packaging Finance PLC/Ardagh Holdings
USA, Inc.
Company Guar. Notes
6.00% due 06/30/2021*........................ 365,000 350,400
Ardagh Packaging Finance PLC/Ardagh Holdings
USA, Inc.
Senior Notes
7.00% due 11/15/2020*........................ 51,176 51,688
----------
683,488
----------
DIVERSIFIED MINERALS -- 0.6%
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
6.88% due 04/01/2022*........................ 580,000 590,150
----------
ENGINEERING/R&D SERVICES -- 0.4%
Abengoa Finance SAU
Company Guar. Notes
7.75% due 02/01/2020*........................ 395,000 424,625
----------
OIL & GAS DRILLING -- 0.7%
Paragon Offshore PLC
Company Guar. Notes
6.75% due 07/15/2022*........................ 810,000 684,450
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 1.7%
Harvest Operations Corp.
Company Guar. Notes
6.88% due 10/01/2017......................... 520,000 542,100
Tullow Oil PLC
Company Guar. Notes
6.00% due 11/01/2020*........................ 575,000 575,000
Tullow Oil PLC
Company Guar. Notes
6.25% due 04/15/2022*........................ 640,000 625,600
----------
1,742,700
----------
SATELLITE TELECOM -- 1.4%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019......................... 695,000 729,750
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------------------
SATELLITE TELECOM (CONTINUED)
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021........................ $ 710,000 $ 723,312
-----------
1,453,062
-----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications Luxembourg II SA
FRS Sub. Notes
6.03% due 01/15/2015*+(1)(2)(7)(10)......... 1,025,000 0
-----------
TELECOM SERVICES -- 1.3%
Altice Financing SA
Senior Sec. Notes
7.88% due 12/15/2019*....................... 350,000 373,188
Altice Finco SA
Senior Sec. Notes
9.88% due 12/15/2020*....................... 455,000 509,600
UPCB Finance VI, Ltd.
Senior Sec. Notes
6.88% due 01/15/2022*....................... 400,000 427,000
-----------
1,309,788
-----------
TELEPHONE-INTEGRATED -- 0.5%
Softbank Corp.
Company Guar. Notes
4.50% due 04/15/2020*....................... 545,000 543,638
-----------
TELEVISION -- 0.4%
Videotron, Ltd.
Company Guar. Notes
5.00% due 07/15/2022........................ 405,000 400,950
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $11,758,107).......................... 10,635,398
-----------
LOANS(2)(11)(12) -- 6.5%
BEVERAGES-NON-ALCOHOLIC -- 0.0%
Le-Natures, Inc.
Escrow Loans
9.36% due 03/01/2011+(1).................... 1,200,000 0
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
Escrow Loans
12.25% due 08/15/2013+(1)................... 2,037,810 0
-----------
COAL -- 0.5%
Arch Coal, Inc.
BTL 2/nd/ Lien
6.25% due 05/01/2018........................ 522,977 477,085
-----------
E-COMMERCE/PRODUCTS -- 0.3%
Lands' End, Inc.
BTL
4.25% due 04/04/2021........................ 308,450 304,594
-----------
ELECTRIC-INTEGRATED -- 1.0%
Texas Competitive Electric Holdings Co. LLC
BTL
4.74% due 10/10/2017+(6)(7)................. 1,372,835 1,015,898
-----------
56
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
----------------------------------------------------------------
LOANS (CONTINUED)
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
BTL
5.00% due 01/15/2021.................... $430,650 $ 428,856
----------
INDEPENDENT POWER PRODUCERS -- 0.1%
Calpine Corp.
BTL
4.00% due 10/31/2020.................... 109,175 108,005
----------
INSURANCE-PROPERTY/CASUALTY -- 1.1%
Asurion LLC
BTL
4.25% due 07/08/2020.................... 787,376 774,089
Asurion LLC
BTL
5.00% due 05/24/2019.................... 178,613 177,571
Asurion LLC
BTL
8.50% due 03/03/2021.................... 200,000 202,084
----------
1,153,744
----------
MACHINERY-GENERAL INDUSTRIAL -- 1.4%
Gardner Denver, Inc.
BTL
4.25% due 07/30/2020.................... 633,600 620,215
RBS Global, Inc.
BTL
4.00% due 08/21/2020.................... 787,050 773,605
----------
1,393,820
----------
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.3%
Amsurg Corp.
BTL
3.75% due 07/16/2021.................... 254,363 251,501
----------
METAL PROCESSORS & FABRICATION -- 0.4%
Crosby US Acquisition Corp.
BTL
4.00% due 11/23/2020.................... 461,513 440,744
----------
PUBLISHING-NEWSPAPERS -- 0.6%
Tribune Media Co.
BTL
4.00% due 12/27/2020.................... 562,489 554,931
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.4%
Neiman Marcus Group, Inc.
BTL
4.25% due 10/25/2020.................... 416,855 409,155
----------
TOTAL LOANS
(cost $7,880,066)....................... 6,538,333
----------
COMMON STOCKS -- 0.8%
FOOD-MISC./DIVERSIFIED -- 0.6%
Wornick Co.+(1)(2)....................... 7,270 550,048
----------
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.+(1)(2). 19,388 0
----------
PAPER & RELATED PRODUCTS -- 0.0%
Caraustar Industries, Inc.(1)(2)......... 73 0
----------
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
-------------------------------------------------------------------
STEEL-PRODUCERS -- 0.2%
AK Steel Holding Corp.+...................... 28,500 $ 228,285
----------
TOTAL COMMON STOCKS
(cost $1,375,687)........................... 778,333
----------
MEMBERSHIP INTEREST CERTIFICATES -- 0.1%
CASINO SERVICES -- 0.1%
Herbst Gaming, Inc.(2)(13)
(cost $232,720)............................. 23,439 152,354
----------
CONVERTIBLE PREFERRED SECURITY -- 0.4%
SATELLITE TELECOM -- 0.4%
Intelsat SA
Series A
5.75%
(cost $403,927)............................. 7,644 362,937
----------
PREFERRED SECURITIES -- 1.4%
DIVERSIFIED BANKING INSTITUTIONS -- 1.2%
GMAC Capital Trust I FRS
Series 2
8.13%....................................... 46,500 1,237,365
----------
INSURANCE-MULTI-LINE -- 0.2%
Hartford Financial Services Group, Inc. FRS
7.88%....................................... 8,000 236,720
----------
TOTAL PREFERRED SECURITIES
(cost $1,391,987)........................... 1,474,085
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 4.5%
DIVERSIFIED BANKING INSTITUTIONS -- 3.4%
Barclays PLC VRS
8.25% due 12/15/2018(14).................... $795,000 815,869
Credit Agricole SA VRS
7.88% due 01/23/2024*(14)................... 215,000 217,150
Credit Suisse Group AG VRS
7.50% due 12/11/2023*(14)................... 305,000 320,250
Royal Bank of Scotland Group PLC FRS
6.99% due 10/05/2017*(14)................... 605,000 692,347
Societe Generale SA VRS
6.00% due 01/27/2020*(14)................... 335,000 306,826
Societe Generale SA VRS
7.88% due 12/18/2023*(14)................... 820,000 820,000
Societe Generale SA VRS
8.25% due 11/29/2018(14).................... 275,000 282,700
----------
3,455,142
----------
INSURANCE-MULTI-LINE -- 0.6%
Hartford Financial Services Group, Inc. FRS
8.13% due 06/15/2068........................ 560,000 656,600
----------
MULTIMEDIA -- 0.5%
NBCUniversal Enterprise, Inc.
5.25% due 03/19/2021*(14)................... 445,000 462,800
----------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $4,367,444)........................... 4,574,542
----------
57
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 2)
---------------------------------------------------------
WARRANTS+ -- 0.3%
TELEVISION -- 0.3%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)(1)(2)(13). 332 $ 147,153
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)(1)(2)(13). 328 145,380
------------
TOTAL WARRANTS
(cost $0)...................... 292,533
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $103,069,187)............ 97,874,017
------------
REPURCHASE AGREEMENTS -- 1.8%
Bank of America Securities LLC
Joint Repurchase Agreement(15). $440,000 440,000
Barclays Capital PLC
Joint Repurchase Agreement(15). 370,000 370,000
BNP Paribas SA
Joint Repurchase Agreement(15). 345,000 345,000
Deutsche Bank AG
Joint Repurchase Agreement(15). 225,000 225,000
Royal Bank of Scotland
Joint Repurchase Agreement(15). 400,000 400,000
------------
TOTAL REPURCHASE AGREEMENTS
(cost $1,780,000).............. 1,780,000
------------
TOTAL INVESTMENTS
(cost $104,849,187)(16)........ 98.6% 99,654,017
Other assets less liabilities..... 1.4 1,459,276
-------- ------------
NET ASSETS -- 100.0% $101,113,293
======== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At September 30, 2014,
the aggregate value of these securities was $42,230,857 representing 41.8%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
** Denominated in United States dollars unless otherwise indicated.
+ Non-income producing security
@ See Note 12
(1) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 2.
(2) Illiquid security. At September 30, 2014, the aggregate value of these
securities was $7,533,349 representing 7.5% of net assets.
(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) Security currently paying interest/dividends in the form of additional
securities.
(6) Company has filed for Chapter 11 bankruptcy protection.
