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 811-04708
---------------------------------------------
SunAmerica Income Funds
--------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6414
-----------------------------
Date of fiscal year end: March 31
--------------------------
Date of reporting period: March 31, 2016
-------------------------
Item 1. Reports to Stockholders
ANNUAL REPORT 2016
SUNAMERICA
Income Funds
[PHOTO]
[LOGO]
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.................................... 14
NOTES TO FINANCIAL STATEMENTS............................... 67
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 84
APPROVAL OF ADVISORY AGREEMENTS............................. 85
TRUSTEE AND OFFICER INFORMATION............................. 90
SHAREHOLDER TAX INFORMATION................................. 93
COMPARISONS: PORTFOLIOS VS. INDICES......................... 94
SHAREHOLDER LETTER -- (unaudited)
Dear Shareholders,
We are pleased to present this annual update for the SunAmerica Income Funds
for the 12 months ended March 31, 2016. It was a period wherein fixed income
market performance was primarily driven by shifting expectations about global
economic growth, central bank monetary policy, geopolitical events and
commodities prices. For the annual period overall, the Barclays U.S. Aggregate
Bond Index/*/, a broad measure of the U.S. fixed income market, returned 1.96%.
As the annual period began in April 2015, volatility surged across global
markets. Positive economic growth, especially in developed economies, and
accommodative central bank policies supported markets, while the risk of a
Greek exit from the Eurozone rose considerably. Government bond yields moved
sharply higher. Also, most yield curves steepened amid brightening economic
outlooks in the U.S. and the Eurozone, due to easing global deflation fears,
and the Federal Reserve (the "Fed") appearing to be on track to raise interest
rates later in 2015. Greece took center stage at the end of the second quarter
of 2015 after debt negotiations broke down, and the country defaulted on its
payment to the International Monetary Fund, triggering a risk-off tone
throughout the global financial markets. Most of the major fixed income sectors
posted negative returns during the second quarter of 2015, as government bond
yields rose, while performance versus duration-equivalent government bonds was
mixed. Emerging market debt, U.S. high yield corporate bonds and asset-backed
securities outpaced government bond yields; but U.S. investment grade corporate
bonds, commercial and residential mortgage-backed securities, and European
investment grade and high yield corporate bonds underperformed.
Though market concerns about Greece receded following a resolution with its
creditors, risk aversion intensified in the third calendar quarter, with
financial markets - both fixed income and equities - coming under significant
pressure amid fresh worries about the global economic outlook. The unexpected
devaluation in China's currency rattled global financial markets, deepening
fears about the Chinese economic slowdown and potential spillover effects.
Falling commodity prices and uncertainty regarding the timing of the first Fed
rate hike further muddied the waters. In contrast to negative news about China
and other emerging markets, data on developed markets was generally positive.
Still, the Fed chose to leave rates unchanged at its September meeting, citing
unfavorable global developments, modestly tighter financial conditions and low
inflation. Global government bond yields declined across most developed market
economies as China's weakness, Greece's ongoing bailout saga and uncertainty
about the timing of Fed tightening bolstered demand for safe-haven assets.
Emerging market sovereign bond yields diverged. Most spread, or non-government
bond, sectors posted positive absolute returns amid lower interest rates but
underperformed duration-equivalent government bonds. The major exception was
U.S. corporate bonds, especially high yield corporate bonds, which generated
negative returns during the third quarter of 2015. Corporate spreads widened on
rising concerns that the deterioration in China's economic growth outlook would
have a meaningful impact on commodity prices and, more broadly, on global
economic growth.
In the fourth quarter of 2015, spread sectors generated positive returns.
Outside the U.S., the global monetary policy environment remained highly
accommodative with the European Central Bank (ECB) lowering interest rates into
negative territory and expanding its stimulus program. The U.S. dollar gained
on expectations the Fed would hike interest rates, which it finally did in
December 2015. The U.S. economy remained on a positive growth trend, but
economic growth in other developed countries softened by the end of 2015.
Growth in emerging market countries weakened even more, largely due to
commodity price declines and concerns about the slowing Chinese economy.
As 2016 began, spread sectors sold off significantly only to retrace their
losses from mid-February to the end of the annual period on March 31, 2016.
Volatility early in the first calendar quarter was driven by an increase in a
number of perceived risks, including a slowing Chinese economy, the possibility
of persistent oil oversupply and deteriorating corporate bond fundamentals as
the U.S. credit cycle entered its later stage. Some of these risks eased during
the second half of the first quarter. Economic news from China improved, U.S.
oil production appeared to slow, and commodity prices stabilized somewhat.
Global central banks remained
2
accommodative. The Bank of Japan, in a surprise move, introduced a negative
interest rate. The ECB shifted its focus from currency depreciation to credit
creation by leaving its deposit rate unchanged, expanding its asset purchase
program and announcing a new series of targeted long-term refinancing
operations. Even in the U.S., the Fed suggested U.S. interest rate increases
might be more measured and fewer in number than previously anticipated. After a
sustained period of appreciation, the U.S. dollar weakened due to generally
tighter financial conditions, mixed U.S. economic data and the Fed's more
dovish commentary.
For the annual period overall, U.S. Treasury securities posted positive
returns, even as both short-term and long-term yields rose. The yield on
intermediate-term U.S. Treasury securities, however, declined modestly, with
the yield on the 10-year U.S. Treasury declining approximately 15 basis points+
to 1.77% by the end of March 2016. The U.S. Treasury yield curve, or spectrum
of maturities, flattened during the 12 months ended March 31, 2016, as both
short-term and long-term yields rose but long-term yields rose less. Non-U.S.
Treasury sectors generated mixed performance. Emerging market debt and
asset-backed securities slightly outperformed U.S. Treasuries. Commercial
mortgage-backed securities generally performed in line with U.S. Treasuries.
High yield corporate bonds underperformed U.S. Treasuries, as did investment
grade corporate bonds, mortgage-backed securities and agency securities to a
lesser degree.
On the following pages, you will find financial statements and portfolio
information for each of the SunAmerica Income Funds during the annual period
ended March 31, 2016.
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 David L. Albrycht
Andrew Doulos Anthony King Frank Ossino
Kara Murphy Dana Burns Jonathan Stanley
John Yovanovic
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
* The Barclays U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. Indices are not managed and an investor cannot invest directly in
an index.
+ A basis point is 1/100/th/ of a percentage point.
3
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2016 -- (UNAUDITED)
DISCLOSURE OF PORTFOLIO EXPENSES IN SHAREHOLDER REPORTS
As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the
SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1)
transaction costs, including sales charges (loads) on purchase payments,
contingent deferred sales charges and (2) ongoing costs, including management
fees, distribution and service fees and other Fund expenses. The example set
forth below is intended to help you understand your ongoing costs (in dollars)
of investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at October 1, 2015 and held until March 31, 2016.
ACTUAL EXPENSES
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During the Six
Months Ended March 31, 2016" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2016" 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 March 31, 2016" column and the "Annualized Expense Ratio" column
do not include administrative fees that may apply to qualified retirement plan
accounts. See the Funds' prospectuses, your retirement plan document and/or
materials from your financial adviser for a full description of these fees. Had
these fees been included, the "Expenses Paid During the Six Months Ended March
31, 2016" column would have been higher and the "Ending Account Value" column
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 annual rate of return of 5% 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 the Funds and other funds. To do so, compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds. The "Expenses Paid During the Six Months Ended March 31, 2016"
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 March 31, 2016" column and the "Annualized Expense Ratio" column
do not include administrative fees that may apply to qualified retirement plan
accounts and accounts held through financial institutions. See the Funds'
prospectuses, your retirement plan document and/or materials from your
financial adviser for a full description of these fees. Had these fees been
included, the "Expenses Paid During the Six Months Ended March 31, 2016" column
would have been higher and the "Ending Account Value" column would have been
lower.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, including sales
charges on purchase payments, contingent deferred sales charges, small account
fees and administrative fees, if applicable to your account. Please refer to
the Funds' prospectus, your retirement plan document and/or material from your
financial adviser, for more information. Therefore, the "Hypothetical" example
is useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transaction costs and other fees were included, your costs would have been
higher.
4
SUNAMERICA INCOME FUNDS
EXPENSE EXAMPLE -- MARCH 31, 2016 -- (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% ANNUAL SIX MONTHS
ACCOUNT VALUE RETURN AT ENDED ACCOUNT VALUE RETURN AT ENDED ANNUALIZED
AT OCTOBER 1, MARCH 31, MARCH 31, AT OCTOBER 1, MARCH 31, MARCH 31, EXPENSE
FUND 2015 2016 2016* 2015 2016 2016* RATIO*
---- ------------- -------------- ------------- ------------- -------------- ------------- ----------
U.S. GOVERNMENT SECURITIES
Class A#................. $1,000.00 $1,011.21 $ 4.98 $1,000.00 $1,020.05 $ 5.00 0.99%
Class C#................. $1,000.00 $1,007.93 $ 8.23 $1,000.00 $1,016.80 $ 8.27 1.64%
STRATEGIC BOND FUND
Class A.................. $1,000.00 $1,013.32 $ 6.69 $1,000.00 $1,018.35 $ 6.71 1.33%
Class B.................. $1,000.00 $1,013.04 $10.07 $1,000.00 $1,015.00 $10.08 2.00%
Class C.................. $1,000.00 $1,013.24 $ 9.92 $1,000.00 $1,015.15 $ 9.92 1.97%
Class W.................. $1,000.00 $1,017.47 $ 5.65 $1,000.00 $1,019.40 $ 5.65 1.12%
FLEXIBLE CREDIT FUND
Class A#................. $1,000.00 $1,009.19 $ 7.28 $1,000.00 $1,017.75 $ 7.31 1.45%
Class C#................. $1,000.00 $1,006.02 $10.53 $1,000.00 $1,014.50 $10.58 2.10%
Class W#................. $1,000.00 $1,007.16 $ 6.27 $1,000.00 $1,018.75 $ 6.31 1.25%
--------
* Expenses are equal to each Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days then divided
by 366 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 March 31,
2016" and the "Annualized Expense Ratio" would have been higher.
5
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2016
U.S. GOVERNMENT STRATEGIC FLEXIBLE
SECURITIES BOND CREDIT
FUND FUND FUND
--------------- ------------ ------------
ASSETS:
Investments at value (unaffiliated)*........................ $162,624,734 $391,659,753 $280,841,105
Repurchase agreements (cost approximates value)............. 25,300,000 7,731,000 --
------------ ------------ ------------
Total investments.......................................... 187,924,734 399,390,753 280,841,105
------------ ------------ ------------
Cash........................................................ 660 51,270 1,145,669
Foreign cash*............................................... -- 60,168 7,264
Receivable for:
Shares of beneficial interest sold......................... 132,442 292,746 1,021,635
Dividends and interest..................................... 587,687 5,240,258 2,763,046
Investments sold........................................... -- 6,278,815 1,831,819
Prepaid Expenses and other assets........................... 4,639 6,186 4,746
Due from investment adviser for expense reimbursements/fee
waivers.................................................... 43,332 -- --
Unrealized appreciation on forward foreign currency
contracts.................................................. -- 153,998 --
------------ ------------ ------------
Total Assets................................................ 188,693,494 411,474,194 287,615,284
------------ ------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed..................... 217,230 727,055 650,153
Investments purchased...................................... -- 20,448,244 8,200,017
Investment advisory and management fees.................... 102,251 210,280 172,402
Distribution and service maintenance fees.................. 72,840 209,219 100,282
Transfer agent fees and expenses........................... 43,218 79,976 59,963
Trustees' fees and expenses................................ 412 700 519
Other accrued expenses..................................... 103,707 188,044 132,230
Dividends payable........................................... 20,711 169,723 192,501
Unrealized depreciation on forward foreign currency
contracts.................................................. -- 1,754,608 --
------------ ------------ ------------
Total Liabilities........................................... 560,369 23,787,849 9,508,067
------------ ------------ ------------
Net Assets.................................................. $188,133,125 $387,686,345 $278,107,217
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01........................ $ 196,139 $ 1,182,261 $ 843,872
Paid-in capital............................................. 193,156,987 476,556,141 348,534,383
------------ ------------ ------------
193,353,126 477,738,402 349,378,255
Accumulated undistributed net investment income (loss)...... (523,668) (1,543,031) 219,626
Accumulated undistributed net realized gain (loss) on
investments, futures contracts, options contracts,
securities sold short and foreign exchange transactions.... (12,551,796) (71,974,730) (61,667,570)
Unrealized appreciation (depreciation) on investments....... 7,855,463 (14,940,058) (9,822,360)
Unrealized foreign exchange gain (loss) on other assets and
liabilities................................................ -- (1,594,238) (734)
------------ ------------ ------------
Net Assets.................................................. $188,133,125 $387,686,345 $278,107,217
============ ============ ============
*Cost
Investment securities (unaffiliated)....................... $154,769,271 $406,599,811 $290,663,465
============ ============ ============
Foreign cash............................................... $ -- $ 59,826 $ 7,998
============ ============ ============
See Notes to Financial Statements
6
SUNAMERICA INCOME FUNDS
STATEMENTS OF ASSETS AND LIABILITIES -- MARCH 31, 2016 -- (CONTINUED)
U.S. GOVERNMENT STRATEGIC FLEXIBLE
SECURITIES BOND CREDIT
FUND FUND FUND
--------------- ------------ ------------
CLASS A (UNLIMITED SHARES AUTHORIZED):
Net assets............................................................ $156,468,328 $175,386,411 $125,775,043
Shares of beneficial interest issued and outstanding.................. 16,310,830 53,555,474 38,234,937
Net asset value and redemption price per share (excluding any
applicable contingent deferred sales charge)......................... $ 9.59 $ 3.27 $ 3.29
Maximum sales charge (4.75% of offering price)........................ $ 0.48 $ 0.16 $ 0.16
------------ ------------ ------------
Maximum offering price to public...................................... $ 10.07 $ 3.43 $ 3.45
============ ============ ============
CLASS B (UNLIMITED SHARES AUTHORIZED):
Net assets............................................................ $ -- $ 31,038,066 $ --
Shares of beneficial interest issued and outstanding.................. -- 9,481,661 --
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge)..................... $ -- $ 3.27 $ --
============ ============ ============
CLASS C (UNLIMITED SHARES AUTHORIZED):
Net assets............................................................ $ 31,664,797 $151,196,585 $ 61,890,870
Shares of beneficial interest issued and outstanding.................. 3,303,102 46,003,058 18,698,377
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge)..................... $ 9.59 $ 3.29 $ 3.31
============ ============ ============
CLASS W (UNLIMITED SHARES AUTHORIZED):
Net assets............................................................ $ -- $ 30,065,283 $ 90,441,304
Shares of beneficial interest issued and outstanding.................. -- 9,185,887 27,453,851
Net asset value, offering and redemption price per share.............. $ -- $ 3.27 $ 3.29
============ ============ ============
See Notes to Financial Statements
7
SUNAMERICA INCOME FUNDS
STATEMENTS OF OPERATIONS -- FOR THE YEAR ENDED MARCH 31, 2016
U.S. GOVERNMENT STRATEGIC FLEXIBLE
SECURITIES BOND CREDIT
FUND FUND FUND
--------------- ------------ ------------
INCOME:
Dividends (unaffiliated)................................................... $ -- $ 49,846 $ 94,453
Interest (unaffiliated).................................................... 3,397,824 20,676,928 12,875,947
----------- ------------ ------------
Total investment income*................................................. 3,397,824 20,726,774 12,970,400
----------- ------------ ------------
EXPENSES:
Investment advisory and management fees.................................... 1,229,165 2,727,768 1,799,820
Distribution and service maintenance fees:
Class A.................................................................. 570,941 681,425 421,192
Class B.................................................................. -- 343,838 --
Class C.................................................................. 260,291 1,659,796 593,875
Service fees -- Class W.................................................... -- 45,608 92,917
Transfer agent fees:
Class A.................................................................. 393,651 455,272 283,856
Class B.................................................................. -- 80,608 --
Class C.................................................................. 63,071 377,304 135,437
Class W.................................................................. -- 67,036 137,742
Registration fees:
Class A.................................................................. 19,928 28,775 47,771
Class B.................................................................. -- 11,538 --
Class C.................................................................. 9,427 17,630 22,350
Class W.................................................................. -- 11,559 44,673
Custodian and accounting fees.............................................. 29,256 126,610 58,750
Reports to shareholders.................................................... 53,484 118,857 55,291
Audit and tax fees......................................................... 54,240 70,618 69,768
Legal fees................................................................. 20,333 35,263 10,134
Trustees' fees and expenses................................................ 9,764 23,237 11,862
Interest expense........................................................... -- -- 1,910
Other expenses............................................................. 29,070 39,846 51,967
----------- ------------ ------------
Total expenses before fee waivers, expense reimbursements and expense
recoupments............................................................. 2,742,621 6,922,588 3,839,315
Net (fees waived and expenses reimbursed)/recouped by investment
advisor (Note 4)........................................................ (700,799) -- (72,928)
----------- ------------ ------------
Net expenses............................................................. 2,041,822 6,922,588 3,766,387
----------- ------------ ------------
Net investment income (loss)............................................. 1,356,002 13,804,186 9,204,013
----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)...................... 182,870 (18,542,305) (5,156,658)
Net realized foreign exchange gain (loss) on other assets and liabilities... -- 1,301,899 --
----------- ------------ ------------
Net realized gain (loss) on investments and foreign currencies.............. 182,870 (17,240,406) (5,156,658)
----------- ------------ ------------
Change in unrealized appreciation (depreciation) on investments
(unaffiliated)............................................................. (1,357,314) (5,469,733) (7,106,060)
Change in unrealized foreign exchange gain (loss) on other assets and
liabilities................................................................ -- (2,834,670) 400
----------- ------------ ------------
Net unrealized gain (loss) on investments and foreign currencies............ (1,357,314) (8,304,403) (7,105,660)
----------- ------------ ------------
Net realized and unrealized gain (loss) on investments and foreign
currencies................................................................. (1,174,444) (25,544,809) (12,262,318)
----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............. $ 181,558 $(11,740,623) $ (3,058,305)
=========== ============ ============
* Net of foreign withholding taxes on interest and dividends of............. $ -- $ (713) $ --
=========== ============ ============
See Notes to Financial Statements
8
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
U.S. GOVERNMENT
SECURITIES FUND
--------------------------
FOR THE YEAR FOR YEAR
ENDED ENDED
MARCH 31, MARCH 31,
2016 2015
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)......................................... $ 1,356,002 $ 1,800,638
Net realized gain (loss) on investments and foreign currencies....... 182,870 3,245,020
Net unrealized gain (loss) on investments and foreign currencies..... (1,357,314) 1,678,618
------------ ------------
Net increase (decrease) in net assets resulting from operations....... 181,558 6,724,276
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (Class A)...................................... (2,895,384) (2,308,336)
Net investment income (Class B)*..................................... -- (50,109)
Net investment income (Class C)...................................... (293,718) (157,120)
Net investment income (Class W)*..................................... -- --
Net realized gain on securities (Class A)............................ -- --
Net realized gain on securities (Class B)*........................... -- --
Net realized gain on securities (Class C)............................ -- --
Net realized gain on securities (Class W)*........................... -- --
------------ ------------
Total distributions to shareholders................................... (3,189,102) (2,515,565)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE
TRANSACTIONS (NOTE 7)................................................ (20,275,343) 89,657,072
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... (23,282,887) 93,865,783
NET ASSETS:
Beginning of period................................................... 211,416,012 117,550,229
------------ ------------
End of period+........................................................ $188,133,125 $211,416,012
============ ============
+ Includes accumulated undistributed net investment income (loss)..... $ (523,668) $ (117,198)
============ ============
* See Note 1
See Notes to Financial Statements
9
SUNAMERICA INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
STRATEGIC BOND FUND FLEXIBLE CREDIT FUND
-------------------------- --------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2016 2015 2016 2015
------------ ------------ ------------ ------------
INCREASE (DECREASE)
IN NET ASSETS
OPERATIONS:
Net investment
income (loss)...... $ 13,804,186 $ 16,287,877 $ 9,204,013 $ 5,545,088
Net realized gain
(loss) on
investments and
foreign currencies. (17,240,406) 4,597,232 (5,156,658) (674,503)
Net unrealized gain
(loss) on
investments and
foreign currencies. (8,304,403) (9,615,191) (7,105,660) (2,672,730)
------------ ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations...... (11,740,623) 11,269,918 (3,058,305) 2,197,855
------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income (Class A)... (8,053,946) (9,771,036) (4,950,089) (3,932,700)
Net investment
income (Class B)*.. (1,193,570) (1,366,990) -- (363,833)
Net investment
income (Class C)... (5,817,628) (6,089,494) (2,058,159) (1,350,467)
Net investment
income (Class W)*.. (1,325,284) (27,319) (2,677,821) (173,730)
Net realized gain on
securities
(Class A).......... -- -- -- --
Net realized gain on
securities
(Class B)*......... -- -- -- --
Net realized gain on
securities
(Class C).......... -- -- -- --
Net realized gain on
securities
(Class W)*......... -- -- -- --
------------ ------------ ------------ ------------
Total distributions
to shareholders...... (16,390,428) (17,254,839) (9,686,069) (5,820,730)
------------ ------------ ------------ ------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM CAPITAL SHARE
TRANSACTIONS (NOTE 7) (58,954,992) (19,429,831) 104,299,983 75,727,824
------------ ------------ ------------ ------------
TOTAL INCREASE
(DECREASE) IN NET
ASSETS............... (87,086,043) (25,414,752) 91,555,609 72,104,949
NET ASSETS:
Beginning of period... 474,772,388 500,187,140 186,551,608 114,446,659
------------ ------------ ------------ ------------
End of period+........ $387,686,345 $474,772,388 $278,107,217 $186,551,608
============ ============ ============ ============
+ Includes
accumulated
undistributed net
investment income
(loss)............... $ (1,543,031) $ 1,552,245 $ 219,626 $ 468,481
============ ============ ============ ============
* See Note 1
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
-------
03/31/12 $ 9.51 $0.17 $ 0.62 $ 0.79 $(0.22) $(0.02) $(0.24) $10.06 8.34%(4) $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
03/31/15 9.43 0.12 0.34 0.46 (0.16) -- (0.16) 9.73 4.94 187,417
03/31/16 9.73 0.08 (0.05) 0.03 (0.17) -- (0.17) 9.59 0.33 156,468
CLASS C
-------
03/31/12 $ 9.50 $0.11 $ 0.61 $ 0.72 $(0.15) $(0.02) $(0.17) $10.05 7.64%(4) $ 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
03/31/15 9.42 0.06 0.34 0.40 (0.10) -- (0.10) 9.72 4.27 23,999
03/31/16 9.72 0.01 (0.03) (0.02) (0.11) -- (0.11) 9.59 (0.22) 31,665
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
0.99% 1.73% 152%
0.99 1.40 89
0.99 1.42 122
0.99 1.24 57
0.99 0.81 36
1.64% 1.08% 152%
1.64 0.76 89
1.64 0.77 122
1.64 0.61 57
1.64 0.16 36
--------
(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):
03/31/12 03/31/13 03/31/14 03/31/15 03/31/16
-------- -------- -------- -------- --------
U.S. Government Securities Fund Class A. 0.39% 0.40% 0.40% 0.38% 0.37%
U.S. Government Securities Fund Class C. 0.46 0.45 0.57 0.50 0.39
(4)The Fund's performance figure was increased by less than 0.01% from gains on
the disposal of investments in violation of investment restrictions.
See Notes to Financial Statements
11
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
STRATEGIC BOND 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
-------
03/31/12 $3.46 $0.16 $ 0.02 $ 0.18 $(0.19) $-- $(0.19) $3.45 5.30% $299,325
03/31/13 3.45 0.13 0.16 0.29 (0.14) -- (0.14) 3.60 8.64 336,759
03/31/14 3.60 0.14 (0.06) 0.08 (0.15) -- (0.15) 3.53 2.34 255,821
03/31/15 3.53 0.13 (0.04) 0.09 (0.13) -- (0.13) 3.49 2.70 235,093
03/31/16 3.49 0.12 (0.20) (0.08) (0.14) -- (0.14) 3.27 (2.32) 175,386
CLASS B
-------
03/31/12 $3.46 $0.14 $ 0.01 $ 0.15 $(0.16) $-- $(0.16) $3.45 4.60% $ 52,000
03/31/13 3.45 0.11 0.15 0.26 (0.12) -- (0.12) 3.59 7.62 56,776
03/31/14 3.59 0.12 (0.05) 0.07 (0.13) -- (0.13) 3.53 1.95 46,462
03/31/15 3.53 0.10 (0.03) 0.07 (0.11) -- (0.11) 3.49 2.01 39,733
03/31/16 3.49 0.10 (0.20) (0.10) (0.12) -- (0.12) 3.27 (2.97) 31,038
CLASS C
-------
03/31/12 $3.48 $0.14 $ 0.02 $ 0.16 $(0.17) $-- $(0.17) $3.47 4.63% $251,425
03/31/13 3.47 0.11 0.15 0.26 (0.12) -- (0.12) 3.61 7.62 270,965
03/31/14 3.61 0.12 (0.06) 0.06 (0.13) -- (0.13) 3.54 1.69 197,904
03/31/15 3.54 0.11 (0.04) 0.07 (0.11) -- (0.11) 3.50 2.05 184,282
03/31/16 3.50 0.10 (0.19) (0.09) (0.12) -- (0.12) 3.29 (2.63) 151,197
CLASS W
-------
01/29/15(4)-03/31/15 $3.48 $0.01 $ 0.02 $ 0.03 $(0.02) $-- $(0.02) $3.49 0.99% $ 15,664
03/31/16 3.49 0.12 (0.20) (0.08) (0.14) -- (0.14) 3.27 (2.14) 30,065
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS NET ASSETS TURNOVER
---------- ---------- ---------
1.31% 4.72% 144%
1.30 3.70 166
1.31 4.01 158
1.30 3.62 137
1.34 3.54 108
1.98% 4.07% 144%
1.97 3.02 166
1.97 3.35 158
1.97 2.95 137
2.01 2.87 108
1.96% 4.09% 144%
1.94 3.05 166
1.96 3.37 158
1.94 2.98 137
1.98 2.90 108
1.20%(3)(5) 2.73%(3)(5) 137%
1.15 3.71 108
--------
(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):
03/31/15
--------
Strategic Bond Fund Class W............. 0.69%(5)
(4)Inception date of class.
(5)Annualized.
See Notes to Financial Statements
12
SUNAMERICA INCOME FUNDS
FINANCIAL HIGHLIGHTS -- (CONTINUED)
FLEXIBLE CREDIT FUND
--------------------
NET GAIN
(LOSS) ON
NET INVESTMENTS DISTRIBUTIONS NET
ASSET (BOTH DIVIDENDS FROM NET ASSET NET ASSETS,
VALUE, NET REALIZED TOTAL FROM FROM NET REALIZED TOTAL VALUE, END OF
BEGINNING INVESTMENT AND INVESTMENT INVESTMENT GAINS ON DISTRI- END OF TOTAL PERIOD
PERIOD ENDED OF PERIOD INCOME(1) UNREALIZED) OPERATIONS INCOME INVESTMENT BUTIONS PERIOD RETURN(2) (000'S)
-------------------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -----------
CLASS A
-------
03/31/12 $3.50 $0.23 $(0.08) $ 0.15 $(0.25) $-- $(0.25) $3.40 4.52% $ 81,477
03/31/13 3.40 0.20 0.18 0.38 (0.20) -- (0.20) 3.58 11.42 74,175
03/31/14 3.58 0.19 0.00 0.19 (0.18) -- (0.18) 3.59 5.60 70,713
03/31/15 3.59 0.15 (0.11) 0.04 (0.17) -- (0.17) 3.46 1.06 127,508
03/31/16 3.46 0.13 (0.16) (0.03) (0.14) -- (0.14) 3.29 (0.93) 125,775
CLASS C
-------
03/31/12 $3.53 $0.21 $(0.09) $ 0.12 $(0.23) $-- $(0.23) $3.42 3.56% $ 36,723
03/31/13 3.42 0.18 0.18 0.36 (0.18) -- (0.18) 3.60 10.67 33,918
03/31/14 3.60 0.17 0.00 0.17 (0.16) -- (0.16) 3.61 4.92 30,595
03/31/15 3.61 0.13 (0.11) 0.02 (0.15) -- (0.15) 3.48 0.43 45,411
03/31/16 3.48 0.11 (0.16) (0.05) (0.12) -- (0.12) 3.31 (1.54) 61,891
CLASS W
-------
10/01/14(4)-03/31/15 $3.50 $0.06 $(0.01) $ 0.05 $(0.08) $-- $(0.08) $3.47 1.57% 13,632
03/31/16 3.47 0.13 (0.17) (0.04) (0.14) -- (0.14) 3.29 (1.02) 90,441
RATIO
OF NET
RATIO OF INVESTMENT
EXPENSES INCOME TO
TO AVERAGE AVERAGE PORTFOLIO
NET ASSETS(3) NET ASSETS(3) TURNOVER
------------- ------------- ---------
1.36% 6.72% 52%
1.36 5.82 44
1.36 5.41 49
1.41 4.50 74
1.45 3.92 52
2.01% 6.11% 52%
2.01 5.18 44
2.01 4.76 49
2.06 3.88 74
2.10 3.27 52
1.25%(5) 4.25%(5) 74%
1.25 4.11 52
--------
(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):
03/31/12 03/31/13 03/31/14 03/31/15 03/31/16
-------- -------- -------- -------- --------
Flexible Credit Fund Class A............ 0.18% 0.16% 0.17% 0.19% 0.03%
Flexible Credit Fund Class C............ 0.19 0.16 0.18 0.20 0.02
Flexible Credit Fund Class W............ -- -- -- 1.12(5) 0.04
(4)Inception date of class.
(5)Annualized.
See Notes to Financial Statements
13
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO PROFILE -- MARCH 31, 2016 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Government National Mtg. Assoc.. 42.0%
United States Treasury Notes.... 17.2
Repurchase Agreements........... 13.5
United States Treasury Bonds.... 9.2
Federal National Mtg. Assoc..... 8.4
Federal Home Loan Mtg. Corp..... 4.1
Federal Farm Credit Bank........ 2.7
Federal Home Loan Bank.......... 2.7
Small Business Administration... 0.1
----
99.9%
====
CREDIT QUALITY+#
Aaa........ 99.9%
Not Rated@. 0.1
-----
100.0%
=====
--------
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues
@Represents debt issues that either have no rating, or the rating is
unavailable from the data source.
14
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. GOVERNMENT AGENCIES -- 60.0%
FEDERAL FARM CREDIT BANK -- 2.7%
2.63% due 02/24/2025.................. $ 5,150,000 $ 5,150,098
-----------
FEDERAL HOME LOAN BANK -- 2.7%
1.69% due 02/26/2021.................. 4,000,000 3,999,340
2.14% due 12/05/2022.................. 1,000,000 996,633
-----------
4,995,973
-----------
FEDERAL HOME LOAN MTG. CORP. -- 4.1%
Federal Home Loan Mtg. Corp.
3.50% due 08/01/2030.................. 4,619,337 4,884,639
Federal Home Loan Mtg. Corp. REMIC
Series 3747, Class WA
3.50% due 10/15/2030(1)............... 2,664,142 2,822,151
-----------
7,706,790
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 8.4%
1.25% due 09/28/2016.................. 10,000,000 10,035,640
2.25% due 10/17/2022.................. 1,000,000 1,000,038
2.50% due 11/01/2027.................. 4,643,545 4,789,412
-----------
15,825,090
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 42.0%
2.50% due 08/20/2030.................. 2,714,204 2,748,785
3.50% due 11/15/2041.................. 676,929 714,873
3.50% due 03/15/2042.................. 490,116 517,587
3.50% due 06/15/2042.................. 3,073,104 3,243,915
3.50% due 07/15/2042.................. 985,161 1,039,919
3.50% due 02/20/2045.................. 1,608,672 1,702,286
4.00% due 03/15/2039.................. 289,694 309,836
4.00% due 04/15/2039.................. 159,218 170,279
4.00% due 06/15/2039.................. 708,931 758,076
4.00% due 12/15/2039.................. 353,251 377,837
4.00% due 08/15/2040.................. 347,412 372,587
4.00% due 09/15/2040.................. 611,865 655,575
4.00% due 11/15/2040.................. 521,557 557,795
4.00% due 12/15/2040.................. 890,425 955,771
4.00% due 02/15/2041.................. 470,606 504,461
4.00% due 03/15/2041.................. 286,809 307,387
4.00% due 07/15/2041.................. 558,549 598,503
4.00% due 08/15/2041.................. 1,154,592 1,237,582
4.00% due 09/15/2041.................. 2,232,887 2,392,952
4.00% due 10/15/2041.................. 972,484 1,042,414
4.00% due 11/15/2041.................. 3,093,572 3,314,160
4.00% due 12/15/2041.................. 1,275,371 1,368,254
4.00% due 01/15/2042.................. 2,434,201 2,611,268
4.00% due 02/15/2042.................. 1,455,880 1,561,214
4.00% due 03/15/2042.................. 344,422 368,826
4.00% due 06/15/2042.................. 616,518 660,061
4.50% due 05/15/2018.................. 115,625 118,713
4.50% due 08/15/2018.................. 120,932 124,226
4.50% due 09/15/2018.................. 393,634 405,114
4.50% due 10/15/2018.................. 521,162 535,903
4.50% due 09/15/2033.................. 505,851 552,194
4.50% due 03/15/2039.................. 153,175 166,589
4.50% due 04/15/2039.................. 134,190 145,936
4.50% due 05/15/2039.................. 609,619 664,665
4.50% due 06/15/2039.................. 2,071,715 2,259,876
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
4.50% due 07/15/2039..................... $1,025,606 $1,118,164
4.50% due 09/15/2039..................... 300,233 327,159
4.50% due 10/15/2039..................... 276,695 301,098
4.50% due 11/15/2039..................... 277,427 302,456
4.50% due 12/15/2039..................... 813,116 886,416
4.50% due 01/15/2040..................... 383,463 418,497
4.50% due 02/15/2040..................... 1,679,750 1,831,111
4.50% due 03/15/2040..................... 898,476 979,186
4.50% due 04/15/2040..................... 979,714 1,068,164
4.50% due 05/15/2040..................... 371,800 406,133
4.50% due 06/15/2040..................... 455,180 495,852
4.50% due 07/15/2040..................... 740,669 807,903
4.50% due 08/15/2040..................... 195,646 213,193
4.50% due 09/15/2040..................... 181,225 198,428
4.50% due 11/15/2040..................... 263,562 287,545
4.50% due 01/15/2041..................... 299,451 326,741
4.50% due 02/15/2041..................... 268,156 291,627
4.50% due 03/15/2041..................... 2,001,637 2,183,514
4.50% due 04/15/2041..................... 1,081,109 1,178,520
4.50% due 05/15/2041..................... 371,236 404,549
4.50% due 06/15/2041..................... 735,314 799,675
4.50% due 07/15/2041..................... 166,408 180,973
4.50% due 08/15/2041..................... 732,768 798,632
4.50% due 04/20/2044..................... 1,138,658 1,223,303
5.00% due 04/15/2018..................... 467,821 485,054
5.00% due 05/15/2018..................... 98,194 101,048
5.00% due 08/15/2033..................... 537,255 598,038
5.00% due 10/15/2033..................... 887,424 983,533
5.00% due 05/15/2035..................... 192,167 211,941
5.00% due 08/15/2035..................... 501,614 562,748
5.00% due 03/15/2036..................... 247,479 276,231
5.00% due 05/15/2036..................... 123,161 138,073
5.00% due 09/15/2036..................... 281,371 313,905
5.00% due 10/15/2036..................... 116,692 128,700
5.00% due 01/15/2037..................... 362,524 399,828
5.00% due 02/15/2037..................... 552,987 617,026
5.00% due 03/15/2037..................... 114,033 127,852
5.00% due 04/15/2037..................... 748,560 827,382
5.00% due 04/15/2038..................... 601,950 668,181
5.00% due 05/15/2038..................... 335,048 371,387
5.00% due 08/15/2038..................... 807,003 895,959
5.00% due 01/15/2039..................... 290,004 322,819
5.00% due 02/15/2039..................... 163,142 181,467
5.00% due 03/15/2039..................... 233,717 260,542
5.00% due 04/15/2039..................... 222,817 247,380
5.00% due 07/20/2039..................... 1,583,140 1,756,119
5.00% due 08/15/2039..................... 446,569 495,013
5.00% due 10/15/2039..................... 1,117,389 1,245,338
5.00% due 11/15/2039..................... 869,963 968,453
5.00% due 12/15/2039..................... 753,349 837,976
5.00% due 04/15/2040..................... 768,428 850,419
5.00% due 05/15/2040..................... 1,554,295 1,722,513
5.00% due 07/20/2045..................... 829,332 916,216
5.50% due 06/15/2033..................... 993,812 1,139,346
5.50% due 07/15/2033..................... 151,706 170,516
5.50% due 10/15/2033..................... 229,830 263,644
5.50% due 01/15/2034..................... 715,736 816,296
15
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. GOVERNMENT AGENCIES (CONTINUED)
GOVERNMENT NATIONAL MTG. ASSOC. (CONTINUED)
5.50% due 02/15/2034.................. $ 330,746 $ 378,909
5.50% due 04/20/2035.................. 634,389 717,929
5.50% due 09/15/2035.................. 536,625 621,154
5.50% due 10/15/2035.................. 445,291 503,206
5.50% due 02/15/2038.................. 212,299 238,610
5.50% due 04/15/2038.................. 125,736 140,729
5.50% due 05/15/2038.................. 138,573 155,417
5.50% due 09/15/2039.................. 104,091 116,796
5.50% due 03/15/2040.................. 198,204 223,513
5.50% due 08/15/2040.................. 143,381 160,478
6.00% due 04/15/2028.................. 213,663 245,227
6.00% due 08/15/2033.................. 342,122 395,083
6.00% due 12/15/2033.................. 154,343 178,367
6.00% due 07/15/2034.................. 118,115 133,291
6.00% due 12/15/2034.................. 112,921 127,430
6.00% due 09/20/2038.................. 1,595,772 1,809,143
6.50% due 10/15/2031.................. 121,542 141,821
Government National Mtg. Assoc. REMIC
Series 2010-104, Class NG
3.00% due 07/20/2038(1)............... 820,058 834,374
------------
79,116,678
------------
SMALL BUSINESS ADMINISTRATION -- 0.1%
6.30% due 06/01/2018.................. 109,095 114,844
------------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $110,037,546)................... 112,909,473
------------
U.S. GOVERNMENT TREASURIES -- 26.4%
UNITED STATES TREASURY BONDS -- 9.2%
2.50% due 02/15/2045.................. 1,000,000 975,078
4.25% due 11/15/2040.................. 8,000,000 10,589,376
4.75% due 02/15/2041.................. 4,000,000 5,681,564
------------
17,246,018
------------
UNITED STATES TREASURY NOTES -- 17.2%
0.88% due 11/15/2017.................. 2,000,000 2,005,000
1.50% due 07/31/2016.................. 16,000,000 16,059,984
2.00% due 02/15/2022.................. 5,000,000 5,170,900
2.00% due 02/15/2025.................. 5,000,000 5,106,835
2.00% due 08/15/2025.................. 3,000,000 3,057,657
3.13% due 05/15/2019.................. 1,000,000 1,068,867
------------
32,469,243
------------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $44,731,725).................... 49,715,261
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $154,769,271)................... 162,624,734
------------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
REPURCHASE AGREEMENTS -- 13.5%
State Street Bank and Trust Co. Joint
Repurchase Agreement(2)
(cost $25,300,000).................... $25,300,000 $ 25,300,000
------------
TOTAL INVESTMENTS
(cost $180,069,271)(3)................ 99.9% 187,924,734
Other assets less liabilities............ 0.1 208,391
----------- ------------
NET ASSETS 100.0% $188,133,125
=========== ============
--------
(1) Collateralized Mortgage Obligation
(2) See Note 3 for details of Joint Repurchase Agreements.