(7) Security in default of interest.
(8) Security in default of interest and principal at maturity.
(9) Company has filed for Chapter 7 bankruptcy.
(10) Company has filed for bankruptcy protection in the country of issuance.
(11) Senior loans in the Fund are generally subject to mandatory and/or
optional prepayment. Because of these mandatory prepayment conditions and
because there may be significant economic incentives for a borrower to
prepay, prepayments may occur. As a result, the actual remaining maturity
may be substantially less than the stated maturities shown.
(12) 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.
(13) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
September 30, 2014, the SunAmerica High Yield Bond Fund held the following
restricted securities:
58
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
VALUE % OF
ACQUISITION ACQUISITION PER NET
DESCRIPTION DATE SHARES COST VALUE SHARE ASSETS
----------- ----------- ------ ----------- -------- ------- ------
MEMBERSHIP INTEREST CERTIFICATE
Herbst Gaming, Inc............................................... 03/26/2008 23,439 $232,720 $152,354 $ 6.50 0.15%
WARRANTS
ION Media Networks, Inc. Expires 12/18/2016 (strike price $0.01). 03/01/2011 332 0 147,153 443.23 0.15
ION Media Networks, Inc. Expires 12/18/2016 (strike price $0.01). 11/11/2010 327 0
03/01/2011 1 0
------
328 145,380 443.23 0.14
-------- ----
$444,887 0.44%
======== ====
(14) Perpetual maturity -- maturity date reflects the next call date.
(15) See Note 2 for details of Joint Repurchase Agreements.
(16) See Note 5 for cost of investments on a tax basis.
BTL --Bank Term Loan
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current interest rates at September 30,
2014 and unless noted otherwise, the dates shown are original maturity dates.
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT TO IN EXCHANGE DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY DELIVER FOR DATE APPRECIATION DEPRECIATION
------------------------------------------------------------------------------------
JPMorgan Chase Bank EUR 1,848,000 USD 2,364,987 10/31/2014 $30,435 $ --
USD 2,355,514 EUR 1,848,000 10/31/2014 -- (20,962)
------- --------
Net Unrealized Appreciation(Depreciation) $30,435 $(20,962)
======= ========
--------
EUR --Euro
USD --United States Dollar
59
SUNAMERICA HIGH YIELD BOND FUND@
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of September 30, 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:
Medical-Drugs........................................... $ -- $ -- $ 0
Other Industries*....................................... -- 886,748 --
U.S. Corporate Bonds & Notes:
Cable/Satellite TV..................................... -- 5,035,031 --
Cellular Telecom....................................... -- 7,338,450 --
Medical-Hospitals...................................... -- 6,531,775 --
Metal-Aluminum......................................... -- -- 81
Rubber/Plastic Products................................ -- -- 0
Other Industries*...................................... -- 53,273,417 --
Foreign Corporate Bonds & Notes:
Special Purpose Entity................................. -- -- 0
Other Industries*...................................... -- 10,635,398 --
Loans:
Beverages-Non-alcoholic................................ -- -- 0
Building-Residential/Commercial........................ -- -- 0
Other Industries*...................................... -- 6,538,333 --
Common Stocks
Food-Misc./Diversified................................. -- -- 550,048
Multimedia............................................. -- -- 0
Paper & Related Products............................... -- -- 0
Steel-Producers........................................ 228,285 -- --
Membership Interest Certificates........................ -- 152,354 --
Convertible Preferred Securities........................ 362,937 -- --
Preferred Securities.................................... 1,474,085 -- --
Preferred Securities/Capital Securities................. -- 4,574,542 --
Warrants................................................ -- -- 292,533
Repurchase Agreements..................................... -- 1,780,000 --
Other Financial Instruments:**
Open Forward Foreign Currency Contracts -- Appreciation. -- 30,435 --
---------- ----------- --------
Total..................................................... $2,065,307 $96,776,483 $842,662
========== =========== ========
LIABILITIES:
Other Financial Instruments:**
Open Forward Foreign Currency Contracts -- Depreciation. $ -- $ 20,962 $ --
========== =========== ========
TOTAL
- -----------
ASSETS:
Long-Term Investment Securities:
Convertible Bonds & Notes:
Medical-Drugs........................................... $ 0
Other Industries*....................................... 886,748
U.S. Corporate Bonds & Notes:
Cable/Satellite TV..................................... 5,035,031
Cellular Telecom....................................... 7,338,450
Medical-Hospitals...................................... 6,531,775
Metal-Aluminum......................................... 81
Rubber/Plastic Products................................ 0
Other Industries*...................................... 53,273,417
Foreign Corporate Bonds & Notes:
Special Purpose Entity................................. 0
Other Industries*...................................... 10,635,398
Loans:
Beverages-Non-alcoholic................................ 0
Building-Residential/Commercial........................ 0
Other Industries*...................................... 6,538,333
Common Stocks
Food-Misc./Diversified................................. 550,048
Multimedia............................................. 0
Paper & Related Products............................... 0
Steel-Producers........................................ 228,285
Membership Interest Certificates........................ 152,354
Convertible Preferred Securities........................ 362,937
Preferred Securities.................................... 1,474,085
Preferred Securities/Capital Securities................. 4,574,542
Warrants................................................ 292,533
Repurchase Agreements..................................... 1,780,000
Other Financial Instruments:**
Open Forward Foreign Currency Contracts -- Appreciation. 30,435
-----------
Total..................................................... $99,684,452
===========
LIABILITIES:
Other Financial Instruments:**
Open Forward Foreign Currency Contracts -- Depreciation. $ 20,962
===========
--------
* 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.
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
60
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
Note 1. Organization
The SunAmerica Income Funds (the "Trust") is a diversified open-end
management investment company organized as a Massachusetts business trust.
The Trust 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"), 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 adviser) without regard to the maturities of such
securities. For purposes of this policy, bonds include fixed-income
securities other than short-term commercial paper and preferred stock. Under
normal market conditions, at least 80% of the Fund's net assets plus
borrowings 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
--------
+ On June 3, 2014, the Board of Trustees of the Trust (the "Board") approved a
change in the High Yield Bond Fund's name to the "SunAmerica Flexible Credit
Fund" ("Flexible Credit Fund"), along with certain changes to the Fund's
principal investment strategy and techniques. The Board also approved a new
Subadvisory Agreement between SunAmerica and Newfleet Asset Management, LLC,
replacing Wellington Management Company, LLP. These changes became effective
on October 1, 2014. See Note 12 for additional details.
61
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(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
establishes 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 September
30, 2014 are reported on a schedule following each Fund's Portfolio of
Investments.
62
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges on which the securities are principally
traded and are generally categorized as Level 1. Stocks listed on the NASDAQ
are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the
NOCP will be the last sale price unless the reported trade for the stock is
outside the range of the bid/ask price. In such cases, the NOCP will be
normalized to the nearer of the bid or ask price. For listed securities
having no sales reported and for unlisted securities, such securities will
be valued based upon the last reported bid price.
As of the close of regular trading on the New York Stock Exchange ("NYSE"),
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, the
Funds use the exchange that is the primary market for the security. Such
securities are generally categorized as Level 1. However, depending on the
foreign market, closing prices may be up to 15 hours old when they are used
to price the Funds' 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 spread 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 Funds if acquired within 60 days of
maturity or, if already held by a 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") are valued at the average of available
bids in the market for such Loans, as provided by a Board-approved loan
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) in what is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market 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
63
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
Trust's fair valuation procedures. Securities for which market quotations
are not readily available or the values of which may be significantly
impacted by the occurrence of developments or significant events are
generally categorized as Level 3. There is no single standard for making
fair value determinations, which may result in prices that vary from those
of other funds.
DERIVATIVE INSTRUMENTS:
Forward Foreign Currency Contracts: Certain Funds may enter into forward
foreign currency contracts ("forward contracts") for various purposes,
including to facilitate settlement of foreign currency denominated Fund
transactions, to attempt to protect securities and related receivables and
payables against changes in future foreign exchange rates, to hedge
portfolio exposure to benchmark currency allocations or to manage and/or
gain exposure to certain foreign currencies. During the period ended
September 30, 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 September 30, 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 certain
instruments. Master Agreements may contain provisions regarding, among other
things, the parties' general obligations, representations, agreements,
collateral requirements, events of default and early termination. Collateral
can be in the form of cash or securities as agreed to by the Fund and
applicable counterparty. Collateral requirements are generally determined
based on a Fund's net position with each counterparty. Master Agreements may
also include certain provisions that require a Fund to post additional
collateral upon the occurrence of certain events, such as when a Fund's net
assets fall below a specified level. In addition, Master Agreements
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 a 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 a 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 a Fund's financial statements. See additional
64
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
information on specific types of derivative instruments and other financial
instruments as disclosed in the Notes to the Financial Statements. The Funds
do not offset derivative assets and derivative liabilities that are subject
to netting arrangements in the Statements of Asset and Liabilities.
The following tables represent the value of derivatives held as of September
30, 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 six months ended September 30, 2014.
For a detailed presentation of derivatives held as of September 30, 2014,
please refer to the Portfolio of Investments.