(3) See Note 6 for cost of investments on a tax basis.
REMIC --Real Estate Mortgage Investment Conduit
16
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2016 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
U.S. Government Agencies... $-- $112,909,473 $-- $112,909,473
U.S. Government Treasuries. -- 49,715,261 -- 49,715,261
Repurchase Agreements...... -- 25,300,000 -- 25,300,000
--- ------------ --- ------------
TOTAL INVESTMENTS AT VALUE. $-- $187,924,734 $-- $187,924,734
=== ============ === ============
--------
* For a detailed presentation of investments, 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.
See Notes to Financial Statements
17
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2016 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Sovereign.............................. 8.2%
Diversified Banking Institutions....... 6.9
Federal National Mtg. Assoc............ 6.2
Time Deposits.......................... 5.1
Banks-Commercial....................... 5.0
United States Treasury Notes........... 3.5
Electric-Integrated.................... 2.8
Telephone-Integrated................... 2.8
Federal Home Loan Mtg. Corp............ 2.6
Oil Companies-Exploration & Production. 2.6
Repurchase Agreements.................. 2.0
Cable/Satellite TV..................... 1.7
Pipelines.............................. 1.6
Oil Companies-Integrated............... 1.6
Medical-Hospitals...................... 1.4
Auto-Cars/Light Trucks................. 1.4
Cellular Telecom....................... 1.1
Medical-Drugs.......................... 1.1
Paper & Related Products............... 1.0
Real Estate Investment Trusts.......... 1.0
Diversified Financial Services......... 0.9
Casino Hotels.......................... 0.9
Diversified Manufacturing Operations... 0.9
Airlines............................... 0.8
Retail-Restaurants..................... 0.8
Food-Retail............................ 0.8
Insurance-Multi-line................... 0.7
Savings & Loans/Thrifts................ 0.7
Finance-Auto Loans..................... 0.7
Brewery................................ 0.7
Investment Management/Advisor Services. 0.7
Electric-Distribution.................. 0.7
Banks-Money Center..................... 0.6
Finance-Consumer Loans................. 0.6
Chemicals-Diversified.................. 0.6
Medical-HMO............................ 0.6
Aerospace/Defense...................... 0.6
Cruise Lines........................... 0.6
Independent Power Producers............ 0.6
Gambling (Non-Hotel)................... 0.6
Insurance-Mutual....................... 0.6
Electronic Components-Semiconductors... 0.6
Steel-Producers........................ 0.5
Finance-Other Services................. 0.5
Food-Dairy Products.................... 0.5
Banks-Super Regional................... 0.5
Finance-Leasing Companies.............. 0.5
Electric-Generation.................... 0.5
Wire & Cable Products.................. 0.5
Publishing-Periodicals................. 0.5
Containers-Metal/Glass................. 0.5
Insurance-Life/Health.................. 0.5
Computers.............................. 0.5
Containers-Paper/Plastic............... 0.5
Printing-Commercial.................... 0.5
Aerospace/Defense-Equipment............ 0.5
Municipal Bonds & Notes................ 0.5
Diversified Minerals................... 0.4
Auto/Truck Parts & Equipment-Original.. 0.4
Satellite Telecom...................... 0.4
Computer Services...................... 0.4
Oil Refining & Marketing............. 0.4%
Machinery-Farming.................... 0.4
Auto-Heavy Duty Trucks............... 0.4
Real Estate Operations & Development. 0.4
Commercial Services-Finance.......... 0.4
Medical Labs & Testing Services...... 0.4
Food-Meat Products................... 0.3
Broadcast Services/Program........... 0.3
Publishing-Newspapers................ 0.3
Theaters............................. 0.3
Building-Residential/Commercial...... 0.3
Banks-Fiduciary...................... 0.3
Networking Products.................. 0.3
Airport Development/Maintenance...... 0.3
Alternative Waste Technology......... 0.3
SupraNational Banks.................. 0.3
Rental Auto/Equipment................ 0.3
Finance-Credit Card.................. 0.3
Food-Misc./Diversified............... 0.2
Chemicals-Specialty.................. 0.2
Chemicals-Plastics................... 0.2
Retail-Discount...................... 0.2
Retail-Drug Store.................... 0.2
Industrial Gases..................... 0.2
Finance-Commercial................... 0.2
Finance-Mortgage Loan/Banker......... 0.2
United States Treasury Bonds......... 0.2
Travel Services...................... 0.2
Security Services.................... 0.2
Medical-Generic Drugs................ 0.2
Batteries/Battery Systems............ 0.2
Hotels/Motels........................ 0.2
Multimedia........................... 0.2
Disposable Medical Products.......... 0.2
Real Estate Management/Services...... 0.2
Beverages-Non-alcoholic.............. 0.2
Government National Mtg. Assoc....... 0.2
Internet Content-Entertainment....... 0.2
Internet Connectivity Services....... 0.2
Rubber/Plastic Products.............. 0.2
Retail-Computer Equipment............ 0.2
Distribution/Wholesale............... 0.2
Coatings/Paint....................... 0.2
Financial Guarantee Insurance........ 0.2
Human Resources...................... 0.2
Gas-Distribution..................... 0.2
Firearms & Ammunition................ 0.2
Marine Services...................... 0.2
Tools-Hand Held...................... 0.2
Television........................... 0.2
Energy-Alternate Sources............. 0.2
Coal................................. 0.2
Retail-Pawn Shops.................... 0.2
Petrochemicals....................... 0.2
Food-Wholesale/Distribution.......... 0.2
Medical-Biomedical/Gene.............. 0.2
Transport-Rail....................... 0.2
Machinery-General Industrial......... 0.1
Telecom Services..................... 0.1
Retail-Major Department Stores....... 0.1
Retail-Appliances.................... 0.1
18
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO PROFILE -- MARCH 31, 2016 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Consumer Products-Misc....................... 0.1%
E-Commerce/Services.......................... 0.1
Advertising Agencies......................... 0.1
Building & Construction Products-Misc........ 0.1
Steel Pipe & Tube............................ 0.1
Cosmetics & Toiletries....................... 0.1
Insurance-Reinsurance........................ 0.1
Beverages-Wine/Spirits....................... 0.1
Computer Software............................ 0.1
Gold Mining.................................. 0.1
Computers-Integrated Systems................. 0.1
Schools...................................... 0.1
Building Products-Wood....................... 0.1
Educational Software......................... 0.1
Oil-Field Services........................... 0.1
Metal-Aluminum............................... 0.1
Transport-Services........................... 0.1
Diagnostic Equipment......................... 0.1
Publishing-Books............................. 0.1
Agricultural Chemicals....................... 0.1
Building Products-Cement..................... 0.1
Medical Products............................. 0.1
Sugar........................................ 0.1
Metal-Copper................................. 0.1
Building & Construction-Misc................. 0.1
Tennessee Valley Authority................... 0.1
Electronic Components-Misc................... 0.1
Retail-Building Products..................... 0.1
Oil & Gas Drilling........................... 0.1
Hazardous Waste Disposal..................... 0.1
Gas-Transportation........................... 0.1
Electric-Transmission........................ 0.1
Applications Software........................ 0.1
Machinery-Construction & Mining.............. 0.1
Metal-Diversified............................ 0.1
Home Decoration Products..................... 0.1
Transport-Marine............................. 0.1
Finance-Investment Banker/Broker............. 0.1
E-Commerce/Products.......................... 0.1
Pharmacy Services............................ 0.1
Power Converter/Supply Equipment............. 0.1
Building Societies........................... 0.1
Engineering/R&D Services..................... 0.1
Enterprise Software/Service.................. 0.1
Warehousing & Harbor Transportation Services. 0.1
Diversified Operations....................... 0.1
Metal-Iron................................... 0.1
Telecommunication Equipment.................. 0.1
-----
103.0%
=====
CREDIT QUALITY+#
Aaa........ 15.4%
Aa......... 4.4
A.......... 14.9
Baa........ 19.9
Ba......... 14.2
B.......... 17.5
Caa........ 8.4
Ca......... 0.1
Not Rated@. 5.2
-----
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 STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
ASSET BACKED SECURITIES -- 0.6%
DIVERSIFIED FINANCIAL SERVICES -- 0.6%
Applebee's Funding LLC/IHOP Funding LLC
Series 2014-1, Class A2
4.28% due 09/05/2044*.......................... $ 28,000 $ 27,890
Asset Backed Securities Corp. Home Equity Loan
Trust FRS
Series 2004-HE7, Class M2
2.01% due 10/25/2034........................... 92,349 85,658
Avis Budget Rental Car Funding AESOP LLC
Series 2014-1A, Class A
2.46% due 07/20/2020*.......................... 67,000 67,001
B2R Mtg. Trust
Series 2015-1, Class A1
2.52% due 05/15/2048*.......................... 97,062 94,268
BA Credit Card Trust
Series 2015-A2,Class A
1.36% due 09/15/2020........................... 78,000 78,265
Chase Issuance Trust FRS
Series 2014-A5, Class A5
0.81% due 04/15/2021........................... 376,000 375,648
COMM Mtg. Trust
Series 2015-CR24, Class A2
3.02% due 08/10/2055(1)........................ 65,325 68,416
Commercial Mtg. Trust VRS
Series 2016-787S, Class A VRS
3.55% due 02/10/2036*(1)....................... 329,000 345,718
Commercial Mtg. Trust VRS
Series 2016-787S, Class B
3.96% due 02/10/2036*(1)....................... 132,000 136,006
Core Industrial Trust
Series 2015-CALW, Class A
3.04% due 02/10/2034*(1)....................... 71,000 72,893
Countrywide Home Loan Mtg. Pass Through Trust
Series 2005-6, Class 1A11
5.25% due 02/25/2026(2)........................ 52,168 52,319
CSAIL Commercial Mtg. Trust
Series 2015-C1, Class A2
2.97% due 04/15/2050(1)........................ 39,000 40,513
DB Master Finance LLC
Series 2015-1A, Class A2II
3.98% due 02/20/2045*.......................... 105,930 103,599
Dell Equipment Finance Trust
Series 2015-1,Class A3
1.30% due 03/23/2020*.......................... 100,000 99,655
Discover Card Execution Note Trust
Series 2015-A4, Class A4
2.19% due 04/17/2023........................... 117,000 118,873
First Franklin Mtg. Loan Trust FRS
Series 2006-FF15, Class A5
0.59% due 11/25/2036........................... 97,547 85,107
Ford Credit Auto Owner Trust
Series 2014-C,Class B
1.97% due 04/15/2020........................... 76,000 76,830
Ford Credit Auto Owner Trust
Series 2015-2, Class A
2.44% due 01/15/2027*.......................... 50,000 50,507
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
DIVERSIFIED FINANCIAL SERVICES (CONTINUED)
GS Mtg. Securities Corp.
Series GC30, Class A2
2.73% due 05/10/2050(1).................. $ 73,125 $ 75,463
GS Mtg. Securities Trust
Series 2015-GC28, Class A2
2.90% due 02/10/2048(1).................. 102,000 105,208
NRP Mtg. Trust VRS
Series 2013-1, Class A1
3.25% due 07/25/2043*(2)................. 139,212 138,899
Santander Drive Auto Receivables Trust
Series 2014-5, Class C
2.46% due 06/15/2020..................... 26,000 26,159
Sierra Timeshare Receivables Funding LLC
Series 2014-2A, Class A
2.05% due 06/20/2031*.................... 40,206 40,016
Wendys Funding LLC
Series 2015-1A, Class A2I
3.37% due 06/15/2045*.................... 78,605 77,163
Wendys Funding LLC
Series 2015-1A, Class A23
4.50% due 06/15/2045*.................... 43,780 42,528
----------
TOTAL ASSET BACKED SECURITIES
(cost $2,477,376)........................ 2,484,602
----------
U.S. CORPORATE BONDS & NOTES -- 47.1%
ADVERTISING AGENCIES -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
4.20% due 04/15/2024..................... 248,000 255,609
Omnicom Group, Inc.
Company Guar. Notes
3.60% due 04/15/2026..................... 275,000 281,698
----------
537,307
----------
AEROSPACE/DEFENSE -- 0.4%
BAE Systems Holdings, Inc.
Company Guar. Notes
3.80% due 10/07/2024*.................... 399,000 409,119
BAE Systems Holdings, Inc.
Company Guar. Notes
4.75% due 10/07/2044*.................... 195,000 203,453
Boeing Co.
Senior Notes
0.95% due 05/15/2018..................... 490,000 488,268
Boeing Co.
Senior Notes
2.20% due 10/30/2022..................... 271,000 269,400
Lockheed Martin Corp.
Senior Notes
4.70% due 05/15/2046..................... 124,000 138,648
----------
1,508,888
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.5%
Harris Corp.
Senior Notes
4.85% due 04/27/2035..................... 345,000 358,596
20
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
AEROSPACE/DEFENSE-EQUIPMENT (CONTINUED)
Harris Corp.
Senior Notes
5.05% due 04/27/2045................. $ 327,000 $ 348,408
Moog, Inc.
Company Guar. Notes
5.25% due 12/01/2022*................ 578,000 578,723
Triumph Group, Inc.
Company Guar. Notes
5.25% due 06/01/2022................. 478,000 430,200
United Technologies Corp.
Senior Notes
1.88% due 02/22/2026................. EUR 115,000 135,595
----------
1,851,522
----------
AIRLINES -- 0.6%
Allegiant Travel Co.
Company Guar. Notes
5.50% due 07/15/2019................. 882,000 906,255
Atlas Air, Inc.
Pass-Through Certs.
Series 1999-1, Class B
7.63% due 01/02/2018(3).............. 29,568 29,674
Atlas Air, Inc.
Pass-Through Certs.
Series 2000-1, Class B
9.06% due 01/02/2018(3).............. 232,838 238,193
United Airlines Pass-Through Trust
Pass-Through Certs
Series 2014-2, Class B
4.63% due 03/03/2024................. 713,210 706,078
United Airlines Pass-Through Trust
Pass-Through Certs
Series 2013-1, Class B
5.38% due 02/15/2023................. 474,952 486,826
----------
2,367,026
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.3%
Advanced Disposal Services, Inc.
Company Guar. Notes
8.25% due 10/01/2020................. 997,000 1,016,840
----------
APPLICATIONS SOFTWARE -- 0.1%
Microsoft Corp.
Senior Notes
1.30% due 11/03/2018................. 293,000 295,849
----------
AUTO-CARS/LIGHT TRUCKS -- 0.7%
American Honda Finance Corp.
Senior Notes
1.20% due 07/14/2017................. 619,000 620,087
American Honda Finance Corp.
Senior Notes
2.63% due 10/14/2022................. GBP 160,000 236,798
Daimler Finance North America LLC
Company Guar. Notes
2.45% due 05/18/2020*................ 577,000 583,097
Ford Motor Credit Co. LLC
Senior Notes
1.50% due 01/17/2017................. 360,000 359,548
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
AUTO-CARS/LIGHT TRUCKS (CONTINUED)
Hyundai Capital America
Senior Notes
2.40% due 10/30/2018*...................... $ 704,000 $ 708,697
Toyota Motor Credit Corp.
Senior Notes
2.00% due 10/24/2018....................... 229,000 233,132
----------
2,741,359
----------
AUTO-HEAVY DUTY TRUCKS -- 0.4%
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/2022*...................... 1,325,000 1,387,937
PACCAR Financial Corp.
Senior Notes
1.65% due 02/25/2019....................... 96,000 96,363
----------
1,484,300
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.3%
Affinia Group, Inc.
Company Guar. Notes
7.75% due 05/01/2021....................... 625,000 643,750
TI Group Automotive Systems, LLC
Senior Notes
8.75% due 07/15/2023*...................... 500,000 480,000
----------
1,123,750
----------
BANKS-COMMERCIAL -- 1.1%
BankUnited, Inc.
Senior Notes
4.88% due 11/17/2025....................... 682,000 684,051
Fifth Third Bank
Senior Notes
2.30% due 03/15/2019....................... 204,000 205,841
Fifth Third Bank
Notes
3.85% due 03/15/2026....................... 200,000 204,880
First Horizon National Corp.
Senior Notes
3.50% due 12/15/2020....................... 857,000 856,392
First Tennessee Bank NA
Senior Notes
2.95% due 12/01/2019....................... 445,000 446,047
KeyBank NA
Senior Notes
2.35% due 03/08/2019....................... 267,000 269,419
Regions Financial Corp.
Senior Notes
3.20% due 02/08/2021....................... 318,000 320,645
Regions Financial Corp.
Sub. Notes
7.38% due 12/10/2037....................... 610,000 785,075
Woori Bank
Sub. Notes
4.75% due 04/30/2024....................... 350,000 367,829
----------
4,140,179
----------
21
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BANKS-FIDUCIARY -- 0.2%
Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*.................. $ 775,000 $ 803,815
----------
BANKS-SUPER REGIONAL -- 0.3%
SunTrust Banks, Inc.
Senior Notes
2.90% due 03/03/2021................... 219,000 222,199
Wells Fargo & Co
Senior Notes
1.50% due 09/12/2022................... EUR 400,000 471,873
Wells Fargo & Co.
Sub. Notes
4.30% due 07/22/2027................... 533,000 565,537
Wells Fargo & Co.
Sub. Notes
4.90% due 11/17/2045................... 65,000 69,767
----------
1,329,376
----------
BATTERIES/BATTERY SYSTEMS -- 0.2%
EnerSys
Company Guar. Notes
5.00% due 04/30/2023*.................. 876,000 845,340
----------
BREWERY -- 0.6%
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
1.90% due 02/01/2019................... 219,000 222,127
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
2.65% due 02/01/2021................... 410,000 421,311
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
3.30% due 02/01/2023................... 180,000 187,132
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
3.65% due 02/01/2026................... 254,000 267,110
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
4.70% due 02/01/2036................... 750,000 810,528
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
4.90% due 02/01/2046................... 450,000 502,903
----------
2,411,111
----------
BROADCAST SERVICES/PROGRAM -- 0.3%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes
6.50% due 11/15/2022................... 830,000 790,575
Univision Communications, Inc.
Company Guar. Notes
8.50% due 05/15/2021*.................. 510,000 520,200
----------
1,310,775
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.1%
Standard Industries, Inc.
Senior Notes
6.00% due 10/15/2025*.................. 507,000 536,152
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
BUILDING & CONSTRUCTION-MISC. -- 0.1%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023........................ $ 384,000 $ 352,320
----------
BUILDING PRODUCTS-WOOD -- 0.1%
Masco Corp.
Senior Notes
4.45% due 04/01/2025........................ 468,000 485,456
----------
CABLE/SATELLITE TV -- 1.1%
Altice US Finance I Corp
Senior Sec. Notes
5.38% due 07/15/2023*....................... 300,000 308,062
Cable One, Inc.
Company Guar. Notes
5.75% due 06/15/2022*....................... 988,000 1,002,820
CCO Holdings LLC/CCO Holdings Capital Corp.
Company Guar. Notes
5.88% due 04/01/2024*....................... 730,000 764,675
CCO Safari II LLC
Senior Sec. Notes
3.58% due 07/23/2020*....................... 412,000 420,997
CCO Safari II LLC
Senior Sec. Notes
6.38% due 10/23/2035*....................... 187,000 206,440
CCOH Safari LLC
Senior Notes
5.75% due 02/15/2026*....................... 585,000 605,475
Comcast Corp.
Company Guar. Notes
5.50% due 11/23/2029........................ GBP 185,000 337,894
DISH DBS Corp.
Company Guar. Notes
5.00% due 03/15/2023........................ 674,000 594,805
----------
4,241,168
----------
CASINO HOTELS -- 0.8%
Caesars Entertainment Resort Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020........................ 618,000 605,022
Caesars Entertainment Resort Properties LLC
Sec. Notes
11.00% due 10/01/2021....................... 779,000 664,097
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*...................... 730,000 693,500
Golden Nugget Escrow, Inc.
Senior Notes
8.50% due 12/01/2021*....................... 482,000 484,410
Seminole Hard Rock Entertainment, Inc./
Seminole Hard Rock International LLC
Company Guar. Notes
5.88% due 05/15/2021*....................... 575,000 576,438
----------
3,023,467
----------
22
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CELLULAR TELECOM -- 0.8%
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021...................... $3,732,000 $2,850,315
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2024...................... 350,000 364,000
----------
3,214,315
----------
CHEMICALS-DIVERSIFIED -- 0.3%
Eco Services Operations LLC/Eco
Finance Corp.
Senior Notes
8.50% due 11/01/2022*..................... 857,000 788,440
Solvay Finance America LLC
Company Guar. Notes
4.45% due 12/03/2025*..................... 440,000 449,444
----------
1,237,884
----------
CHEMICALS-PLASTICS -- 0.1%
A. Schulman, Inc.
Company Guar. Notes
6.88% due 06/01/2023*..................... 573,000 564,405
----------
CHEMICALS-SPECIALTY -- 0.2%
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034...................... 248,000 324,124
Tronox Finance LLC
Company Guar. Notes
7.50% due 03/15/2022*..................... 847,000 635,250
----------
959,374
----------
COAL -- 0.2%
SunCoke Energy Partners LP/SunCoke Energy
Partners Finance Corp.
Company Guar. Notes
7.38% due 02/01/2020*..................... 891,000 619,245
----------
COATINGS/PAINT -- 0.2%
RPM International, Inc.
Senior Notes
5.25% due 06/01/2045...................... 573,000 567,729
Valspar Corp.
Senior Notes
3.95% due 01/15/2026...................... 144,000 148,649
----------
716,378
----------
COMMERCIAL SERVICES-FINANCE -- 0.4%
Automatic Data Processing, Inc.
Senior Notes
2.25% due 09/15/2020...................... 174,000 179,079
Harland Clarke Holdings Corp.
Senior Sec. Notes
6.88% due 03/01/2020*..................... 540,000 480,600
Harland Clarke Holdings Corp.
Senior Notes
9.25% due 03/01/2021*..................... 775,000 593,844
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
COMMERCIAL SERVICES-FINANCE (CONTINUED)
Total System Services, Inc.
Senior Notes
3.80% due 04/01/2021.................. $ 87,000 $ 89,471
Total System Services, Inc.
Senior Notes
4.80% due 04/01/2026.................. 67,000 69,134
----------
1,412,128
----------
COMPUTER SERVICES -- 0.4%
Hewlett Packard Enterprise Co.
Company Guar. Notes
4.90% due 10/15/2025*................. 329,000 338,596
Hewlett Packard Enterprise Co.
Company Guar. Notes
6.20% due 10/15/2035*................. 455,000 447,695
Hewlett Packard Enterprise Co.
Company Guar. Notes
6.35% due 10/15/2045*................. 349,000 342,990
International Business Machines Corp.
Senior Notes
1.75% due 03/07/2028.................. EUR 170,000 197,734
International Business Machines Corp.
Senior Notes
3.45% due 02/19/2026.................. 203,000 213,088
----------
1,540,103
----------
COMPUTER SOFTWARE -- 0.1%
Rackspace Hosting, Inc.
Company Guar. Notes
6.50% due 01/15/2024*................. 520,000 509,600
----------
COMPUTERS -- 0.5%
Apple, Inc.
Senior Notes
2.85% due 05/06/2021.................. 504,000 528,459
Apple, Inc.
Senior Notes
2.85% due 02/23/2023.................. 336,000 348,284
Apple, Inc.
Senior Notes
3.05% due 07/31/2029.................. GBP 160,000 237,709
Apple, Inc.
Senior Notes
4.50% due 02/23/2036.................. 362,000 388,460
Hewlett-Packard Co.
Senior Notes
6.00% due 09/15/2041.................. 435,000 391,232
----------
1,894,144
----------
COMPUTERS-INTEGRATED SYSTEMS -- 0.1%
Everi Payments, Inc.
Senior Notes
10.00% due 01/15/2022................. 602,000 508,690
----------
CONSUMER PRODUCTS-MISC. -- 0.0%
Kimberly-Clark Corp.
Senior Notes
1.85% due 03/01/2020.................. 137,000 139,052
----------
23
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CONTAINERS-METAL/GLASS -- 0.5%
Ball Corp.
Company Guar. Notes
4.38% due 12/15/2020......................... $ 360,000 $ 374,625
Crown Cork & Seal Co., Inc.
Company Guar. Notes
7.38% due 12/15/2026......................... 642,000 685,335
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
5.38% due 01/15/2025*........................ 865,000 858,512
----------
1,918,472
----------
CONTAINERS-PAPER/PLASTIC -- 0.5%
Berry Plastics Corp.
Sec. Notes
5.13% due 07/15/2023......................... 570,000 574,275
Brambles USA, Inc.
Company Guar. Notes
4.13% due 10/23/2025*........................ 142,000 147,446
Consolidated Container Co.
LLC/Consolidated Container Capital, Inc.
Company Guar. Notes
10.13% due 07/15/2020*....................... 560,000 459,200
Multi-Color Corp.
Company Guar. Notes
6.13% due 12/01/2022*........................ 686,000 696,290
----------
1,877,211
----------
COSMETICS & TOILETRIES -- 0.1%
Colgate-Palmolive Co. FRS
Senior Notes
0.05% due 05/14/2019......................... EUR 300,000 340,857
Procter & Gamble Co.
Senior Notes
1.13% due 11/02/2023......................... EUR 160,000 189,210
----------
530,067
----------
DATA PROCESSING/MANAGEMENT -- 0.0%
Fidelity National Information Services, Inc.
Senior Notes
5.00% due 10/15/2025......................... 145,000 156,581
----------
DIAGNOSTIC EQUIPMENT -- 0.1%
Danaher Corp.
Senior Notes
3.35% due 09/15/2025......................... 254,000 270,175
Danaher Corp.
Senior Notes
4.38% due 09/15/2045......................... 141,000 157,482
----------
427,657
----------
DISTRIBUTION/WHOLESALE -- 0.2%
H&E Equipment Services, Inc.
Company Guar. Notes
7.00% due 09/01/2022......................... 703,000 713,545
LKQ Corp.
Company Guar. Notes
4.75% due 05/15/2023......................... 10,000 9,725
----------
723,270
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
DIVERSIFIED BANKING INSTITUTIONS -- 3.1%
Bank of America Corp.
Senior Notes
2.50% due 07/27/2020...... EUR 450,000 $551,499
Bank of America Corp.
Senior Notes
2.63% due 10/19/2020...... 211,000 212,470
Bank of America Corp.
Sub. Notes
3.95% due 04/21/2025...... 354,000 352,214
Bank of America Corp.
Sub. Notes
4.25% due 10/22/2026...... 504,000 511,514
Bank of America Corp.
Senior Notes
7.00% due 07/31/2028...... GBP 100,000 196,455
Bank of America Corp.
Sub. Notes
7.25% due 10/15/2025...... 117,000 133,919
Citigroup, Inc.
Sub. Notes
3.88% due 03/26/2025...... 186,000 184,303
Citigroup, Inc.
Sub. Notes
4.40% due 06/10/2025...... 843,000 859,617
Citigroup, Inc.
Sub. Notes
4.45% due 09/29/2027...... 306,000 307,911
Citigroup, Inc.
Senior Notes
5.15% due 05/21/2026...... GBP 40,000 67,187
Citigroup, Inc.
Sub. Notes
6.00% due 10/31/2033...... 199,000 218,242
Goldman Sachs Group, Inc.
Senior Notes
2.13% due 09/30/2024...... EUR 300,000 353,310
Goldman Sachs Group, Inc.
Senior Notes
2.63% due 08/19/2020...... EUR 275,000 336,897
Goldman Sachs Group, Inc.
Senior Notes
3.63% due 01/22/2023...... 412,000 424,947
Goldman Sachs Group, Inc.
Sub. Notes
4.25% due 10/21/2025...... 440,000 447,386
Goldman Sachs Group, Inc.
Senior Notes
4.75% due 10/21/2045...... 126,000 131,698
Goldman Sachs Group, Inc.
Sub. Notes
5.15% due 05/22/2045...... 150,000 152,383
Goldman Sachs Group, Inc.
Sub. Notes
6.13% due 05/14/2017...... GBP 175,000 262,469
Goldman Sachs Group, Inc.
Senior Notes
6.13% due 02/15/2033...... 518,000 627,303
24
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037.................... $ 643,000 $ 768,022
JPMorgan Chase & Co.
Senior Notes
2.63% due 04/23/2021.................... EUR 400,000 497,894
JPMorgan Chase & Co.
Senior Notes
3.25% due 09/23/2022.................... 337,000 351,468
JPMorgan Chase & Co.
Sub. Notes
4.13% due 12/15/2026.................... 513,000 532,519
JPMorgan Chase & Co.
Sub. Notes
4.95% due 06/01/2045.................... 195,000 205,816
Morgan Stanley
Senior Notes
1.75% due 03/11/2024.................... EUR 350,000 399,631
Morgan Stanley
Senior Notes
2.38% due 03/31/2021.................... EUR 400,000 484,053
Morgan Stanley
Senior Notes
2.80% due 06/16/2020.................... 213,000 216,879
Morgan Stanley
Sub. Notes
4.10% due 05/22/2023.................... 771,000 795,089
Morgan Stanley
Senior Notes
4.75% due 03/22/2017.................... 700,000 722,972
Morgan Stanley
Sub. Notes
5.00% due 11/24/2025.................... 395,000 427,476
Morgan Stanley
Senior Notes
6.50% due 12/28/2018.................... EUR 300,000 397,633
-----------
12,131,176
-----------
DIVERSIFIED FINANCIAL SERVICES -- 0.1%
USAA Capital Corp.
Senior Notes
2.13% due 06/03/2019*................... 420,000 426,458
-----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.8%
3M Co. FRS
Senior Notes
0.05% due 05/15/2020.................... EUR 300,000 338,666
General Electric Co.
Senior Notes
1.88% due 05/28/2027.................... EUR 300,000 366,499
General Electric Co.
Senior Notes
2.70% due 10/09/2022.................... 432,000 449,294
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
5.75% due 06/15/2043.................... 567,000 675,392
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
DIVERSIFIED MANUFACTURING OPERATIONS (CONTINUED)
Textron, Inc.
Senior Notes
4.00% due 03/15/2026....... $ 293,000 $ 300,391
Textron, Inc.
Senior Notes
4.63% due 09/21/2016....... 595,000 603,900
Trinity Industries, Inc.
Company Guar. Notes
4.55% due 10/01/2024....... 343,000 286,196
----------
3,020,338
----------
EDUCATIONAL SOFTWARE -- 0.1%
Blackboard, Inc.
Senior Notes
7.75% due 11/15/2019*...... 585,000 470,925
----------
ELECTRIC-DISTRIBUTION -- 0.3%
Entergy Louisiana LLC
1st Mtg. Notes
4.95% due 01/15/2045....... 1,022,000 1,045,825
----------
ELECTRIC-GENERATION -- 0.0%
NRG REMA LLC
Sub. Notes
9.24% due 07/02/2017....... 155,247 152,142
----------
ELECTRIC-INTEGRATED -- 1.9%
AES Corp.
Senior Notes
5.50% due 03/15/2024....... 1,020,000 997,050
Arizona Public Service Co.
Senior Notes
2.20% due 01/15/2020....... 227,000 229,605
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033....... 755,000 797,413
Entergy Arkansas, Inc.
1st Mtg. Bonds
3.50% due 04/01/2026....... 95,000 101,510
Entergy Arkansas, Inc.
1st Mtg. Notes
4.95% due 12/15/2044....... 359,000 362,357
Exelon Corp.
Senior Notes
4.95% due 06/15/2035*...... 161,000 171,864
Exelon Corp.
Senior Notes
5.10% due 06/15/2045*...... 164,000 177,964
Exelon Generation Co. LLC
Senior Notes
2.95% due 01/15/2020....... 307,000 308,977
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/2031....... 456,000 553,842
Georgia Power Co.
Senior Notes
3.25% due 04/01/2026....... 96,000 98,369
25
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
ELECTRIC-INTEGRATED (CONTINUED)
Indiana Michigan Power Co.
Senior Notes
4.55% due 03/15/2046....................... $ 66,000 $ 67,912
Louisville Gas & Electric Co.
1st Mtg. Notes
4.38% due 10/01/2045....................... 41,000 44,715
Mirant Mid Atlantic LLC Pass Through Trust
Pass-Through Certs.
9.13% due 06/30/2017....................... 194,808 188,964
Mirant Mid Atlantic LLC Pass Through Trust
1st. Mtg. Bonds
10.06% due 12/30/2028...................... 1,051,264 1,019,726
South Carolina Electric & Gas Co.
1st. Mtg. Bonds
5.10% due 06/01/2065....................... 208,000 235,935
Southern California Edison Co.
1st. Mtg. Notes
1.13% due 05/01/2017....................... 628,000 628,075
Southern Power Co.
Senior Notes
4.15% due 12/01/2025....................... 312,000 321,477
Talen Energy Supply LLC
Senior Notes
6.50% due 06/01/2025....................... 844,000 700,520
Trans-Allegheny Interstate Line Co.
Senior Notes
3.85% due 06/01/2025*...................... 255,000 263,444
----------
7,269,719
----------
ELECTRONIC COMPONENTS-MISC. -- 0.1%
Corning, Inc.
Senior Notes
1.50% due 05/08/2018....................... 229,000 227,998
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.3%
Intel Corp.
Senior Notes
1.35% due 12/15/2017....................... 496,000 500,029
Micron Technology, Inc.
Senior Notes
5.63% due 01/15/2026*...................... 900,000 711,000
----------
1,211,029
----------
ELECTRONIC PARTS DISTRIBUTION -- 0.0%
Avnet, Inc.
Senior Notes
4.63% due 04/15/2026....................... 154,000 155,681
----------
ELECTRONICS-MILITARY -- 0.0%
L-3 Communications Corp.
Company Guar. Notes
3.95% due 05/28/2024....................... 35,000 33,685
----------
ENERGY-ALTERNATE SOURCES -- 0.2%
TerraForm Power Operating LLC
Company Guar. Notes
5.88% due 02/01/2023*...................... 770,000 623,700
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
ENTERPRISE SOFTWARE/SERVICE -- 0.1%
Oracle Corp.
Senior Notes
3.90% due 05/15/2035....................... $ 226,000 $ 225,480
----------
FINANCE-AUTO LOANS -- 0.7%
Ally Financial, Inc.
Senior Notes
5.13% due 09/30/2024....................... 985,000 1,007,162
Ally Financial, Inc.
Sub. Notes
5.75% due 11/20/2025....................... 691,000 675,453
Credit Acceptance Corp.
Company Guar. Notes
7.38% due 03/15/2023*...................... 1,115,000 1,062,037
----------
2,744,652
----------
FINANCE-COMMERCIAL -- 0.2%
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
6.88% due 04/15/2022*...................... 524,000 444,090
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
7.38% due 04/01/2020*...................... 498,000 430,770
----------
874,860
----------
FINANCE-CONSUMER LOANS -- 0.6%
Enova International, Inc.
Company Guar. Notes
9.75% due 06/01/2021....................... 1,422,000 1,009,620
OneMain Financial Holdings, Inc.
Company Guar. Notes
6.75% due 12/15/2019*...................... 575,000 575,575
SLM Corp.
Senior Notes
5.63% due 08/01/2033....................... 611,000 430,755
Synchrony Financial
Senior Notes
4.25% due 08/15/2024....................... 447,000 454,541
----------
2,470,491
----------
FINANCE-CREDIT CARD -- 0.3%
Discover Financial Services
Senior Notes
3.75% due 03/04/2025....................... 441,000 429,242
Visa, Inc.
Senior Notes
2.20% due 12/14/2020....................... 373,000 382,267
Visa, Inc.
Senior Notes
4.30% due 12/14/2045....................... 161,000 176,135
----------
987,644
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.1%
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+(4)................... 280,000 28
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+(4)................... 361,000 36
26
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FINANCE-INVESTMENT BANKER/BROKER (CONTINUED)
TD Ameritrade Holding Corp.
Senior Notes
2.95% due 04/01/2022............................... $ 281,000 $ 286,809
----------
286,873
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.2%
Quicken Loans, Inc.
Company Guar. Notes
5.75% due 05/01/2025*.............................. 900,000 873,000
----------
FINANCE-OTHER SERVICES -- 0.4%
National Rural Utilities Cooperative Finance Corp.
Senior Notes
0.95% due 04/24/2017............................... 192,000 191,971
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
1.10% due 01/27/2017............................... 850,000 851,131
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
2.00% due 01/27/2020............................... 385,000 388,253
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
2.30% due 11/01/2020............................... 166,000 169,000
----------
1,600,355
----------
FIREARMS & AMMUNITION -- 0.2%
FGI Operating Co. LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020............................... 1,115,000 669,000
----------
FOOD-DAIRY PRODUCTS -- 0.1%
Dean Foods Co.
Company Guar. Notes
6.50% due 03/15/2023*.............................. 525,000 540,094
----------
FOOD-MEAT PRODUCTS -- 0.2%
JBS USA LLC/JBS USA Finance, Inc.
Senior Notes
5.88% due 07/15/2024*.............................. 1,033,000 932,282
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
Kraft Heinz Foods Co.
Sec. Notes
4.88% due 02/15/2025*.............................. 402,000 442,867
----------
FOOD-RETAIL -- 0.3%
Kroger Co.
Senior Notes
3.50% due 02/01/2026............................... 166,000 174,458
SUPERVALU, Inc.
Senior Notes
7.75% due 11/15/2022............................... 1,058,000 896,655
----------
1,071,113
----------
FOOD-WHOLESALE/DISTRIBUTION -- 0.2%
C&S Group Enterprises LLC
Senior Sec. Notes
5.38% due 07/15/2022*.............................. 631,000 597,872
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
GAMBLING (NON-HOTEL) -- 0.3%
Scientific Games International, Inc.
Senior Sec. Notes
7.00% due 01/01/2022*................. $ 585,000 $ 596,700
Scientific Games International, Inc.
Company Guar. Notes
10.00% due 12/01/2022................. 572,000 463,320
Waterford Gaming LLC/Waterford Gaming
Financial Corp.
Escrow Notes
8.63% due 09/15/2014*+(3)(4).......... 478,062 5,402
----------
1,065,422
----------
GAS-DISTRIBUTION -- 0.1%
Dominion Gas Holdings LLC
Senior Notes
4.80% due 11/01/2043.................. 252,000 252,274
----------
HAZARDOUS WASTE DISPOSAL -- 0.1%
Clean Harbors, Inc.
Company Guar. Notes
5.13% due 06/01/2021*................. 318,000 321,578
----------
HOME DECORATION PRODUCTS -- 0.1%
Newell Rubbermaid, Inc.
Senior Notes
4.20% due 04/01/2026.................. 158,000 165,275
Newell Rubbermaid, Inc.
Senior Notes
5.38% due 04/01/2036.................. 115,000 122,992
----------
288,267
----------
HOTELS/MOTELS -- 0.2%
Hyatt Hotels Corp.
Senior Notes
4.85% due 03/15/2026.................. 149,000 155,476
Interval Acquisition Corp.
Company Guar. Notes
5.63% due 04/15/2023*................. 650,000 651,625
----------
807,101
----------
HUMAN RESOURCES -- 0.2%
Team Health, Inc.
Company Guar. Notes
7.25% due 12/15/2023*................. 650,000 695,500
----------
INDEPENDENT POWER PRODUCERS -- 0.6%
Dynegy, Inc.
Company Guar. Notes
7.38% due 11/01/2022.................. 1,085,000 1,003,625
GenOn Energy, Inc.
Senior Notes
9.50% due 10/15/2018.................. 245,000 178,850
NRG Energy, Inc.
Company Guar. Notes
6.25% due 07/15/2022.................. 1,062,000 987,660
----------
2,170,135
----------
27
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
INDUSTRIAL GASES -- 0.2%
Airgas, Inc.
Senior Notes
3.05% due 08/01/2020.................... $ 114,000 $ 116,650
Praxair, Inc.
Senior Notes
1.20% due 02/12/2024.................... EUR 320,000 372,061
Praxair, Inc.
Senior Notes
1.50% due 03/11/2020.................... EUR 325,000 387,627
----------
876,338
----------
INSURANCE-LIFE/HEALTH -- 0.4%
CNO Financial Group, Inc.
Senior Notes
5.25% due 05/30/2025.................... 638,000 652,355
Pacific LifeCorp
Senior Notes
6.00% due 02/10/2020*................... 295,000 329,521
Pricoa Global Funding I
Senior Sec. Notes
1.35% due 08/18/2017*................... 494,000 492,005
----------
1,473,881
----------
INSURANCE-MULTI-LINE -- 0.3%
Assurant, Inc.
Senior Notes
6.75% due 02/15/2034.................... 831,000 991,045
MetLife, Inc.
Senior Notes
4.60% due 05/13/2046.................... 189,000 193,754
----------
1,184,799
----------
INSURANCE-MUTUAL -- 0.6%
Massachusetts Mutual Life Insurance Co.
Sub. Notes
4.50% due 04/15/2065*................... 242,000 223,270
MassMutual Global Funding II
Senior Sec. Notes
2.10% due 08/02/2018*................... 872,000 880,028
MassMutual Global Funding II
Senior Sec. Notes
2.50% due 10/17/2022*................... 345,000 344,224
New York Life Global Funding
Sec. Notes
1.65% due 05/15/2017*................... 679,000 683,136
----------
2,130,658
----------
INSURANCE-REINSURANCE -- 0.0%
Berkshire Hathaway, Inc.
Senior Notes
3.13% due 03/15/2026.................... 161,000 165,081
----------
INTERNET CONNECTIVITY SERVICES -- 0.2%
Cogent Communications Group, Inc.
Senior Sec. Notes
5.38% due 03/01/2022*................... 759,000 745,717
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
INTERNET CONTENT-ENTERTAINMENT -- 0.2%
Netflix, Inc.
Senior Notes
5.88% due 02/15/2025...................... $ 712,000 $ 749,380
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.6%
Drawbridge Special Opportunities Fund LP/
Drawbridge Special Opportunities Finance
Senior Notes
5.00% due 08/01/2021*..................... 1,106,000 1,025,815
National Financial Partners Corp.
Senior Notes
9.00% due 07/15/2021*..................... 1,196,000 1,148,160
----------
2,173,975
----------
MACHINERY-FARMING -- 0.4%
John Deere Capital Corp.
Senior Notes
1.13% due 06/12/2017...................... 756,000 757,207
John Deere Capital Corp.
Senior Notes
1.55% due 12/15/2017...................... 766,000 771,084
----------
1,528,291
----------
MARINE SERVICES -- 0.2%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/2019...................... 699,000 662,302
----------
MEDICAL LABS & TESTING SERVICES -- 0.4%
Laboratory Corp. of America Holdings
Senior Notes
3.20% due 02/01/2022...................... 119,000 120,637
Laboratory Corp. of America Holdings
Senior Notes
3.60% due 02/01/2025...................... 386,000 390,756
Laboratory Corp. of America Holdings
Senior Notes
4.70% due 02/01/2045...................... 198,000 194,024
Roche Holdings, Inc.
Company Guar. Notes
1.35% due 09/29/2017*..................... 700,000 704,185
----------
1,409,602
----------
MEDICAL PRODUCTS -- 0.1%
Greatbatch, Ltd.
Company Guar. Notes
9.13% due 11/01/2023*..................... 382,000 378,657
----------
MEDICAL-BIOMEDICAL/GENE -- 0.2%
Amgen, Inc.
Senior Notes
2.00% due 02/25/2026...................... EUR 100,000 118,127
Amgen, Inc.
Senior Notes
2.13% due 09/13/2019...................... EUR 325,000 391,306
Gilead Sciences, Inc.
Senior Notes
4.75% due 03/01/2046...................... 77,000 84,283
----------
593,716
----------
28
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-DRUGS -- 0.6%
Baxalta, Inc.
Senior Notes
3.60% due 06/23/2022*.................... $ 301,000 $ 305,783
Endo Finance LLC/Endo Finco, Inc.
Company Guar. Notes
7.75% due 01/15/2022*.................... 675,000 688,507
Forest Laboratories LLC
Company Guar. Notes
4.88% due 02/15/2021*.................... 486,000 535,853
Johnson & Johnson
Senior Notes
3.55% due 03/01/2036..................... 236,000 245,392
Merck & Co., Inc.
Senior Notes
1.88% due 10/15/2026..................... EUR 550,000 674,265
----------
2,449,800
----------
MEDICAL-HMO -- 0.6%
Centene Escrow Corp.
Senior Notes
6.13% due 02/15/2024*.................... 557,000 586,242
Opal Acquisition, Inc.
Senior Notes
8.88% due 12/15/2021*.................... 1,227,000 855,832
UnitedHealth Group, Inc.
Senior Notes
1.40% due 12/15/2017..................... 395,000 396,702
UnitedHealth Group, Inc.
Senior Notes
2.13% due 03/15/2021..................... 288,000 290,520
UnitedHealth Group, Inc.
Senior Notes
3.35% due 07/15/2022..................... 212,000 225,528
----------
2,354,824
----------
MEDICAL-HOSPITALS -- 1.4%
HCA, Inc.
Senior Sec. Notes
5.25% due 06/15/2026..................... 444,000 455,100
HCA, Inc.
Company Guar. Notes
7.50% due 11/15/2095..................... 1,823,000 1,759,195
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019..................... 1,420,000 1,400,475
Tenet Healthcare Corp.
Senior Sec. Notes
4.75% due 06/01/2020..................... 1,249,000 1,280,225
Tenet Healthcare Corp.
Senior Notes
6.88% due 11/15/2031..................... 565,000 455,531
----------
5,350,526
----------
METAL-ALUMINUM -- 0.1%
Aleris International, Inc.
Senior Sec. Notes
9.50% due 04/01/2021*.................... 447,000 455,661
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
MULTIMEDIA -- 0.2%
21st Century Fox America, Inc.
Company Guar. Notes
4.95% due 10/15/2045............................ $ 129,000 $ 137,918
Time Warner, Inc.
Company Guar. Notes
4.85% due 07/15/2045............................ 71,000 72,226
Viacom, Inc.
Senior Notes
4.85% due 12/15/2034............................ 169,000 150,001
Walt Disney Co.
Senior Notes
1.50% due 09/17/2018............................ 298,000 302,086
Walt Disney Co.
Senior Notes
1.65% due 01/08/2019............................ 140,000 142,428
----------
804,659
----------
NETWORKING PRODUCTS -- 0.3%
Cisco Systems, Inc.
Senior Notes
1.40% due 02/28/2018............................ 375,000 378,158
Cisco Systems, Inc.
Senior Notes
2.13% due 03/01/2019............................ 453,000 466,070
Cisco Systems, Inc.
Senior Notes
2.20% due 02/28/2021............................ 321,000 327,387
----------
1,171,615
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.0%
Anadarko Petroleum Corp.
Senior Notes
5.55% due 03/15/2026............................ 133,000 134,171
Anadarko Petroleum Corp.
Senior Notes
6.45% due 09/15/2036............................ 718,000 716,959
Anadarko Petroleum Corp.
Senior Notes
6.60% due 03/15/2046............................ 137,000 139,865
Carrizo Oil & Gas, Inc.
Company Guar. Notes
6.25% due 04/15/2023............................ 600,000 528,750
Denbury Resources, Inc.
Company Guar. Notes
5.50% due 05/01/2022............................ 596,000 268,200
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
7.75% due 09/01/2022............................ 604,000 280,860
EV Energy Partners LP/EV Energy Finance Corp.
Company Guar. Notes
8.00% due 04/15/2019............................ 915,000 228,750
Halcon Resources Corp.
Sec. Notes
12.00% due 02/15/2022*.......................... 214,000 142,310
Hess Corp.
Senior Notes
5.60% due 02/15/2041............................ 208,000 184,762
29
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Hess Corp.
Senior Notes
7.88% due 10/01/2029....................... $ 235,000 $ 255,554
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
5.00% due 12/01/2024*...................... 685,000 577,113
Laredo Petroleum, Inc.
Company Guar. Notes
7.38% due 05/01/2022....................... 712,000 605,200
Legacy Reserves LP/Legacy Reserves Finance
Corp.
Company Guar. Notes
6.63% due 12/01/2021....................... 652,000 123,880
Newfield Exploration Co.
Senior Notes
5.38% due 01/01/2026....................... 559,000 508,690
Noble Energy, Inc.
Senior Notes
3.90% due 11/15/2024....................... 407,000 383,101
Noble Energy, Inc.
Senior Notes
5.05% due 11/15/2044....................... 94,000 80,060
Northern Oil and Gas, Inc.
Senior Notes
8.00% due 06/01/2020....................... 764,000 483,230
Oasis Petroleum, Inc.
Company Guar. Notes
6.88% due 03/15/2022....................... 1,015,000 751,100
Occidental Petroleum Corp.
Senior Notes
4.40% due 04/15/2046....................... 214,000 215,387
Penn Virginia Corp.
Company Guar. Notes
7.25% due 04/15/2019(8)(17)................ 579,000 72,375
Rex Energy Corp.
Senior Sec. Notes
8.00% due 10/01/2020....................... 646,815 64,203
Sanchez Energy Corp.
Company Guar. Notes
6.13% due 01/15/2023....................... 839,000 453,060
SM Energy Co.
Senior Notes
5.63% due 06/01/2025....................... 506,000 351,513
SM Energy Co.
Senior Notes
6.50% due 01/01/2023....................... 116,000 81,780
Southwestern Energy Co.
Senior Notes
3.30% due 01/23/2018....................... 119,000 95,200
----------
7,726,073
----------
OIL COMPANIES-INTEGRATED -- 0.4%
Chevron Corp.
Senior Notes
1.37% due 03/02/2018....................... 456,000 457,624
Chevron Corp.
Senior Notes
1.96% due 03/03/2020....................... 251,000 254,370
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
OIL COMPANIES-INTEGRATED (CONTINUED)
ConocoPhillips Co.
Company Guar. Notes
1.50% due 05/15/2018.......................... $ 160,000 $ 157,578
Exxon Mobil Corp.
Senior Notes
1.31% due 03/06/2018.......................... 464,000 466,084
Exxon Mobil Corp.
Senior Notes
3.04% due 03/01/2026.......................... 124,000 126,909
----------
1,462,565
----------
OIL REFINING & MARKETING -- 0.3%
Calumet Specialty Products Partner LP/Calumet
Finance Corp.
Company Guar. Notes
6.50% due 04/15/2021.......................... 646,000 458,660
Murphy Oil USA, Inc.
Company Guar. Notes
6.00% due 08/15/2023.......................... 57,000 58,995
PBF Holding Co LLC/PBF Finance Corp.
Senior Sec. Notes
7.00% due 11/15/2023*......................... 590,000 559,762
----------
1,077,417
----------
OIL-FIELD SERVICES -- 0.1%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.......................... 675,000 465,750
----------
PAPER & RELATED PRODUCTS -- 0.8%
Clearwater Paper Corp.
Company Guar. Notes
4.50% due 02/01/2023.......................... 219,000 208,871
Domtar Corp.
Company Guar. Notes
6.75% due 02/15/2044.......................... 312,000 317,450
Georgia-Pacific LLC
Senior Notes
3.60% due 03/01/2025*......................... 692,000 715,880
Georgia-Pacific LLC
Senior Notes
3.73% due 07/15/2023*......................... 946,000 984,726
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*......................... 387,000 432,324
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020.......................... 620,000 610,700
----------
3,269,951
----------
PHARMACY SERVICES -- 0.1%
Express Scripts Holding Co.
Company Guar. Notes
4.50% due 02/25/2026.......................... 269,000 278,514
----------
PIPELINES -- 1.5%
Columbia Pipeline Group, Inc.
Company Guar. Notes
2.45% due 06/01/2018*......................... 83,000 82,166
30
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES (CONTINUED)
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020............................... $ 700,000 $ 673,750
Energy Transfer Partners LP
Senior Notes
4.90% due 03/15/2035............................... 265,000 209,814
Energy Transfer Partners LP
Senior Notes
5.15% due 03/15/2045............................... 153,000 118,936
Energy Transfer Partners LP
Senior Notes
6.63% due 10/15/2036............................... 516,000 473,729
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
5.63% due 06/15/2024............................... 715,000 600,600
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
6.00% due 05/15/2023............................... 532,000 468,160
Kinder Morgan Energy Partners LP
Company Guar. Notes
4.70% due 11/01/2042............................... 224,000 175,968
Kinder Morgan Energy Partners LP
Company Guar. Notes
6.50% due 04/01/2020............................... 315,000 335,518
Rose Rock Midstream LP/Rose Rock Finance Corp.
Company Guar. Notes
5.63% due 07/15/2022............................... 606,000 402,990
Sabine Pass Liquefaction LLC
Senior Sec. Notes
5.63% due 04/15/2023............................... 575,000 546,250
Sabine Pass Liquefaction LLC
Senior Sec. Notes
6.25% due 03/15/2022............................... 511,000 500,141
Summit Midstream Holdings LLC/Summit
Midstream Finance Corp.
Company Guar. Notes
5.50% due 08/15/2022............................... 416,000 295,360
Tesoro Logistics LP/Tesoro Logistics Finance Corp.
Company Guar. Notes
6.13% due 10/15/2021............................... 926,000 926,000
----------
5,809,382
----------
POWER CONVERTER/SUPPLY EQUIPMENT -- 0.1%
Hubbell, Inc.
Senior Notes
3.35% due 03/01/2026............................... 257,000 258,139
----------
PRINTING-COMMERCIAL -- 0.3%
Quad/Graphics, Inc.
Company Guar. Notes
7.00% due 05/01/2022............................... 1,175,000 975,250
----------
PUBLISHING-NEWSPAPERS -- 0.3%
Lee Enterprises, Inc.
Senior Sec. Notes
9.50% due 03/15/2022*.............................. 600,000 590,250
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
PUBLISHING-NEWSPAPERS (CONTINUED)
McClatchy Co.
Senior Sec. Notes
9.00% due 12/15/2022....................... $ 728,000 $ 671,580
----------
1,261,830
----------
PUBLISHING-PERIODICALS -- 0.5%
Expo Event Transco, Inc.
Senior Notes
9.00% due 06/15/2021*...................... 1,364,000 1,302,620
Time, Inc.
Company Guar. Notes
5.75% due 04/15/2022*...................... 701,000 621,920
----------
1,924,540
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.0%
Communications Sales & Leasing, Inc./CSL
Capital LLC
Senior Sec. Notes
6.00% due 04/15/2023*...................... 471,000 458,048
Communications Sales & Leasing, Inc./CSL
Capital LLC
Company Guar. Notes
8.25% due 10/15/2023....................... 381,000 352,425
CTR Partnership LP/CareTrust Capital Corp.
Company Guar. Notes
5.88% due 06/01/2021....................... 781,000 784,905
DuPont Fabros Technology LP
Company Guar. Notes
5.63% due 06/15/2023....................... 442,000 453,050
ESH Hospitality, Inc.
Company Guar. Notes
5.25% due 05/01/2025*...................... 654,000 636,015
Omega Healthcare Investors, Inc.
Company Guar. Notes
4.50% due 04/01/2027....................... 480,000 459,359
Omega Healthcare Investors, Inc.
Company Guar. Notes
4.95% due 04/01/2024....................... 474,000 482,762
Omega Healthcare Investors, Inc.
Company Guar. Notes
5.25% due 01/15/2026....................... 283,000 288,569
----------
3,915,133
----------
REAL ESTATE MANAGEMENT/SERVICES -- 0.2%
Kennedy-Wilson, Inc.
Company Guar. Notes
5.88% due 04/01/2024....................... 775,000 757,562
----------
REAL ESTATE OPERATIONS & DEVELOPMENT -- 0.4%
Greystar Real Estate Partners LLC
Senior Sec. Notes
8.25% due 12/01/2022*...................... 941,000 971,582
Prologis LP
Company Guar. Notes
1.38% due 05/13/2021....................... EUR 400,000 459,151
----------
1,430,733
----------
31
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RENTAL AUTO/EQUIPMENT -- 0.3%
United Rentals North America, Inc.
Senior Sec. Notes
4.63% due 07/15/2023............... $ 450,000 $447,188
United Rentals North America, Inc.
Company Guar. Notes
5.50% due 07/15/2025............... 550,000 547,134
--------
994,322
--------
RETAIL-APPLIANCES -- 0.1%
Conn's, Inc.
Company Guar. Notes
7.25% due 07/15/2022............... 720,000 565,200
--------
RETAIL-AUTO PARTS -- 0.0%
O'Reilly Automotive, Inc.
Company Guar. Notes
3.55% due 03/15/2026............... 88,000 90,537
--------
RETAIL-BUILDING PRODUCTS -- 0.1%
Home Depot, Inc.
Senior Notes
2.00% due 04/01/2021............... 159,000 160,593
Home Depot, Inc.
Senior Notes
3.00% due 04/01/2026............... 163,000 171,113
--------
331,706
--------
RETAIL-COMPUTER EQUIPMENT -- 0.2%
GameStop Corp.
Company Guar. Notes
5.50% due 10/01/2019*.............. 755,000 724,800
--------
RETAIL-DISCOUNT -- 0.2%
Costco Wholesale Corp.
Senior Notes
2.25% due 02/15/2022............... 484,000 490,842
Dollar General Corp.
Company Guar. Notes
4.13% due 07/15/2017............... 440,000 454,208
--------
945,050
--------
RETAIL-DRUG STORE -- 0.2%
CVS Pass-Through Trust
Pass-Through Certs.
4.70% due 01/10/2036*.............. 267,191 278,286
CVS Pass-Through Trust
Pass-Through Certs.
5.77% due 01/10/2033*.............. 216,554 234,597
CVS Pass-Through Trust
Pass-Through Certs.
5.93% due 01/10/2034*.............. 343,813 380,484
--------
893,367
--------
RETAIL-PAWN SHOPS -- 0.2%
Cash America International, Inc.
Company Guar. Notes
5.75% due 05/15/2018............... 625,000 618,750
--------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
RETAIL-REGIONAL DEPARTMENT STORES -- 0.0%
Kohl's Corp.
Senior Notes
5.55% due 07/17/2045..................... $ 89,000 $ 80,548
----------
RETAIL-RESTAURANTS -- 0.8%
Landry's, Inc.
Company Guar. Notes
9.38% due 05/01/2020*.................... 863,000 906,150
McDonald's Corp.
Senior Notes
3.70% due 01/30/2026..................... 215,000 227,716
McDonald's Corp.
Senior Notes
4.70% due 12/09/2035..................... 154,000 165,489
McDonald's Corp.
Senior Notes
4.88% due 12/09/2045..................... 217,000 237,065
PF Chang's China Bistro, Inc.
Company Guar. Notes
10.25% due 06/30/2020*................... 1,637,000 1,481,485
----------
3,017,905
----------
RUBBER/PLASTIC PRODUCTS -- 0.2%
Gates Global LLC/Gates Global Co.
Company Guar. Notes
6.00% due 07/15/2022*.................... 850,000 726,750
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(3)(4)(7)(13)...... 100,000 0
----------
726,750
----------
SATELLITE TELECOM -- 0.2%
Hughes Satellite Systems Corp.
Company Guar. Notes
7.63% due 06/15/2021..................... 648,000 722,520
----------
SAVINGS & LOANS/THRIFTS -- 0.7%
Astoria Financial Corp.
Senior Notes
5.00% due 06/19/2017..................... 718,000 740,714
First Niagara Financial Group, Inc.
Senior Notes
6.75% due 03/19/2020..................... 1,145,000 1,296,195
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021..................... 714,000 830,832
----------
2,867,741
----------
SCHOOLS -- 0.1%
President and Fellows of Harvard College
Notes
3.62% due 10/01/2037..................... 191,000 194,621
University of Pennsylvania
Senior Notes
4.67% due 09/01/2112..................... 292,000 312,307
----------
506,928
----------
32
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
STEEL PIPE & TUBE -- 0.1%
Valmont Industries, Inc.
Company Guar. Notes
5.25% due 10/01/2054............. $ 619,000 $ 532,253
----------
STEEL-PRODUCERS -- 0.3%
AK Steel Corp.
Senior Sec. Notes
8.75% due 12/01/2018............. 575,000 552,000
Steel Dynamics, Inc.
Company Guar. Notes
5.13% due 10/01/2021............. 704,000 711,040
----------
1,263,040
----------
TELECOMMUNICATION EQUIPMENT -- 0.1%
Plantronics, Inc.
Company Guar. Notes
5.50% due 05/31/2023*............ 189,000 185,693
----------
TELEPHONE-INTEGRATED -- 2.0%
AT&T, Inc.
Senior Notes
1.45% due 06/01/2022............. EUR 325,000 378,935
AT&T, Inc.
Senior Notes
3.00% due 06/30/2022............. 633,000 642,204
AT&T, Inc.
Senior Notes
4.35% due 06/15/2045............. 423,000 387,509
AT&T, Inc.
Senior Notes
4.50% due 05/15/2035............. 518,000 510,799
AT&T, Inc.
Senior Notes
4.75% due 05/15/2046............. 329,000 320,925
AT&T, Inc.
Senior Notes
5.80% due 02/15/2019............. 182,000 202,658
CenturyLink, Inc.
Senior Notes
5.63% due 04/01/2025............. 513,000 459,135
CenturyLink, Inc.
Senior Notes
6.88% due 01/15/2028............. 311,000 263,184
CenturyLink, Inc.
Senior Notes
7.50% due 04/01/2024............. 135,000 135,337
Frontier Communications Corp.
Senior Notes
8.13% due 10/01/2018............. 250,000 266,875
Frontier Communications Corp.
Senior Notes
9.25% due 07/01/2021............. 99,000 100,980
Frontier Communications Corp.
Senior Notes
10.50% due 09/15/2022*........... 450,000 461,250
Frontier Communications Corp.
Senior Notes
11.00% due 09/15/2025*........... 1,365,000 1,371,825
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
TELEPHONE-INTEGRATED (CONTINUED)
Verizon Communications, Inc.
Senior Notes
3.00% due 11/01/2021.......................... $ 569,000 $ 591,204
Verizon Communications, Inc.
Senior Notes
4.40% due 11/01/2034.......................... 208,000 210,277
Verizon Communications, Inc.
Senior Notes
4.67% due 03/15/2055.......................... 563,000 540,480
Verizon Communications, Inc.
Senior Notes
4.75% due 02/17/2034.......................... GBP 325,000 514,360
Verizon Communications, Inc.
Senior Notes
4.86% due 08/21/2046.......................... 450,000 474,534
Verizon Communications, Inc.
Senior Notes
6.40% due 09/15/2033.......................... 16,000 19,680
------------
7,852,151
------------
THEATERS -- 0.3%
Cinemark USA, Inc.
Company Guar. Notes
4.88% due 06/01/2023*......................... 475,000 479,014
National CineMedia LLC
Senior Sec. Notes
6.00% due 04/15/2022.......................... 420,000 435,750
Regal Entertainment Group
Senior Notes
5.75% due 02/01/2025.......................... 340,000 341,700
------------
1,256,464
------------
TRANSPORT-RAIL -- 0.1%
Union Pacific Corp.
Senior Notes
4.38% due 11/15/2065.......................... 236,000 233,842
------------
TRAVEL SERVICES -- 0.2%
Sabre GLBL, Inc.
Senior Sec. Notes
5.38% due 04/15/2023*......................... 835,000 856,919
------------
TRUCKING/LEASING -- 0.0%
Penske Truck Leasing Co. LP/PTL Finance Corp.
Senior Notes
3.38% due 02/01/2022*......................... 175,000 173,749
------------
WIRE & CABLE PRODUCTS -- 0.5%
Belden, Inc.*
Company Guar. Notes
5.25% due 07/15/2024.......................... 540,000 515,700
General Cable Corp.
Company Guar. Notes
5.75% due 10/01/2022.......................... 1,825,000 1,441,750
------------
1,957,450
------------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $190,007,409)........................... 182,710,118
------------
33
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES -- 22.0%
AEROSPACE/DEFENSE -- 0.1%
BAE Systems PLC
Senior Notes
4.13% due 06/08/2022....................... GBP 150,000 $ 234,775
----------
AGRICULTURAL CHEMICALS -- 0.1%
Consolidated Energy Finance SA
Company Guar. Notes
6.75% due 10/15/2019*...................... 415,000 395,288
----------
AIRLINES -- 0.2%
Air Canada
Senior Sec. Notes
6.75% due 10/01/2019*...................... 638,000 660,330
----------
AIRPORT DEVELOPMENT/MAINTENANCE -- 0.3%
Heathrow Funding, Ltd.
Senior Sec. Notes
1.88% due 05/23/2024....................... EUR 600,000 723,038
Heathrow Funding, Ltd.
Senior Sec. Notes
6.75% due 12/03/2028....................... GBP 200,000 387,727
----------
1,110,765
----------
AUTO-CARS/LIGHT TRUCKS -- 0.7%
BMW Finance NV
Company Guar. Notes
3.38% due 12/14/2018....................... GBP 300,000 452,814
Daimler AG
Senior Notes
2.75% due 12/04/2020....................... GBP 235,000 350,747
FCE Bank PLC
Senior Notes
1.53% due 11/09/2020....................... EUR 300,000 347,512
Renault SA
Senior Notes
3.63% due 09/19/2018....................... EUR 430,000 527,531
Volkswagen Financial Services NV
Company Guar. Notes
2.38% due 11/13/2018....................... GBP 225,000 324,969
Volkswagen Financial Services NV
Company Guar. Notes
2.63% due 07/22/2019....................... GBP 235,000 340,545
Volkswagen International Finance NV
Company Guar. Notes
2.38% due 03/22/2017*...................... 254,000 255,087
----------
2,599,205
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.1%
Tenedora Nemak SA de CV
Senior Notes
5.50% due 02/28/2023*...................... 250,000 256,875
Tupy Overseas SA
Company Guar. Notes
6.63% due 07/17/2024....................... 290,000 269,700
----------
526,575
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
BANKS-COMMERCIAL -- 3.9%
Abbey National Treasury Services PLC
Company Guar. Notes
1.13% due 01/14/2022................. EUR 900,000 $1,018,422
Abbey National Treasury Services PLC
Company Guar. Notes
2.50% due 03/14/2019................. 307,000 309,926
Abbey National Treasury Services PLC
Company Guar. Notes
3.88% due 10/15/2029................. GBP 100,000 150,832
Banco de Credito del Peru/Panama
Senior Notes
5.38% due 09/16/2020................. 200,000 218,000
Bank of China, Ltd.
Sub. Notes
5.00% due 11/13/2024................. 200,000 208,009
Bank of Nova Scotia/The
Sub. Notes
4.50% due 12/16/2025................. 233,000 232,611
BPCE SA
Senior Notes
1.38% due 05/22/2019................. EUR 400,000 470,700
BPCE SA
Senior Notes
2.88% due 01/16/2024................. EUR 300,000 389,511
BPCE SA
Sub. Notes
4.50% due 03/15/2025*................ 443,000 438,615
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA
Senior Notes
5.25% due 05/23/2041................. GBP 130,000 231,978
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA/Netherlands
Senior Notes
4.55% due 08/30/2029................. GBP 110,000 184,253
Credit Suisse AG
Senior Notes
3.00% due 10/29/2021................. 254,000 259,087
Credit Suisse AG FRS
Sub. Notes
5.75% due 09/18/2025................. EUR 275,000 337,211
Danske Bank A/S FRS
Sub. Notes
3.88% due 10/04/2023................. EUR 300,000 362,723
DBS Group Holdings, Ltd.
Senior Notes
2.25% due 07/16/2019*................ 691,000 697,559
ICICI Bank, Ltd.
Senior Notes
5.75% due 11/16/2020................. 200,000 225,557
ING Bank NV
Senior Notes
5.38% due 04/15/2021................. GBP 200,000 332,705
Intesa Sanpaolo SpA
Senior Notes
2.00% due 06/18/2021................. EUR 250,000 298,258
34
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
BANKS-COMMERCIAL (CONTINUED)
Intesa Sanpaolo SpA
Senior Notes
3.50% due 01/17/2022.................... EUR 725,000 $931,724
Intesa Sanpaolo SpA
Sub. Notes
5.02% due 06/26/2024*................... 554,000 518,789
Kookmin Bank
Senior Notes
1.63% due 07/14/2017*................... 855,000 855,891
Malayan Banking Bhd FRS
Sub. Notes
3.25% due 09/20/2022.................... 250,000 252,146
National Australia Bank, Ltd.
Senior Notes
2.75% due 08/08/2022.................... EUR 450,000 574,474
National Bank of Canada
Bank Guar. Notes
2.10% due 12/14/2018.................... 269,000 270,843
Nordea Bank AB
Senior Notes
2.13% due 11/13/2019.................... GBP 100,000 146,893
Oversea-Chinese Banking Corp., Ltd. VRS
Sub. Notes
4.00% due 10/15/2024*................... 200,000 207,668
Royal Bank of Canada
Sub. Notes
4.65% due 01/27/2026.................... 415,000 422,123
Santander Issuances SAU
Company Guar. Notes
5.18% due 11/19/2025.................... 600,000 579,811
Sberbank of Russia Via SB Capital SA
Senior Notes
6.13% due 02/07/2022.................... 200,000 207,000
Shinhan Bank
Notes
3.88% due 03/24/2026*................... 200,000 202,307
Siam Commercial Bank PCL
Senior Notes
3.50% due 04/07/2019*................... 200,000 207,072
Skandinaviska Enskilda Banken AB
Senior Notes
1.88% due 11/14/2019.................... EUR 400,000 480,837
Skandinaviska Enskilda Banken AB FRS
Sub. Notes
2.50% due 05/28/2026.................... EUR 350,000 404,782
Standard Chartered Bank
Sub. Notes
5.88% due 09/26/2017.................... EUR 250,000 302,272
Svenska Handelsbanken AB FRS
Sub. Notes
2.66% due 01/15/2024.................... EUR 600,000 706,865
Svenska Handelsbanken AB
Senior Notes
3.00% due 11/20/2020.................... GBP 225,000 341,030
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
BANKS-COMMERCIAL (CONTINUED)
Turkiye IS Bankasi A.S
Senior Notes
5.38% due 10/06/2021*..................... GBP 200,000 $ 199,080
Westpac Banking Corp.
Senior Notes
4.13% due 05/25/2018...................... EUR 325,000 401,195
Zenith Bank PLC
Senior Notes
6.25% due 04/22/2019*..................... 300,000 270,996
-----------
14,849,755
-----------
BANKS-MONEY CENTER -- 0.6%
ABN AMRO Bank NV
Senior Notes
2.50% due 11/29/2023...................... EUR 265,000 338,143
ABN AMRO Bank NV
Senior Notes
4.13% due 03/28/2022...................... EUR 350,000 479,363
Bank of Scotland PLC
Sub. Notes
6.38% due 08/16/2019...................... GBP 150,000 239,198
Lloyds Bank PLC FRS
Sub. Notes
11.88% due 12/16/2021..................... EUR 500,000 612,650
Mizuho Bank, Ltd.
Company Guar. Notes
2.15% due 10/20/2018*..................... 215,000 215,132
Mizuho Bank, Ltd.