HIGH YIELD BOND FUND
-------------------------------------------------------------------------------------------------------
ASSET DERIVATIVES LIABILITY DERIVATIVES
--------------------------------------------------- ---------------------------------------------------
DERIVATIVE STATEMENTS OF ASSETS AND STATEMENTS OF ASSETS AND
CONTRACTS(1) LIABILITIES LOCATION VALUE LIABILITIES LOCATION VALUE
------------- ------------------------------------------- ------- ------------------------------------------- -------
Foreign
exchange Unrealized appreciation on forward foreign Unrealized depreciation on forward foreign
contracts(2) currency contracts $30,435 currency contracts $20,962
======= =======
CHANGE IN UNREALIZED
APPRECIATION
LOCATION OF GAIN (LOSS) REALIZED GAIN (LOSS) ON (DEPRECIATION)
ON DERIVATIVES DERIVATIVES ON DERIVATIVES
DERIVATIVE RECOGNIZED IN STATEMENTS RECOGNIZED IN STATEMENTS RECOGNIZED IN STATEMENTS
CONTRACTS(1) OF OPERATIONS OF OPERATIONS OF OPERATIONS
------------- --------------------------------------------- ------------------------ ------------------------
Foreign Net realized foreign exchange gain (loss) on
exchange other assets and liabilities/Change in
contracts(2) unrealized foreign exchange gain (loss) on
other assets and liabilities $155,558 $9,148
======== ======
--------
(1)The Fund's derivative contracts held during the six months ended September
30, 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 $2,389,861.
As of September 30, 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 September 30, 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 Over
the
Counter....... $ 30,435 $-- $30,435
------------- --- -------
Total
derivatives,
subject
to a
master
netting
arrangement
or
similar
arrangement... $ 30,435 $-- $30,435
======= === =======
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 ----------------- ---------------- ------------ -------
JPMorgan Chase Bank. $ 30,435 $ (20,962) $ -- $9,473
================= ================ ============ ======
65
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
-------------
GROSS
AMOUNTS OF
RECOGNIZED
LIABILITIES
-------------
LIABILITIES:
DESCRIPTION:
Derivatives:
Foreign exchange contracts
Over the Counter...................................................... $ 20,962
-------------
Total derivatives, subject to a master netting arrangement or similar
arrangement........................................................... $ 20,962
=======
HIGH YIELD BOND FUND
--------------------------------------------------
NET AMOUNTS OF LIABILITIES
GROSS AMOUNTS OFFSET PRESENTED IN THE
IN THE STATEMENTS OF STATEMENTS OF ASSETS AND
ASSETS AND LIABILITIES LIABILITIES
---------------------- --------------------------
LIABILITIES:
DESCRIPTION:
Derivatives:
Foreign exchange contracts
Over the Counter...................................................... $-- $ 20,962
--- -------
Total derivatives, subject to a master netting arrangement or similar
arrangement........................................................... $-- $ 20,962
=== =============
GROSS AMOUNTS NOT OFFSET IN THE
STATEMENTS OF ASSETS AND LIABILITIES
----------------------------------------
NET AMOUNT OF
LIABILITIES IN THE
STATEMENTS OF
ASSETS AND FINANCIAL COLLATERAL NET
LIABILITIES INSTRUMENTS@ PLEDGED@ AMOUNT#
COUNTERPARTY: ------------------ ---------------- ----------- -----------
JPMorgan Chase Bank. $ 20,962 $ (20,962) $ -- $ --
================= ================ =========== ===========
--------
@ For each respective counterparty, collateral received or (pledged) is
limited to an amount not to exceed 100% of the net amount of the derivative
or financial asset/liability in the table above.
# Net amount represents the net amount due from (due to) the counterparty in
the event of a default based on the contractual set-off rights under the
master netting arrangement.
MORTGAGE-BACKED DOLLAR ROLLS: During the six months ended September 30,
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 Funds' policy is to record the components of
TBA Rolls as purchase/sale transactions. Any difference between the purchase
and sale price is recorded as a realized gain or loss on the date the
transaction is entered into. 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 a 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 Funds' 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 Funds' obligation to repurchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may not
exceed the transaction costs. For the six months ended September 30, 2014,
the GNMA Fund and the Strategic Bond Fund had realized gains (losses) from
mortgage-backed dollar rolls of $3,516 and $12,531, respectively.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: The Funds may purchase or
sell when-issued securities, including TBA securities that have been
authorized, but not yet issued in the market. In addition, a Fund may
purchase or sell securities on a forward commitment basis. A forward
commitment involves entering into a contract to purchase or sell securities,
typically on an extended settlement basis, for a fixed price at a future
date. The Funds may engage in when-issued or forward commitment transactions
in order to secure what is considered to be an advantageous price and yield
at the time of entering into the obligation. The purchase of securities on a
when-issued or forward commitment basis involves a risk of loss if the value
of the security to be purchased declines before the settlement date.
Conversely, the sale of securities on a when-issued or forward commitment
basis involves the risk that the value of the securities sold may increase
before the settlement date. For the six months ended September 30, 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
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
principal (the "principal only" class) from the mortgage pool, while the
other class will receive all or most of the interest (the "interest only"
class). The yield to maturity on an interest only class is extremely
sensitive not only to changes in prevailing interest rates, but also to the
rate of principal payments, including principal prepayments, on the
underlying pool of mortgage assets, and a rapid rate of principal payment
may have a material adverse effect on a Fund's yield.
INFLATION-INDEXED BONDS: Certain Funds may purchase inflation-indexed bonds.
Inflation-indexed bonds are fixed income securities whose principal value is
adjusted periodically according to the rate of inflation. Two structures are
common. The U.S. Treasury and certain other issuers use a structure that
reflects inflation in the principal value of the bond. Other issuers pay out
any inflation related accruals as part of a semiannual coupon. The value of
inflation-indexed bonds is expected to change in response to changes in real
interest rates. Real interest rates, in turn, are tied to the relationship
between nominal interest rates (i.e., stated interest rates) and the rate of
inflation. Therefore, if the rate of inflation rises at a faster rate than
nominal interest rates, real interest rates (i.e., nominal interest rates
minus inflation) might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increase at
a faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly
correlated to changes in nominal interest rates, and short-term increases in
inflation may lead to a decline in their value. Coupon payments received
from inflation-indexed bonds are recorded in the Statements of Operations as
interest income. In addition, any increase or decrease in the principal
amount of an inflation-indexed bond will be recorded in the Statements of
Operations as an increase or decrease to interest income, even though
principal is not paid until maturity.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the Trust's 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, a Fund has the right to liquidate
the collateral and apply the proceeds in satisfaction of the obligation. If
the seller defaults and the value of the collateral declines or if
bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Trust may be delayed or
limited.
As of September 30, 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. 0.55% $440,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Bank of America Securities LLC, dated September 30, 2014, bearing interest
at a rate of 0.00% per annum, with a principal amount of $80,190,000, a
repurchase price of $80,190,002 and a maturity date of October 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...... 0.75% 10/31/2017 $82,600,000 $81,845,862
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
As of September 30, 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........................................... 0.53% $370,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Barclays Capital PLC, dated September 30, 2014, bearing interest at a rate
of 0.00% per annum, with a principal amount of $69,950,000, a repurchase
price of $69,950,000, and a maturity date of October 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............... 1.75% 10/31/2020 $10,304,000 $10,190,244
U.S. Treasury Notes............... 3.13 05/15/2019 5,884,000 6,323,476
U.S. Treasury Notes............... 3.50 05/15/2020 50,000,000 54,880,000
As of September 30, 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........................................... 0.53% $345,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
BNP Paribas SA, dated September 30, 2014, bearing interest at a rate of
0.00% per annum, with a principal amount of $64,955,000, a repurchase price
of $64,955,001, and a maturity date of October 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............... 3.00% 08/31/2016 $63,218,200 $66,319,053
As of September 30, 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........................................... 0.52% $225,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Deutsche Bank AG, dated September 30, 2014, bearing interest at a rate of
0.01% per annum, with a principal amount of $42,920,000, a repurchase price
of $42,920,006, and a maturity date of October 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............... 0.75% 03/31/2018 $44,751,000 $43,843,002
As of September 30, 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............................... 3.76% $7,479,000
GNMA..................................................... 1.98 3,927,000
Strategic Bond........................................... 1.81 3,605,000
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank and Trust Co., dated September 30, 2014, bearing interest
at a rate of 0.00% per annum, with a principal amount of $198,835,000, a
repurchase price of $198,835,000, and a maturity date of October 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.............. 0.88% 05/15/2017 $ 39,310,000 $ 39,383,706
U.S. Treasury Notes.............. 2.13 01/31/2021 100,000,000 100,321,000
U.S. Treasury Notes.............. 2.13 08/15/2021 33,160,000 33,077,100
U.S. Treasury Notes.............. 3.75 11/15/2018 25,000,000 27,533,200
U.S. Treasury Bonds.............. 8.00 11/15/2021 430,000 608,047
U.S. Treasury Bonds.............. 8.13 08/15/2021 1,355,000 1,889,167
As of September 30, 2014, the following Fund held an undivided interest in
the joint repurchase agreement with Royal Bank of Scotland:
PERCENTAGE PRINCIPAL
FUND OWNERSHIP AMOUNT
---- ---------- ---------
High Yield Bond........................................... 0.53% $400,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
Royal Bank of Scotland, dated September 30, 2014, bearing interest at a rate
of 0.01% per annum, with a principal amount of $74,945,000, a repurchase
price of $74,945,010, and a maturity date of October 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........... 2.38% 02/28/2015 $50,000,000 $50,588,000
U.S. Treasury Notes........... 8.50% 02/15/2020 19,201,000 25,967,816
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.
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.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The Funds reserve the right to declare and pay dividends less frequently
than disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually. The amount of
dividends and distributions from net investment income and 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 period. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statements of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates and realized gains and losses on forward
foreign currency contracts.
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
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
MANAGEMENT
ASSETS FEES
---------------------------- ----------
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.
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 Securities 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.
--------
* See Note 12
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
For the period ended September 30, 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...................................... $67,659
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A.............................. $129,541
U.S. Government Securities Class B.............................. 11,654
U.S. Government Securities Class C.............................. 18,082
GNMA Class A.................................................... 105,156
GNMA Class B.................................................... 17,485
GNMA Class C.................................................... 29,898
High Yield Bond Class A......................................... 68,216
High Yield Bond Class B......................................... 16,303
High Yield Bond Class C......................................... 31,865
At September 30, 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 SEPTEMBER 30, 2016
---- -------------- -------------- ------------------
U.S. Government Securities.... $108,327 $179,558 $ 67,659
GNMA.......................... -- 4,153 --
CLASS SPECIFIC EXPENSES REIMBURSED
------------------------------------------------
FUND MARCH 31, 2015 MARCH 31, 2016 SEPTEMBER 30, 2016
---- -------------- -------------- ------------------
U.S. Government Securities
Class A...................... $144,036 $288,050 $129,541
U.S. Government Securities
Class B...................... 9,712 22,943 11,654
U.S. Government Securities
Class C...................... 19,511 39,432 18,082
GNMA Class A.................. 193,116 301,462 105,156
GNMA Class B.................. 17,931 38,339 17,485
GNMA Class C.................. 56,785 86,483 29,898
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
the provisions of Rule 12b-1 under the 1940 Act (each, a "Plan", and
collectively, the "Plans"), hereinafter referred to as the "Class A Plan,"
the "Class B Plan" and the "Class C Plan." In adopting the Class A Plan, the
Class B Plan and the Class C Plan, the Trustees determined that there was a
reasonable likelihood that each such Plan would benefit the Trust and the
shareholders of the respective class. The sales charge and distribution fees
of a particular class will not be used to subsidize the sale of shares of
any other class.
The Class A, Class B and Class C Plans, provide that the Trust, on behalf of
the respective classes, shall pay the Distributor a distribution fee at an
annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of
such Fund's Class A, Class B and Class C shares respectively, to compensate
the Distributor and certain securities firms for providing sales and
promotional activities for distributing that class of shares. The
distribution costs for which the Distributor may be compensated for include
fees paid to broker-dealers that have sold Fund shares, commissions, and
other expenses such as those incurred for sales literature, prospectus
printing and distribution and compensation to wholesalers. It is possible
that in any given year, the amount paid to the Distributor under the Class A
Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution
costs as described above. The Plans also provide that each class of shares
of the Trust will also pay the Distributor an account maintenance fee at the
annual rate of up to 0.25% of the aggregate average daily net assets of such
class of shares to compensate the Distributor and securities firms for
account maintenance activities. Accordingly, for the six months ended
September 30, 2014, ACS received fees (see the Statements of Operations)
based upon the aforementioned rates.
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
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 six
months ended September 30, 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. $ 9,239 $ 3,958 $ 3,824 $ -- $ 6,179 $ 63
GNMA....................... 18,201 9,852 5,378 -- 9,932 165
Strategic Bond............. 224,725 130,334 55,368 5,500 23,742 4,476
High Yield Bond............ 28,844 10,433 13,129 110 15,549 777
The Trust has entered into a Service Agreement with SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement permits the Funds to
compensate SAFS for services rendered, based upon an annual rate of 0.22% of
average daily net assets, which is approved annually by the Trustees. For
the six months ended September 30, 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 SEPTEMBER 30, 2014
---- -------- ------------------
US Government Securities Class A................... $110,646 $16,943
US Government Securities Class B................... 3,530 541
US Government Securities Class C................... 8,035 1,392
GNMA Class A....................................... 109,053 16,453
GNMA Class B....................................... 10,509 1,627
GNMA Class C....................................... 23,183 3,283
Strategic Bond Class A............................. 284,715 45,849
Strategic Bond Class B............................. 50,235 7,951
Strategic Bond Class C............................. 216,312 34,826
High Yield Bond Class A............................ 77,367 11,285
High Yield Bond Class B............................ 12,594 1,741
High Yield Bond Class C............................ 33,444 5,314
At September 30, 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 10%
Focused Multi-Asset Strategy Portfolio 15
Pershing LLC 6
GNMA........................ Pershing LLC 27
Strategic Bond.............. Pershing LLC 5
High Yield Bond............. Pershing LLC 9
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
Note 4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the six months ended September 30, 2014 were as follows:
U.S. GOVERNMENT STRATEGIC HIGH YIELD
SECURITIES FUND GNMA FUND BOND FUND BOND FUND
--------------- ----------- ------------ -----------
Purchases (excluding U.S.
government securities)... $ -- $ -- $259,966,659 $26,800,490
Sales (excluding U.S.
government securities)... -- -- 261,587,359 32,647,258
Purchases of U.S.
government securities.... 26,995,422 30,031,211 81,215,393 --
Sales of U.S. government
securities............... 22,181,398 34,883,936 73,558,723 --
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.
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 Funds 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 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.......................................... $102,780,779 $125,180,698 $495,545,863 $105,248,408
============ ============ ============ ============
Appreciation.................................. 6,900,621 2,528,663 7,783,322 2,607,628
Depreciation.................................. (387,709) (1,135,702) (16,816,992) (8,202,019)
------------ ------------ ------------ ------------
Unrealized appreciation (depreciation) -- net. $ 6,512,912 $ 1,392,961 $ (9,033,670) $ (5,594,391)
============ ============ ============ ============
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
U.S. GOVERNMENT SECURITIES FUND
---------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- -----------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014 (UNAUDITED) MARCH 31, 2014
------------------------ ------------------------ ------------------ ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ------- --------- -------- -----------
Shares sold(1)(2)....... 1,745,407 $ 16,663,199 2,997,405 $ 28,749,556 35,576 $ 338,236 103,345 $ 976,258
Reinvested dividends.... 76,969 734,492 187,267 1,783,073 1,290 12,309 3,649 34,823
Shares redeemed(1)(2)... (2,769,730) (26,331,451) (4,154,046) (39,601,661) (98,507) (937,182) (209,133) (1,985,784)
---------- ------------ ---------- ------------ ------- --------- -------- -----------
Net increase (decrease). (947,354) $ (8,933,760) (969,374) $ (9,069,032) (61,641) $(586,637) (102,139) $ (974,703)
========== ============ ========== ============ ======= ========= ======== ===========
U.S. GOVERNMENT SECURITIES FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold............. 144,005 $ 1,374,741 82,491 $ 790,305
Reinvested dividends.... 3,221 30,723 9,214 87,861
Shares redeemed......... (115,397) (1,097,774) (551,933) (5,256,522)
---------- ------------ ---------- ------------
Net increase (decrease). 31,829 $ 307,690 (460,228) $ (4,378,356)
========== ============ ========== ============
GNMA FUND
---------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------ -------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014 (UNAUDITED) MARCH 31, 2014
---------------------- ------------------------ -------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ------------ ---------- ------------ ------- ----------- -------- -----------
Shares sold(3)(4)....... 576,791 $ 6,171,434 1,757,439 $ 19,039,758 33,117 $ 354,863 117,880 $ 1,282,581
Reinvested dividends.... 115,118 1,231,561 249,100 2,678,268 7,555 81,052 15,009 161,599
Shares redeemed(3)(4)... (968,904) (10,358,049) (6,604,175) (71,061,403) (95,578) (1,024,572) (486,265) (5,247,432)
-------- ------------ ---------- ------------ ------- ----------- -------- -----------
Net increase (decrease). (276,995) $ (2,955,054) (4,597,636) $(49,343,377) (54,906) $ (588,657) (353,376) $(3,803,252)
======== ============ ========== ============ ======= =========== ======== ===========
GNMA FUND
------------------------------------------------
CLASS C
------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ---------- ------------
Shares sold............. 61,149 $ 656,415 240,934 $ 2,645,994
Reinvested dividends.... 15,756 169,299 38,032 410,705
Shares redeemed......... (408,721) (4,387,409) (2,340,241) (25,407,206)
-------- ------------ ---------- ------------
Net increase (decrease). (331,816) $ (3,561,695) (2,061,275) $(22,350,507)
======== ============ ========== ============
--------
(1)For the six months ended September 30, 2014, includes automatic conversion
of 13,837 shares of Class B shares in the amount of $131,774 to 13,838
shares of Class A shares in the amount of $131,774.
(2)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.
(3)For the six months ended September 30, 2014, includes automatic conversion
of 10,726 shares of Class B shares in the amount of $114,968 to 10,757
shares of Class A shares in the amount of $114,968.