Company Guar. Notes
2.45% due 04/16/2019*..................... 275,000 277,729
-----------
2,162,215
-----------
BEVERAGES-NON-ALCOHOLIC -- 0.2%
Coca-Cola Femsa SAB de CV
Company Guar. Notes
2.38% due 11/26/2018...................... 742,000 753,267
-----------
BEVERAGES-WINE/SPIRITS -- 0.1%
Diageo Capital PLC
Company Guar. Notes
5.75% due 10/23/2017...................... 487,000 519,374
-----------
BREWERY -- 0.1%
Anadolu Efes Biracilik Ve Malt Sanayii AS
Senior Notes
3.38% due 11/01/2022...................... 350,000 306,901
-----------
BUILDING PRODUCTS-CEMENT -- 0.1%
CRH Finance BV
Company Guar. Notes
5.00% due 01/25/2019...................... EUR 300,000 386,717
-----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.3%
Mattamy Group Corp.
Company Guar. Notes
6.50% due 11/15/2020*..................... 1,325,000 1,192,500
-----------
35
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
CABLE/SATELLITE TV -- 0.6%
Altice Financing SA
Senior Sec. Notes
6.50% due 01/15/2022*..................... $1,361,000 $1,384,817
Altice Luxembourg SA
Company Guar. Notes
7.75% due 05/15/2022*..................... 650,000 639,652
Virgin Media Secured Finance PLC
Senior Sec. Notes
5.25% due 01/15/2026*..................... 500,000 500,000
----------
2,524,469
----------
CELLULAR TELECOM -- 0.3%
America Movil Sab De Cv
Senior Notes
2.13% due 03/10/2028...................... EUR 420,000 477,440
America Movil SAB de CV
Senior Notes
5.00% due 10/27/2026...................... GBP 185,000 302,153
Empresa Nacional de Telecomunicaciones SA
Senior Notes
4.88% due 10/30/2024...................... 200,000 196,940
Millicom International Cellular SA
Senior Notes
6.63% due 10/15/2021...................... 200,000 201,250
Turkcell Iletisim Hizmetleri AS
Notes
5.75% due 10/15/2025*..................... 200,000 194,456
----------
1,372,239
----------
CHEMICALS-DIVERSIFIED -- 0.3%
NOVA Chemicals Corp.
Senior Notes
5.00% due 05/01/2025*..................... 800,000 778,000
Solvay SA
Senior Notes
4.63% due 06/27/2018...................... EUR 325,000 405,906
----------
1,183,906
----------
CHEMICALS-PLASTICS -- 0.1%
Mexichem SAB de CV
Company Guar. Notes
5.88% due 09/17/2044*..................... 440,000 394,350
----------
CONSUMER PRODUCTS-MISC. -- 0.1%
Kimberly-Clark de Mexico SAB de CV
Senior Notes
3.25% due 03/12/2025*..................... 413,000 411,215
----------
CRUISE LINES -- 0.6%
NCL Corp., Ltd.
Senior Notes
4.63% due 11/15/2020*..................... 615,000 618,075
Royal Caribbean Cruises, Ltd.
Senior Notes
5.25% due 11/15/2022...................... 140,000 147,700
Royal Caribbean Cruises, Ltd.
Senior Notes
7.50% due 10/15/2027...................... 571,000 646,658
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
CRUISE LINES (CONTINUED)
Viking Cruises, Ltd.
Senior Notes
6.25% due 05/15/2025*................. $1,001,000 $ 838,337
----------
2,250,770
----------
DIAMONDS/PRECIOUS STONES -- 0.0%
Petra Diamonds US Treasury PLC
Sec. Notes
8.25% due 05/31/2020*................. 200,000 169,500
----------
DISPOSABLE MEDICAL PRODUCTS -- 0.2%
ConvaTec Finance International SA
1st. Mtg. Bonds
8.25% due 01/15/2019*................. 800,000 792,500
----------
DIVERSIFIED BANKING INSTITUTIONS -- 2.3%
BNP Paribas SA
Senior Notes
2.88% due 09/26/2023.................. EUR 400,000 520,558
BNP Paribas SA FRS
Sub. Notes
2.88% due 03/20/2026.................. EUR 225,000 260,620
Credit Agricole SA
Senior Notes
3.13% due 02/05/2026.................. EUR 200,000 267,519
Credit Agricole SA
Sub. Notes
3.90% due 04/19/2021.................. EUR 350,000 456,097
Credit Agricole SA
Sub. Notes
4.38% due 03/17/2025*................. 239,000 234,031
Credit Agricole SA
Senior Notes
5.50% due 12/17/2021.................. GBP 250,000 421,034
Deutsche Bank AG
Senior Notes
1.88% due 02/13/2018.................. 564,000 560,410
Deutsche Bank AG
Sub. Notes
4.50% due 04/01/2025.................. 273,000 237,278
HSBC Holdings PLC
Senior Notes
3.40% due 03/08/2021.................. 215,000 219,406
HSBC Holdings PLC
Sub. Notes
4.25% due 08/18/2025.................. 393,000 388,233
HSBC Holdings PLC
Senior Notes
4.30% due 03/08/2026.................. 236,000 243,980
HSBC Holdings PLC
Senior Notes
6.50% due 05/20/2024.................. GBP 150,000 262,925
Lloyds Banking Group PLC
Sub. Notes
4.58% due 12/10/2025*................. 336,000 329,413
Mitsubishi UFJ Financial Group, Inc.
Senior Notes
2.95% due 03/01/2021.................. 514,000 523,684
36
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Mitsubishi UFJ Financial Group, Inc.
Senior Notes
3.85% due 03/01/2026................. $ 597,000 $ 620,976
Royal Bank of Scotland PLC FRS
Sub. Notes
10.50% due 03/16/2022................ EUR 700,000 864,235
Societe Generale SA
Senior Notes
5.00% due 12/20/2018................. GBP 345,000 539,276
Societe Generale SA
Sub. Notes
6.13% due 08/20/2018................. EUR 300,000 384,562
UBS AG
Senior Notes
1.80% due 03/26/2018................. 372,000 373,257
UBS AG London
Senior Notes
1.13% due 06/30/2020................. EUR 550,000 648,209
UBS Group Funding Jersey, Ltd.
Company Guar. Notes
4.13% due 09/24/2025*................ 202,000 202,288
UBS Group Funding Jersey, Ltd.
Company Guar. Notes
4.13% due 04/15/2026*................ 208,000 207,839
----------
8,765,830
----------
DIVERSIFIED FINANCIAL SERVICES -- 0.2%
GE Capital International Funding Co.
Company Guar. Notes
0.96% due 04/15/2016*................ 695,000 695,038
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.1%
Ingersoll-Rand Luxembourg Finance SA
Company Guar. Notes
4.65% due 11/01/2044................. 194,000 199,787
----------
DIVERSIFIED MINERALS -- 0.4%
FMG Resources August 2006 Pty, Ltd.
Company Guar. Notes
8.25% due 11/01/2019*................ 750,000 716,250
FMG Resources August 2006 Pty, Ltd.
Senior Sec. Notes
9.75% due 03/01/2022*................ 807,000 804,982
Teck Resources, Ltd.
Company Guar. Notes
2.50% due 02/01/2018................. 171,000 149,625
----------
1,670,857
----------
DIVERSIFIED OPERATIONS -- 0.1%
KOC Holding AS
Senior Notes
5.25% due 03/15/2023*................ 200,000 199,500
----------
E-COMMERCE/PRODUCTS -- 0.1%
Alibaba Group Holding, Ltd.
Company Guar. Notes
3.60% due 11/28/2024................. 280,000 282,370
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
ELECTRIC-DISTRIBUTION -- 0.1%
State Grid Overseas Investment 2014, Ltd.
Company Guar. Notes
4.13% due 05/07/2024*...................... $ 200,000 $ 218,302
----------
ELECTRIC-GENERATION -- 0.5%
Electricite de France SA
Senior Notes
2.35% due 10/13/2020*...................... 980,000 989,993
Electricite de France SA
Senior Notes
3.63% due 10/13/2025*...................... 180,000 183,629
Electricite de France SA
Senior Notes
4.95% due 10/13/2045*...................... 413,000 425,803
Electricite de France SA
Senior Notes
6.00% due 01/22/2114*...................... 236,000 241,496
----------
1,840,921
----------
ELECTRIC-INTEGRATED -- 0.7%
EDP Finance BV
Senior Notes
6.63% due 08/09/2017....................... GBP 290,000 439,733
Empresas Publicas de Medellin ESP
Senior Notes
8.38% due 02/01/2021....................... COP 266,000,000 84,395
Enel Finance International NV
Company Guar. Notes
5.00% due 09/14/2022....................... EUR 400,000 579,664
Enel Finance International NV
Company Guar. Notes
5.63% due 08/14/2024....................... GBP 100,000 171,239
GDF Suez
Senior Notes
2.38% due 05/19/2026....................... EUR 700,000 897,370
Hrvatska Elektroprivreda
Senior Notes
5.88% due 10/23/2022*...................... 200,000 205,160
Iberdrola International BV
Company Guar. Notes
2.50% due 10/24/2022....................... EUR 300,000 380,758
SSE PLC
Senior Notes
5.00% due 10/01/2018....................... GBP 90,000 140,371
----------
2,898,690
----------
ELECTRIC-TRANSMISSION -- 0.1%
National Grid Electricity Transmission PLC
Senior Notes
6.50% due 07/27/2028....................... GBP 150,000 298,729
----------
ELECTRONIC COMPONENTS-MISC. -- 0.0%
Flextronics International, Ltd.
Company Guar. Notes
4.75% due 06/15/2025....................... 111,000 108,503
----------
37
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.1%
Sensata Technologies UK Financing Co. PLC
Company Guar. Notes
6.25% due 02/15/2026*..................... $ 230,000 $ 244,950
----------
ENGINEERING/R&D SERVICES -- 0.1%
ABB Finance BV
Company Guar. Notes
2.63% due 03/26/2019...................... EUR 200,000 243,652
----------
FINANCE-LEASING COMPANIES -- 0.5%
Aircastle, Ltd.
Senior Notes
5.00% due 04/01/2023...................... 486,000 488,430
Fly Leasing, Ltd.
Senior Notes
6.38% due 10/15/2021...................... 1,375,000 1,302,812
Lincoln Finance, Ltd.
Senior Sec. Notes
7.38% due 04/15/2021*..................... 235,000 244,400
----------
2,035,642
----------
FOOD-MEAT PRODUCTS -- 0.1%
BRF SA
Senior Notes
7.75% due 05/22/2018*(4).................. BRL 1,000,000 230,834
Minerva Luxembourg SA
Company Guar. Notes
7.75% due 01/31/2023...................... 200,000 201,750
----------
432,584
----------
FOOD-MISC./DIVERSIFIED -- 0.1%
General Mills, Inc.
Senior Notes
2.10% due 11/16/2020...................... EUR 375,000 456,160
Nestle Finance International, Ltd.
Company Guar. Notes
2.25% due 11/30/2023...................... GBP 75,000 111,360
----------
567,520
----------
FOOD-RETAIL -- 0.5%
Carrefour SA
Senior Notes
4.00% due 04/09/2020...................... EUR 415,000 542,102
Casino Guichard Perrachon SA
Senior Notes
3.16% due 08/06/2019...................... EUR 500,000 605,419
Cencosud SA
Company Guar. Notes
5.15% due 02/12/2025...................... 375,000 379,253
Tesco PLC
Senior Notes
3.38% due 11/02/2018...................... EUR 275,000 328,093
----------
1,854,867
----------
GAMBLING (NON-HOTEL) -- 0.3%
International Game Technology PLC
Senior Sec. Notes
6.25% due 02/15/2022*..................... 520,000 528,996
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
GAMBLING (NON-HOTEL) (CONTINUED)
International Game Technology PLC
Senior Sec. Notes
6.50% due 02/15/2025*........................ $ 575,000 $ 569,250
----------
1,098,246
----------
GAS-DISTRIBUTION -- 0.1%
Gas Natural Capital Markets SA
Company Guar. Notes
5.13% due 11/02/2021......................... EUR 300,000 423,051
----------
GAS-TRANSPORTATION -- 0.1%
National Grid Gas PLC
Senior Notes
6.00% due 05/13/2038......................... GBP 60,000 120,968
Transportadora de Gas del Peru SA
Senior Notes
4.25% due 04/30/2028......................... 200,000 194,000
----------
314,968
----------
GOLD MINING -- 0.1%
Gold Fields Orogen Holding BVI, Ltd.
Company Guar. Notes
4.88% due 10/07/2020......................... 200,000 180,000
Goldcorp, Inc.
Senior Notes
5.45% due 06/09/2044......................... 227,000 206,914
Kinross Gold Corp.
Company Guar. Notes
5.95% due 03/15/2024......................... 144,000 122,448
----------
509,362
----------
INSURANCE-LIFE/HEALTH -- 0.1%
AIA Group, Ltd.
Senior Notes
4.50% due 03/16/2046*........................ 292,000 293,311
----------
INSURANCE-MULTI-LINE -- 0.2%
Willow No 2 Ireland PLC for Zurich Insurance
Co., Ltd.
Senior Sec. Notes
3.38% due 06/27/2022......................... EUR 275,000 357,212
XLIT, Ltd.
Company Guar. Notes
4.45% due 03/31/2025......................... 194,000 192,100
XLIT, Ltd.
Company Guar. Notes
5.50% due 03/31/2045......................... 439,000 421,205
----------
970,517
----------
INSURANCE-PROPERTY/CASUALTY -- 0.0%
Allied World Assurance Co. Holdings, Ltd.
Company Guar. Notes
4.35% due 10/29/2025......................... 163,000 163,328
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.1%
China Cinda Finance 2015 I, Ltd.
Company Guar. Notes
4.25% due 04/23/2025*........................ 380,000 373,926
----------
38
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
MACHINERY-CONSTRUCTION & MINING -- 0.1%
Ferreycorp SAA
Company Guar. Notes
4.88% due 04/26/2020........................ $ 300,000 $ 294,750
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.1%
ATS Automation Tooling Systems, Inc.
Senior Notes
6.50% due 06/15/2023*....................... 569,000 585,359
----------
MEDICAL-DRUGS -- 0.5%
Grifols Worldwide Operations, Ltd.
Company Guar. Notes
5.25% due 04/01/2022........................ 414,000 425,385
Roche Finance Europe BV
Company Guar. Notes
5.38% due 08/29/2023........................ GBP 125,000 222,131
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
5.38% due 03/15/2020*....................... 1,525,000 1,242,875
----------
1,890,391
----------
MEDICAL-GENERIC DRUGS -- 0.2%
Actavis Funding SCS
Company Guar. Notes
3.00% due 03/12/2020........................ 385,000 395,860
Perrigo Finance Unlimited Co.
Company Guar. Notes
3.50% due 12/15/2021........................ 444,000 452,574
----------
848,434
----------
METAL-COPPER -- 0.1%
First Quantum Minerals, Ltd.
Company Guar. Notes
7.25% due 05/15/2022*....................... 537,000 359,790
----------
METAL-DIVERSIFIED -- 0.1%
Glencore Finance Europe SA
Company Guar. Notes
6.50% due 02/27/2019........................ GBP 200,000 293,225
----------
METAL-IRON -- 0.1%
Metalloinvest Finance, Ltd.
Company Guar. Notes
5.63% due 04/17/2020........................ 200,000 198,087
----------
MINING SERVICES -- 0.0%
Consolidated Minerals, Ltd.
Senior Sec. Notes
8.00% due 05/15/2020*....................... 457,000 155,380
----------
OIL & GAS DRILLING -- 0.1%
Pacific Drilling SA
Senior Sec. Notes
5.38% due 06/01/2020*....................... 1,050,000 330,750
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.6%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031........................ 165,000 178,659
Baytex Energy Corp.
Company Guar. Notes
5.13% due 06/01/2021*....................... 466,000 328,530
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
KazMunayGas National Co. JSC
Senior Notes
6.38% due 04/09/2021.................. $ 450,000 $ 462,429
MEG Energy Corp.
Company Guar. Notes
6.38% due 01/30/2023*................. 1,194,000 704,460
Novatek OAO via Novatek Finance, Ltd.
Senior Notes
6.60% due 02/03/2021.................. 200,000 208,040
Pertamina Persero PT
Senior Notes
4.88% due 05/03/2022*................. 500,000 507,892
----------
2,390,010
----------
OIL COMPANIES-INTEGRATED -- 1.1%
BP Capital Markets PLC
Company Guar. Notes
1.38% due 11/06/2017.................. 425,000 423,627
BP Capital Markets PLC
Company Guar. Notes
2.97% due 02/27/2026.................. EUR 450,000 584,996
BP Capital Markets PLC
Company Guar. Notes
3.25% due 05/06/2022.................. 286,000 294,331
BP Capital Markets PLC
Company Guar. Notes
3.54% due 11/04/2024.................. 194,000 198,201
BP Capital Markets PLC
Company Guar. Notes
4.33% due 12/10/2018.................. GBP 100,000 153,734
Ecopetrol SA
Senior Notes
4.13% due 01/16/2025.................. 200,000 170,500
Gazprom OAO Via Gaz Capital SA
Senior Notes
6.51% due 03/07/2022.................. 200,000 209,398
Lukoil International Finance BV
Company Guar. Notes
4.56% due 04/24/2023.................. 200,000 190,958
Petroleos de Venezuela SA
Company Guar. Notes
5.38% due 04/12/2027.................. 350,000 111,090
Petroleos de Venezuela SA
Company Guar. Notes
6.00% due 11/15/2026.................. 1,200,000 370,200
Petroleos Mexicanos
Company Guar. Notes
5.50% due 06/27/2044.................. 221,000 183,629
Petronas Capital, Ltd.
Company Guar. Notes
3.50% due 03/18/2025.................. 275,000 279,955
Shell International Finance BV
Company Guar. Notes
1.25% due 11/10/2017.................. 283,000 283,337
Shell International Finance BV
Company Guar. Notes
2.13% due 05/11/2020.................. 309,000 311,865
39
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
OIL COMPANIES-INTEGRATED (CONTINUED)
Shell International Finance BV
Company Guar. Notes
2.25% due 11/10/2020................ $ 327,000 $ 331,676
Total Capital International SA
Company Guar. Notes
2.25% due 12/17/2020................ GBP 95,000 140,641
----------
4,238,138
----------
OIL REFINING & MARKETING -- 0.1%
Reliance Industries, Ltd.
Senior Notes
4.13% due 01/28/2025*............... 250,000 257,233
Thai Oil PCL
Senior Notes
3.63% due 01/23/2023*............... 200,000 202,085
----------
459,318
----------
PAPER & RELATED PRODUCTS -- 0.2%
Cascades, Inc.
Senior Notes
5.75% due 07/15/2023*............... 680,000 641,750
Klabin Finance SA
Company Guar. Notes
5.25% due 07/16/2024*............... 200,000 188,830
----------
830,580
----------
PETROCHEMICALS -- 0.2%
Alpek SAB de CV
Company Guar. Notes
5.38% due 08/08/2023*............... 400,000 417,000
Braskem Finance, Ltd.
Company Guar. Notes
5.75% due 04/15/2021................ 200,000 190,540
----------
607,540
----------
PIPELINES -- 0.1%
Southern Gas Corridor CJSC
Government Guar. Notes
6.88% due 03/24/2026*............... 500,000 500,475
----------
PRINTING-COMMERCIAL -- 0.2%
Cimpress NV
Company Guar. Notes
7.00% due 04/01/2022*............... 890,000 881,100
----------
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
LS Finance 2022, Ltd.
Company Guar. Notes
4.25% due 10/16/2022................ 300,000 297,383
Marks & Spencer PLC
Senior Notes
6.13% due 12/06/2021................ GBP 160,000 270,133
----------
567,516
----------
SATELLITE TELECOM -- 0.2%
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019................ 830,000 612,125
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
SATELLITE TELECOM (CONTINUED)
Intelsat Luxembourg SA
Company Guar. Notes
7.75% due 06/01/2021................ $ 730,000 $ 217,175
----------
829,300
----------
SECURITY SERVICES -- 0.2%
Garda World Security Corp.
Company Guar. Notes
7.25% due 11/15/2021*............... 1,111,000 855,470
----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications
Luxembourg II SCA FRS
Sub. Notes
6.26% due 01/15/2015*+(3)(4)(7)(13). 1,330,000 0
----------
STEEL-PRODUCERS -- 0.2%
ArcelorMittal
Senior Notes
7.25% due 02/25/2022................ 943,000 933,099
----------
SUGAR -- 0.1%
Cosan Luxembourg SA
Company Guar. Notes
9.50% due 03/14/2018*(4)............ BRL 1,590,000 362,605
----------
SUPRANATIONAL BANKS -- 0.3%
European Investment Bank
Senior Notes
2.63% due 03/15/2035................ EUR 285,000 412,712
North American Development Bank
Senior Notes
2.30% due 10/10/2018................ 584,000 598,557
----------
1,011,269
----------
TELEPHONE-INTEGRATED -- 0.7%
British Telecom PLC
Senior Notes
6.63% due 06/23/2017................ GBP 150,000 228,794
British Telecommunications PLC
Senior Notes
1.13% due 06/10/2019................ EUR 250,000 292,026
British Telecommunications PLC
Senior Notes
8.63% due 03/26/2020................ GBP 145,000 262,360
Empresa de Telecomunicaciones de
Bogota
Senior Notes
7.00% due 01/17/2023*............... COP 640,000,000 164,631
Koninklijke KPN NV
Senior Notes
5.75% due 09/17/2029................ GBP 200,000 348,957
Oi SA
Senior Notes
9.75% due 09/15/2016*(4)............ BRL 575,000 52,972
Orange SA
Senior Notes
3.88% due 01/14/2021................ EUR 300,000 397,180
40
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
TELEPHONE-INTEGRATED (CONTINUED)
Orange SA
Senior Notes
7.25% due 11/10/2020................ GBP 90,000 $ 160,208
Telecom Italia Capital SA
Company Guar. Notes
7.72% due 06/04/2038................ 480,000 503,093
Telefonica Emisiones SAU
Company Guar. Notes
4.69% due 11/11/2019................ EUR 100,000 131,329
-----------
2,541,550
-----------
TRANSPORT-MARINE -- 0.1%
PT Pelabuhan Indonesia II
Senior Notes
4.25% due 05/05/2025*............... 300,000 287,112
-----------
TRANSPORT-RAIL -- 0.1%
Canadian Pacific Railway Co.
Senior Notes
6.13% due 09/15/2115................ 214,000 229,453
-----------
TRANSPORT-SERVICES -- 0.1%
Autostrade Per L' Italia
Senior Unsecured Notes
1.63% due 06/12/2023................ EUR 375,000 444,559
-----------
WAREHOUSING & HARBOR TRANSPORTATION SERVICES -- 0.1%
DP World, Ltd.
Senior Notes
6.85% due 07/02/2037................ 200,000 203,892
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $91,087,144).................. 84,630,219
-----------
FOREIGN GOVERNMENT OBLIGATIONS -- 8.3%
ELECTRIC-DISTRIBUTION -- 0.2%
Hydro-Quebec
Government Guar. Notes
1.38% due 06/19/2017................ 527,000 529,614
-----------
SOVEREIGN -- 8.1%
Arab Republic of Egypt
Senior Notes
6.88% due 04/30/2040................ 200,000 170,040
Dominican Republic
Senior Notes
5.50% due 01/27/2025*............... 415,000 415,000
Dominican Republic
Senior Bonds
5.88% due 04/18/2024................ 380,000 389,500
Dominican Republic
Notes
6.88% due 01/29/2026*............... 200,000 212,500
Dominican Republic
Senior Bonds
7.45% due 04/30/2044................ 350,000 367,500
Dominican Republic
Senior Notes
8.63% due 04/20/2027................ 350,000 393,750
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
SOVEREIGN (CONTINUED)
Federal Republic of Germany
Bonds
0.50% due 02/15/2025......... EUR 200,000 $ 236,900
Federal Republic of Germany
Bonds
1.75% due 02/15/2024......... EUR 900,000 1,174,096
Federal Republic of Germany
Bonds
2.50% due 08/15/2046......... EUR 175,000 287,425
Federal Republic of Germany
Bonds
6.25% due 01/04/2030......... EUR 550,000 1,120,621
Government of Finland
Senior Bonds
2.63% due 07/04/2042*........ EUR 130,000 202,816
Islamic Republic of Pakistan
Senior Notes
8.25% due 04/15/2024......... 200,000 212,422
Islamic Republic of Pakistan
Senior Notes
8.25% due 09/30/2025*........ 500,000 531,643
Kingdom of Belgium
Bonds
5.00% due 03/28/2035*........ EUR 225,000 428,846
Lebanese Republic
Senior Notes
6.60% due 11/27/2026......... 700,000 679,070
Lebanese Republic
Senior Notes
8.25% due 04/12/2021......... 190,000 205,800
Oriental Republic of Uruguay
Senior Notes
5.10% due 06/18/2050......... 760,000 706,800
Republic of Angola
Senior Notes
9.50% due 11/12/2025*........ 425,000 386,750
Republic of Armenia
Senior Notes
6.00% due 09/30/2020......... 250,000 247,085
Republic of Armenia
Notes
7.15% due 03/26/2025......... 700,000 689,080
Republic of Colombia
Senior Notes
6.13% due 01/18/2041......... 250,000 262,500
Republic of Costa Rica
Senior Notes
7.16% due 03/12/2045*........ 280,000 253,400
Republic of Croatia
Senior Notes
6.75% due 11/05/2019......... 600,000 658,284
Republic of El Salvador
Senior Notes
7.63% due 02/01/2041......... 280,000 237,300
41
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Ghana
Government Guar. Notes
10.75% due 10/14/2030... $ 200,000 $195,190
Republic of Hungary
Senior Notes
4.00% due 03/25/2019.... 200,000 207,500
Republic of Hungary
Senior Notes
5.75% due 11/22/2023.... 670,000 763,130
Republic of Hungary
Senior Notes
7.63% due 03/29/2041.... 340,000 481,440
Republic of Indonesia
Senior Notes
5.95% due 01/08/2046*... 470,000 520,900
Republic of Indonesia
Senior Notes
6.63% due 02/17/2037.... 117,000 135,640
Republic of Ivory Coast
Senior Notes
5.38% due 07/23/2024.... 400,000 367,000
Republic of Ivory Coast
Senior Notes
6.38% due 03/03/2028.... 200,000 189,000
Republic of Lebanon
Notes
6.65% due 02/26/2030.... 200,000 196,150
Republic of Lithuania
Senior Notes
6.63% due 02/01/2022.... 500,000 603,931
Republic of Mozambique
Government Guar. Notes
6.31% due 09/11/2020.... 738,000 621,839
Republic of Panama
Senior Notes
3.75% due 03/16/2025.... 600,000 616,500
Republic of Panama
Senior Notes
5.20% due 01/30/2020.... 320,000 352,800
Republic of Panama
Senior Notes
6.70% due 01/26/2036.... 670,000 854,250
Republic of Paraguay
Senior Notes
6.10% due 08/11/2044.... 350,000 357,000
Republic of Peru
Senior Notes
6.55% due 03/14/2037.... 500,000 622,500
Republic of Poland
Senior Notes
3.25% due 04/06/2026.... 700,000 699,398
Republic of Poland
Senior Notes
4.00% due 01/22/2024.... 770,000 822,129
Republic of Poland
Senior Notes
5.13% due 04/21/2021.... 50,000 55,875
Republic of Serbia
Senior Notes
7.25% due 09/28/2021.... 750,000 838,125
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
SOVEREIGN (CONTINUED)
Republic of South Africa
Senior Notes
5.38% due 07/24/2044........ $ 200,000 $197,632
Republic of South Africa
Senior Notes
5.38% due 07/24/2044........ 200,000 197,632
Republic of South Africa
Senior Notes
5.50% due 03/09/2020........ 350,000 370,597
Republic of South Africa
Senior Notes
5.88% due 09/16/2025........ 350,000 378,647
Republic of South Africa
Senior Notes
6.88% due 05/27/2019........ 350,000 384,496
Republic of Sri Lanka
Senior Notes
6.85% due 11/03/2025*....... 800,000 762,583
Republic of the Philippines
Senior Notes
3.70% due 03/01/2041........ 200,000 211,453
Republic of the Philippines
Senior Notes
4.00% due 01/15/2021........ 330,000 362,306
Republic of the Philippines
Senior Notes
8.38% due 06/17/2019........ 100,000 121,575
Republic of the Philippines
Senior Notes
10.63% due 03/16/2025....... 341,000 559,254
Republic of Turkey
Senior Notes
3.25% due 03/23/2023........ 1,040,000 980,198
Republic of Turkey
Senior Notes
4.88% due 04/16/2043........ 330,000 306,158
Republic of Venezuela
Senior Notes
7.00% due 12/01/2018........ 450,000 180,000
Republic of Venezuela
Senior Notes
9.00% due 05/07/2023........ 370,000 129,500
Republic of Venezuela
Senior Notes
9.38% due 01/13/2034........ 278,000 98,690
Republic of Venezuela
Senior Bonds
11.75% due 10/21/2026....... 560,000 219,800
Republic of Venezuela
Senior Bonds
11.95% due 08/05/2031....... 555,000 219,225
Republic of Venezuela
Senior Bonds
12.75% due 08/23/2022....... 790,000 339,700
Republic of Zambia
Notes
5.38% due 09/20/2022........ 410,000 311,600
42
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FOREIGN GOVERNMENT OBLIGATIONS (CONTINUED)
SOVEREIGN (CONTINUED)
Republic of Zambia
Senior Notes
8.50% due 04/14/2024.............. $ 750,000 $ 620,625
Russian Federation
Senior Notes
5.88% due 09/16/2043.............. 200,000 206,370
Russian Federation
Notes
12.75% due 06/24/2028............. 250,000 414,700
United Kingdom Gilt Treasury
Bonds
4.50% due 09/07/2034.............. GBP 650,000 1,279,396
United Mexican States
Senior Notes
3.60% due 01/30/2025.............. 447,000 455,940
United Mexican States
Senior Notes
4.13% due 01/21/2026.............. 600,000 629,100
United Mexican States
Senior Notes
4.75% due 03/08/2044.............. 770,000 768,075
United Mexican States
Senior Notes
6.05% due 01/11/2040.............. 900,000 1,055,250
-----------
31,729,927
-----------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(cost $33,950,300)................ 32,259,541
-----------
U.S. GOVERNMENT AGENCIES -- 9.1%
FEDERAL HOME LOAN MTG. CORP. -- 2.6%
2.12% due 02/01/2037 FRS.......... 28,982 30,082
2.50% due 01/01/2028.............. 309,567 319,362
2.50% due 04/01/2028.............. 105,646 108,861
2.66% due 11/01/2037 FRS.......... 178,057 187,950
3.00% due 08/01/2043.............. 1,114,116 1,142,308
3.00% due 07/01/2045.............. 871,368 892,922
3.00% due 10/01/2045.............. 305,355 312,908
3.00% due 12/01/2045.............. 99,168 101,621
3.50% due 03/01/2042.............. 418,068 438,122
3.50% due 04/01/2042.............. 429,940 450,960
3.50% due 09/01/2043.............. 496,072 522,433
3.50% due 03/01/2045.............. 525,903 550,977
3.50% due 08/01/2045.............. 178,623 187,724
3.50% due 10/01/2045.............. 293,605 307,580
3.50% due 11/01/2045.............. 140,987 147,697
3.50% due 02/01/2046.............. 1,347,587 1,411,728
4.00% due 09/01/2040.............. 1,194,942 1,278,556
4.00% due 07/01/2044.............. 194,384 207,561
4.00% due 10/01/2045.............. 339,701 362,929
4.00% due 11/01/2045.............. 300,333 320,870
4.50% due 02/01/2020.............. 8,753 9,066
4.50% due 08/01/2020.............. 19,188 19,832
4.50% due 01/01/2039.............. 25,057 27,201
4.50% due 12/01/2039.............. 15,540 17,129
5.00% due 02/01/2034.............. 34,067 37,895
5.00% due 05/01/2034.............. 54,034 60,353
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
FEDERAL HOME LOAN MTG. CORP. (CONTINUED)
5.00% due 11/01/2043.................... $ 338,158 $ 374,244
5.50% due 05/01/2037.................... 91,331 102,326
6.00% due 03/01/2040.................... 70,317 80,160
6.50% due 02/01/2035.................... 26,091 30,654
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
6.36% due 09/15/2039(2)(9)(14).......... 767,849 116,639
Series 1103, Class N
11.57% due 06/15/2021(2)(9)............. 669 89
Federal Home Loan Mtg. Corp. Structured
Agency Credit Risk......................
Series 2014-DN1, Class M2...............
2.63% due 02/25/2024 FRS(2)............. 84,000 83,866
Series 2014-HQ2, Class M2...............
2.63% due 09/25/2024 FRS(2)............. 150,000 148,113
-----------
10,390,718
-----------
FEDERAL NATIONAL MTG. ASSOC. -- 6.2%
Federal National Mtg. Assoc
2.37% due 09/01/2035 FRS................ 128,495 133,878
2.39% due 05/01/2037 FRS................ 46,978 49,127
2.47% due 10/01/2035 FRS................ 126,411 133,631
2.49% due 07/01/2039 FRS................ 113,827 119,318
2.50% due 02/01/2031.................... 302,628 310,958
2.50% due April 15 TBA.................. 875,000 898,242
2.51% due 11/01/2036 FRS................ 80,159 84,701
2.58% due 10/01/2040 FRS................ 48,883 51,799
2.66% due 05/01/2040 FRS................ 151,535 159,781
2.67% due 10/01/2040 FRS................ 78,897 82,709
2.70% due 08/01/2035 FRS................ 103,339 108,904
3.00% due 10/01/2027.................... 374,057 391,674
3.00% due 11/01/2027.................... 391,025 409,402
3.00% due 03/01/2042.................... 171,385 176,134
3.00% due 12/01/2042.................... 175,932 180,905
3.00% due 05/01/2043.................... 962,984 989,953
3.00% due 06/01/2045.................... 48,208 49,619
3.00% due 10/01/2030.................... 301,968 315,595
3.00% due April 15 TBA.................. 686,000 716,548
3.00% due April 30 TBA.................. 2,733,000 2,803,460
3.50% due 08/01/2026.................... 150,334 158,995
3.50% due 08/01/2027.................... 167,128 176,702
3.50% due 10/01/2028.................... 53,950 57,431
3.50% due 08/01/2042.................... 170,970 179,672
3.50% due 02/01/2043.................... 156,706 166,370
3.50% due 07/01/2045.................... 140,964 147,951
3.50% due 08/01/2045.................... 265,307 278,690
3.50% due 09/01/2045.................... 155,567 163,185
3.50% due 10/01/2045.................... 297,814 313,951
3.50% due 11/01/2045.................... 320,746 336,873
3.50% due April 30 TBA.................. 4,143,000 4,343,839
4.00% due 11/01/2025.................... 233,141 249,222
4.00% due 06/01/2039.................... 437,139 476,285
4.00% due 09/01/2040.................... 358,535 384,128
4.00% due 10/01/2040.................... 426,007 456,393
4.00% due 11/01/2041.................... 332,481 356,176
4.00% due 12/01/2043.................... 12,818 13,919
4.00% due 10/01/2044.................... 152,884 163,337
4.00% due 02/01/2045.................... 118,251 126,642
43
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
U.S. GOVERNMENT AGENCIES (CONTINUED) ..........