(4)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.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
STRATEGIC BOND FUND
-------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014 (UNAUDITED) MARCH 31, 2014
------------------------ -------------------------- ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Shares sold(1)(2)... 8,814,277 $ 31,416,089 20,037,364 $ 70,574,479 666,704 $ 2,381,444 1,561,817 $ 5,483,865
Reinvested dividends 1,163,097 4,149,208 2,812,086 9,825,626 159,237 568,187 392,316 1,370,206
Shares
redeemed(1)(2)..... (9,692,269) (34,537,816) (44,018,941) (153,795,261) (1,730,907) (6,177,600) (4,581,464) (15,981,270)
---------- ------------ ----------- ------------- ---------- ----------- ---------- ------------
Net increase
(decrease)......... 285,105 $ 1,027,481 (21,169,491) $ (73,395,156) (904,966) $(3,227,969) (2,627,331) $ (9,127,199)
========== ============ =========== ============= ========== =========== ========== ============
STRATEGIC BOND FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
Shares sold......... 3,074,828 $ 11,014,066 6,034,013 $ 21,399,391
Reinvested dividends 575,456 2,059,553 1,500,983 5,264,874
Shares redeemed..... (5,283,444) (18,905,818) (26,746,922) (93,597,683)
---------- ------------ ----------- -------------
Net increase
(decrease)......... (1,633,160) $ (5,832,199) (19,211,926) $ (66,933,418)
========== ============ =========== =============
HIGH YIELD BOND FUND
----------------------------------------------------------------------------------------------------
CLASS A CLASS B
-------------------------------------------------- ------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED FOR THE SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014 (UNAUDITED) MARCH 31, 2014
------------------------ ------------------------ ----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ---------- ----------- ---------- -----------
Shares sold(3)(4)....... 2,957,455 $ 10,665,339 6,980,643 $ 24,808,319 155,674 $ 561,767 985,464 $ 3,523,721
Reinvested dividends.... 354,963 1,271,541 752,185 2,657,899 49,169 176,423 114,254 404,144
Shares redeemed(3)(4)... (5,092,572) (18,238,760) (8,798,049) (30,951,768) (1,193,483) (4,309,146) (1,346,048) (4,747,328)
---------- ------------ ---------- ------------ ---------- ----------- ---------- -----------
Net increase (decrease). (1,780,154) $ (6,301,880) (1,065,221) $ (3,485,550) (988,640) $(3,570,956) (246,330) $ (819,463)
========== ============ ========== ============ ========== =========== ========== ===========
HIGH YIELD BOND FUND
--------------------------------------------------
CLASS C
--------------------------------------------------
FOR THE
SIX MONTHS ENDED FOR THE
SEPTEMBER 30, 2014 YEAR ENDED
(UNAUDITED) MARCH 31, 2014
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
Shares sold............. 367,163 $ 1,329,487 1,029,564 $ 3,674,020
Reinvested dividends.... 128,822 463,832 291,589 1,035,927
Shares redeemed......... (669,165) (2,413,357) (2,287,139) (8,107,960)
---------- ------------ ---------- ------------
Net increase (decrease). (173,180) $ (620,038) (965,986) $ (3,398,013)
========== ============ ========== ============
--------
(1)For the six months ended September 30, 2014, includes automatic conversion
of 180,632 shares of Class B shares in the amount of $645,025 to 180,632
shares of Class A shares in the amount of $645,025.
(2)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.
(3)For the six months ended September 30, 2014, includes automatic conversion
of 46,400 shares of Class B shares in the amount of $167,107 to 46,481
shares of Class A shares in the amount of $167,107.
(4)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.
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
Note 7. Line of Credit
The SunAmerica family of mutual funds has established a $75 million
committed and a $50 million uncommitted line of credit with State Street
Bank and Trust Company, the Funds' custodian. Interest is currently payable
at the higher of the Federal Funds Rate plus 125 basis points or the
overnight London Interbank Offered Rate plus 125 basis points on the
committed line and State Street Bank and Trust Company's discretionary bid
rate on the uncommitted line of credit. There is also a commitment fee of 15
basis points per annum on the daily unused portion of the committed line of
credit and a one-time closing fee of 5 basis points on the uncommitted line
of credit, both of which are included in other expenses on the Statements of
Operations. Prior to September 12, 2014, the commitment fee was 10 basis
points per annum on the daily unused portion of the committed line of credit
and there was no closing fee on the uncommitted line of credit. Borrowings
under the line of credit will commence when the respective Fund's cash
shortfall exceeds $100,000. For the six months ended September 30, 2014, the
following Funds had borrowings:
DAYS INTEREST AVERAGE DEBT WEIGHTED AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ------------ ----------------
Strategic Bond.. 5 $197 $1,052,347 1.35%
High Yield Bond. 1 72 1,925,400 1.35
At September 30, 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 six
months ended September 30, 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.
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statements of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statements of Operations.
AS OF SEPTEMBER 30, 2014
- -----------------------------------------------
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
FUND LIABILITY EXPENSE PAYMENTS
---- --------------- --------------- ---------------
U.S. Government Securities. $1,717 $2 $1,671
GNMA....................... 1,035 2 1,006
Strategic Bond............. 1,245 7 1,203
High Yield Bond............ 772 2 751
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 September 30,
2014, the Funds had 39.4% and 87.0% respectively, of their net assets
invested in such securities.
Note 11. Unfunded Loan Commitments
At September 30, 2014, the Strategic Bond Fund had the following unfunded
loan commitment which could be extended at the option of the Borrower:
PRINCIPAL
TYPE MATURITY DATE AMOUNT VALUE
BORROWER ------------ ------------- --------- -------
SI Organization, Inc.. Delayed Draw 7/15/2015 $69,092 $69,322
======= =======
Note 12. Subsequent Events
On June 3, 2014, the Board approved a change in the High Yield Bond Fund's
name to the "SunAmerica Flexible Credit Fund," along with certain changes to
the Fund's principal investment strategy and techniques. The Board also
approved a new Subadvisory Agreement between SunAmerica and Newfleet Asset
Management, LLC ("Newfleet"), replacing Wellington Management Company, LLP
("Wellington Management"). In addition, at a special meeting of the Board
held on July 17, 2014, the Board approved the creation of Class W shares of
the Flexible Credit Fund. These changes became effective on October 1, 2014
(the "Effective Date"). Under the Subadvisory Agreement, the subadvisory fee
payable by SunAmerica to Newfleet is equal to an annual rate of 0.30% of
average daily net assets on the first $200 million, 0.25% on the next $200
million and 0.15% thereafter. As of the Effective Date, SunAmerica agreed to
waive its fees and/or reimburse expenses with respect to the Flexible Credit
Fund to the extent that the total annual operating expenses exceed 1.45%,
2.10%, 2.10% and 1.25% for Class A, B, C and W shares, respectively.
Newfleet assumed the day-to-day portfolio management responsibility for the
Flexible Credit Fund, replacing Wellington Management, as of the Effective
Date.
On June 4, 2014, the Board approved, subject to shareholder approval, a
proposed Agreement and Plan of Reorganization pursuant to which the GNMA
Fund would transfer all of its assets to the U.S. Government Securities
Fund, in exchange solely for the assumption of the GNMA Fund's liabilities
by the U.S. Government Securities Fund and Class A, Class B and Class C
shares of the U.S. Government Securities Fund, which shares would be
distributed by the GNMA Fund to the holders of its
78
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
shares in complete liquidation thereof (the "Reorganization"). At a special
meeting of shareholders of the GNMA Fund on October 16, 2014 (the "Special
Meeting"), shareholders approved the Reorganization. The voting results of
the Special Meeting will be provided in the U.S. Government Securities
Fund's next shareholder report. The closing of the Reorganization occurred
on November 10, 2014.
79
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND SUBADVISORY
AGREEMENTS
The Board of Trustees (the "Board" the members of which are referred to as
"Trustees") of SunAmerica Income Funds (the "Trust"), including the Trustees
who are not "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act") (the "Independent
Trustees"), of the Trust or its separate series (each, a "Fund," and
collectively, the "Funds"), SunAmerica Asset Management, LLC ("SunAmerica"),
PineBridge Investments LLC ("PineBridge"), Wellington Management Company, LLP
("Wellington,") or Newfleet Asset Management, LLC ("Newfleet," and together
with Wellington and PineBridge, the "Subadvisers"), approved the continuation
of the Investment Advisory and Management Agreement between the Trust, on
behalf of the Funds, and SunAmerica (the "Advisory Agreement") for a one-year
period ending June 30, 2015 at an in-person meeting held on June 3, 2014 (the
"Meeting"). The Trust currently consists of the following four separate Funds:
SunAmerica GNMA Fund ("GNMA Fund"), SunAmerica High Yield Bond Fund ("High
Yield Bond Fund"), SunAmerica Strategic Bond Fund ("Strategic Bond Fund") and
SunAmerica U.S. Government Securities Fund ("U.S. Government Securities Fund").
At the Meeting, the Board, including the Independent Trustees, also approved
the continuation of the Subadvisory Agreement between SunAmerica and PineBridge
with respect to the Strategic Bond Fund and the Subadvisory Agreement between
SunAmerica and Wellington with respect to the High Yield Bond Fund (the
"Subadvisory Agreements" and together with the Advisory Agreement, the
"Agreements") for a one-year period ending June 30, 2015.
In addition, at the Meeting, the Board, including the Independent Trustees,
approved a change in the SunAmerica High Yield Bond Fund's name to the
"SunAmerica Flexible Credit Fund" (the "Flexible Credit Fund"), along with
certain changes to the Fund's principal investment strategy and techniques. The
Board also approved a new Subadvisory Agreement (the "Newfleet Subadvisory
Agreement") between SunAmerica and Newfleet with respect to the Flexible Credit
Fund for an initial two-year period ending June 30, 2016, replacing the Fund's
current subadviser. These changes are expected to become effective on or about
October 1, 2014.
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and the Subadvisers provided, materials relating to the Board's
consideration of whether to approve the Newfleet Subadvisory Agreement with
respect to Newfleet and the continuation of the Agreements with respect to
SunAmerica, PineBridge and Wellington. These materials included, as applicable:
(a) a summary of the services provided or to be provided, as applicable, by
SunAmerica and its affiliates to the Funds and by the Subadvisers;
(b) information independently compiled and prepared by Lipper, Inc. ("Lipper"),
an independent third-party provider of mutual fund data, on fees and expenses
of the Funds, and the investment performance of the Funds as compared with a
peer group of funds, along with fee and performance data with respect to the
Funds and any other mutual funds or other accounts advised or subadvised by
SunAmerica or the Subadvisers with similar investment objectives and/or
strategies, as applicable; (c) information on the profitability of SunAmerica
and its affiliates, and a discussion relating to indirect benefits;
(d) information relating to economies of scale; (e) information about
SunAmerica's general compliance policies and procedures and the services it
provides in connection with its oversight of subadvisers; (f) information about
SunAmerica's and the Subadvisers' risk management processes; (g) information
regarding brokerage and soft dollar practices; and (h) information about the
key personnel of SunAmerica and its affiliates, and the Subadvisers, that are
involved in the investment management, administration, compliance and risk
management activities with respect to the Funds, as well as current and
projected staffing levels and compensation practices.
In determining whether to approve the continuation of the Agreements, the
Board, including the Independent Trustees, considered at the Meeting, and from
time to time as appropriate, factors it deemed relevant, including the
following information:
Nature, Extent and Quality of Services Provided by SunAmerica and the
Subadvisers. The Board, including the Independent Trustees, considered the
nature, extent and quality of services provided by SunAmerica. The Board noted
that the services include acting as investment manager and adviser to the
Funds, managing the daily business affairs of the Funds, and obtaining and
evaluating economic, statistical and financial information to formulate and
implement investment policies. Additionally, the Board observed that SunAmerica
provides office space, bookkeeping, accounting, legal, and compliance, clerical
and administrative services and has authorized its officers and employees, if
elected, to serve as officers or trustees of the Trust without compensation.
The Board also noted that SunAmerica is responsible for monitoring and
reviewing the activities of affiliated and unaffiliated third-party service
providers, including the Subadvisers. In addition to the quality of the
advisory services provided by SunAmerica, the Board considered the quality of
the administrative and other services provided by SunAmerica to the Funds
pursuant to the Advisory Agreement.
80
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
In connection with the services provided by SunAmerica, the Board analyzed the
structure and duties of SunAmerica's fund administration, accounting,
operations, legal and compliance departments and concluded that they were
adequate to meet the needs of the Funds. The Board also reviewed the personnel
responsible for providing advisory services to the Funds and other key
personnel of SunAmerica, in addition to current and projected staffing levels
and compensation practices. The Board further considered certain strategic
changes that SunAmerica had implemented with respect to its investment
department, and concluded, based on its experience and interaction with
SunAmerica, that: (i) SunAmerica would continue to be able to retain quality
investment and other personnel; (ii) SunAmerica has exhibited a high level of
diligence and attention to detail in carrying out its advisory and other
responsibilities under the Advisory Agreement; (iii) SunAmerica has been
responsive to requests of the Board; and (iv) SunAmerica has kept the Board
apprised of developments relating to the Funds and the industry in general. The
Board concluded that the nature and extent of services provided under the
Advisory Agreement were reasonable and appropriate in relation to the
management fee and that the quality of services continues to be high.
The Board also considered SunAmerica's reputation and long-standing
relationship with the Funds and considered the benefit to shareholders of
investing in funds that are part of a family of funds offering a variety of
types of mutual funds and shareholder services. The Board considered
SunAmerica's experience in providing management and investment advisory and
administrative services to advisory clients and noted that as of March 31,
2014, SunAmerica managed, advised and/or administered approximately $66.7
billion in assets. In addition, the Board considered SunAmerica's code of
ethics and its commitment to compliance generally and with respect to its
management and administration of the Funds. The Board also considered
SunAmerica's risk management processes. The Board further observed that
SunAmerica has developed internal procedures for monitoring compliance with the
investment objectives, policies and restrictions of the Funds as set forth in
the Funds' prospectuses. The Board also reviewed SunAmerica's compliance and
regulatory history and noted that there were no material legal, regulatory or
compliance issues that would potentially impact SunAmerica from effectively
serving as the investment adviser to the Funds.
The Board also considered the nature, extent and quality of services provided
by each Subadviser to the applicable Fund. The Board observed that the
Subadvisers are responsible for providing day-to-day investment management
services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by a Fund, or portion
thereof, that each Subadviser manages, subject to the oversight and review of
SunAmerica. The Board reviewed each Subadviser's history, structure, size,
visibility and resources, which are needed to attract and retain highly
qualified investment professionals. The Board reviewed the personnel that are
responsible for providing subadvisory services to the Funds, in addition to
current and projected staffing levels and compensation practices, and
concluded, based on its experience with each Subadviser, that each Subadviser:
(i) has been able to retain high quality portfolio managers and other
investment personnel; (ii) has exhibited a high level of diligence and
attention to detail in carrying out its responsibilities under the Subadvisory
Agreements; and (iii) has been responsive to requests of the Board and of
SunAmerica. In addition, the Board considered each Subadviser's code of ethics
and risk management process. The Board further observed that each Subadviser
has developed internal policies and procedures for monitoring compliance with
the investment objectives, policies and restrictions of the Funds as set forth
in the Funds' prospectuses. The Board also reviewed each Subadviser's
compliance and regulatory history and noted that there were no material legal,
regulatory or compliance issues that would potentially impact the Subadvisers
from effectively serving as Subadvisers to the Funds. The Board concluded that
the nature and extent of services provided by the Subadvisers under the
Subadvisory Agreements were reasonable and appropriate in relation to the
subadvisory fees and that the quality of services continues to be high.
With respect to the Newfleet Subadvisory Agreement, the Board considered the
nature, extent and quality of services to be provided by Newfleet with respect
to the High Yield Bond Fund, including investment management services such as
investment research, advice and supervision, and determining which securities
will be purchased or sold by the Fund, subject to the oversight and review of
SunAmerica. In addition, the Board reviewed Newfleet's history, structure,
size, visibility and resources, which are needed to attract and retain highly
qualified investment professionals. The Board also reviewed the personnel that
would be responsible for providing portfolio management services to the Fund.
The Board concluded, based on the materials provided, discussions with Newfleet
representatives, and diligence conducted by management, that: (i) Newfleet
would be able to retain high quality portfolio managers and other investment
personnel; (ii) Newfleet would exhibit a high level of diligence and attention
to detail in carrying out its responsibilities as a subadviser; and
(iii) Newfleet would be responsive to requests of the Board and of SunAmerica.
The Board also considered that Newfleet has developed internal policies and
procedures for monitoring compliance with the investment objectives, policies
and restrictions of the Fund. The Board further considered Newfleet's code of
ethics, compliance and regulatory history and risk management processes. The
Board also noted that the Newfleet had not experienced any material regulatory
or compliance problems nor has it been involved in any material litigation or
administrative proceedings that would potentially impact it from effectively
serving as a subadviser to the Fund.
81
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The Board concluded that the nature and extent of services to be provided by
Newfleet under the Newfleet Subadvisory Agreement were reasonable and
appropriate in relation to the proposed subadvisory fees and that the quality
of services was reasonably expected to be high.
Investment Performance. The Board, including the Independent Trustees, also
considered the investment performance of SunAmerica and the Subadvisers with
respect to the Funds, as applicable. In connection with its review, the Board
received and reviewed information regarding the investment performance of the
Funds as compared to each Fund's peer group ("Peer Group") and/or peer universe
("Peer Universe") as independently determined by Lipper and to an appropriate
index or combination of indices, including the Funds' benchmarks. The Board was
provided with a description of the methodology used by Lipper to select the
funds in each Peer Group and Peer Universe.
With respect to the approval of the Newfleet Subadvisory Agreement, the Board
also considered performance data with respect to any other mutual funds or
other accounts advised or subadvised by Newfleet with similar investment
objectives and/or strategies, as applicable. In considering this comparative
performance, however, the Board also reviewed any relevant distinctions and
differences, and acknowledged that past performance is not necessarily
indicative of future results.
The Board noted that performance information was for the periods ended
March 31, 2014. The Board also noted that it regularly reviews the performance
of the Funds throughout the year. The Board further noted that, while it
monitors performance of the Funds closely, it generally attaches more
importance to performance over relatively long periods of time, typically three
to five years.