FEDERAL NATIONAL MTG. ASSOC. (CONTINUED)
4.00% due April 30 TBA....................... $2,794,000 $ 2,985,214
4.50% due 06/01/2019......................... 23,898 24,744
4.50% due 11/01/2022......................... 63,218 66,361
4.50% due 06/01/2023......................... 30,722 32,515
4.50% due 07/01/2041......................... 50,084 54,511
4.50% due 12/01/2044......................... 368,572 400,775
4.50% due April 30 TBA....................... 2,793,000 3,039,133
5.00% due 06/01/2019......................... 19,272 19,982
5.00% due 01/01/2023......................... 16,156 17,363
5.00% due 03/01/2034......................... 28,014 31,024
5.00% due 05/01/2035......................... 18,252 20,233
5.00% due 05/01/2040......................... 142,484 158,405
5.00% due 07/01/2040......................... 141,622 156,966
5.50% due 06/01/2038......................... 45,523 51,595
6.00% due 02/01/2032......................... 5,252 5,984
6.00% due 05/01/2034......................... 2,754 3,170
6.00% due 10/01/2034......................... 21,573 24,582
7.50% due 01/01/2030......................... 1,367 1,409
8.00% due 11/01/2028......................... 4,887 5,724
Fannie Mae Connecticut Avenue Securities FRS
Series 2014-C01, Class M1
2.03% due 01/25/2024(2)...................... 152,193 151,968
Federal National Mtg. Assoc., REMIC
Series 1989-2, Class D
8.80% due 01/25/2019(2)...................... 4,143 4,403
-----------
23,972,160
-----------
GOVERNMENT NATIONAL MTG. ASSOC. -- 0.2%
3.00% due 02/20/2045......................... 204,580 212,199
3.00% due 05/20/2045......................... 131,669 136,573
3.50% due 03/20/2045......................... 161,899 171,321
3.50% due 04/20/2045......................... 219,419 232,188
-----------
752,281
-----------
TENNESSEE VALLEY AUTHORITY -- 0.1%
1.75% due 10/15/2018......................... 335,000 341,442
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(cost $34,961,209)........................... 35,456,601
-----------
U.S. GOVERNMENT TREASURIES -- 3.7%
UNITED STATES TREASURY BONDS -- 0.2%
3.00% due 11/15/2045......................... 794,000 857,179
-----------
UNITED STATES TREASURY NOTES -- 3.5%
0.13% due 04/15/2018 TIPS(11)................ 1,316,932 1,340,235
0.63% due 11/30/2017......................... 7,500,000 7,487,985
0.75% due 01/15/2017......................... 400 400
0.75% due 01/31/2018......................... 394,000 394,139
1.13% due 02/28/2021......................... 238,000 237,024
1.38% due 09/30/2020......................... 1,289,000 1,299,775
1.38% due 01/31/2021......................... 394,000 396,832
1.63% due 02/15/2026......................... 1,803,000 1,776,801
1.75% due 12/31/2020......................... 497,000 509,172
-----------
13,442,363
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(cost $14,319,435)........................... 14,299,542
-----------
PRINCIPAL
AMOUNT**/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
LOANS(5)(6)(16) -- 0.6%
AEROSPACE/DEFENSE -- 0.1%
Vencore Inc FRS
1st Lien
5.75% due 11/23/2019.................... $517,838 $ 512,659
----------
CASINO HOTELS -- 0.1%
Caesars Growth Properties Holdings LLC
BTL-B
5.25% due 05/08/2021.................... 357,143 290,179
----------
E-COMMERCE/SERVICES -- 0.1%
Rentpath, Inc. FRS
2nd Lien
10.00% due 12/17/2022................... 693,906 544,716
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.2%
SunEdison Semiconductor, Ltd. FRS
BTL
6.50% due 05/27/2019.................... 663,126 644,890
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
American Energy-Marcellus LLC FRS
2nd Lien
8.50% due 08/04/2021.................... 199,129 7,633
----------
PUBLISHING-BOOKS -- 0.1%
Cengage Learning Acquisitions, Inc. FRS
1st Lien
7.00% due 03/31/2020.................... 427,856 425,396
----------
TOTAL LOANS
(cost $2,756,718)....................... 2,425,473
----------
MUNICIPAL BONDS & NOTES -- 0.5%
Ohio State University
Revenue Bonds
Series A
4.80% due 06/01/2011.................... 616,000 661,750
Port Authority of New York & New Jersey
Revenue Bonds
Series 168
4.93% due 10/01/2051.................... 353,000 404,859
Port Authority of New York & New Jersey
Revenue Bonds
Series 174
4.46% due 10/01/2062.................... 725,000 758,082
----------
TOTAL MUNICIPAL BONDS & NOTES
(cost $1,687,993)....................... 1,824,691
----------
COMMON STOCKS -- 0.2%
POWER CONVERTER/SUPPLY EQUIPMENT -- 0.0%
TELEVISION -- 0.2%
ION Media Networks, Inc.+(3)(4)
(cost $163,657)......................... 655 639,636
----------
PREFERRED SECURITIES -- 0.2%
ELECTRIC-DISTRIBUTION -- 0.1%
Entergy Louisiana LLC
4.70%................................... 12,025 296,897
----------
44
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
SHARES/
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
PREFERRED SECURITIES (CONTINUED)
SOVEREIGN AGENCY -- 0.0%
Federal Home Loan Mtg. Corp. FRS
Series Z
8.38%+................................ $ 11,300 $ 35,030
----------
TELECOM SERVICES -- 0.1%
Qwest Corp.
6.13%................................. 23,325 570,530
----------
TOTAL PREFERRED SECURITIES
(cost $1,058,158)..................... 902,457
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 3.6%
BANKS COMMERCIAL -- 0.1%
Cooperatieve Rabobank UA VRS
0.50% due 06/29/2020(12).............. EUR 300,000 328,719
----------
BANKS-FIDUCIARY -- 0.1%
Bank of New York Mellon Corp. FRS
Series E
4.95% due 06/20/2020(12).............. 369,000 368,539
----------
BANKS-MONEY CENTER -- 0.1%
ABN Amro Bank NV VRS
5.75% due 09/22/2020(12).............. EUR 300,000 326,435
----------
BANKS-SUPER REGIONAL -- 0.2%
Fifth Third Bancorp FRS
Series J
4.90% due 09/30/2019(12).............. 558,000 486,855
Wells Fargo Capital X
5.95% due 12/01/2086.................. 223,000 226,969
----------
713,824
----------
BUILDING SOCIETIES -- 0.1%
Nationwide Building Society FRS
6.88% due 06/20/2019(12).............. GBP 185,000 248,435
----------
DIVERSIFIED BANKING INSTITUTIONS -- 1.5%
BAC Capital Trust XIII FRS
Series F
4.00% due 04/21/2016(12).............. 1,070,000 765,050
Bank of America Corp. FRS
Series AA
6.10% due 03/17/2025(12).............. 620,000 610,700
Citigroup, Inc. FRS
5.95% due 05/15/2025(12).............. 762,000 733,425
Credit Agricole SA VRS
6.63% due 09/23/2019*(12)............. 524,000 492,434
Deutsche Bank AG VRS
7.50% due 04/30/2025(12).............. 600,000 514,500
Goldman Sachs Group, Inc. FRS
Series M
5.38% due 05/10/2020(12).............. 209,000 202,187
HSBC Holdings PLC VRS
5.25% due 09/16/2022(12).............. EUR 275,000 279,596
JPMorgan Chase & Co. FRS
Series U
6.13% due 04/30/2024(12).............. 1,393,000 1,426,084
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
DIVERSIFIED BANKING INSTITUTIONS (CONTINUED)
Lloyds Banking Group PLC VRS
7.00% due 06/27/2019(12)...................... GBP 225,000 $ 307,402
Societe Generale SA VRS
7.88% due 12/18/2023*(12)..................... 715,000 666,715
----------
5,998,093
----------
ELECTRIC-INTEGRATED -- 0.2%
Dominion Resources, Inc. FRS
5.75% due 10/01/2054.......................... 315,000 302,085
Enel SpA FRS
6.50% due 01/10/2074.......................... EUR 175,000 215,224
Engie SA FRS
3.88% due 07/10/2018(12)...................... EUR 100,000 118,768
Gas Natural Fenosa Finance BV FRS
4.13% due 11/18/2022(12)...................... EUR 100,000 111,816
----------
747,893
----------
FINANCE-INVESTMENT BANKER/BROKER -- 0.0%
Lehman Brothers Holdings Capital Trust VII
Escrow Security
0.00% +(4).................................... 222,000 22
----------
FINANCE-OTHER SERVICES -- 0.1%
National Rural Utilities Cooperative Finance
Corp. FRS
4.75% due 04/30/2043.......................... 547,000 526,843
----------
FINANCIAL GUARANTEE INSURANCE -- 0.2%
Assured Guaranty Municipal Holdings, Inc. FRS
6.40% due 12/15/2066*......................... 1,046,000 711,280
----------
FOOD-DAIRY PRODUCTS -- 0.4%
Land O'Lakes Capital Trust I
7.45% due 03/15/2028*......................... 1,450,000 1,522,500
----------
INSURANCE-LIFE/HEALTH -- 0.0%
Prudential Financial, Inc. FRS
5.38% due 05/15/2045.......................... 131,000 129,690
----------
INSURANCE-MULTI-LINE -- 0.2%
MetLife Capital Trust IV
7.88% due 12/15/2067*......................... 197,000 226,550
MetLife, Inc.
6.40% due 12/15/2066.......................... 533,000 550,589
----------
777,139
----------
INSURANCE-REINSURANCE -- 0.1%
Muenchener Rueckversicherungs-Gesellschaft
AG VRS
7.63% due 06/21/2028.......................... GBP 225,000 355,386
----------
OIL COMPANIES-INTEGRATED -- 0.1%
TOTAL SA FRS
2.25% due 02/26/2021(12)...................... EUR 175,000 187,284
----------
PIPELINES -- 0.0%
TransCanada Trust FRS
5.63% due 05/20/2075.......................... 166,000 146,188
----------
45
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT** (NOTE 3)
PREFERRED SECURITIES/CAPITAL SECURITIES (CONTINUED)
TELEPHONE-INTEGRATED -- 0.1%
Telefonica Europe BV VRS
5.00% due 03/31/2020(12)............ EUR 300,000 $ 345,152
------------
TOOLS-HAND HELD -- 0.2%
Stanley Black & Decker, Inc. FRS
5.75% due 12/15/2053................ 629,000 660,451
------------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $14,197,412).................. 14,093,873
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $386,666,811)................. 371,726,753
------------
SHORT-TERM INVESTMENT SECURITIES -- 5.1%
TIME DEPOSITS -- 5.1%
Euro Time Deposit with State Street
Bank and Trust Co.
0.01% due 04/01/2016
(cost $19,933,000).................. $19,933,000 19,933,000
------------
REPURCHASE AGREEMENTS -- 2.0%
State Street Bank and Trust Co.
Joint Repurchase Agreement(15)
(cost $7,731,000)................... 7,731,000 7,731,000
------------
TOTAL INVESTMENTS
(cost $414,330,811)(10)............. 103.0% 399,390,753
Liabilities in excess of other assets.. (3.0) (11,704,408)
------------- ------------
NET ASSETS 100.0% $387,686,345
============= ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund has no
right to demand registration of these securities. At March 31, 2016, the
aggregate value of these securities was $97,667,571 representing 25.2% 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) Commercial Mortgage Backed Security
(2) Collateralized Mortgage Obligation
(3) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 3.
(4) Illiquid security. At March 31, 2016, the aggregate value of these
securities was $1,291,535 representing 0.3% of net assets.
(5) 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.
(6) 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.
(7) Company has filed for bankruptcy protection.
(8) Subsequent to March 31, 2016, security is in default of interest.
(9) Interest Only
(10) See Note 6 for cost of investments on a tax basis.
(11) Principal amount of security is adjusted for inflation.
(12) Perpetual maturity -- maturity date reflects the next call date.
(13) Security in default of interest and principal at maturity.
(14) Inverse floater
(15) See Note 3 for details of Joint Repurchase Agreement
(16) All loans in the fund were purchased through assignment agreements unless
otherwise indicated.
(17) Subsequent to March 31, 2016, company has filed for bankruptcy protection.
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
amount and maturity date will be determined upon settlement date.
TIPS --Treasury Inflation Protected Security
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at March 31, 2016 and
unless noted otherwise, the dates shown are the original maturity dates.
BRL --Brazilian Real
COP --Columbian Peso
EUR --Euro
GBP --British Pound
46
SUNAMERICA STRATEGIC BOND FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
FORWARD FOREIGN CURRENCY CONTRACTS
CONTRACT IN EXCHANGE DELIVERY UNREALIZED UNREALIZED
COUNTERPARTY TO DELIVER FOR DATE APPRECIATION DEPRECIATION
--------------------------------------------------------------------------------------------
JPMorgan Chase Bank N.A EUR 14,675,000 USD 15,914,891 04/01/2016 $ -- $ (783,789)
EUR 16,350,000 USD 18,105,173 04/22/2016 -- (509,596)
EUR 14,750,000 USD 16,698,770 05/06/2016 -- (101,306)
GBP 9,310,000 USD 13,059,509 04/01/2016 -- (311,971)
GBP 8,975,000 USD 12,944,553 05/06/2016 52,984 --
USD 16,557,840 EUR 14,640,000 04/01/2016 101,014 --
USD 13,160,901 GBP 9,130,000 04/01/2016 -- (47,946)
-------- -----------
Net Unrealized Appreciation/(Depreciation)...... $153,998 $(1,754,608)
======== ===========
EUR --Euro Dollar
GBP --Pound Sterling
USD --United States Dollar
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2016 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Asset Backed Securities.................. $ -- $ 2,484,602 $ -- $ 2,484,602
U.S. Corporate Bonds & Notes:
Airlines............................... -- 2,099,159 267,867 2,367,026
Gambling (Non-Hotel)................... -- 1,060,020 5,402 1,065,422
Rubber/Plastic Products................ -- 726,750 0 726,750
Other Industries....................... -- 178,550,920 -- 178,550,920
Foreign Corporate Bonds & Notes:
Special Purpose Entity................. -- -- 0 0
Other Industries....................... -- 84,630,219 -- 84,630,219
Foreign Government Obligation............ -- 32,259,541 -- 32,259,541
U.S. Government Agencies................. -- 35,456,601 -- 35,456,601
U.S. Government Treasuries............... -- 14,299,542 -- 14,299,542
Loans:
Oil Companies-Exploration & Production. -- -- 7,633 7,633
Other Industries....................... -- 2,417,840 -- 2,417,840
Municipal Bonds & Notes.................. -- 1,824,691 -- 1,824,691
Common Stocks............................ -- -- 639,636 639,636
Preferred Securities..................... 902,457 -- -- 902,457
Preferred Securities/Capital Securities.. -- 14,093,873 -- 14,093,873
Short-Term Investment Securities......... -- 19,933,000 -- 19,933,000
Repurchase Agreements.................... -- 7,731,000 -- 7,731,000
-------- ------------ -------- ------------
TOTAL INVESTMENTS AT VALUE............... $902,457 $397,567,758 $920,538 $399,390,753
======== ============ ======== ============
Other Financial Instruments:+
Forward Foreign Currency Contracts....... $ -- $ 153,998 $ -- $ 153,998
======== ============ ======== ============
LIABILITIES:
Other Financial Instruments:+
Forward Foreign Currency Contracts....... $ -- $ 1,754,608 $ -- $ 1,754,608
======== ============ ======== ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
+ Other financial instruments are derivative instruments, not reflected in the
Portfolio of Investments, such as futures, forward, swap and written option
contracts, which are valued at the unrealized appreciation (depreciation) on
the instrument.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no material transfers between Levels during the
reporting period.
At the beginning and end of the reporting period, Level 3 investments were not
considered a material portion of the Fund.
See Notes to Financial Statements
47
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO PROFILE -- MARCH 31, 2016 -- (UNAUDITED)
INDUSTRY ALLOCATION*
Medical-Hospitals...................... 5.5%
Cable/Satellite TV..................... 5.0
Telephone-Integrated................... 3.2
Oil Companies-Exploration & Production. 3.0
Broadcast Services/Program............. 2.5
Medical-Drugs.......................... 2.5
Data Processing/Management............. 2.4
Independent Power Producers............ 2.3
Building-Residential/Commercial........ 2.1
Casino Hotels.......................... 2.1
Distribution/Wholesale................. 2.0
Building & Construction Products-Misc.. 1.9
Hotels/Motels.......................... 1.9
Applications Software.................. 1.6
Real Estate Investment Trusts.......... 1.6
Real Estate Management/Services........ 1.6
Finance-Leasing Companies.............. 1.6
Cellular Telecom....................... 1.5
Commercial Services.................... 1.5
Containers-Metal/Glass................. 1.5
Pipelines.............................. 1.5
Auto/Truck Parts & Equipment-Original.. 1.5
Airlines............................... 1.3
Aerospace/Defense-Equipment............ 1.2
Telecom Services....................... 1.2
Commercial Services-Finance............ 1.2
Food-Misc./Diversified................. 1.2
Electronic Components-Semiconductors... 1.1
Building Products-Cement............... 1.1
Diversified Financial Services......... 1.1
Auto-Cars/Light Trucks................. 1.0
Dialysis Centers....................... 1.0
Chemicals-Diversified.................. 1.0
Racetracks............................. 1.0
Gambling (Non-Hotel)................... 0.9
Computers-Periphery Equipment.......... 0.9
Consumer Products-Misc................. 0.9
Television............................. 0.8
Enterprise Software/Service............ 0.8
Food-Catering.......................... 0.8
Oil Refining & Marketing............... 0.8
Containers-Paper/Plastic............... 0.8
Medical Products....................... 0.8
Finance-Auto Loans..................... 0.8
Retail-Office Supplies................. 0.7
Computers-Integrated Systems........... 0.7
Food-Retail............................ 0.7
Machinery-General Industrial........... 0.7
Human Resources........................ 0.6
Specified Purpose Acquisitions......... 0.6
Computer Services...................... 0.6
Extended Service Contracts............. 0.6
Oil-Field Services..................... 0.6
Physicians Practice Management......... 0.6
Electric-Integrated.................... 0.6
MRI/Medical Diagnostic Imaging......... 0.6
Oil & Gas Drilling..................... 0.5
Medical-Outpatient/Home Medical........ 0.5
Retail-Drug Store...................... 0.5
Chemicals-Specialty.................... 0.5
Investment Companies................... 0.5%
Food-Baking............................ 0.5
Security Services...................... 0.5
Professional Sports.................... 0.5
Retail-Arts & Crafts................... 0.5
Investment Management/Advisor Services. 0.5
Medical Labs & Testing Services........ 0.5
Diversified Banking Institutions....... 0.5
Medical-HMO............................ 0.4
Special Purpose Entities............... 0.4
Non-Hazardous Waste Disposal........... 0.4
Finance-Consumer Loans................. 0.4
Paper & Related Products............... 0.4
Banks-Mortgage......................... 0.4
Auction Houses/Art Dealers............. 0.4
Rental Auto/Equipment.................. 0.4
Diagnostic Kits........................ 0.4
Research & Development................. 0.4
Oil Companies-Integrated............... 0.4
Insurance-Multi-line................... 0.4
Disposable Medical Products............ 0.4
Medical-Generic Drugs.................. 0.4
Retail-Leisure Products................ 0.3
Cosmetics & Toiletries................. 0.3
Schools................................ 0.3
Leisure Products....................... 0.3
Retail-Bedding......................... 0.3
Insurance-Property/Casualty............ 0.3
Medical-Biomedical/Gene................ 0.3
Retail-Propane Distribution............ 0.3
Leisure Games.......................... 0.3
Diversified Manufacturing Operations... 0.3
Retail-Restaurants..................... 0.3
Building Products-Wood................. 0.3
Miscellaneous Manufacturing............ 0.2
Steel-Producers........................ 0.2
Internet Security...................... 0.2
Satellite Telecom...................... 0.2
Alternative Waste Technology........... 0.2
Insurance-Life/Health.................. 0.2
Electronic Components-Misc............. 0.2
Retail-Hypermarkets.................... 0.2
Energy-Alternate Sources............... 0.2
Direct Marketing....................... 0.2
Bicycle Manufacturing.................. 0.2
Recreational Centers................... 0.2
Retail-Pet Food & Supplies............. 0.2
Metal-Aluminum......................... 0.2
Gas-Distribution....................... 0.2
Finance-Mortgage Loan/Banker........... 0.2
Retail-Perfume & Cosmetics............. 0.2
Chemicals-Plastics..................... 0.2
Diagnostic Equipment................... 0.2
Theaters............................... 0.2
Banks-Commercial....................... 0.2
Computers-Memory Devices............... 0.2
Savings & Loans/Thrifts................ 0.2
Office Automation & Equipment.......... 0.2
Hospital Beds/Equipment................ 0.1
Filtration/Separation Products......... 0.1
48
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO PROFILE -- MARCH 31, 2016 -- (UNAUDITED) (CONTINUED)
INDUSTRY ALLOCATION* (CONTINUED)
Resorts/Theme Parks...................... 0.1%
Diversified Minerals..................... 0.1
Finance-Other Services................... 0.1
Retail-Major Department Stores........... 0.1
Casino Services.......................... 0.1
Rubber/Plastic Products.................. 0.1
Athletic Equipment....................... 0.1
Building & Construction-Misc............. 0.1
Beverages-Wine/Spirits................... 0.1
Advertising Services..................... 0.1
Semiconductor Equipment.................. 0.1
Auto/Truck Parts & Equipment-Replacement. 0.1
-----
101.0%
=====
CREDIT QUALITY+#
Baa........ 4.0%
Ba......... 42.5
B.......... 42.6
Caa........ 7.1
Ca......... 0.1
Not Rated@. 3.7
-----
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.
49
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
ASSET BACKED SECURITIES -- 1.1%
DIVERSIFIED FINANCIAL SERVICES -- 1.1%
Flagship Credit Auto Trust
Series 2016-1, Class A
2.77% due 12/15/2020*............... $ 907,888 $ 905,399
GLS Auto Receivables Trust
9.79% due 10/15/2025(1)............. 340,000 338,167
Home Equity Loan Trust VRS
Series 2007-HSA3, Class AI4
6.11% due 06/25/2037................ 1,105,738 1,128,032
Leaf Receivables Funding 10 LLC
Series 2015-1, Class E2
6.00% due 06/15/2023*............... 590,000 568,985
----------
TOTAL ASSET BACKED SECURITIES
(cost $2,912,043).................... 2,940,583
----------
CONVERTIBLE BONDS & NOTES -- 0.0%
MEDICAL-DRUGS -- 0.0%
Savient Pharmaceuticals, Inc.
Escrow Notes
4.75% due 02/01/2018+(1)(2)
(cost $387,640)..................... 745,000 0
----------
U.S. CORPORATE BONDS & NOTES -- 35.7%
AEROSPACE/DEFENSE-EQUIPMENT -- 0.5%
Transdigm, Inc.
Company Guar. Notes
6.50% due 05/15/2025................ 1,530,000 1,495,575
----------
AIRLINES -- 0.2%
US Airways Pass Through Trust
Series 2012-2 Class C
5.45% due 06/03/2018................ 500,000 500,000
----------
ALTERNATIVE WASTE TECHNOLOGY -- 0.2%
Advanced Disposal Services, Inc.
Company Guar. Notes
8.25% due 10/01/2020................ 620,000 632,338
----------
APPLICATIONS SOFTWARE -- 0.2%
Emdeon, Inc.
Company Guar. Notes
6.00% due 02/15/2021*............... 230,000 224,250
Emdeon, Inc.
Company Guar. Notes
11.00% due 12/31/2019............... 420,000 444,150
----------
668,400
----------
ATHLETIC EQUIPMENT -- 0.1%
Jarden Corp.
Company Guar. Notes
5.00% due 11/15/2023*............... 295,000 309,013
----------
AUTO-CARS/LIGHT TRUCKS -- 0.3%
General Motors Co.
Senior Notes
4.88% due 10/02/2023................ 665,000 696,847
General Motors Financial Co., Inc.
Company Guar. Notes
3.45% due 04/10/2022................ 205,000 201,283
----------
898,130
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 0.5%
Meritor, Inc.
Company Guar. Notes
6.75% due 06/15/2021........................ $ 545,000 $ 505,487
MPG Holdco I, Inc.
Company Guar. Notes
7.38% due 10/15/2022........................ 340,000 336,600
TI Group Automotive Systems, LLC
Senior Notes
8.75% due 07/15/2023*....................... 570,000 547,200
----------
1,389,287
----------
BANKS-COMMERCIAL -- 0.2%
CIT Group, Inc.
Senior Notes
5.50% due 02/15/2019*....................... 430,000 444,835
----------
BANKS-MORTGAGE -- 0.4%
Provident Funding Associates LP/PFG
Finance Corp.
Company Guar. Notes
6.75% due 06/15/2021*....................... 1,205,000 1,141,737
----------
BEVERAGES-WINE/SPIRITS -- 0.1%
Constellation Brands, Inc.
Company Guar. Notes
4.75% due 12/01/2025........................ 235,000 243,225
----------
BROADCAST SERVICES/PROGRAM -- 0.6%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes
7.63% due 03/15/2020........................ 1,230,000 1,128,525
iHeartCommunications, Inc.
Senior Sec. Notes
9.00% due 12/15/2019........................ 640,000 473,600
----------
1,602,125
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 0.6%
Builders FirstSource, Inc.
Senior Sec. Notes
7.63% due 06/01/2021*....................... 815,000 847,600
NCI Building Systems, Inc.
Company Guar. Notes
8.25% due 01/15/2023*....................... 585,000 615,712
Standard Industries, Inc.
Senior Notes
5.13% due 02/15/2021*....................... 35,000 35,831
Standard Industries, Inc.
Senior Notes
5.50% due 02/15/2023*....................... 215,000 219,838
----------
1,718,981
----------
BUILDING PRODUCTS-CEMENT -- 0.2%
Cemex Finance LLC
Senior Sec. Notes
6.00% due 04/01/2024*....................... 490,000 463,001
----------
50
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
BUILDING PRODUCTS-WOOD -- 0.3%
Masco Corp.
Senior Notes
3.50% due 04/01/2021.................. $ 690,000 $ 695,175
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 2.1%
Lennar Corp.
Company Guar. Notes
4.50% due 11/15/2019.................. 355,000 369,200
Lennar Corp.
Company Guar. Notes
4.88% due 12/15/2023.................. 620,000 620,000
M/I Homes, Inc.
Company Guar. Notes
6.75% due 01/15/2021.................. 475,000 466,688
MDC Holdings, Inc.
Company Guar. Notes
5.50% due 01/15/2024.................. 755,000 722,912
PulteGroup, Inc.
Company Guar. Notes
4.25% due 03/01/2021.................. 670,000 680,050
PulteGroup, Inc.
Company Guar. Notes
5.50% due 03/01/2026.................. 675,000 694,406
Toll Brothers Finance Corp.
Company Guar. Notes
4.88% due 11/15/2025.................. 1,280,000 1,267,200
TRI Pointe Group Inc./TRI Pointe
Homes Inc.
Company Guar. Notes
5.88% due 06/15/2024.................. 835,000 829,781
TRI Pointe Holdings, Inc.
Company Guar. Notes
4.38% due 06/15/2019.................. 230,000 228,275
----------
5,878,512
----------
CABLE/SATELLITE TV -- 2.7%
Altice US Finance II Corp.
Senior Sec. Notes
7.75% due 07/15/2025*................. 500,000 492,500
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
5.13% due 02/15/2023.................. 25,000 25,500
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
5.25% due 09/30/2022.................. 185,000 190,550
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
5.75% due 09/01/2023.................. 125,000 129,687
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
6.63% due 01/31/2022.................. 580,000 610,450
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
CABLE/SATELLITE TV (CONTINUED)
CCO Holdings LLC/CCO Holdings
Capital Corp.
Company Guar. Notes
7.38% due 06/01/2020............. $ 365,000 $ 379,828
CCO Safari II LLC
Senior Sec. Notes
4.91% due 07/23/2025*............ 300,000 316,445
CCOH Safari LLC
Senior Notes
5.75% due 02/15/2026*............ 1,160,000 1,200,600
Cequel Communications Holdings I
LLC/Cequel Capital Corp.
Senior Notes
5.13% due 12/15/2021*............ 570,000 530,100
CSC Holdings LLC
Senior Notes
5.25% due 06/01/2024............. 595,000 530,294
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021............. 1,320,000 1,362,900
Neptune Finco Corp.
Senior Notes
6.63% due 10/15/2025*............ 540,000 583,821
Neptune Finco Corp.
Senior Notes
10.13% due 01/15/2023*........... 350,000 374,500
RCN Telecom Services LLC/RCN
Capital Corp.
Senior Notes
8.50% due 08/15/2020*............ 810,000 810,000
----------
7,537,175
----------
CASINO HOTELS -- 0.8%
Boyd Gaming Corp.
Company Guar. Notes
6.88% due 05/15/2023............. 520,000 553,800
Boyd Gaming Corp.
Company Guar. Notes
9.00% due 07/01/2020............. 600,000 634,500
Caesars Entertainment Resort
Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020............. 265,000 259,435
MGM Resorts International
Company Guar. Notes
6.75% due 10/01/2020............. 730,000 789,860
----------
2,237,595
----------
CELLULAR TELECOM -- 1.3%
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021............. 615,000 469,706
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023............. 1,050,000 803,029
51
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
CELLULAR TELECOM (CONTINUED)
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2026.................. $ 780,000 $ 810,225
T-Mobile USA, Inc.
Company Guar. Notes
6.63% due 11/15/2020.................. 645,000 665,963
T-Mobile USA, Inc.
Company Guar. Notes
6.73% due 04/28/2022.................. 955,000 997,784
----------
3,746,707
----------
COMMERCIAL SERVICES-FINANCE -- 0.2%
Harland Clarke Holdings Corp.
Senior Sec. Notes
6.88% due 03/01/2020*................. 350,000 311,500
Harland Clarke Holdings Corp.
Senior Notes
9.25% due 03/01/2021*................. 400,000 306,500
----------
618,000
----------
COMPUTERS-MEMORY DEVICES -- 0.2%
Western Digital Corp.
Senior Sec. Notes
7.38% due 04/01/2023*................. 150,000 153,000
Western Digital Corp.
Senior Notes
10.50% due 04/01/2024*................ 290,000 290,725
----------
443,725
----------
CONTAINERS-PAPER/PLASTIC -- 0.4%
Berry Plastics Corp.
Sec. Notes
5.13% due 07/15/2023.................. 990,000 997,425
----------
DATA PROCESSING/MANAGEMENT -- 0.5%
First Data Corp.
Senior Sec. Notes
5.00% due 01/15/2024*................. 1,415,000 1,416,769
----------
DIAGNOSTIC KITS -- 0.2%
Alere, Inc.
Company Guar. Notes
6.50% due 06/15/2020.................. 600,000 611,400
----------
DIALYSIS CENTERS -- 0.1%
DaVita HealthCare Partners, Inc.
Company Guar. Notes
5.00% due 05/01/2025.................. 335,000 331,650
----------
DISPOSABLE MEDICAL PRODUCTS -- 0.3%
Sterigenics-Nordion Holdings LLC
Senior Notes
6.50% due 05/15/2023*................. 720,000 718,200
----------
DISTRIBUTION/WHOLESALE -- 0.4%
HD Supply, Inc.
Senior Sec. Notes
5.25% due 12/15/2021*................. 705,000 740,250
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
DISTRIBUTION/WHOLESALE (CONTINUED)
HD Supply, Inc.
Company Guar. Notes
5.75% due 04/15/2024*..................... $ 285,000 $ 292,838
----------
1,033,088
----------
ELECTRIC-INTEGRATED -- 0.0%
Texas Competitive Electric Holdings
Co. LLC/TCEH Finance, Inc.
Senior Sec. Notes
11.50% due 10/01/2020+*(3)(4)............. 295,000 85,550
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.4%
Freescale Semiconductor, Inc.
Senior Sec. Notes
6.00% due 01/15/2022*..................... 1,065,000 1,128,900
----------
ENERGY-ALTERNATE SOURCES -- 0.2%
TerraForm Power Operating LLC
Company Guar. Notes
5.88% due 02/01/2023*..................... 760,000 615,600
----------
FINANCE-AUTO LOANS -- 0.8%
Ally Financial, Inc.
Senior Notes
3.25% due 02/13/2018...................... 185,000 183,150
Ally Financial, Inc.
Senior Notes
4.13% due 03/30/2020...................... 1,910,000 1,895,675
----------
2,078,825
----------
FINANCE-CONSUMER LOANS -- 0.4%
Springleaf Finance Corp.
Senior Notes
5.25% due 12/15/2019...................... 705,000 673,275
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
8.50% due 09/15/2018*..................... 600,000 480,000
----------
1,153,275
----------
FINANCE-OTHER SERVICES -- 0.1%
Nationstar Mtg. LLC/Nationstar
Capital Corp.
Company Guar. Notes
6.50% due 07/01/2021...................... 415,000 368,313
----------
FOOD-CATERING -- 0.5%
Aramark Services, Inc.
Company Guar. Notes
5.13% due 01/15/2024...................... 385,000 405,694
Aramark Services, Inc.
Company Guar. Notes
5.75% due 03/15/2020...................... 985,000 1,015,781
----------
1,421,475
----------
FOOD-MISC./DIVERSIFIED -- 0.2%
Dole Food Co, Inc.
Senior Sec. Notes
7.25% due 05/01/2019*..................... 450,000 447,750
52
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
FOOD-MISC./DIVERSIFIED (CONTINUED)
Pinnacle Foods Finance LLC/Pinnacle
Foods Finance Corp.
Company Guar. Notes
5.88% due 01/15/2024*................. $ 130,000 $ 136,071
----------
583,821
----------
FOOD-RETAIL -- 0.3%
Safeway, Inc.
Senior Notes
7.25% due 02/01/2031.................. 760,000 695,476
----------
GAMBLING (NON-HOTEL) -- 0.4%
Mohegan Tribal Gaming Authority
Company Guar. Notes
9.75% due 09/01/2021.................. 560,000 574,000
Scientific Games International, Inc.
Senior Sec. Notes
7.00% due 01/01/2022*................. 565,000 576,300
----------
1,150,300
----------
GAS-DISTRIBUTION -- 0.2%
NGL Energy Partners LP/NGL Energy
Finance Corp
Company Guar. Notes
5.13% due 07/15/2019.................. 935,000 565,675
----------
HOSPITAL BEDS/EQUIPMENT -- 0.1%
Kinetic Concepts, Inc./KCI USA, Inc.
Senior Sec. Notes
7.88% due 02/15/2021*................. 385,000 407,138
----------
HUMAN RESOURCES -- 0.0%
Team Health, Inc.
Company Guar. Notes
7.25% due 12/15/2023*................. 65,000 69,550
----------
INDEPENDENT POWER PRODUCERS -- 1.0%
Calpine Corp.
Senior Notes
5.38% due 01/15/2023.................. 727,000 704,739
Dynegy, Inc.
Company Guar. Notes
7.38% due 11/01/2022.................. 1,545,000 1,429,125
NRG Yield Operating LLC
Company Guar. Notes
5.38% due 08/15/2024.................. 665,000 618,450
----------
2,752,314
----------
INSURANCE-MULTI-LINE -- 0.2%
Genworth Holdings, Inc.
Company Guar. Notes
4.90% due 08/15/2023.................. 645,000 478,913
----------
INTERNET CONNECTIVITY SERVICES -- 0.0%
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
10.13% due 07/01/2020................. 62,000 66,340
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
MACHINERY-GENERAL INDUSTRIAL -- 0.0%
Manitowoc Foodservice, Inc.
Senior Notes
9.50% due 02/15/2024*................. $ 50,000 $ 54,500
----------
MEDICAL LABS & TESTING SERVICES -- 0.2%
inVentiv Health, Inc.
Senior Sec. Notes
9.00% due 01/15/2018*................. 415,000 428,488
----------
MEDICAL PRODUCTS -- 0.1%
Fredenius US Finance II, Inc.
Company Guar. Notes
4.50% due 01/15/2023*................. 190,000 192,850
----------
MEDICAL-DRUGS -- 0.6%
Endo Finance LLC/Endo Finco, Inc.
Company Guar. Notes
5.88% due 01/15/2023*................. 460,000 438,150
PRA Holdings, Inc.
Senior Notes
9.50% due 10/01/2023*................. 421,000 465,205
Quintiles Transnational Corp.
Company Guar. Notes
4.88% due 05/15/2023*................. 510,000 523,209
Valeant Pharmaceuticals International
Company Guar. Notes
7.25% due 07/15/2022*................. 295,000 236,000
----------
1,662,564
----------
MEDICAL-HMO -- 0.2%
Centene Escrow Corp.
Senior Notes
5.63% due 02/15/2021*................. 570,000 594,225
----------
MEDICAL-HOSPITALS -- 3.3%
Acadia Healthcare Co., Inc.
Company Guar. Notes
5.63% due 02/15/2023.................. 790,000 801,850
Acadia Healthcare Co., Inc.
Company Guar. Notes
6.50% due 03/01/2024*................. 20,000 20,800
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/15/2018.................. 405,000 408,037
CHS/Community Health Systems, Inc.
Company Guar. Notes
6.88% due 02/01/2022.................. 1,025,000 925,062
HCA, Inc.
Senior Sec. Notes
5.25% due 06/15/2026.................. 490,000 502,250
HCA, Inc.
Company Guar. Notes
5.38% due 02/01/2025.................. 1,255,000 1,268,730
HCA, Inc.
Senior Sec. Notes
6.50% due 02/15/2020.................. 2,030,000 2,227,925
Surgery Center Holdings, Inc.
Senior Notes
8.88% due 04/15/2021*................. 420,000 420,000
53
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
MEDICAL-HOSPITALS (CONTINUED)
Tenet Healthcare Corp. FRS
Senior Sec. Notes
4.13% due 06/15/2020*....................... $315,000 $ 312,638
Tenet Healthcare Corp.
Senior Notes
5.00% due 03/01/2019........................ 760,000 751,450
Tenet Healthcare Corp.
Senior Sec. Notes
6.00% due 10/01/2020........................ 750,000 798,750
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022........................ 775,000 797,281
----------
9,234,773
----------
METAL-ALUMINUM -- 0.2%
Aleris International, Inc.
Senior Sec. Notes
9.50% due 04/01/2021*....................... 570,000 581,044
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.3%
Surgical Care Affiliates, Inc.
Company Guar. Notes
6.00% due 04/01/2023*....................... 734,000 739,505
----------
OFFICE AUTOMATION & EQUIPMENT -- 0.2%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
6.00% due 08/15/2022........................ 410,000 433,317
----------
OIL & GAS DRILLING -- 0.1%
Helmerich & Payne International
Drilling Co.
Company Guar. Notes
4.65% due 03/15/2025........................ 375,000 377,400
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 2.6%
Anadarko Petroleum Corp.
Senior Notes
4.85% due 03/15/2021........................ 500,000 505,303
Anadarko Petroleum Corp.
Senior Notes
5.55% due 03/15/2026........................ 210,000 211,849
Antero Resources Corp.
Company Guar. Notes
5.38% due 11/01/2021........................ 130,000 120,250
Antero Resources Corp.
Company Guar. Notes
5.63% due 06/01/2023........................ 190,000 174,800
Antero Resources Corp.
Company Guar. Notes
6.00% due 12/01/2020........................ 350,000 332,500
Bonanza Creek Energy, Inc.
Company Guar. Notes
6.75% due 04/15/2021........................ 425,000 119,000
Carrizo Oil & Gas, Inc.
Company Guar. Notes
6.25% due 04/15/2023........................ 960,000 846,000
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
OIL COMPANIES-EXPLORATION & PRODUCTION (CONTINUED)
Concho Resources, Inc.
Company Guar. Notes
5.50% due 04/01/2023................ $ 480,000 $ 470,400
Continental Resources, Inc.
Company Guar. Notes
4.50% due 04/15/2023................ 420,000 351,225
Continental Resources, Inc.
Company Guar. Notes
5.00% due 09/15/2022................ 695,000 599,003
Diamondback Energy, Inc.
Company Guar. Notes
7.63% due 10/01/2021................ 570,000 587,100
EP Energy LLC/Everest Acquisition
Finance, Inc.
Company Guar. Notes
9.38% due 05/01/2020................ 964,000 486,218
Newfield Exploration Co.
Senior Notes
5.38% due 01/01/2026................ 635,000 577,850
QEP Resources, Inc.
Senior Notes
5.25% due 05/01/2023................ 930,000 809,100
Range Resources Corp.
Company Guar. Notes
5.00% due 03/15/2023................ 800,000 678,000
SM Energy Co
Senior Notes
6.13% due 11/15/2022................ 405,000 295,245
----------
7,163,843
----------
OIL COMPANIES-INTEGRATED -- 0.2%
ConocoPhillips Co.
Company Guar. Notes
4.20% due 03/15/2021................ 185,000 193,198
ConocoPhillips Co.
Company Guar. Notes
4.95% due 03/15/2026................ 255,000 266,205
----------
459,403
----------
OIL REFINING & MARKETING -- 0.6%
Sunoco LP/Sunoco Finance Corp.
Company Guar. Notes
6.38% due 04/01/2023*............... 1,755,000 1,756,088
----------
OIL-FIELD SERVICES -- 0.1%
FTS International, Inc. FRS
Senior Sec. Notes
8.13% due 06/15/2020*............... 475,000 320,382
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.4%
Envision Healthcare Corp.
Company Guar. Notes
5.13% due 07/01/2022*............... 480,000 487,200
MEDNAX, Inc.
Company Guar. Notes
5.25% due 12/01/2023*............... 620,000 644,800
----------
1,132,000
----------
54
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
PIPELINES -- 1.5%
Blue Racer Midstream LLC/Blue
Racer Finance Corp.
Company Guar. Notes
6.13% due 11/15/2022*................. $ 875,000 $ 728,437
Crestwood Midstream Partners
LP/Crestwood Midstream Finance Corp.
Company Guar. Notes
6.25% due 04/01/2023*................. 600,000 444,000
Enbridge Energy Partners LP
Senior Notes
4.38% due 10/15/2020.................. 125,000 121,075
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020.................. 571,000 549,587
MPLX LP
Company Guar. Notes
4.88% due 12/01/2024*................. 830,000 766,287
Regency Energy Partners LP/Regency
Energy Finance Corp.
Company Guar. Notes
5.00% due 10/01/2022.................. 630,000 592,062
Sabine Pass Liquefaction LLC
Senior Sec. Notes
5.63% due 02/01/2021.................. 700,000 672,875
Sabine Pass Liquefaction LLC
Senior Sec. Notes
6.25% due 03/15/2022.................. 200,000 195,750
----------
4,070,073
----------
RACETRACKS -- 0.6%
Churchill Downs, Inc.
Company Guar. Notes
5.38% due 12/15/2021*................. 310,000 319,300
GLP Capital LP/GLP Financing II, Inc.
Company Guar. Notes
4.88% due 11/01/2020.................. 610,000 634,400
Penn National Gaming, Inc.
Senior Notes
5.88% due 11/01/2021.................. 660,000 656,700
----------
1,610,400
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.6%
Corrections Corp. of America
Company Guar. Notes
5.00% due 10/15/2022.................. 615,000 641,137
Crown Castle International Corp.
Senior Notes
3.40% due 02/15/2021.................. 25,000 25,373
Crown Castle International Corp.
Senior Notes
4.45% due 02/15/2026.................. 80,000 83,180
DuPont Fabros Technology LP
Company Guar. Notes
5.88% due 09/15/2021.................. 625,000 654,687
ESH Hospitality, Inc.
Company Guar. Notes
5.25% due 05/01/2025*................. 1,180,000 1,147,550
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
iStar Financial, Inc.
Senior Notes
5.00% due 07/01/2019..................... $1,000,000 $ 960,000
MPT Operating Partnership LP/MPT
Finance Corp.
Company Guar. Notes
6.38% due 03/01/2024..................... 315,000 331,538
Sabra Health Care LP/Sabra Capital Corp.
Company Guar. Notes
5.50% due 02/01/2021..................... 590,000 592,950
----------
4,436,415
----------
RENTAL AUTO/EQUIPMENT -- 0.4%
Ahern Rentals, Inc.
Sec. Notes
7.38% due 05/15/2023*.................... 580,000 400,200
United Rentals North America, Inc.
Company Guar. Notes
5.50% due 07/15/2025..................... 675,000 671,483
----------
1,071,683
----------
RESEARCH & DEVELOPMENT -- 0.3%
Jaguar Holding Co. II / Pharmaceutical
Product Development LLC
Company Guar. Notes
6.38% due 08/01/2023*.................... 745,000 764,966
----------
RETAIL-DRUG STORE -- 0.3%
Rite Aid Corp.
Company Guar. Notes
6.13% due 04/01/2023*.................... 130,000 137,800
Rite Aid Corp.
Company Guar. Notes
6.75% due 06/15/2021..................... 730,000 771,063
----------
908,863
----------
RETAIL-HYPERMARKETS -- 0.2%
Tops Holding LLC / Tops Markets II Corp
Senior Sec. Notes
8.00% due 06/15/2022*.................... 670,000 619,750
----------
RETAIL-LEISURE PRODUCTS -- 0.0%
Party City Holdings, Inc.
Company Guar. Notes
6.13% due 08/15/2023*.................... 105,000 107,363
----------
RETAIL-PERFUME & COSMETICS -- 0.2%
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
5.63% due 12/01/2025..................... 500,000 532,500
----------
RETAIL-PROPANE DISTRIBUTION -- 0.3%
AmeriGas Finance LLC/AmeriGas
Finance Corp.
Company Guar. Notes
6.75% due 05/20/2020..................... 645,000 661,125
55
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
U.S. CORPORATE BONDS & NOTES (CONTINUED)
RETAIL-PROPANE DISTRIBUTION (CONTINUED)
AmeriGas Finance LLC/AmeriGas
Finance Corp.
Company Guar. Notes
7.00% due 05/20/2022.................. $ 145,000 $ 148,625
-----------
809,750
-----------
RETAIL-RESTAURANTS -- 0.3%
Landry's, Inc.
Company Guar. Notes
9.38% due 05/01/2020*................. 700,000 735,000
-----------
RUBBER/PLASTIC PRODUCTS -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(1)(2)(4)(6).... 550,000 0
-----------
SECURITY SERVICES -- 0.5%
ADT Corp.
Senior Notes
6.25% due 10/15/2021.................. 1,395,000 1,401,975
-----------
SPECIFIED PURPOSE ACQUISITIONS -- 0.4%
Argos Merger Sub, Inc.
Senior Notes
7.13% due 03/15/2023*................. 1,135,000 1,206,505
-----------
TELEPHONE-INTEGRATED -- 1.6%
CenturyLink, Inc.
Senior Notes
5.63% due 04/01/2020.................. 640,000 648,326
CenturyLink, Inc.
Senior Notes
7.50% due 04/01/2024.................. 1,020,000 1,022,550
Frontier Communications Corp.
Senior Notes
6.25% due 09/15/2021.................. 945,000 873,549
Frontier Communications Corp.
Senior Notes
10.50% due 09/15/2022*................ 110,000 112,750
Level 3 Financing, Inc.
Company Guar. Notes
5.25% due 03/15/2026*................. 950,000 957,125
Level 3 Financing, Inc.
Company Guar. Notes
5.38% due 01/15/2024*................. 220,000 222,750
Windstream Services LLC
Company Guar. Notes
7.75% due 10/15/2020.................. 805,000 692,300
-----------
4,529,350
-----------
TOTAL U.S. CORPORATE BONDS & NOTES
(cost $103,703,619).................... 99,328,508
-----------
FOREIGN CORPORATE BONDS & NOTES -- 7.2%
AUTO-CARS/LIGHT TRUCKS -- 0.2%
Fiat Chrysler Automobiles NV
5.25% due 04/15/2023.................. 600,000 596,700
-----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
BUILDING PRODUCTS-CEMENT -- 0.2%
Cemex SAB de CV
Senior Sec. Notes
5.70% due 01/11/2025*..................... $510,000 $ 472,770
Cemex SAB de CV
Senior Sec. Notes
7.75% due 04/16/2026*..................... 200,000 204,980
----------
677,750
----------
CABLE/SATELLITE TV -- 1.2%
Altice Financing SA
Senior Sec. Notes
6.63% due 02/15/2023*..................... 400,000 401,000
Altice Financing SA
Senior Sec. Notes
7.88% due 12/15/2019*..................... 350,000 365,750
Altice Finco SA
Senior Sec. Notes
9.88% due 12/15/2020*..................... 455,000 489,125
Altice SA
Company Guar. Notes
7.63% due 02/15/2025*..................... 660,000 631,950
Numericable Group SA
Senior Sec. Notes
6.00% due 05/15/2022*..................... 625,000 609,375
UPCB Finance VI, Ltd.
Senior Sec. Notes
6.88% due 01/15/2022*..................... 360,000 380,700
Virgin Media Finance PLC
Company Guar. Notes
6.00% due 10/15/2024*..................... 400,000 411,000
----------
3,288,900
----------
CHEMICALS-DIVERSIFIED -- 0.2%
INEOS Group Holdings SA
Sec. Notes
5.88% due 02/15/2019*..................... 450,000 453,375
----------
CONTAINERS-METAL/GLASS -- 0.2%
Ardagh Finance Holdings SA
Senior Notes
8.63% due 06/15/2019*(8).................. 318,027 306,896
Ardagh Packaging Finance
PLC/Ardagh Holdings USA, Inc.
Company Guar. Notes
6.00% due 06/30/2021*..................... 365,000 346,750
Ardagh Packaging Finance PLC/Ardagh MP
Holdings USA, Inc.
Senior Notes
7.00% due 11/15/2020*..................... 51,176 48,746
----------
702,392
----------
DIVERSIFIED MANUFACTURING OPERATIONS -- 0.3%
Bombardier, Inc.
Senior Notes
4.75% due 04/15/2019*..................... 585,000 507,487
56
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
FOREIGN CORPORATE BONDS & NOTES (CONTINUED)
DIVERSIFIED MANUFACTURING OPERATIONS (CONTINUED)
Bombardier, Inc.
Senior Notes
6.13% due 01/15/2023*......................... $ 305,000 $ 231,038
----------
738,525
----------
FINANCE-LEASING COMPANIES -- 1.1%
AerCap Ireland Capital, Ltd./AerCap
Global Aviation Trust
Company Guar. Notes
4.25% due 07/01/2020.......................... 170,000 171,487
AerCap Ireland Capital, Ltd./AerCap
Global Aviation Trust
Company Guar. Notes
4.63% due 10/30/2020.......................... 475,000 486,875
Aircastle, Ltd.
Senior Notes
5.00% due 04/01/2023.......................... 1,425,000 1,432,125
Aircastle, Ltd.
Senior Notes
5.13% due 03/15/2021.......................... 840,000 874,650
----------
2,965,137
----------
MEDICAL PRODUCTS -- 0.3%
Mallinckrodt International Finance
SA/Mallinckrodt CB LLC
Company Guar. Notes
5.63% due 10/15/2023*......................... 940,000 853,050
----------
MEDICAL-BIOMEDICAL/GENE -- 0.3%
Concordia Healthcare Corp.
Company Guar. Notes
7.00% due 04/15/2023*......................... 945,000 810,338
----------
MEDICAL-DRUGS -- 0.8%
Capsugel SA
Senior Notes
7.00% due 05/15/2019*(7)...................... 741,000 744,705
JLL/Delta Dutch Pledgeco BV
Senior Notes
8.75% due 05/01/2020*(7)...................... 395,000 385,125
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
5.38% due 03/15/2020*......................... 715,000 582,725
Valeant Pharmaceuticals International, Inc.
Senior Notes
6.75% due 08/15/2018*......................... 520,000 471,900
----------
2,184,455
----------
MEDICAL-GENERIC DRUGS -- 0.1%
Mylan NV
Company Guar. Notes
3.00% due 12/15/2018*......................... 260,000 263,568
----------
OIL & GAS DRILLING -- 0.3%
Transocean, Inc.
Company Guar. Notes
5.80% due 12/15/2016.......................... 625,000 623,125
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
OIL & GAS DRILLING (CONTINUED)
Transocean, Inc.
Company Guar. Notes
6.80% due 03/15/2038........................ $ 520,000 $ 260,000
-----------
883,125
-----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.4%
Alberta Energy Co., Ltd.
Senior Notes
8.13% due 09/15/2030........................ 480,000 435,600
Encana Corp.
Senior Notes
3.90% due 11/15/2021........................ 625,000 547,656
-----------
983,256
-----------
OIL COMPANIES-INTEGRATED -- 0.2%
YPF Sociedad Anonima
Senior Notes
8.50% due 03/23/2021*....................... 580,000 580,725
-----------
OIL-FIELD SERVICES -- 0.4%
Weatherford International, Ltd.
Company Guar. Notes
9.63% due 03/01/2019........................ 1,005,000 1,002,487
-----------
PAPER & RELATED PRODUCTS -- 0.4%
Cascades, Inc.
Company Guar. Notes
5.50% due 07/15/2022*....................... 675,000 649,266
Cascades, Inc.
Senior Notes
5.75% due 07/15/2023*....................... 530,000 500,187
-----------
1,149,453
-----------
SATELLITE TELECOM -- 0.2%
Intelsat Jackson Holdings SA
Company Guar. Notes
5.50% due 08/01/2023........................ 240,000 144,600
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019........................ 695,000 512,563
-----------
657,163
-----------
SPECIAL PURPOSE ENTITY -- 0.0%
Hellas Telecommunications
Luxembourg II SCA FRS
Sub. Notes
6.26% due 01/15/2015+*(1)(2)(6)(8).......... 1,025,000 0
-----------
STEEL-PRODUCERS -- 0.2%
ArcelorMittal
Senior Notes
6.13% due 06/01/2025........................ 745,000 689,125
-----------
TELEPHONE-INTEGRATED -- 0.2%
SoftBank Group Corp.
Company Guar. Notes
4.50% due 04/15/2020*....................... 545,000 552,495
-----------
TOTAL FOREIGN CORPORATE BONDS & NOTES
(cost $21,965,130)........................... 20,032,019
-----------
57
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) -- 56.1%
ADVERTISING SERVICES -- 0.1%
Advantage Sales & Marketing, Inc. FRS
2nd Lien
7.50% due 07/25/2022.................. $ 258,000 $ 231,770
----------
AEROSPACE/DEFENSE-EQUIPMENT -- 0.7%
TransDigm, Inc. FRS
BTL-C
3.75% due 02/28/2020.................. 476,308 469,759
TransDigm, Inc. FRS
BTL-D
3.75% due 06/04/2021.................. 1,477,444 1,458,052
----------
1,927,811
----------
AIRLINES -- 1.1%
American Airlines, Inc. FRS
BTL
3.25% due 06/27/2020.................. 1,325,630 1,317,551
American Airlines, Inc. FRS
BTL-B
3.50% due 10/10/2021.................. 479,160 477,791
United Airlines, Inc. FRS
BTL-B1
3.50% due 09/15/2021.................. 1,348,453 1,339,463
----------
3,134,805
----------
APPLICATIONS SOFTWARE -- 1.4%
Deltek, Inc. FRS
1st Lien
5.00% due 06/25/2022.................. 691,586 687,263
Deltek, Inc. FRS
BTL-B
9.50% due 06/25/2023.................. 247,000 237,120
Emdeon, Inc. FRS
BTL-B2
3.75% due 11/02/2018.................. 839,509 834,961
Mitchell International, Inc. FRS
BTL
4.50% due 10/13/2020.................. 876,449 842,122
Mitchell International, Inc. FRS
2nd Lien
8.50% due 10/11/2021.................. 160,000 139,200
SS&C European Holdings SARL FRS
BTL-A1
3.18% due 07/08/2020.................. 48,157 47,395
SS&C European Holdings SARL FRS
BTL-B2
4.08% due 07/08/2022.................. 121,444 121,618
SS&C Technologies Holdings Europe
SARL FRS
BTL-A2
3.18% due 07/08/2020.................. 74,693 73,510
SS&C Technologies, Inc. FRS
BTL-B1
4.00% due 07/08/2022.................. 837,803 839,000
----------
3,822,189
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
AUCTION HOUSES/ART DEALERS -- 0.4%
KAR Auction Services, Inc. FRS
BTL-B3
4.25% due 03/09/2023........................ $1,092,000 $1,092,000
----------
AUTO-CARS/LIGHT TRUCKS -- 0.5%
FCA US LLC FRS
BTL-B
3.25% due 12/31/2018........................ 1,424,736 1,421,530
----------
AUTO/TRUCK PARTS & EQUIPMENT-ORIGINAL -- 1.0%
Cooper-Standard Automotive, Inc. FRS
BTL
4.00% due 04/04/2021........................ 789,950 782,544
Federal-Mogul Holdings Corp. FRS
BTL-C
4.75% due 04/15/2021........................ 543,108 489,702
MPG Holdco I, Inc. FRS
BTL-B
3.75% due 10/20/2021........................ 695,495 684,690
TI Group Automotive Systems LLC FRS
Term B
4.50% due 06/30/2022........................ 705,455 698,401
----------
2,655,337
----------
AUTO/TRUCK PARTS & EQUIPMENT-REPLACEMENT -- 0.1%
Allison Transmission, Inc. FRS
BTL-B3
3.50% due 08/23/2019........................ 153,430 153,239
----------
BICYCLE MANUFACTURING -- 0.2%
SRAM LLC FRS
1st Lien
4.00% due 04/10/2020........................ 723,296 592,198
----------
BLOODSTOCK SERVICES -- 0.0%
NVA Holdings, Inc. FRS
1st Lien
4.75% due 08/14/2021........................ 27,650 27,327
----------
BROADCAST SERVICES/PROGRAM -- 1.9%
iHeartCommunications, Inc. FRS
BTL-D
7.18% due 01/30/2019........................ 1,555,000 1,061,936
Univision Communications, Inc. FRS
BTL-C4
4.00% due 03/01/2020........................ 548,544 542,568
Univision Communications, Inc. FRS
BTL
4.00% due 03/01/2020........................ 3,850,945 3,806,932
----------
5,411,436
----------
BUILDING & CONSTRUCTION PRODUCTS-MISC. -- 1.3%
Builders FirstSource, Inc. FRS
BTL-B
6.00% due 07/31/2022........................ 678,874 672,085
CPG International, Inc. FRS
BTL
4.75% due 09/30/2020........................ 729,389 711,155
58
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
BUILDING & CONSTRUCTION PRODUCTS-MISC. (CONTINUED)
Nortek, Inc. FRS
BTL-B
3.50% due 10/30/2020....................... $1,243,698 $1,204,833
Summit Materials Comp I LLC FRS
BTL
4.00% due 07/17/2022....................... 1,045,103 1,034,651
----------
3,622,724
----------
BUILDING & CONSTRUCTION-MISC. -- 0.1%
Brock Holdings III, Inc. FRS
1st Lien
6.00% due 03/16/2017....................... 309,814 293,549
----------
BUILDING PRODUCTS-CEMENT -- 0.7%
Headwaters, Inc. FRS
BTL-B
4.50% due 03/24/2022....................... 1,218,980 1,219,741
Quikrete Holdings, Inc. FRS
1st Lien
4.00% due 09/28/2020....................... 600,000 595,500
----------
1,815,241
----------
BUILDING-RESIDENTIAL/COMMERCIAL -- 0.0%
TOUSA, Inc.
Escrow Loans
12.25% due 08/15/2013+(1)(2)............... 2,037,810 0
----------
CABLE/SATELLITE TV -- 1.1%
CCO Safari III LLC FRS
BTL
3.25% due 08/24/2021....................... 356,000 354,856
CCO Safari III LLC FRS
BTL
3.50% due 01/24/2023....................... 287,000 287,051
Neptune Finco Corp. FRS
BTL
5.00% due 10/09/2022....................... 990,000 990,495
Virgin Media Investment Holdings, Ltd. FRS
BTL-F
3.50% due 06/30/2023....................... 974,991 965,851
Ziggo BV FRS
BTL-B1
3.50% due 01/15/2022....................... 147,915 146,004
Ziggo BV FRS
BTL-B2
3.60% due 01/15/2022....................... 95,319 94,088
Ziggo BV FRS
BTL-B3
3.60% due 01/15/2022....................... 156,766 154,741
----------
2,993,086
----------
CASINO HOTELS -- 1.3%
Boyd Gaming Corp. FRS
BTL-B
4.00% due 08/14/2020....................... 544,202 543,618
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
CASINO HOTELS (CONTINUED)
CityCenter Holdings LLC FRS
BTL-B
4.25% due 10/16/2020.......... $1,044,331 $1,043,026
MGM Resorts International FRS
BTL-B
3.50% due 12/20/2019.......... 1,364,828 1,360,847
Station Casinos LLC FRS
BTL-B
4.25% due 03/02/2020.......... 578,888 576,898
----------
3,524,389
----------
CASINO SERVICES -- 0.1%
Eldorado Resorts, Inc. FRS
BTL-B
4.25% due 07/13/2022.......... 331,495 331,771
----------
CELLULAR TELECOM -- 0.2%
T-Mobile USA, Inc. FRS
BTL-B
3.50% due 11/09/2022.......... 583,538 585,401
----------
CHEMICALS-DIVERSIFIED -- 0.8%
Ineos US Finance LLC FRS
BTL-B
3.75% due 05/04/2018.......... 1,097,185 1,085,528
Ineos US Finance LLC FRS
BTL
4.25% due 03/31/2022.......... 1,209,206 1,189,556
----------
2,275,084
----------
CHEMICALS-PLASTICS -- 0.2%
PolyOne Corp. FRS
BTL-B
3.75% due 11/11/2022.......... 522,690 521,383
----------
CHEMICALS-SPECIALTY -- 0.5%
Huntsman International LLC
BTL-B
4.25% due 03/23/2023.......... 826,000 821,870
Royal Holdings, Inc. FRS
1st Lien
4.50% due 06/19/2022.......... 618,328 599,623
----------
1,421,493
----------
COMMERCIAL SERVICES -- 1.5%
Brickman Group, Ltd. FRS
1st Lien
4.00% due 12/18/2020.......... 1,392,321 1,365,781
Brickman Group, Ltd. FRS
2nd Lien
7.50% due 12/17/2021.......... 515,000 480,666
ServiceMaster Co. LLC FRS
BTL-B
4.25% due 07/01/2021.......... 2,434,096 2,433,081
----------
4,279,528
----------
59
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
COMMERCIAL SERVICES-FINANCE -- 1.0%
Harland Clarke Holdings Corp. FRS
BTL-B-4
6.00% due 08/04/2019................ $ 307,771 $ 293,536
TransUnion LLC FRS
BTL-B2
3.50% due 04/09/2021................ 2,380,223 2,354,438
----------
2,647,974
----------
COMPUTER SERVICES -- 0.6%
DynCorp International, Inc. FRS
BTL
6.25% due 07/07/2016................ 560,000 540,400
Presidio, Inc. FRS
BTL
5.25% due 02/02/2022................ 418,176 407,721
Science Applications Int. Corp. FRS
BTL-B
3.75% due 05/04/2022................ 728,308 729,825
----------
1,677,946
----------
COMPUTERS-INTEGRATED SYSTEMS -- 0.7%
Kronos, Inc. FRS
1st Lien
4.50% due 10/30/2019................ 1,340,230 1,329,173
Kronos, Inc. FRS
2nd Lien
9.75% due 04/30/2020................ 564,396 560,163
----------
1,889,336
----------
COMPUTERS-PERIPHERY EQUIPMENT -- 0.9%
CDW LLC FRS
BTL-B
3.25% due 04/29/2020................ 2,475,806 2,466,329
----------
CONSUMER PRODUCTS-MISC. -- 0.9%
Jarden Corp. FRS
BTL-B1
3.18% due 09/30/2020................ 37,710 37,647
Jarden Corp. FRS
BTL-B2
3.18% due 07/30/2022................ 267,655 267,254
Reynolds Group Holdings, Inc. FRS
BTL
4.50% due 12/01/2018................ 1,166,660 1,165,334
Spectrum Brands, Inc. FRS
1st Lien
3.50% due 06/23/2022................ 982,753 985,210
----------
2,455,445
----------
CONTAINERS-METAL/GLASS -- 1.3%
Anchor Glass Container Corp. FRS
1st Lien
4.25% due 07/01/2022................ 1,337,742 1,332,308
Ardagh Holdings USA, Inc. FRS
Delayed Draw
4.00% due 12/17/2019................ 633,384 632,065
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
CONTAINERS-METAL/GLASS (CONTINUED)
Berlin Packaging LLC FRS
1st Lien
4.50% due 10/01/2021..................... $ 543,325 $ 537,722
Owens-Brockway Glass Container, Inc. FRS
BTL-B
3.50% due 09/01/2022..................... 974,667 974,465
----------
3,476,560
----------
CONTAINERS-PAPER/PLASTIC -- 0.4%
Berry Plastics Group, Inc. FRS
BTL-D
3.50% due 02/08/2020..................... 1,196,497 1,190,349
----------
COSMETICS & TOILETRIES -- 0.3%
Coty, Inc. FRS
BTL
3.75% due 10/27/2022..................... 291,667 290,937
Galleria Co.
BTL
3.75% due 01/26/2023..................... 583,333 581,146
----------
872,083
----------
DATA PROCESSING/MANAGEMENT -- 1.9%
CCC Information Services, Inc. FRS
Term Loan B
4.00% due 12/20/2019..................... 1,043,230 1,029,537
First Data Corp. FRS
BTL
3.93% due 03/24/2018..................... 3,588,374 3,578,306
First Data Corp. FRS
BTL
4.18% due 07/08/2022..................... 651,000 646,389
----------
5,254,232
----------
DIAGNOSTIC EQUIPMENT -- 0.2%
Ortho-Clinical Diagnostics, Inc. FRS
BTL-B
4.75% due 06/30/2021..................... 543,108 498,301
----------
DIAGNOSTIC KITS -- 0.2%
Alere, Inc. FRS
BTL-B
4.25% due 06/18/2022..................... 455,068 451,584
----------
DIALYSIS CENTERS -- 0.9%
DaVita HealthCare Partners, Inc. FRS
BTL-B
3.50% due 06/24/2021..................... 1,477,444 1,478,830
U.S. Renal Care, Inc. FRS
BTL
5.25% due 12/31/2022..................... 1,051,365 1,047,422
----------
2,526,252
----------
DIRECT MARKETING -- 0.2%
Acosta, Inc. FRS
BTL
4.25% due 09/26/2021..................... 609,727 595,246
----------
60
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
DISPOSABLE MEDICAL PRODUCTS -- 0.1%
Sterigenics-Nordion Holdings LLC FRS
BTL-B
4.25% due 05/15/2022........................ $ 292,530 $ 287,411
----------
DISTRIBUTION/WHOLESALE -- 1.6%
American Builders & Contractors
Supply Co., Inc. FRS
BTL-B
3.50% due 04/16/2020........................ 1,918,710 1,913,514
HD Supply, Inc. FRS
BTL-B
3.75% due 08/13/2021........................ 1,075,660 1,067,144
Spin Holdco, Inc. FRS
1st Lien
4.25% due 11/14/2019........................ 491,269 478,066
Univar, Inc. FRS
BTL
4.25% due 07/01/2022........................ 1,040,770 1,023,207
----------
4,481,931
----------
DIVERSIFIED MINERALS -- 0.1%
FMG Resources August 2006 Pty, Ltd. FRS
BTL-B
4.25% due 06/30/2019........................ 444,378 374,574
----------
ELECTRIC-INTEGRATED -- 0.6%
Energy Future Intermediate Holding
Co. LLC FRS
DIP
4.25% due 12/19/2016........................ 1,150,000 1,148,083
Texas Competitive Electric Holdings
Co. LLC FRS
BTL
4.92% due 10/10/2017+(3)(4)................. 1,372,835 385,537
----------
1,533,620
----------
ELECTRONIC COMPONENTS-MISC. -- 0.2%
NXP BV/NXP Funding LLC
BTL
3.75% due 12/07/2020........................ 619,448 620,706
----------
ELECTRONIC COMPONENTS-SEMICONDUCTORS -- 0.7%
Avago Technologies Cayman Finance, Ltd. FRS
BTL-B1
4.25% due 02/01/2023........................ 1,991,000 1,979,663
----------
ENTERPRISE SOFTWARE/SERVICE -- 0.8%
Applied Systems, Inc. FRS
2nd Lien
7.50% due 01/24/2022........................ 472,550 444,788
Infor US, Inc. FRS
BTL-B5
3.75% due 06/03/2020........................ 1,108,451 1,073,639
Sophia LP FRS
BTL-B
4.75% due 09/30/2022........................ 845,750 830,104
----------
2,348,531
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
EXTENDED SERVICE CONTRACTS -- 0.6%
Sedgwick Claims Management
Services, Inc. FRS
1st Lien
3.75% due 03/01/2021................... $1,143,728 $1,103,698
Sedgwick Claims Management
Services, Inc. FRS
2nd Lien
6.75% due 02/28/2022................... 595,000 550,375
----------
1,654,073
----------
FILTRATION/SEPARATION PRODUCTS -- 0.1%
Filtration Group, Inc. FRS
1st Lien
4.25% due 11/21/2020................... 410,129 405,771
----------
FINANCE-LEASING COMPANIES -- 0.5%
Delos Finance SARL FRS
BTL
3.50% due 03/06/2021................... 1,330,000 1,332,217
----------
FINANCE-MORTGAGE LOAN/BANKER -- 0.2%
Walter Investment Management Corp. FRS
BTL-B
4.75% due 12/19/2020................... 616,839 535,879
----------
FOOD-BAKING -- 0.5%
Hostess Brands LLC FRS
1st Lien
4.50% due 08/03/2022................... 825,850 824,560
Hostess Brands LLC FRS
2nd Lien
8.50% due 08/03/2023................... 610,000 585,600
----------
1,410,160
----------
FOOD-CATERING -- 0.3%
Aramark Services, Inc. FRS
BTL-F
3.25% due 02/24/2021................... 913,350 909,925
----------
FOOD-MISC./DIVERSIFIED -- 1.0%
Dole Food Co., Inc. FRS
BTL-B
4.50% due 11/01/2018................... 533,379 530,712
Pinnacle Foods Finance LLC FRS
BTL-H
3.00% due 04/29/2020................... 2,073,560 2,069,672
Pinnacle Foods Finance LLC FRS
BTL
3.75% due 01/13/2023................... 58,853 59,031
----------
2,659,415
----------
FOOD-RETAIL -- 0.4%
Albertsons LLC FRS
BTL-B4
5.50% due 08/25/2021................... 722,432 722,432
Albertsons LLC FRS
BTL-B5
5.50% due 12/21/2022................... 467,828 467,243
----------
1,189,675
----------
61
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
GAMBLING (NON-HOTEL) -- 0.5%
Mohegan Tribal Gaming Authority FRS
BTL-B
5.50% due 06/15/2018..................... $ 825,660 $ 796,504
Scientific Games International, Inc. FRS
BTL-B2
6.00% due 10/01/2021..................... 724,497 700,612
----------
1,497,116
----------
HOTELS/MOTELS -- 1.9%
Hilton Worldwide Finance LLC FRS
BTL
3.50% due 10/26/2020..................... 5,264,305 5,262,331
----------
HUMAN RESOURCES -- 0.6%
CHG Buyer Corp. FRS
BTL
4.25% due 11/19/2019..................... 994,565 986,795
Team Health, Inc. FRS
BTL-B
4.50% due 11/23/2022..................... 718,200 716,854
----------
1,703,649
----------
INDEPENDENT POWER PRODUCERS -- 1.3%
Calpine Corp. FRS
BTL-B5
3.50% due 05/27/2022..................... 1,622,738 1,598,904
Calpine Corp. FRS
Delayed Draw
4.00% due 10/31/2020..................... 1,259,842 1,248,294
NRG Energy, Inc. FRS
BTL-B
2.75% due 07/02/2018..................... 646,667 639,190
----------
3,486,388
----------
INSURANCE-LIFE/HEALTH -- 0.2%
FHC Health Systems, Inc. FRS
BTL
5.00% due 12/23/2021..................... 653,400 630,531
----------
INSURANCE-PROPERTY/CASUALTY -- 0.3%
Asurion LLC FRS
BTL-B2
4.25% due 07/08/2020..................... 410,022 395,288
Asurion LLC FRS
BTL-B-1
5.00% due 05/24/2019..................... 84,415 83,219
Asurion LLC FRS
BTL-B4
5.00% due 08/04/2022..................... 354,600 346,917
----------
825,424
----------
INTERNET SECURITY -- 0.2%
Blue Coat Systems, Inc. FRS
BTL
4.50% due 05/20/2022..................... 683,288 671,842
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
INVESTMENT COMPANIES -- 0.5%
Concentra, Inc. FRS
1st Lien
4.00% due 06/01/2022................... $ 671,923 $ 666,883
RPI Finance Trust FRS
BTL-B4
3.50% due 11/09/2020................... 747,431 748,365
----------
1,415,248
----------
INVESTMENT MANAGEMENT/ADVISOR SERVICES -- 0.5%
AlixPartners LLP FRS
BTL-B
4.50% due 07/28/2022................... 1,329,320 1,322,119
----------
LEISURE GAMES -- 0.3%
Aristocrat International Pty, Ltd. FRS
BTL-B
4.75% due 10/20/2021................... 750,769 751,603
----------
LEISURE PRODUCTS -- 0.3%
Leslie's Poolmart, Inc. FRS
Tranche B
4.25% due 10/16/2019................... 852,644 843,762
----------
MACHINERY-GENERAL INDUSTRIAL -- 0.7%
RBS Global, Inc. FRS
1st Lien
4.00% due 08/21/2020................... 1,849,787 1,820,884
----------
MEDICAL LABS & TESTING SERVICES -- 0.3%
American Renal Holdings, Inc. FRS
2nd Lien
8.50% due 03/20/2020................... 290,000 284,200
inVentiv Health, Inc. FRS
BTL-B4
7.75% due 05/15/2018................... 590,000 586,313
----------
870,513
----------
MEDICAL PRODUCTS -- 0.4%
ConvaTec, Inc. FRS
BTL-B
4.25% due 06/15/2020................... 28,473 28,260
DJO Finance LLC FRS
BTL
4.25% due 06/08/2020................... 375,165 366,489
Greatbatch, Ltd. FRS
BTL-B
5.25% due 10/27/2022................... 704,235 703,135
----------
1,097,884
----------
MEDICAL-DRUGS -- 1.1%
Capsugel Holdings Us Inc.
BTL-B
4.00% due 07/31/2021................... 800,000 798,000
Endo Lux Finance Company FRS
BTL
3.75% due 09/26/2022................... 650,370 639,293
Horizon Pharma, Inc. FRS
BTL-B
4.50% due 05/07/2021................... 307,675 295,368
62
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
MEDICAL-DRUGS (CONTINUED)
Quintiles Transnational Corp. FRS
BTL-B
3.25% due 05/12/2022............................ $ 148,875 $ 148,689
Valeant Pharmaceuticals International, Inc. FRS
BTL-BE
3.75% due 08/05/2020............................ 700,000 656,750
Valeant Pharmaceuticals International, Inc. FRS
BTL-B
4.00% due 04/01/2022............................ 643,500 606,298
----------
3,144,398
----------
MEDICAL-GENERIC DRUGS -- 0.3%
Amneal Pharmaceuticals LLC FRS
BTL-B
4.50% due 11/01/2019............................ 722,700 713,215
----------
MEDICAL-HMO -- 0.2%
MPH Acquisition Holdings LLC FRS
BTL-B
3.75% due 03/31/2021............................ 693,097 685,819
----------
MEDICAL-HOSPITALS -- 2.2%
Acadia Healthcare Co., Inc. FRS
BTL-B
4.50% due 02/16/2023............................ 349,125 349,780
CHS/Community Health Systems, Inc. FRS
BTL-F
3.68% due 12/31/2018............................ 284,266 281,334
CHS/Community Health Systems, Inc. FRS
BTL-H
4.00% due 01/27/2021............................ 1,195,360 1,174,142
HCA, Inc,
BTL-B6
3.68% due 03/17/2023............................ 183,600 184,289
IASIS Healthcare LLC FRS
BTL-B2
4.50% due 05/03/2018............................ 997,423 989,631
National Surgical Hospitals, Inc. FRS
1st Lien
4.50% due 06/01/2022............................ 291,795 283,406
Onex Schumacher Finance LP FRS
1st Lien
5.00% due 07/31/2022............................ 619,885 609,037
RegionalCare Hospital Partners, Inc.