GNMA Fund. The Board considered that the Fund's performance was below the
median of its Peer Group and Peer Universe for the one-, three- and five-year
periods. The Board also considered that the Fund underperformed its Lipper
Index for the one-, three- and five-year periods. The Board noted management's
discussion of the Fund's performance and that the Board had approved a proposal
to merge the Fund into the SunAmerica U.S. Government Securities Fund, a series
of SunAmerica Income Funds, subject to shareholder approval, and concluded that
the Fund's performance was being addressed.
U.S. Government Securities Fund. The Board considered that the Fund's
performance was below the median of its Peer Group and Peer Universe for the
one-, three- and five-year periods. The Board also considered that the Fund
underperformed its Lipper Index for the one-, three-, and five-year periods.
The Board considered that a new management team within SunAmerica was expected
to assume responsibility for day-to-day management of the Fund, effective June
2014. The Board noted management's discussion of the Fund's performance,
including the impending portfolio management changes and continued monitoring
of the Fund, and concluded that the Fund's performance was being addressed.
High Yield Bond Fund. The Board considered that the Fund's performance was
below the median of its Peer Group and Peer Universe for the one- and
three-year periods, above the median of its Peer Group for the five-year
period, and below the median of its Peer Universe for the five-year period. The
Board further considered that the Fund underperformed its Lipper Index for the
one-, three- and five-year periods. The Board noted management's discussion of
the Fund's performance and that the Board had approved certain changes to the
Fund's principal investment strategy in order to address these performance
concerns, including a change in the Fund's subadviser. The Board concluded that
the Fund's performance was being addressed.
Strategic Bond Fund. The Board considered that the Fund's performance was below
the median of its Peer Group for the one- and three-year periods, at the median
for the five-year period, above the median of its Peer Universe for the one-
and five-year periods, and at the median for the three-year period. The Board
further considered that the Fund underperformed its Lipper Index for the one-,
three- and five-year periods and outperformed its Lipper Index for the ten-year
period. The Board noted management's discussion of the Fund's performance and
that the Board had approved certain changes to the Fund's principal investment
strategy and concluded that the Fund's performance was being addressed.
Consideration of the Management Fees and Subadvisory Fees and the Cost of the
Services and Profits to be Realized by SunAmerica and the Subadvisers and their
Affiliates from the Relationship with the Funds. The Board, including the
Independent Trustees, received and reviewed information regarding the fees to
be paid by the Funds to SunAmerica pursuant to the Advisory Agreement and the
fees to be paid by SunAmerica to the Subadvisers pursuant to the Subadvisory
Agreements. The Board examined this information in order to determine the
reasonableness of the fees in light of the nature and quality of services to be
provided and any potential additional benefits to be received by SunAmerica,
the Subadvisers or their affiliates in connection with providing such services
to the Funds.
82
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe as determined by Lipper, including rankings within each category. In
considering the reasonableness of the management fee to be paid by each Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering each Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to each Fund.
The Board further considered that, unlike the funds in each Peer Group and Peer
Universe, the fee waivers and/or reimbursements being made by SunAmerica with
respect to the Funds are only reflected in the total expenses category of the
Lipper reports, rather than also being reflected as specific management fee
waivers in the actual management fees category of the Lipper reports. As a
result, the Board took into account that the actual management fees presented
by Lipper for the funds in each Peer Group and Peer Universe may appear lower
on a relative basis. The Board also considered the various expense components
of the Funds and compared each Fund's net expense ratio (taking into account
the contractual fee caps and waivers) to those of other funds within its Peer
Group and/or Peer Universe as a guide to help assess the reasonableness of the
management fee for the Funds. The Board acknowledged that it was difficult to
make precise comparisons with other funds in the Peer Groups and Peer Universes
since the exact nature of services provided under the various fund agreements
is often not apparent. The Board noted, however, that the comparative fee
information provided by Lipper as a whole was useful in assessing whether
SunAmerica was providing services at a cost that was competitive with other,
similar funds.
The Board also considered the management fees received by SunAmerica with
respect to other mutual funds and accounts with similar investment strategies
to the Funds, to the extent applicable. The Board noted, however, that the
mutual funds identified as similar to the U.S. Government Securities Fund and
the GNMA fund are sold only in the variable annuity market and, accordingly,
are in different Lipper classifications, with a peer groups consisting of funds
underlying variable insurance products. The Board further noted that SunAmerica
serves as subadviser to the mutual fund identified as similar to the U.S.
Government Securities Fund and observed that the services SunAmerica provides
as subadviser are much more limited in scope than it its role as investment
manager and adviser to the Fund. The Board then noted the management fees paid
by the Funds were reasonable as compared to the fees SunAmerica was receiving
from other mutual funds and accounts for which it serves as adviser or
subadviser.
The Board also received and reviewed information regarding the fees paid by
SunAmerica to the Subadvisers pursuant to the Subadvisory Agreements. To assist
in analyzing the reasonableness of the subadvisory fees, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of each Fund's Peer Group that the Board used as a guide to help
assess the reasonableness of the subadvisory fees. The Board noted that Peer
Group information as a whole was useful in assessing whether the Subadvisers
were providing services at a cost that was competitive with other similar
funds. The Board also considered that the subadvisory fees are paid by
SunAmerica out of its management fee and not by the Funds, and that subadvisory
fees may vary widely within a Peer Group for various reasons, including market
pricing demands, existing relationships, experience and success, and individual
client needs. The Board further considered the amount of subadvisory fees paid
out by SunAmerica and the amount of the management fees which it retained and
determined that these amounts were reasonable in light of the services
performed by SunAmerica and the Subadviser, respectively.
The Board also considered advisory fees received by the Subadvisers with
respect to other mutual funds and accounts with similar investment strategies
to the Funds for which they serves as adviser or subadviser, to the extent
applicable. The Board noted in particular that certain of the similar accounts
identified by Wellington were institutional separate accounts, and Wellington
highlighted certain differences between these separate accounts and the High
Yield Bond Fund, including that these separate accounts are subject to
different investment limitations and restrictions and do not experience daily
cash flows in a manner similar to the Fund. The Board then noted that the
subadvisory fees paid by SunAmerica to the Subadvisers were reasonable as
compared to fees the Subadvisers receive for other mutual funds and accounts
for which they serve as adviser or subadviser.
GNMA Fund. The Board considered that the Fund's actual management fees were
below the median of its Peer Group and above the median of its Peer Universe.
The Board also considered that the Fund's total expenses were above the median
of its Peer Group and Peer Universe. The Board noted that the Fund's advisory
fee contains breakpoints and further noted management's discussions regarding
the Fund's expenses.
83
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
U.S. Government Securities Fund. The Board considered that the Fund's actual
management fees were above the median of its Peer Group and Peer Universe. The
Board also considered that the Fund's total expenses were below the median of
its Peer Group and above the median of its Peer Universe. The Board noted that
the Fund's advisory fee contains breakpoints and further noted management's
discussion regarding the Fund's expenses.
High Yield Bond Fund. The Board considered that the Fund's actual management
fees were above the median of its Peer Group and Peer Universe. The Board also
considered that the Fund's total expenses were above the median of its Peer
Group and Peer Universe. The Board noted that the Fund's advisory fee contains
breakpoints and further noted management's discussion regarding the Fund's
expenses.
Strategic Bond Fund. The Board considered that the Fund's actual management
fees were equal to the median of its Peer Group and above the median of its
Peer Universe. The Board also considered that the Fund's total expenses were
above the median of its Peer Group and Peer Universe. The Board noted that the
Fund's advisory fee contains breakpoints and further noted management's
discussion regarding the Fund's expenses.
With respect to the Newfleet Subadvisory Agreement, the Board also received and
reviewed information regarding the subadvisory fee to be paid by SunAmerica to
Newfleet pursuant to the Newfleet Subadvisory Agreement. To assist in analyzing
the reasonableness of the subadvisory fee, the Board received a report prepared
independently by Lipper. The report showed comparative fee information of the
Fund's Peer Group and Peer Universe that the Board used as a guide to help
assess the reasonableness of the subadvisory fees. The Board noted that the
Peer Group and Peer Universe information, as a whole, was useful in assessing
whether Newfleet was providing services at a cost that was competitive with
other similar funds. The Board also considered that the subadvisory fee was
paid by SunAmerica out of its advisory fee and not by the Fund, and that
subadvisory fee may vary widely within a Peer Group for various reasons,
including market pricing demands, existing relationships, experience and
success, and individual client needs. The Board further considered the amount
of the subadvisory fees to be paid out by SunAmerica and the amount of the
advisory fee that it would retain and determined that these amounts were
reasonable in light of the services to be performed by SunAmerica and Newfleet,
respectively.
The Board also considered fees received by Newfleet with respect to other
mutual funds and accounts for which it serves as adviser or subadviser that
have similar investment strategies to the Fund, and reviewed any relevant
distinctions or differences with respect to such other mutual funds or accounts.
Profitability. The Board also considered SunAmerica's profitability and the
benefits SunAmerica and its affiliates received from its relationship with the
Funds. The Board received and reviewed financial statements relating to
SunAmerica's financial condition and profitability with respect to the services
it provided the Funds and considered how profit margins could affect
SunAmerica's ability to attract and retain high quality investment
professionals and other key personnel. The Board was also provided with a
profitability analysis that detailed the revenues earned and the expenses
incurred by SunAmerica and its affiliates that provide services to the Funds on
a Fund by Fund basis. In particular, the Board considered the contractual fee
waivers and/or expense reimbursements agreed to by SunAmerica.