FRS BTL-B2
6.00% due 04/23/2019............................ 844,138 842,027
Select Medical Corp. FRS
BTL-F
6.00% due 03/03/2021............................ 801,000 791,989
Surgery Center Holdings, Inc.
BTL
5.25% due 11/03/2020............................ 732,000 721,935
----------
6,227,570
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
MEDICAL-OUTPATIENT/HOME MEDICAL -- 0.5%
21st Century Oncology, Inc. FRS
BTL
6.50% due 04/30/2022........................ $516,100 $ 459,329
Amsurg Corp. FRS
BTL
3.50% due 07/16/2021........................ 841,515 840,814
National Mentor Holdings, Inc. FRS
Tranche B
4.25% due 01/27/2021........................ 140,212 138,590
----------
1,438,733
----------
MISCELLANEOUS MANUFACTURING -- 0.2%
Gates Global LLC FRS
BTL-B
4.25% due 07/06/2021........................ 733,743 690,635
----------
MRI/MEDICAL DIAGNOSTIC IMAGING -- 0.3%
Surgical Care Affiliates LLC FRS
BTL
4.25% due 03/17/2022........................ 756,273 753,909
----------
NON-HAZARDOUS WASTE DISPOSAL -- 0.4%
Infiltrator Systems Integrated LLC FRS
BTL
5.25% due 05/27/2022........................ 194,530 193,192
Waste Industries USA, Inc. FRS
BTL-B
4.25% due 02/27/2020........................ 960,230 962,631
----------
1,155,823
----------
OIL & GAS DRILLING -- 0.1%
Jonah Energy LLC FRS
2nd Lien
7.50% due 05/12/2021........................ 400,000 198,000
Paragon Offshore Finance Co. FRS
BTL-B
5.25% due 07/18/2021(4)..................... 263,655 54,489
----------
252,489
----------
OIL COMPANIES-EXPLORATION & PRODUCTION -- 0.0%
Fieldwood Energy LLC FRS
2nd Lien
8.38% due 09/30/2020........................ 340,000 56,950
----------
OIL REFINING & MARKETING -- 0.2%
Chelsea Petroleum Products
BTL-B
5.25% due 10/22/2022........................ 519,042 482,709
----------
OIL-FIELD SERVICES -- 0.1%
McJunkin Red Man Corp. FRS
BTL-B
4.75% due 11/08/2019........................ 345,045 329,518
----------
PHYSICIANS PRACTICE MANAGEMENT -- 0.2%
Envision Healthcare Corp. FRS
BTL-B2
4.50% due 10/28/2022........................ 505,733 505,733
----------
63
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
PROFESSIONAL SPORTS -- 0.5%
Delta 2 Lux Sarl FRS
BTL-B3
4.75% due 07/31/2021....................... $1,035,000 $1,003,303
NVA Holdings, Inc.
BTL
5.50% due 08/14/2021....................... 334,000 333,165
----------
1,336,468
----------
RACETRACKS -- 0.4%
Penn National Gaming, Inc. FRS
BTL-B
3.25% due 10/30/2020....................... 1,097,194 1,094,451
----------
REAL ESTATE MANAGEMENT/SERVICES -- 1.6%
Capital Automotive LP FRS
2nd Lien
6.00% due 04/30/2020....................... 955,000 950,225
DTZ US Borrower LLC FRS
1st Lien
4.25% due 11/04/2021....................... 1,488,750 1,467,659
Realogy Group LLC FRS
BTL-B
3.75% due 03/05/2020....................... 2,006,047 2,002,286
----------
4,420,170
----------
RECREATIONAL CENTERS -- 0.2%
Life Time Fitness, Inc. FRS
BTL-B
4.25% due 06/10/2022....................... 595,017 587,022
----------
RESEARCH & DEVELOPMENT -- 0.1%
Pharmaceutical Product Development LLC FRS
BTL-B
4.25% due 08/18/2022....................... 289,810 286,912
----------
RESORT/THEME PARKS -- 0.1%
Six Flags Theme Parks, Inc. FRS
Term B
3.50% due 06/30/2022....................... 391,045 390,556
----------
RETAIL-ARTS & CRAFTS -- 0.5%
Michaels Stores, Inc. FRS
BTL-B
3.75% due 01/28/2020....................... 1,339,668 1,335,761
----------
RETAIL-BEDDING -- 0.3%
Mattress Holding Corp. FRS
BTL
6.25% due 10/20/2021....................... 856,000 841,020
----------
RETAIL-DRUG STORE -- 0.2%
Rite Aid Corp. FRS
BTL-2
4.88% due 06/21/2021....................... 520,000 520,325
----------
RETAIL-LEISURE PRODUCTS -- 0.3%
Party City Holdings, Inc. FRS
BTL-B
4.25% due 08/19/2022....................... 924,059 914,530
----------
PRINCIPAL VALUE
SECURITY DESCRIPTION AMOUNT (NOTE 3)
RETAIL-MAJOR DEPARTMENT STORES -- 0.1%
Hudson's Bay Co. FRS
BTL-B
4.75% due 09/30/2022.................... $ 341,014 $ 340,588
----------
RETAIL-OFFICE SUPPLIES -- 0.7%
Staples Escrow LLC FRS
BTL
4.75% due 02/02/2022.................... 2,055,000 2,048,761
----------
RETAIL-PET FOOD & SUPPLIES -- 0.2%
PetSmart, Inc. FRS
BTL-B
4.25% due 03/11/2022.................... 584,583 581,587
----------
RUBBER/PLASTIC PRODUCTS -- 0.1%
US Farathane LLC FRS
BTL
6.75% due 12/23/2021.................... 315,210 314,422
----------
SAVINGS & LOANS/THRIFTS -- 0.2%
Medimpact Healthcare Systems
BTL-B
5.75% due 10/27/2022.................... 438,750 437,653
----------
SCHOOLS -- 0.3%
Laureate Education, Inc. FRS
BTL-B
5.00% due 06/15/2018.................... 989,673 851,119
----------
SEMICONDUCTOR EQUIPMENT -- 0.1%
On Semiconductor Corp.
BTL-B
4.50% due 03/31/2023.................... 220,000 220,220
----------
SPECIAL PURPOSE ENTITIES -- 0.4%
Graton Economic Development Authority
BTL-B
5.25% due 09/01/2022.................... 358,767 357,870
US LLC 2 FRS
BTL
4.00% due 08/06/2021.................... 885,347 836,653
----------
1,194,523
----------
SPECIFIED PURPOSE ACQUISITIONS -- 0.2%
Ardent Legacy Acquisitions, Inc.
BTL-B
6.50% due 08/04/2021.................... 502,475 502,475
----------
TELECOM SERVICES -- 1.2%
Sable International Finance, Ltd.
BTL-B1
5.50% due 11/23/2022.................... 490,875 488,727
Sable International Finance, Ltd.
BTL-B2
5.50% due 11/23/2022.................... 401,625 399,617
SBA Senior Finance II LLC FRS
Term B2
3.25% due 06/10/2022.................... 832,708 826,723
Securus Technologies Holdings, Inc. FRS
BTL-B2
5.25% due 04/30/2020.................... 997,500 923,311
64
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
PRINCIPAL
AMOUNT/ VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
LOANS(9)(10)(11) (CONTINUED)
TELECOM SERVICES (CONTINUED)
West Corp. FRS
BTL-B10
3.25% due 06/30/2018....................... $ 690,019 $ 686,030
------------
3,324,408
------------
TELEPHONE-INTEGRATED -- 1.4%
Level 3 Financing, Inc. FRS
BTL-B2
3.50% due 05/31/2022....................... 3,251,000 3,242,873
XO Communications LLC FRS
BTL
4.25% due 03/19/2021....................... 541,709 539,135
------------
3,782,008
------------
TELEVISION -- 0.6%
Sinclair Television Group, Inc. FRS
BTL-B1
3.50% due 07/30/2021....................... 838,663 835,517
Tribune Media Co. FRS
BTL
3.75% due 12/27/2020....................... 882,933 877,415
------------
1,712,932
------------
THEATERS -- 0.2%
CDS US Intermediate Holdings Inc. FRS
BTL
5.00% due 07/08/2022....................... 468,645 445,408
------------
TOTAL LOANS
(cost $159,489,490)........................ 155,978,593
------------
COMMON STOCKS+(1)(2) -- 0.0%
MULTIMEDIA -- 0.0%
Haights Cross Communication, Inc.
(cost $167,305)............................ 19,388 0
------------
PREFERRED SECURITIES -- 0.4%
DIVERSIFIED BANKING INSTITUTIONS -- 0.4%
GMAC Capital Trust I FRS
Series 2
8.13%
(cost $1,191,988).......................... 46,500 1,139,715
------------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.3%
BANKS-SUPER REGIONAL -- 0.0%
SunTrust Banks, Inc. FRS
5.63% due 12/15/2019(12)................... 110,000 108,900
------------
DIVERSIFIED BANKING INSTITUTIONS -- 0.1%
JPMorgan Chase & Co. FRS
Series Z
5.30% due 05/01/2020(12)................... 110,000 110,275
------------
INSURANCE-MULTI-LINE -- 0.2%
Voya Financial, Inc. FRS
Company Guar. Notes
5.65% due 05/15/2053....................... 600,000 558,000
------------
TOTAL PREFERRED SECURITIES/CAPITAL SECURITIES
(cost $846,250)............................ 777,175
------------
VALUE
SECURITY DESCRIPTION SHARES (NOTE 3)
WARRANTS+(1)(2)(13) -- 0.2%
TELEVISION -- 0.2%
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)............... 332 324,209
ION Media Networks, Inc.
Expires 12/18/2016
(strike price $0.01)............... 328 320,303
------------
TOTAL WARRANTS
(cost $0).......................... 644,512
------------
TOTAL LONG-TERM INVESTMENT SECURITIES
(cost $290,663,465)................ 280,841,105
------------
TOTAL INVESTMENTS
(cost $290,663,465)(15)............ 101.0% 280,841,105
Liabilities in excess of other assets. (1.0) (2,733,888)
----- ------------
NET ASSETS 100.0% $278,107,217
===== ============
--------
* Securities exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from registration,
normally to qualified institutional buyers. The Fund has no right to demand
registration of these securities. At March 31, 2016, the aggregate value of
these securities was $47,947,900 representing 17.2% of net assets. Unless
otherwise indicated, these securities are not considered to be illiquid.
+ Non-income producing security
(1)Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs; see Note 3.
(2)Illiquid security. At March 31, 2016, the aggregate value of these
securities was $644,512 representing 0.2% of net assets.
(3)Security in default of interest.
(4)Company has filed for bankruptcy protection.
(5)See Note 6 for cost of investments on a tax basis.
(6)Security in default of interest and principal at maturity.
(7)PIK ("Payment-in-Kind") security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in cash at the coupon rate listed.
(8)PIK ("Payment-in-Kind") security -- Income may be paid in additional
securities or cash at the discretion of the issuer. The security is
currently paying interest in the form of additional securities at the coupon
rate listed.
(9)All loans in the portfolio were purchased through assignment agreements
unless otherwise indicated.
(10)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.
(11)The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major European banks, such as the London
Inter-Bank Offer Rate ("LIBOR") or the prime rate offered by one or more
major United States banks, or the certificate of deposit rate. Senior loans
are generally considered to be restrictive in that the Fund is ordinarily
contractually obligated to receive approval from the Agent Bank and/or
borrower prior to the disposition of a senior loan.
(12)Perpetual maturity -- maturity date reflects the next call date.
65
SUNAMERICA FLEXIBLE CREDIT FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2016 -- (CONTINUED)
(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
3. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
March 31, 2016, the Fund held the following restricted securities:
SHARES/ VALUE % OF
ACQUISITION PRINCIPAL ACQUISITION PER NET
DESCRIPTION DATE AMOUNT COST VALUE SHARE ASSETS
----------- ----------- --------- ----------- -------- ------- ------
WARRANTS
ION Media
Networks,
Inc. Expires
12/18/2016
(strike price
$0.01)........ 03/01/2011 332 $0 $324,209 $976.53 0.12%
ION Media
Networks,
Inc. Expires
12/18/2016
(strike price 11/11/2010 327 0
$0.01)........ 03/01/2011 1 0
--- --
328 0 320,303 976.53 0.12
-------- ----
$644,512 0.24%
======== ====
BTL --Bank Term Loan
DIP --Debtor-in-possession
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current interest rates at March 31, 2016
and unless noted otherwise, the dates shown are the original maturity dates.
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2016 (see Note 3):
LEVEL 1 -- UNADJUSTED LEVEL 2 -- OTHER LEVEL 3 -- SIGNIFICANT
QUOTED PRICES OBSERVABLE INPUTS UNOBSERVABLE INPUTS TOTAL
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Asset Backed Securities:
Diversified Financial Services........ $ -- $ 2,602,416 $ 338,167 $ 2,940,583
Convertible Bonds & Notes............... -- -- 0 0
U.S. Corporate Bonds & Notes:
Rubber/Plastic Products............... -- -- 0 0
Other Industries...................... -- 99,328,508 -- 99,328,508
Foreign Corporate Bonds & Notes:
Special Purpose Entity................ -- -- 0 0
Other Industries...................... -- 20,032,019 -- 20,032,019
Loans:
Building-Residential/Commercial....... -- -- 0 0
Oil & Gas Drilling.................... -- 198,000 54,489 252,489
Other Industries...................... -- 155,726,104 -- 155,726,104
Common Stocks........................... -- -- 0 0
Preferred Securities.................... 1,139,715 -- -- 1,139,715
Preferred Securities/Capital Securities. -- 777,175 -- 777,175
Warrants................................ -- -- 644,512 644,512
---------- ------------ ---------- ------------
TOTAL INVESTMENTS AT VALUE.............. $1,139,715 $278,664,222 $1,037,168 $280,841,105
========== ============ ========== ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no material transfers between Levels during the
reporting period.
At the beginning and end of the reporting period, Level 3 investments were not
considered a material portion of the Fund.
See Notes to Financial Statements
66
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016
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 three 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 Strategic Bond Fund ("Strategic Bond Fund"), and
SunAmerica Flexible Credit Fund ("Flexible Credit 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.
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.
FLEXIBLE CREDIT FUND seeks a high level of total return by the active
trading in credit instruments. Under normal circumstances, at least 80% of
the Fund's net assets, plus any borrowings for investment purposes, will be
invested in credit instruments and derivative instruments and
exchange-traded funds ("ETFs") that are linked to, or provide investment
exposure to, credit instruments. The Fund considers a credit instrument to
be any debt instrument or instrument with debt-like characteristics,
including but not limited to, corporate and sovereign bonds, secured
floating rate loans and other institutionally traded secured floating rate
debt obligations ("Loans"), and securitized instruments, which are
securities backed by pools of assets such as mortgages, loans, or other
receivables. The credit instruments in which the Fund intends to primarily
invest are U.S. and non-U.S. below investment grade, high yield bonds
(commonly referred to as "junk bonds") and Loans.
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 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. The U.S.
Government Fund and the Flexible Credit Fund stopped offering Class B shares
for sale as of the close of business December 2, 2014. As of the close of
business January 27, 2015, Class B shares of each of the U.S. Government
Securities Fund and the Flexible Credit Fund converted to Class A shares of
each respective Fund.
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.
Class W shares are offered at net asset value per share. The class is
offered exclusively through advisory fee-based programs sponsored by certain
financial intermediaries and other programs. Class W shares of the Flexible
Credit Fund and the Strategic Bond Fund commenced operations effective
October 1, 2014 and January 29, 2015, respectively.
67
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions except as may otherwise be provided in the Trust's
registration statement. Class A, Class B and Class C shares each makes
distribution and account maintenance and service fee payments under the
distribution plan pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), except that Class B and Class C shares
are subject to higher distribution fees.
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. Fund Merger
Pursuant to an Agreement and Plan of Reorganization, all of the assets and
liabilities of the SunAmerica GNMA Fund, a series of the Trust, were
transferred in a tax-free exchange to the U.S. Government Securities Fund,
in exchange for shares of the U.S. Government Securities Fund. The
reorganization was consummated on November 10, 2014. The acquiring fund
acquired all of the assets and liabilities of the target fund as shown in
the table below. Class A, Class B, and Class C shares of the SunAmerica GNMA
Fund were exchanged tax-free for Class A, Class B, and Class C shares of the
U.S. Government Securities Fund at an exchange ratio of 1.11 to 1, 1.11 to
1, and 1.11 to 1, respectively. Shares of the U.S. Government Securities
Fund issued in connection with the acquisition of the SunAmerica GNMA Fund
were 12,979,447 with a value of $125,333,608. The assets in the investment
portfolio of the SunAmerica GNMA Fund with a value of $125,119,235 and
identified cost of $122,854,034 as of the date of the reorganization, were
the principal assets acquired by the acquiring fund. For financial statement
purposes, assets received and shares issued by the acquiring fund were
recorded at value; however, the cost basis of the investments received from
the target fund were carried forward to align ongoing reporting of the
acquiring fund's realized and unrealized gains and losses with amounts
distributable to shareholders for tax purposes.
The following is a summary of the shares outstanding, net assets, net asset
value per share and net unrealized appreciation (depreciation) immediately
before and after the reorganization:
NET ASSET NET UNREALIZED
SHARES VALUE APPRECIATION
OUTSTANDING NET ASSETS PER SHARE (DEPRECIATION)
----------- ------------ --------- --------------
Target Fund
SunAmerica GNMA Fund....................... $2,265,201
Class A.................................... 9,096,890 $ 97,317,280 $10.70
Class B.................................... 851,684 9,136,498 10.73
Class C.................................... 1,757,477 18,879,830 10.74
Acquiring Fund
SunAmerica U.S. Government Securities Fund. $5,835,409
Class A.................................... 9,875,105 $ 95,366,623 $ 9.66
Class B.................................... 294,560 2,845,301 9.66
Class C.................................... 853,892 8,239,955 9.65
Post Reorganization
SunAmerica U.S. Government Securities Fund. $8,100,610
Class A.................................... 19,952,209 $192,683,902 $ 9.66
Class B.................................... 1,240,419 11,981,799 9.66
Class C.................................... 2,810,376 27,119,786 9.65
Assuming the reorganization had been completed on April 1, 2014, the
beginning of the annual reporting period for the acquiring fund, the pro
forma results of operations for the period ended March 31, 2015, are as
follows:
Net investment income (loss)................... $2,770,789
Net realized/unrealized gains (losses)......... 6,356,714
----------
Change in net assets resulting from operations. $9,127,503
==========
68
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
Because the combined investment portfolios have been managed as a single
integrated portfolio since the reorganization was completed, it is not
practicable to separate the amounts of revenue and earnings of the target
fund that have been included in the Statement of Operations since November
10, 2014.
Note 3. 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 each Fund's asset and liabilities classified in the fair
value hierarchy as of March 31, 2016 is reported on a schedule following
each Fund's Portfolio of Investments.
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.
69
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
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 a Fund's shares, and a 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 and other debt securities 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.
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) which is, in the opinion of the Adviser,
the broadest and most representative market, that may be either a securities
exchange or over-the-counter market and are generally categorized as Level 1
or Level 2.
The Board is responsible for the share valuation process and has adopted
policies and procedures (the "PRC Procedures") for valuing the securities
and other assets held by the Funds, including procedures for the fair
valuation of securities and other assets for which market quotations are not
readily available or are unreliable. The PRC Procedures provide for the
establishment of a pricing review committee, which is responsible for, among
other things, making certain determinations in connection with the Trust's
fair valuation procedures. Securities for which market quotations are not
readily available or the values of which may be significantly impacted by
the occurrence of developments or significant events are generally
categorized as Level 3. There is no single standard for making fair value
determinations, which may result in prices that vary from those of other
funds.
DERIVATIVE INSTRUMENTS:
Forward Foreign Currency Contracts: During the period, the Strategic Bond
Fund used forward contracts to attempt to protect securities and related
receivables and payables against changes in future foreign exchange rates.
70
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
A forward contract is an agreement between two parties to buy or sell
currency at a set price on a future date. The market value of the contract
will fluctuate with changes in currency exchange rates. The contract is
marked-to-market daily using the forward rate and the cumulative change in
market value is recorded by a Fund as unrealized appreciation or
depreciation. On the settlement date, a 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, a 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 exposure 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
portfolio 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.
Forward foreign currency contracts outstanding at the end of the period, if
any, are reported on a schedule following each Fund's Portfolio of
Investments.
Master Agreements: Certain Funds that hold derivative instruments and other
financial instruments may be a party to ISDA (International Swaps 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 the Fund's net assets below a specified level over a certain
period of time. Additional termination events applicable to counterparties
may occur upon a decline in a counterparty's long-term and short-term credit
ratings below a specified level, or upon a decline in the ratings of a
counterparty's credit support provider. Upon the occurrence of a termination
event, the other party may elect to terminate early and cause settlement of
all instruments outstanding pursuant to a particular Master Agreement,
including the payment of any losses and costs resulting from such early
termination, as reasonably determined by the terminating party. Any decision
by one or more of a Fund's counterparties to elect early termination could
cause 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. 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 March 31,
2016, 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 period ended March 31, 2016. The
derivative contracts held during the period are not accounted for as hedging
71
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
instruments under GAAP. For a detailed presentation of derivatives held as
of March 31, 2016, please refer to each Fund's Portfolio of Investments.
LIABILITY
ASSET DERIVATIVES DERIVATIVES
----------------- ---------------
FOREIGN FOREIGN
EXCHANGE EXCHANGE
CONTRACTS CONTRACTS
----------------- ---------------
FOREIGN FORWARD FOREIGN FORWARD
EXCHANGE EXCHANGE
FUND CONTRACTS(1) CONTRACTS(2)
---- ----------------- ---------------
Strategic Bond. $153,998 $1,754,608
======== ==========
--------
STATEMENT OF ASSETS AND LIABILITIES LOCATION:
(1)Unrealized appreciation on forward foreign currency contracts
(2)Unrealized depreciation on forward foreign currency contracts
CHANGE IN
UNREALIZED
REALIZED GAIN APPRECIATION
(LOSS) ON (DEPRECIATION) ON
DERIVATIVES DERIVATIVES
RECOGNIZED IN RECOGNIZED IN
STATEMENT OF STATEMENT OF
OPERATIONS OPERATIONS
--------------- -----------------
FOREIGN FOREIGN
EXCHANGE EXCHANGE
CONTRACTS CONTRACTS
--------------- -----------------
FOREIGN FORWARD FOREIGN FORWARD
EXCHANGE EXCHANGE
FUND CONTRACTS(1) CONTRACTS(2)
---- --------------- -----------------
Strategic Bond. $1,347,682 $(2,909,587)
========== ===========
--------
STATEMENT OF OPERATIONS LOCATION:
(1)Net realized foreign exchange gain (loss) on other assets and liabilities
(2)Change in unrealized foreign exchange gain (loss) on other assets and
liabilities
The following table represents the average monthly balances of derivatives
held during the twelve months ended March 31, 2016:
AVERAGE AMOUNT
OUTSTANDING
DURING THE YEAR
---------------
FOREIGN FORWARD
EXCHANGE
FUND CONTRACTS(1)
---- ---------------
Strategic Bond. $72,415,742
===========
--------
(1)Amounts represent notional amounts in US dollars.
There were no derivative assets and liabilities subject to Master Agreements
outstanding at March 31, 2016. The repurchase agreements held by the Funds
as of March 31, 2016, are subject to Master Agreements. See the Portfolio of
Investments and the Notes to the Financial Statements for more information
about the Funds' holdings in repurchase agreements.
MORTGAGE-BACKED DOLLAR ROLLS: During the year ended March 31, 2016, the
Strategic Bond Fund entered into dollar rolls using "to be announced"
("TBA") mortgage-backed securities ("TBA Rolls"). TBA 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 Strategic Bond Fund
72
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
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. TBA 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 TBA Roll
transaction files bankruptcy or becomes insolvent, a Fund's use of the
proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to repurchase the securities. The return
earned by a Fund with the proceeds of the TBA Roll transaction may not
exceed the transaction costs.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS: Certain 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 period ended March 31, 2016, the
Strategic Bond Fund purchased and/or sold when-issued securities.
STRIPPED MORTGAGE-BACKED SECURITIES: Stripped Mortgage-Backed Securities
("SMBS") are 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. SMBS have
greater market volatility than other types of U.S. government securities in
which a Fund invests. A common type of SMBS has one class receiving some of
the interest and all or most of the principal (the "principal only" class)
from the mortgage pool, while the other class will receive all or most of
the interest (the "interest only" class). The yield to maturity on an
interest only class is extremely sensitive not only to changes in prevailing
interest rates, but also to the rate of principal payments, including
principal prepayments, on the underlying pool of mortgage assets, and a
rapid rate of principal payment may have a material adverse effect on a
Fund's yield.
INFLATION-INDEXED BONDS: Certain Funds may purchase inflation-indexed bonds.
Inflation-indexed bonds are fixed income securities whose principal value is
adjusted periodically according to the rate of inflation. Two structures are
common. The U.S. Treasury and certain other issuers use a structure that
reflects inflation in the principal value of the bond. Other issuers pay out
any inflation related accruals as part of a semiannual coupon. The value of
inflation-indexed bonds is expected to change in response to changes in real
interest rates. Real interest rates, in turn, are tied to the relationship
between nominal interest rates (i.e., stated interest rates) and the rate of
inflation. Therefore, if the rate of inflation rises at a faster rate than
nominal interest rates, real interest rates (i.e., nominal interest rates
minus inflation) might decline, leading to an increase in value of
inflation-indexed bonds. In contrast, if nominal interest rates increase at
a faster rate than inflation, real interest rates might rise, leading to a
decrease in value of inflation-indexed bonds. There can be no assurance,
however, that the value of inflation-indexed bonds will be directly
correlated to changes in nominal interest rates, and short-term increases in
inflation may lead to a decline in their value. Coupon payments received
from inflation-indexed bonds are recorded in the Statements of Operations as
interest income. In addition, any increase or decrease in the principal
amount of an inflation-indexed bond will be recorded in the Statements of
Operations as an increase or decrease to interest income, even though
principal is not paid until maturity.
REPURCHASE AGREEMENTS: The Funds, along with other affiliated registered
investment companies, pursuant to procedures adopted by the Board and
applicable guidance from the Securities and Exchange Commission ("SEC"), may
transfer uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. In a
repurchase agreement, the seller of a security agrees to repurchase the
security at a mutually agreed-upon time and price, which reflects the
effective rate of return for the term of the agreement. For repurchase
agreements and joint repurchase agreements, the 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 a Fund may be delayed or limited.
73
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
As of March 31, 2016, 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. 5.45% $25,300,000
Strategic Bond............. 1.67 7,731,000
As of such date, the repurchase agreement in that joint account and the
collateral thereof were as follows:
State Street Bank and Trust Co., dated March 31, 2016, bearing interest at a
rate of 0.01% per annum, with a principal amount of $463,848,000, a
repurchase price of $463,848,129, and a maturity date of April 1, 2016. The
repurchase agreement is collateralized by the following:
INTEREST MATURITY PRINCIPAL
TYPE OF COLLATERAL RATE DATE AMOUNT VALUE
------------------ -------- ---------- ------------ ------------
U.S. Treasury Notes. 1.75% 01/31/2023 $466,710,000 $473,127,263
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 are allocated among the Funds based upon
relative net assets or other appropriate allocation methods. In all other
respects, expenses are charged to each Fund as incurred on a specific
identification basis.
Dividends from net investment income are accrued daily and paid monthly.
Capital gain distributions, if any, are paid annually. The Funds record
dividends and distributions to their shareholders on the ex-dividend date.
The Funds reserve the right to declare and pay dividends less frequently
than disclosed above, provided that the net realized capital gains and net
investment income, if any, are paid at least annually.
The amount of dividends and distributions from net investment income and net
realized capital gains are determined 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 it will not be subject to
excise tax on undistributed income and gains. Therefore, no federal income
tax or excise tax provision is required.
74
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
The Funds recognize 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
2012 -- 2014 or expected to be taken in each Fund's 2015 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 2012.
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 4. 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
FUND ASSETS FEES
---- ---------------------------- ----------
U.S. Government Securities........................ $0 - $200 million 0.650%
(greater than) $200 million 0.620
(greater than) $400 million 0.550
Strategic Bond.................................... $0 - $350 million 0.650
(greater than) $350 million 0.600
Flexible Credit................................... $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") and the Flexible Credit Fund is subadvised by Newfleet Asset
Management, LLC ("Newfleet"). Under the Subadvisory Agreements, PineBridge
and Newfleet manage the investment and reinvestment of the assets of the
Strategic Bond Fund and the Flexible Credit Fund, respectively.
75
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
SunAmerica pays PineBridge and Newfleet 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
Newfleet Asset Management, LLC with respect to the Strategic Bond Fund and
Flexible Credit Fund are as follows:
SUBADVISORY
FUND ASSETS FEES
---- ---------------------------- -----------
Strategic Bond.................................... $0 - $200 million 0.350%
(greater than) $200 million 0.250
(greater than) $500 million 0.200
Flexible Credit................................... $0 - $200 million 0.300
(greater than) $200 million 0.250
(greater than) $400 million 0.150
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 (i.e., expenses
that are unusual in nature and/or infrequent in occurrence, such as
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 C..... 1.64
Strategic Bond Class A................. 1.40
Strategic Bond Class B................. 2.05
Strategic Bond Class C................. 2.05
Strategic Bond Class W................. 1.20
Flexible Credit Class A................ 1.45
Flexible Credit Class C................ 2.10
Flexible Credit Class W................ 1.25
For the U.S. Government Securities Fund, any contractual waivers and/or
reimbursements made by SunAmerica are subject to recoupment from the Fund
within two years after the occurrence of the waivers and/or reimbursements,
provided that the Fund is able to effect such payment to SunAmerica and
remain in compliance with the expense limitations in effect at the time the
waivers and/or reimbursements were made.
For the period ended March 31, 2016, pursuant to the contractual expense
limitations in the above tables SunAmerica has waived and/or reimbursed
expenses as follows:
OTHER EXPENSES
FUND REIMBURSED
---- --------------
U.S. Government Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $216,436
CLASS SPECIFIC
FUND EXPENSES
---- --------------
U.S. Government Securities Class A........................................................................... $412,070
U.S. Government Securities Class C........................................................................... 72,293
Flexible Credit Fund Class A................................................................................. 34,212
Flexible Credit Fund Class B................................................................................. 11,199
Flexible Credit Fund Class C................................................................................. 27,517
76
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
At March 31, 2016, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment and expire during the time period indicated
are as follows:
FUND OTHER EXPENSES REIMBURSED
---- -----------------------------
MARCH 31, 2017 MARCH 31, 2018
-------------- --------------
U.S. Government Securities. $195,553 $216,436
CLASS SPECIFIC EXPENSES
REIMBURSED
-----------------------------
FUND MARCH 31, 2017 MARCH 31, 2018
---- -------------- --------------
U.S. Government Securities Class A. $340,654 $412,070
U.S. Government Securities Class C. 53,973 72,293
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 (other than Class W shares of the Strategic Bond and Flexible Credit
Funds), 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. Except for Class W shares of the Strategic Bond
and Flexible Credit Funds, 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. For the period ended March 31, 2016, ACS
received fees as reflected in the Statements of Operations based on the
aforementioned rates.
The Trust, on behalf of the Strategic Bond and Flexible Credit Funds, has
entered into an Administrative and Shareholder Services Agreement with ACS,
pursuant to which ACS is paid an annual fee of 0.15% of average daily net
assets of Class W shares as compensation for providing additional
shareholder services to Class W shareholders. For the period ended March 31,
2016, ACS earned fees as reflected in the Statements of Operations based on
the aforementioned rate.
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 period
ended March 31, 2016, 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. $ 73,781 $ 31,358 $ 29,996 $5,377 $ -- $ 1,263
Strategic Bond............. 259,201 173,529 41,091 5,225 76,480 9,641
Flexible Credit............ 432,376 91,454 273,886 4,948 -- 17,966
77
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
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 period ended March 31, 2016, the Funds incurred the following expenses
which are included in transfer agent fees and expenses in the Statements of
Operations to compensate SAFS pursuant to the terms of the Service Agreement:
PAYABLE AT
FUND EXPENSES MARCH 31, 2016
---- -------- --------------
US Government Securities Class A. $357,753 $28,589
US Government Securities Class C. 57,264 6,019
Strategic Bond Class A........... 427,591 32,345
Strategic Bond Class B........... 75,644 5,799
Strategic Bond Class C........... 364,939 28,094
Strategic Bond Class W........... 66,891 5,430
Flexible Credit Class A.......... 263,967 23,214
Flexible Credit Class C.......... 130,616 11,471
Flexible Credit Class W.......... 136,279 16,441
At March 31, 2016, Focused Balanced Strategy Portfolio and Focused
Multi-Asset Strategy Portfolio, each a series of SunAmerica Series, Inc.,
and Pershing LLC via shares held in a brokerage account 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:
HOLDER
--------------------------------------------------
FOCUSED BALANCED FOCUSED MULTI-ASSET
FUND STRATEGY PORTFOLIO STRATEGY PORTFOLIO PERSHING LLC
---- ------------------ ------------------- ------------
U.S. Government Securities . . . . . . . . . . . . .. 5.31% 3.96% 22.97%
Strategic Bond . . . . . . . . . . . ................ 4.01 1.82 13.12
Flexible Credit . . . . . . ......................... 3.89 4.90 6.57
Note 5. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the year ended March 31, 2016 were as follows:
PURCHASES OF INVESTMENT SALES OF INVESTMENT PURCHASE OF U.S. SALES OF U.S.
SECURITIES (EXCLUDING U.S. SECURITIES (EXCLUDING U.S. GOVERNMENT GOVERNMENT
FUND GOVERNMENT SECURITIES) GOVERNMENT SECURITIES) SECURITIES SECURITIES
---- -------------------------- -------------------------- ---------------- -------------
U.S. Government Securities. $ 3,093,010 $ 896,898 $ 55,329,653 $ 60,468,131
Strategic Bond............. 306,962,791 393,136,879 139,242,374 112,594,750
Flexible Credit............ 235,975,191 122,989,704 -- --
78
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
Note 6. 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, 2016 FOR THE YEAR ENDED MARCH 31, 2016
---------------------------------------- ---------------------------------
LONG-TERM UNREALIZED
ORDINARY GAINS/CAPITAL APPRECIATION ORDINARY LONG-TERM
FUND INCOME LOSS CARRYOVER (DEPRECIATION)* INCOME CAPITAL GAINS
---- ---------- -------------- --------------- ----------- -------------
U.S. Government Securities. $ 481,941 $(11,882,338) $ 6,747,202 $ 3,189,102 $--
Strategic Bond............. 356,714 (61,012,609) (16,453,517) 16,390,428 --
Flexible Credit............ 1,132,885 (58,512,325) (10,246,257) 9,686,069 --
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
TAX DISTRIBUTIONS
FOR THE YEAR ENDED MARCH 31, 2015
---------------------------------
ORDINARY LONG-TERM
FUND INCOME CAPITAL GAINS
---- ----------- -------------
U.S. Government Securities.. $ 2,515,565 $--
Strategic Bond.............. 17,254,839 --
Flexible Credit............. 5,820,730 --
As of March 31, 2016, for Federal income tax purposes, the Funds indicated
below have capital loss carryforwards, which expire in the year indicated,
which are available to offset future capital gains, if any:
CAPITAL LOSS CARRYFORWARD+ UNLIMITED+
-------------------------- ---------------------
FUND 2017 2018 ST LT
---- ---------- ----------- ---------- ----------
U.S. Government Securities............. $ -- $ -- $8,832,105 $3,050,233
Strategic Bond......................... -- 49,688,392 2,433,730 8,890,487
Flexible Credit........................ 9,384,737 41,322,811 1,504,166 6,300,611
--------
+ On December 22, 2010, the Regulated Investment Company Modernization Act of
2010 (the "Act") was enacted which changes various technical rules governing
the tax treatment of regulated investment companies. The changes are
generally effective taxable years beginning after the date of enactment.
Under the Act, the fund will be permitted to carry forward capital losses
incurred in taxable years beginning after the date of enactment for an
unlimited period. However, any losses incurred during those future taxable
years will be required to be utilized prior to the losses incurred in
pre-enactment taxable years, which carry an expiration date. As a result of
this ordering rule, pre-enactment capital loss carryforwards may be more
likely to expire unused. Additionally, post-enactment capital losses that
are carried forward will retain their character as either short-term or
long-term losses rather than being considered all short-term as under
previous law.