The Board considered the profitability of SunAmerica under the Advisory
Agreement, including the amount of management fees it retained after payment to
the Subadvisers, and considered the profitability of SunAmerica's affiliates
under the Rule 12b-1 Plans and Service Agreements. Additionally, the Board
considered whether SunAmerica and their affiliates received any indirect
benefits from the relationship with the Funds. Specifically, the Board observed
that AIG Federal Savings Bank, an affiliate of SunAmerica serves as custodian
with respect to certain shareholder retirement accounts that are administered
by SunAmerica and receives a fee payable by the qualifying shareholders. The
Board further considered whether there were any collateral or "fall-out"
benefits that SunAmerica and its affiliates may derive as a result of their
relationship with the Funds. The Board noted that SunAmerica believes that any
such benefits are de minimis and do not impact the reasonableness of the
management fees.
The Board also reviewed financial statements from the Subadvisers and their
affiliates and considered whether the Subadvisers had the financial resources
necessary to attract and retain high quality investment management personnel
and to provide a high quality of services.
84
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- SEPTEMBER 30, 2014 -- (UNAUDITED)
(CONTINUED)
The Board concluded that SunAmerica and the Subadvisers had the financial
resources necessary to perform their obligations under the Agreements and to
continue to provide the Funds with the high quality services that they had
provided in the past. The Board also concluded that the management fee and
subadvisory fees were reasonable in light of the factors discussed above.
Economies of Scale. The Board, including the Independent Trustees, considered
whether the shareholders would benefit from economies of scale and whether
there was potential for future realization of economies with respect to the
Funds. The Board considered that as a result of being part of the SunAmerica
fund complex, the Funds share common resources and may share certain expenses,
and if the size of the complex increases, each Fund could incur lower expenses
than they otherwise would achieve as stand-alone entities. The Board also took
into account that each of the Funds had management fee arrangements that
included breakpoints that will adjust the fee downward as the size of the Fund
increases, thereby allowing the shareholders to potentially participate in any
economies of scale. The Board further noted that SunAmerica has agreed to
contractually cap the total annual operating expenses of the Funds at certain
levels. The Board observed that those expense caps and fee waivers benefited
shareholders by keeping total fees down even in the absence of breakpoints or
economies of scale. The Board concluded that the Funds' management fee
structure was reasonable and that it would continue to review fees in
connection with the renewal of the Advisory Agreement, including whether the
implementation of additional breakpoints would be appropriate in the future due
to an increase in asset size or otherwise.
The Board noted that the Subadvisory Agreements included breakpoints, but did
not review specific information regarding whether there have been economies of
scale with respect to the Subadvisers' management of the Funds because it
regards that information as less relevant at the subadviser level. Rather, the
Board considered information regarding economies of scale in the context of the
renewal of the Advisory Agreement.
The Board did not review specific information regarding whether there would be
economies of scale with respect to Newfleet's management of the Fund because it
regards that information as less relevant at the subadviser level. Rather, the
Board noted that it considered information regarding economies of scale in the
context of the renewal of the Advisory Agreements between Income Funds and
SunAmerica with respect to the Fund.
Other Factors. In consideration of the Agreements, including the Newfleet
Subadvisory Agreement, the Board also received information regarding
SunAmerica's and the Subadvisers' brokerage and soft dollar practices. The
Board considered that SunAmerica and the Subadvisers are responsible for
decisions to buy and sell securities for the Funds they manage, selection of
broker-dealers and negotiation of commission rates. The Board also considered
that Newfleet does not have any soft dollar arrangements and does not
anticipate entering into any in the foreseeable future. The Board also
considered the benefits SunAmerica and the Subadvisers may derive from soft
dollar arrangements, including arrangements under which brokers provide
brokerage and/or research services to SunAmerica and/or the Subadvisers in
return for allocating brokerage; however, the Board noted that the securities
in which the Funds invest are traded primarily in the over-the-counter market
on a "net" basis with dealers acting as principal for their own accounts
without a stated commission (although the price of the security usually
includes a profit to the dealer) and, therefore, the Funds generally do not
incur brokerage commissions. Accordingly, the Board observed that SunAmerica
and the Subadvisers typically would not receive soft dollar benefits in return
for allocating the Funds' brokerage transactions. The Board further observed
that when making purchases of new issues with fixed underwriting fees,
SunAmerica or the Subadvisers may designate the use of broker-dealers who have
agreed to provide certain statistical, research and other information.
Conclusion. After a full and complete discussion, the Board approved the
Agreements, each for a one-year period ending June 30, 2015 and approved the
Newfleet Subadvisory Agreement, for an initial term ending June 30, 2016. Based
upon their evaluation of all these factors in their totality, the Board,
including the Independent Trustees, was satisfied that the terms of the
Agreements, including the Newfleet Subadvisory Agreement, were fair and
reasonable and in the best interests of the Funds and the Funds' shareholders.
In arriving at a decision to approve the Advisory Agreement and Subadvisory
Agreements, including the Newfleet Subadvisory Agreement, the Board did not
identify any single factor or group of factors as all-important or controlling,
but considered all factors together, and each Independent Trustee may have
attributed different weights to different factors. The Independent Trustees
were also assisted by the advice of independent legal counsel in making this
determination.
85
[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.
OFFICERS determine how to vote Securities and
John T. Genoy, President proxies relating to Exchange Commission
Gregory R. Kingston, secu-rities held in a for its first and
Treasurer Fund's portfolio, third fiscal quarters
James Nichols, Vice which is available in on Form N-Q. The
President the Trust's Statement Trust's Forms N-Q are
Kara Murphy, Vice of Additional available on the
President Information, may be U.S. Securities and
Katherine Stoner, Vice ob-tained without Exchange Commis-sion
President and Chief charge upon request, website at
Compliance Officer by calling (800) www.sec.gov. You can
Gregory N. Bressler, 858-8850. The also review and obtain
Secretary in-formation is also copies of the Forms
Nori L. Gabert, Vice available from the N-Q at the U.S.
President and EDGAR database on the Securities and
Assistant Secretary U.S. Secu-rities and Exchange Commission
Kathleen Fuentes, Chief Exchange Commission's Public Refer-ence Room
Legal Officer and website at in Washington DC
Assistant Secretary http://www.sec.gov. (information on the
Shawn Parry, Vice DELIVERY OF operation of the
President and SHAREHOLDER DOCUMENTS Public Reference Room
Assistant Treasurer The Funds have adopted may be ob-tained by
Donna McManus, Vice a policy that allows calling
President and them to send only one 1-800-SEC-0330).
Assistant Treasurer copy of a Fund's PROXY VOTING RECORD ON
John E. Smith Jr., prospectus, proxy SUNAMERICA INCOME FUNDS
Assistant Treasurer material, annual Information regarding
Matthew J. Hackethal, report and semi-annual how the Funds voted
Anti-Money Laundering report (the proxies relating to
Compliance Officer "shareholder securities held in the
INVESTMENT ADVISER documents") to Funds during the most
SunAmerica Asset shareholders with recent twelve month
Management, LLC multiple accounts period ended June 30
Harborside Financial residing at the same is available, once
Center "household." This filed with the U.S.
3200 Plaza 5 practice is called Securities and
Jersey City, NJ householding and Exchange Commission,
07311-4992 reduces Fund expenses, without charge, upon
DISTRIBUTOR which benefits you and request, by calling
AIG Capital Services, other shareholders. (800) 858-8850 or on
Inc. Unless the Funds the U.S. Securities
Harborside Financial receive instructions and Exchange
Center to the con-trary, you Commission's website
3200 Plaza 5 will only receive one at http://www.sec.gov.
Jersey City, NJ copy of the This report is
07311-4992 shareholder documents. submitted solely for
SHAREHOLDER SERVICING The Funds will the general
AGENT continue to household information of
SunAmerica Fund the share-holder shareholders of the
Services, Inc. documents Funds. Distribution of
Harborside Financial indefinitely, until we this report to persons
Center are instructed other than
3200 Plaza 5 otherwise. If you do shareholders of the
Jersey City, NJ not wish to Funds is authorized
07311-4992 participate in only in con-nection
CUSTODIAN AND TRANSFER householding please with a currently
AGENT contact Shareholder effective pro-spectus,
State Street Bank and Services at (800) setting forth details
Trust Company 858-8850 ext. 6010 or of the Funds, which
P.O. Box 5607 send a written request must precede or
Boston, MA 02110 with your name, the accom-pany this report.
name of your fund(s) The accompanying
and your account report has not been
number(s) to audited by independent
SunAmerica Mutual accountants and
Funds c/o BFDS, P.O. accordingly no
Box 219186, Kansas opinions has been
City MO, 64121-9186. expressed thereon.
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
INSAN - 9/14
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15) of Schedule 14A (17 CFR 240.14a-
101)), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined under Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Not applicable.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-------------------------
John T. Genoy
President
Date: December 8, 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: December 8, 2014
By: /s/ Gregory R. Kingston
-------------------------
Gregory R. Kingston
Treasurer
Date: December 8, 2014