The Funds indicated below had expired capital loss carryforwards in the year
ended March 31, 2016:
CAPITAL LOSS
CARRYFORWARD
FUND EXPIRED
---- ------------
U.S. Government Securities. $ --
Strategic Bond............. --
Flexible Credit............ 1,874,057
Under the current law, capital losses realized after October 31 and late
year ordinary losses may be deferred and treated as occurring on the first
day of the following year. For the fiscal year ended March 31, 2016, the
Funds elected to defer late year ordinary losses and post October capital
losses as follows:
DEFERRED DEFERRED
DEFERRED POST-OCTOBER POST-OCTOBER
LATE YEAR SHORT-TERM LONG-TERM
FUND ORDINARY LOSS CAPITAL LOSS CAPITAL LOSS
---- ------------- ------------ ------------
U.S. Government Securities............. $ -- $ 27,620 $ 517,775
Strategic Bond......................... 1,517,537 2,616,057 8,247,774
Flexible Credit........................ -- 1,418,217 1,719,068
79
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
For the period ended March 31, 2016, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net paydown adjustments, amortization of discount/premium, treatment
of litigation payments, expiring capital loss carryforwards and treatment of
foreign currency to the components of net assets as follows:
ACCUMULATED ACCUMULATED
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED
FUND INCOME (LOSS) GAIN (LOSS) CAPITAL PAID-IN
---- -------------- ------------- ---------------
U.S. Government Securities. $1,796,472 $(1,796,316) $ (156)
Strategic Bond............. (509,034) 509,034 --
Flexible Credit............ 233,201 1,640,851 (1,874,052)
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:
AGGREGATE AGGREGATE UNREALIZED
UNREALIZED UNREALIZED GAIN/(LOSS) COST OF
FUND GAIN LOSS NET INVESTMENTS
---- ---------- ------------ ------------ ------------
U.S. Government Securities....... $8,779,149 $ (2,031,947) $ 6,747,202 $181,177,532
Strategic Bond................... 8,311,780 (24,771,669) (16,459,889) 415,850,642
Flexible Credit Bond............. 2,740,804 (12,986,327) (10,245,523) 291,086,628
Note 7. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
U.S. GOVERNMENT SECURITIES FUND
------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- ------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 2016 MARCH 31, 2015 JANUARY 27, 2015+
------------------------- ------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ---------- ------------
Shares
sold(1)(2).... 3,180,760 $ 30,402,860 3,831,245 $ 36,906,014 63,229 $ 605,716
Shares
issued
in
merger#....... -- -- 10,077,104 97,317,280 945,859 9,136,498
Reinvested
dividends..... 270,193 2,586,420 213,308 2,057,492 3,369 32,429
Shares
redeemed(1)(2) (6,403,106) (61,225,580) (6,175,600) (59,297,986) (1,384,324) (13,444,429)
----------- ------------ ----------- ------------ ---------- ------------
Net
increase
(decrease).... (2,952,153) $(28,236,300) 7,946,057 $ 76,982,800 (371,867) $ (3,669,786)
=========== ============ =========== ============ ========== ============
U.S. GOVERNMENT SECURITIES FUND
----------------------------------------------------
CLASS C
----------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
MARCH 31, 2016 MARCH 31, 2015
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
Shares
sold.......... 2,452,847 $ 23,409,209 352,307 $ 3,393,240
Shares
issued
in
merger#....... -- -- 1,956,484 18,879,830
Reinvested
dividends..... 25,490 243,879 13,622 131,560
Shares
redeemed...... (1,643,682) (15,692,131) (627,961) (6,060,572)
----------- ------------ ----------- ------------
Net
increase
(decrease).... 834,655 $ 7,960,957 1,694,452 $ 16,344,058
=========== ============ =========== ============
STRATEGIC BOND
--------------------------------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, 2016 MARCH 31, 2015 MARCH 31, 2016 MARCH 31, 2015
------------------------- ------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Shares
sold(3)(4).... 11,811,127 $ 39,450,903 19,143,787 $ 67,456,885 1,109,451 $ 3,647,483 1,352,463 $ 4,771,995
Reinvested
dividends..... 2,121,593 7,060,743 2,285,858 8,067,498 287,331 954,645 301,291 1,063,953
Shares
redeemed(3)(4) (27,771,848) (93,474,978) (26,532,888) (92,825,598) (3,308,675) (11,047,375) (3,429,949) (12,094,118)
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease).... (13,839,128) $(46,963,332) (5,103,243) $(17,301,215) (1,911,893) $ (6,445,247) (1,776,195) $ (6,258,170)
=========== ============ =========== ============ ========== ============ ========== ============
80
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
STRATEGIC BOND
------------------------------------------------------------------------------------------------------
CLASS C CLASS W
---------------------------------------------------- ------------------------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED JANUARY 29, 2015@
MARCH 31, 2016 MARCH 31, 2015 MARCH 31, 2016 THROUGH MARCH 31, 2015
------------------------- ------------------------- ------------------------ ----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ---------- ------------ --------- -----------
Shares
sold...... 4,799,228 $ 15,900,642 7,003,618 $ 24,755,006 9,165,702 $ 31,407,808 4,495,707 $15,562,006
Reinvested
dividends. 1,188,650 3,965,886 1,129,436 4,000,084 253,845 842,281 7,382 25,765
Shares
redeemed.. (12,615,217) (42,009,648) (11,371,270) (40,177,422) (4,726,445) (15,653,382) (10,304) (35,885)
----------- ------------ ----------- ------------ ---------- ------------ --------- -----------
Net
increase
(decrease) (6,627,339) $(22,143,120) (3,238,216) $(11,422,332) 4,693,102 $ 16,596,707 4,492,785 $15,551,886
=========== ============ =========== ============ ========== ============ ========= ===========
--------
(1)For the year ended March 31, 2015, includes automatic conversion of 21,005
shares of Class B shares in the amount of $201,042 to 21,009 shares of Class
A shares in the amount of $201,042.
(2)For the year ended March 31, 2015, includes the conversion of 593,059 shares
of Class B shares in the amount of $5,776,391 to 593,668 shares of Class A
shares in the amount of $5,776,391 relating to the conversion of Class B
shares on January 27, 2015.
(3)For the year ended March 31, 2016, includes automatic conversion of 239,551
shares of Class B shares in the amount of $798,621 to 239,551 shares of
Class A shares in the amount of $798,621.
(4)For the year ended March 31, 2015, includes automatic conversion of 371,070
shares of Class B shares in the amount of $1,309,413 to 371,070 shares of
Class A shares in the amount of $1,309,413
+ See Note 1
# See Note 2
@ Commencement of operations.
FLEXIBLE CREDIT FUND
-------------------------------------------------------------------------------
CLASS A CLASS B
---------------------------------------------------- -------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED PERIOD ENDED
MARCH 31, 2016 MARCH 31, 2015 JANUARY 27, 2015+
------------------------- ------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ----------- ------------
Shares
sold(1)(2).... 28,006,173 $ 94,181,643 28,174,315 $ 97,646,255 410,799 $ 1,457,988
Reinvested
dividends..... 1,280,817 4,286,740 831,116 2,923,018 71,262 253,385
Shares
redeemed(1)(2) (27,862,342) (94,089,799) (11,868,733) (41,693,769) (4,132,646) (14,417,561)
----------- ------------ ----------- ------------ ----------- ------------
Net
increase
(decrease).... 1,424,648 $ 4,378,584 17,136,698 $ 58,875,504 (3,650,585) $(12,706,188)
=========== ============ =========== ============ =========== ============
FLEXIBLE CREDIT FUND
--------------------------------------------------------------------------------------------------------
CLASS C CLASS W
---------------------------------------------------- --------------------------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 1, 2014@
MARCH 31, 2016 MARCH 31, 2015 MARCH 31, 2016 THROUGH MARCH 31, 2015
------------------------- ------------------------- ------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------ ----------- ------------ ---------- -----------
Shares
sold.......... 11,931,449 $ 40,650,007 6,133,326 $ 21,431,596 34,047,527 $115,125,832 5,079,276 $17,617,248
Reinvested
dividends..... 448,842 1,510,779 274,366 971,877 377,753 1,259,129 48,605 168,265
Shares
redeemed...... (6,713,380) (22,403,219) (1,839,787) (6,483,464) (10,903,475) (36,221,129) (1,195,835) (4,147,014)
----------- ------------ ----------- ------------ ----------- ------------ ---------- -----------
Net
increase
(decrease).... 5,666,911 $ 19,757,567 4,567,905 $ 15,920,009 23,521,805 $ 80,163,832 3,932,046 $13,638,499
=========== ============ =========== ============ =========== ============ ========== ===========
--------
(1)For the year ended March 31, 2015, includes automatic conversion of 162,884
shares of Class B shares in the amount of $574,439 to 163,300 shares of
Class A shares in the amount of $574,439.
(2)For the year ended March 31, 2015, includes the conversion of 469,743 shares
of Class B shares in the amount of $1,611,218 to 471,116 shares of Class A
shares in the amount of $1,611,218 relating to the conversion of Class B
shares on January 27, 2015.
@ Commencement of Operations.
+ See Note 1
Note 8. Line of Credit
The Trust, along with certain other funds managed by the Adviser, has access
to a $75 million committed unsecured line of credit and a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an annual basis with State Street Bank and Trust
Company, the Trust's custodian. Interest is currently payable on the
committed line of credit at the higher of the Federal Funds Rate (but not
less than zero) plus 125 basis points or the One-Month London Interbank
Offered Rate (but not less than zero) plus 125 basis points and State Street
Bank and Trust Company's discretionary bid rate on the uncommitted line of
credit. There is also a commitment fee of 20 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. Borrowings under
the line of credit will commence when the respective Fund's cash shortfall
exceeds $100,000.
81
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
For the year ended March 31, 2016, the following Funds had borrowings:
AVERAGE WEIGHTED
DAYS INTEREST DEBT AVERAGE
FUND OUTSTANDING CHARGES UTILIZED INTEREST
---- ----------- -------- ---------- --------
Flexible Credit. 25 $1,910 $1,810,394 1.49%
At March 31, 2016, there were no borrowings outstanding.
Note 9. 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 period
ended March 31, 2016, none of the Funds participated in this program.
Note 10. 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.
The following amounts for the Retirement Plan Liabilities are included in
the Trustees' fees and expenses payable line on the Statements of Assets and
Liabilities and the amounts for the Retirement Plan Expenses are included in
the Trustees' fees and expenses line on the Statements of Operations.
AS OF MARCH 31, 2016
- -----------------------------------------------
RETIREMENT PLAN RETIREMENT PLAN RETIREMENT PLAN
FUND LIABILITY EXPENSE PAYMENTS
---- --------------- --------------- ---------------
U.S. Government Securities............. $-- $-- $110
Strategic Bond......................... -- -- 51
Flexible Credit........................ -- -- 31
82
SUNAMERICA INCOME FUNDS
NOTES TO FINANCIAL STATEMENTS -- MARCH 31, 2016 -- (CONTINUED)
Note 11. Investment Concentration
The Flexible Credit 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 Flexible Credit Fund and Strategic Bond Fund invest in participations
and assignments, or act as a party to the primary lending syndicate of a
variable rate senior loan interest to United States corporations,
partnerships, and other entities. If the lead lender in a typical lending
syndicate becomes insolvent, enters receivership or, if not FDIC insured,
enters into bankruptcy, a Fund may incur certain costs and delays in
receiving payment, or may suffer a loss of principal and/or interest. When a
Fund purchases a participation of a senior loan interest, the Fund typically
enters into a contractual agreement with the lender or other third party
selling the participation but not with the borrower directly. As such, a
Fund is subject to the credit risk of the borrower, selling participant,
lender or other persons positioned between the Funds and the borrower.
Each 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, a 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 Fund's concentration
in such investments, it may be subject to risks associated with U.S.
Government agencies or instrumentalities.
83
SUNAMERICA INCOME FUNDS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of SunAmerica Income Funds
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of each of the three
funds constituting SunAmerica Income Funds (the "Trust") at March 31, 2016, the
results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended,
in conformity with accounting principles generally accepted in the United
States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at March 31, 2016 by correspondence with the custodian and
brokers, and the application of alternative auditing procedures where
securities purchased had not been received, provide a reasonable basis for our
opinion expressed above.
PricewaterhouseCoopers LLP
Houston, Texas
May 27, 2016
84
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2016 -- (UNAUDITED)
APPROVAL OF THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND
SUBADVISORY AGREEMENT
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") and Newfleet Asset Management, LLC
("Newfleet," and together with 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, 2016 at an in-person meeting held on June 2,
2015 (the "Meeting"). The Trust currently consists of the following three
separate Funds: SunAmerica Flexible Credit Fund ("Flexible Credit 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 (the "Subadvisory Agreement" and
together with the Advisory Agreement, the "Agreements") for a one-year period
ending June 30, 2016.1
In accordance with Section 15(c) of the 1940 Act, the Board requested, and
SunAmerica and PineBridge provided, materials relating to the Board's
consideration of whether to approve the continuation of the Agreements with
respect to SunAmerica and PineBridge. 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 PineBridge; (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 PineBridge, 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 PineBridge.
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.
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
--------
1 At an in-person meeting of the Board of Trustees on June 3, 2014, the Board
approved the Subadvisory Agreement between SunAmerica, on behalf of the
Flexible Credit Fund, and Newfleet for an initial term ending on June 30,
2016. Therefore, the Board did not consider the Subadvisory Agreement with
respect to the Flexible Credit Fund at the Meeting.
85
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
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,
2015, SunAmerica managed, advised and/or administered approximately $74.7
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 PineBridge to the Strategic Bond Fund. The Board observed that PineBridge is
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 the Fund, subject to the oversight and review of
SunAmerica. The Board reviewed PineBridge'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 Fund, in addition to
current and projected staffing levels and compensation practices, and
concluded, based on its experience with PineBridge, that PineBridge: (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 Agreement; and
(iii) has been responsive to requests of the Board and of SunAmerica. In
addition, the Board considered PineBridge's code of ethics and risk management
process. The Board further observed that PineBridge has developed internal
policies and procedures for monitoring compliance with the investment
objectives, policies and restrictions of the Fund as set forth in the Fund's
Prospectus. The Board also reviewed PineBridge's compliance and regulatory
history and noted that there were no material legal, regulatory or compliance
issues that would potentially impact PineBridge from effectively serving as
Subadviser to the Fund. The Board concluded that the nature and extent of
services provided by PineBridge under the Subadvisory Agreement were reasonable
and appropriate in relation to the subadvisory fee and that the quality of
services continues 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.
The Board noted that performance information was for the periods ended
March 31, 2015. 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.
U.S. Government Securities Fund. The Board considered that the Fund's
performance was above the median of its Peer Group and Peer Universe for the
one-year period and below the median of its Peer Group and Peer Universe for
the three- and five-year periods. The Board also considered that the Fund
underperformed its Lipper Index for the one-, three- and five-year periods. The
Board considered that a new management team within SunAmerica assumed
responsibility for day-to-day management of the Fund, effective July 2014. The
Board noted management's discussion of the Fund's performance, including
continued monitoring of the Fund and improved performance over the short-term,
and concluded that the Fund's performance was being addressed.
86
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
Flexible Credit Fund. The Board considered that the Fund's performance was
equal to the median of its Peer Group for the one-year period and above the
median of its Peer Group for the three- and five-year periods. The Board
further considered that the Fund's performance was above the median of its Peer
Universe for the one-, three- and five-year periods and that the Fund
outperformed its Lipper Index for the one- and three-year periods. The Board
noted management's discussion of the Fund's performance and that effective
October 1, 2014, the Fund changed its name and certain of the Fund's principal
investment strategies and techniques, and Newfleet was appointed as the
subadviser to the Fund. The Board concluded that the Fund's performance was
satisfactory.
Strategic Bond Fund. The Board considered that the Fund's performance was above
the median of its Peer Group for the one-year period, equal to the median of
its Peer Group for the three-year period, and below the median of its Peer
Group for the five-year period. The Board further considered that the Fund's
performance was above the median of its Peer Universe for the one-, three- and
five-year periods and that the Fund outperformed its Lipper Index for the
one-year period and underperformed its Lipper Index for the 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 effective July 29, 2014, and concluded that the
Fund's performance was satisfactory.
Consideration of the Management Fees and Subadvisory Fee and the Cost of the
Services and Profits to be Realized by SunAmerica and PineBridge 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 PineBridge pursuant to the Subadvisory
Agreement. 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,
PineBridge or their affiliates in connection with providing such services to
the Funds.
To assist in analyzing the reasonableness of the management fee for each of the
Funds, the Board received reports independently prepared by Lipper. The reports
showed comparative fee information for each Fund's Peer Group and/or Peer
Universe as determined by Lipper, including rankings within each category. In
considering the reasonableness of the management fee to be paid by each Fund to
SunAmerica, the Board reviewed a number of expense comparisons, including:
(i) contractual and actual management fees; and (ii) actual total operating
expenses. In considering each Fund's total operating expenses, the Board
analyzed the level of fee waivers and expense reimbursements and the net
expense caps contractually agreed upon by SunAmerica with respect to each Fund.
The Board further considered that, unlike the funds in 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 fee 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 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 PineBridge pursuant to the Subadvisory Agreement. To assist in
analyzing the reasonableness of the subadvisory fee, the Board received a
report independently prepared by Lipper. The report showed comparative fee
information of the Strategic Bond Fund's Peer Group that the Board used as a
guide to
87
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
help assess the reasonableness of the subadvisory fee. The Board noted that
Peer Group information as a whole was useful in assessing whether PineBridge
was providing services at a cost that was competitive with other similar funds.
The Board also considered that the subadvisory fee is paid by SunAmerica out of
its management 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 subadvisory fee paid out by
SunAmerica and the amount of the management fee which it retained and
determined that these amounts were reasonable in light of the services
performed by SunAmerica and PineBridge, respectively.
The Board also considered advisory fees received by PineBridge with respect to
other mutual funds and accounts with similar investment strategies to the Fund.
The Board then noted that the subadvisory fee paid by SunAmerica to PineBridge
was reasonable as compared to fees PineBridge receives for other mutual funds
and accounts for which it serves as adviser or subadviser.
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 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.
Flexible Credit 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.
Strategic 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.
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 PineBridge and its affiliates
and considered whether PineBridge had the financial resources necessary to
attract and retain high quality investment management personnel and to provide
a high quality of services.
The Board concluded that SunAmerica and PineBridge 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 fee 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
88
SUNAMERICA INCOME FUNDS
APPROVAL OF ADVISORY AGREEMENTS -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
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 limiting total
fees 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 Agreement included breakpoints, but did
not review specific information regarding whether there have been economies of
scale with respect to PineBridge's management of the Strategic Bond Fund
because it regards that information as less relevant at the subadviser level.
Rather, the Board considered information regarding economies of scale in the
context of the renewal of the Advisory Agreement.
Other Factors. In consideration of the Agreements, the Board also received
information regarding SunAmerica's and PineBridge's brokerage and soft dollar
practices. The Board considered that SunAmerica and PineBridge are responsible
for decisions to buy and sell securities for the applicable Funds, selection of
broker-dealers and negotiation of commission rates. The Board noted that it
receives reports from SunAmerica and from an independent third party which
include information on brokerage commissions and execution throughout the year.
The Board also considered the benefits SunAmerica and PineBridge derive from
their soft dollar arrangements, including arrangements under which brokers
provide brokerage and/or research services to SunAmerica and/or Pinebridge 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 PineBridge 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
PineBridge 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, 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 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 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.
89
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2016 -- (UNAUDITED)
The following table contains basic information regarding the Trustees and
Officers who oversee operations of the Funds and other investment companies
within the Fund Complex.
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ----------- -------------- ----------------------------- ------------ -----------------------------
DISINTERESTED
TRUSTEES
Dr. Judith L. Craven Trustee 2001 to Retired. 77 Director, Sysco Corporation
Age: 70 present (1996 to present); Director,
Luby's Inc. (1998 to
present).
William F. Devin Trustee 2001 to Retired. 77 None
Age: 77 present
Richard W. Grant Trustee; 2011 to Retired. Prior to that, 28 None
Age: 70 Chairman present Attorney and Partner at
of the Morgan Lewis and Bockius
Board (1989 to 2011).
Stephen J. Gutman Trustee 1985 to Senior Vice President and 28 None
Age: 72 present Associate Broker, Corcoran
Group (real estate) (2002 to
present); President, SJG
Marketing, Inc. (2009 to
present).
William J. Shea Trustee 2004 to Executive Chairman, 28 Director, Boston Private
Age: 68 present Caliber ID, Inc. (formerly Financial Holdings (2004 to
Lucid, Inc.) (medical present); Chairman,
devices) (2007 to present); Demoullas Supermarkets
(1999 to present).
90
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* THE FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
------------------- ----------- -------------- ----------------------------- ------------ --------------------
INTERESTED TRUSTEE
Peter A. Harbeck(3) Trustee 1995 to President, CEO and 140 None
Age: 62 present Director, SunAmerica,
(1995 to present); Director,
AIG Capital Services, Inc.
("ACS") (1993 to present);
Chairman, Advisor Group,
Inc. (2004 to present).
OFFICERS
John T. Genoy President 2007 to Chief Financial Officer, N/A N/A
Age: 47 present SunAmerica (2002 to
present); Senior Vice
President, SunAmerica
(2003 to present); Chief
Operating Officer,
SunAmerica (2006 to
present).
Gregory R. Kingston Treasurer 2014 to Vice President, SunAmerica N/A N/A
Age: 50 present (2001 to present); Head of
Mutual Fund
Administration,
SunAmerica (2014 to
present).
Donna McManus Vice 2014 to Vice President, SunAmerica N/A N/A
Age: 55 President present (2014 to present); Managing
and Director, BNY Mellon
Assistant (2009 to 2014).
Treasurer
Shawn Parry Vice 2014 to Vice President, SAAMCo N/A N/A
Age: 43 President present (2014 to present); Assistant
and Vice President, SAAMCo
Assistant (2005 to 2014).
Treasurer
Gregory N. Bressler Secretary 2005 to Senior Vice President and N/A N/A
Age: 50 present General Counsel,
SunAmerica (2005 to
present).
James Nichols Vice 2006 to Director, President and N/A N/A
Age: 50 President present CEO, ACS (2006 to
present); Senior Vice
President, SunAmerica
(2002 to present).
91
SUNAMERICA INCOME FUNDS
TRUSTEE AND OFFICER INFORMATION -- MARCH 31, 2016 -- (UNAUDITED)
(CONTINUED)
NUMBER OF
TERM OF FUNDS IN
POSITION(S) OFFICE AND FUND COMPLEX
NAME, ADDRESS HELD WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY OTHER TRUSTEESHIP(S)
AND DATE OF BIRTH* FUND TIME SERVED(4) DURING PAST 5 YEARS TRUSTEE(1) HELD BY TRUSTEE(2)
-------------------- ------------- -------------- --------------------------- ------------ --------------------
Katherine Stoner Vice 2011 to Vice President, SunAmerica N/A N/A
Age: 59 President present (2011 to Present); Vice
and Chief President, The Variable
Compliance Annuity Life Insurance
Officer Company ("VALIC"),
("CCO") Western National Life
Insurance Company
("WNL") and American
General Distributors, Inc.
(2006 to 2013); Deputy
General Counsel and
Secretary, VALIC and
WNL (2007 to 2011); Vice
President, VALIC Financial
Advisors, Inc. (2010 to
2011) and VALIC
Retirement Services
Company (2010 to Present).
Kathleen D. Fuentes Chief Legal 2013 to Vice President and Deputy N/A N/A
Age: 47 Officer and present General Counsel,
Assistant SunAmerica (2006 to
Secretary present).
Matthew J. Hackethal Anti- 2006 to Chief Compliance Officer, N/A N/A
Age: 44 Money present SunAmerica (2006 to
Laundering present).
Compliance
Officer
--------
* The business address for each Trustee and Officer is Harborside Financial
Center, 3200 Plaza 5, Jersey City, NJ 07311-4992.
(1)The term "Fund Complex" means two or more registered investment companies
that hold themselves out to investors as related companies for purposes of
investment services or have a common investment adviser or an investment
adviser that is an affiliated person of the investment adviser. The "Fund
Complex" includes the Trust (3 funds), SunAmerica Equity Funds (2 funds),
SunAmerica Series, Inc. (6 portfolios), SunAmerica Money Market Funds, Inc.
(1 fund); Anchor Series Trust (8 portfolios), SunAmerica Senior Floating
Rate Fund, Inc. (1 fund), SunAmerica Series Trust (43 portfolios), VALIC
Company I (34 funds), VALIC Company II (15 funds), Seasons Series Trust
(20 portfolios) and SunAmerica Specialty Series (7 funds).
(2)Trusteeships of companies required to report to the Commission under the
Securities Exchange Act of 1934 (i.e. "public companies") or other
investment companies regulated under the 1940 Act.
(3)Mr. Harbeck is an "interested person" of the Funds, as defined within the
1940 Act, because he is an officer and a director of the Adviser and a
director of the principal underwriter of the Trust.
(4)Trustees serve until their successors are duly elected and qualified,
subject to the Trustees' retirement plan as discussed in Note 10 of the
financial statements. Each officer will hold office for an indefinite term,
until the date he or she resigns or retires or until his/her successor is
duly elected and qualifies.
Additional information concerning the Trustees and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
92
SUNAMERICA INCOME FUNDS
SHAREHOLDER TAX INFORMATION -- MARCH 31, 2016 -- (UNAUDITED)
Certain tax information regarding the Fund is required to be provided to
shareholders based upon each Fund's income and distributions for the taxable
year ended March 31, 2016. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calendar year ending December 31, 2016. The information necessary to
complete your income tax returns will be included with your Form 1099-DIV which
will be sent to shareholders in early 2017.
For the year ended March 31, 2016, the Funds paid the following long-term
capital gains dividends along with percentage of ordinary income dividends that
qualified for the 70% dividends received deduction for corporations:
NET QUALIFYING % FOR THE
LONG-TERM 70% DIVIDENDS
CAPITAL GAINS RECEIVED DEDUCTION
------------- --------------------
U.S. Government Securities Fund Class A. $-- --%
U.S. Government Securities Fund Class C. -- --
Strategic Bond Fund Class A............. -- 0.26
Strategic Bond Fund Class B............. -- 0.26
Strategic Bond Fund Class C............. -- 0.26
Strategic Bond Fund Class W............. -- 0.26
Flexible Credit Fund Class A............ -- 0.19
Flexible Credit Fund Class C............ -- 0.19
Flexible Credit Fund Class W............ -- 0.19
For the year ended March 31, 2016, certain dividends paid by the Strategic Bond
Fund and Flexible Credit Fund may be subject to a maximum tax rate of 15%, as
provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the
distributions paid during the fiscal year, the following represents the maximum
amount that may be considered qualified dividend income:
AMOUNT
-------
Strategic Bond Fund.. $49,846
Flexible Credit Fund. 94,453
93
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (unaudited)
As required by the Securities and Exchange Commission, the graphs on the
following pages compare the performance of a $10,000 investment in the
SunAmerica Income Funds' portfolios to a similar investment in an index. Please
note that "inception," as used herein, reflects the date on which a specific
class of shares commenced operations. It is important to note that the
SunAmerica Income Funds are professionally managed mutual funds, while the
indices are not available for investment and are unmanaged. The comparison is
shown for illustrative purposes only. The graphs present the performance of the
largest class of that particular Fund. The performance of the other classes
will vary based upon the difference in sales charges and fees assessed to
shareholders of that class.
94
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA U.S. GOVERNMENT SECURITIES FUND
The SunAmerica U.S. Government Securities Fund Class A shares returned 0.33%
(before maximum sales charge) for the 12-month period ended March 31, 2016. The
Fund posted absolute gains but trailed its benchmark, the Bank of America
Merrill Lynch ("BofA ML") U.S. Treasury Master Index/*/, which returned 2.42%
during the same period.
The U.S. Treasury market performed positively during the annual period. Global
turmoil, a global economic slowdown and the relative safety of U.S. Treasuries
fueled demand for U.S. Treasuries. The Federal Reserve (the "Fed") maintained a
federal funds target rate of 0% to 0.25% until its meeting on December 14,
2015, when it made its initial interest rate hike to a target rate of 0.25% to
0.50%.
Amid this backdrop, duration and yield curve positioning within the U.S.
Treasury sector overall detracted from the Fund's results during the annual
period. The Fund held a shorter duration position than the BofA ML U.S.
Treasury Master Index for much of the annual period, which detracted as
interest rates in the intermediate segment of the yield curve generally
declined. Security selection in the intermediate segment of the yield curve,
i.e., U.S. Treasury securities with 3-year to 10-year maturities, proved
prudent, contributing positively to relative results. However, having an
underweight exposure to the intermediate segment of the yield curve and
positioning on the shorter-term and longer-term ends of the yield curve
detracted. Having a sizable allocation to mortgage-backed securities,
especially GNMAs and those with lower coupon payments, also dampened relative
results, as mortgage-backed securities, which are not components of the BofA ML
U.S. Treasury Master Index, underperformed U.S. Treasuries during the annual
period. Allocations to U.S. Treasuries, GNMAs and U.S. agency securities
contributed positively, however, to the Fund's absolute performance.
At the end of the annual period, the Fund had a shorter duration than that of
the BofA ML U.S. Treasury Master Index in anticipation of the Fed increasing
interest rates further at some time in the next several months. At the end of
the annual period, the Fund had approximately 26% of its total net assets
invested in U.S. Treasuries, 42% in GNMAs, 18% in government-related agency
securities and 14% in cash and cash equivalents. The cash position was held
primarily in repurchase agreements.
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
U.S. Government guarantee applies only to the underlying securities of the
Fund's portfolio and not to the Fund shares. Interest rates and bond prices
typically move inversely to each other; therefore, as with any bond fund, the
value of your investment in this Fund may go up or down in response to changes
in interest rates.
*The Bank of America Merrill Lynch (BofA ML) U.S. Treasury Master Index tracks
the performance of U.S. dollar denominated sovereign debt publicly issued by
the U.S. government in its domestic market. Indices are not managed and an
investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
95
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in U.S. Government Securities Fund
Class A shares would have increased to $13,407. The same amount invested in
securities mirroring the performance of the BofA Merrill Lynch U.S. Treasury
Master Index would be valued at $15,836.
[CHART]
U.S. Government BofA Merrill Lynch
Date Securities Fund Class A/#/ U.S. Treasury Master Index/*/*/
---------- -------------------------- -------------------------------
3/31/2005 $ 9,522 $10,000
4/30/2005 9,696 10,173
5/31/2005 9,779 10,296
6/30/2005 9,808 10,359
7/31/2005 9,702 10,222
8/31/2005 9,845 10,384
9/30/2005 9,720 10,247
10/31/2005 9,615 10,169
11/30/2005 9,659 10,218
12/31/2005 9,789 10,322
1/31/2006 9,782 10,293
2/28/2006 9,804 10,309
3/31/2006 9,682 10,203
4/30/2006 9,610 10,161
5/31/2006 9,591 10,166
6/30/2006 9,614 10,198
7/31/2006 9,746 10,322
8/31/2006 9,900 10,473
9/30/2006 9,989 10,569
10/31/2006 10,046 10,623
11/30/2006 10,157 10,734
12/31/2006 10,073 10,646
1/31/2007 10,044 10,629
2/28/2007 10,219 10,805
3/31/2007 10,190 10,799
4/30/2007 10,237 10,855
5/31/2007 10,129 10,761
6/30/2007 10,076 10,755
7/31/2007 10,213 10,934
8/31/2007 10,340 11,106
9/30/2007 10,395 11,166
10/31/2007 10,481 11,253
11/30/2007 10,754 11,595
12/31/2007 10,754 11,610
1/31/2008 10,970 11,902
2/29/2008 11,034 12,032
3/31/2008 11,088 12,119
4/30/2008 10,945 11,914
5/31/2008 10,790 11,770
6/30/2008 10,866 11,868
7/31/2008 10,874 11,916
8/31/2008 11,032 12,066
9/30/2008 11,119 12,145
10/31/2008 11,043 12,127
11/30/2008 11,607 12,779
12/31/2008 11,993 13,232
1/31/2009 11,662 12,825
2/28/2009 11,599 12,755
3/31/2009 11,835 13,043
4/30/2009 11,646 12,796
5/31/2009 11,529 12,666
6/30/2009 11,543 12,642
7/31/2009 11,625 12,692
8/31/2009 11,718 12,810
9/30/2009 11,824 12,911
10/31/2009 11,835 12,904
11/30/2009 11,926 13,086
12/31/2009 11,649 12,740
1/31/2010 11,788 12,942
2/28/2010 11,815 12,993
3/31/2010 11,746 12,882
4/30/2010 11,861 13,018
5/31/2010 12,075 13,242
6/30/2010 12,275 13,490
7/31/2010 12,302 13,581
8/31/2010 12,540 13,859
9/30/2010 12,444 13,859
10/31/2010 12,347 13,835
11/30/2010 12,303 13,740
12/31/2010 12,142 13,490
1/31/2011 12,050 13,490
2/28/2011 12,099 13,479
3/31/2011 12,113 13,471
4/30/2011 12,241 13,627
5/31/2011 12,409 13,842
6/30/2011 12,343 13,800
7/31/2011 12,533 14,052
8/31/2011 12,896 14,445
9/30/2011 13,150 14,677
10/31/2011 13,058 14,565
11/30/2011 13,172 14,672
12/31/2011 13,289 14,810
1/31/2012 13,299 14,877
2/29/2012 13,229 14,772
3/31/2012 13,123 14,619
4/30/2012 13,289 14,842
5/31/2012 13,483 15,114
6/30/2012 13,440 15,057
7/31/2012 13,567 15,218
8/31/2012 13,549 15,197
9/30/2012 13,505 15,145
10/31/2012 13,463 15,119
11/30/2012 13,498 15,206
12/31/2012 13,455 15,131
1/31/2013 13,305 14,987
2/28/2013 13,367 15,076
3/31/2013 13,364 15,092
4/30/2013 13,509 15,251
5/31/2013 13,154 14,944
6/30/2013 12,933 14,756
7/31/2013 12,847 14,727
8/31/2013 12,785 14,648
9/30/2013 12,830 14,760
10/31/2013 12,902 14,841
11/30/2013 12,823 14,777
12/31/2013 12,719 14,624
1/31/2014 12,914 14,857
2/28/2014 12,971 14,904
3/31/2014 12,948 14,862
4/30/2014 13,033 14,954
5/31/2014 13,133 15,118
6/30/2014 13,137 15,094
7/31/2014 13,128 15,071
8/31/2014 13,313 15,255
9/30/2014 13,234 15,158
10/31/2014 13,378 15,323
11/30/2014 13,451 15,464
12/31/2014 13,447 15,504
1/31/2015 13,592 15,951
2/28/2015 13,526 15,672
3/31/2015 13,587 15,775
U.S. GOVERNMENT SECURITIES FUND
Class A@ Class C
----------------- ------------------ ------------------
Average Average
Annual Cumulative Annual Cumulative
Return Return+ Return Return+
----------------- ------- ---------- ------- ----------
1 Year Return -4.48% 0.33% -1.21% -0.22%
-------------------------------------------------------
5 Year Return 1.41% 12.54% 1.75% 9.07%
-------------------------------------------------------
10 Year Return 2.98% 40.80% 2.82% 32.11%
-------------------------------------------------------
Since Inception* 4.31% 170.99% 3.58% 80.84%
-------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 10/1/93; Class C: 06/1/99.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class C shares has been deducted, as applicable.
@ As of the close of business on December 2, 2014, Class B shares of the Fund
were no longer offered to new or existing shareholders, except that
dividends and/or capital gain distributions received by a shareholder from
the Fund continued to be automatically reinvested in additional Class B
shares of the Fund, at the net asset value per share in effect on the
payable date, unless the shareholder had elected to receive them in cash or
automatically reinvest them in any retail fund distributed by AIG Capital
Services, Inc. As of the close of business on January 27, 2015, all
outstanding Class B shares of the Funds were converted to Class A shares.
For the 12-month period ending March 31, 2016, the SunAmerica U.S. Government
Securities Fund Class A returned -4.48%, compared to 2.42% for the BofA Merrill
Lynch U.S. Treasury Master Index. (The performance table and graph do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class C: 1.00% CDSC. The
fund's daily net asset values are not guaranteed and shares are not insured by
the FDIC, the Federal Reserve Board or any other agency. The investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be higher or lower than the original cost. Current
performance may be higher or lower than that shown. Performance as of the most
recent month end is available at www.safunds.com.
** The BofA Merrill Lynch U.S. Treasury Master Index tracks the performance of
U.S. dollar denominated sovereign debt publicly issued by the U.S.
government in its domestic market. Indices are not managed and an investor
cannot invest directly into an index.
96
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA STRATEGIC BOND FUND
The SunAmerica Strategic Bond Fund Class A shares returned -2.32% (before
maximum sales charge) for the 12-month period ended March 31, 2016. The Fund
underperformed its benchmark, the Barclays U.S. Aggregate Bond Index/*/, which
returned 1.96% during the same period. The Fund also underperformed the LIBOR
3-Month Index*, a widely recognized benchmark of interest rate performance,
which returned 0.41% for the same annual period.
The Fund's underperformance relative to its benchmark can be attributed
primarily to positioning among risk asset classes, as credit spreads, or yield
differentials to U.S. Treasuries, widened in most spread, or non-U.S. Treasury,
sectors. For example, U.S. high yield bond spreads, as measured by the
option-adjusted spread of the Barclays U.S. Corporate High Yield Index/*/,
widened 190 basis points+ during the annual period, leading to an
underperformance of duration-matched U.S. Treasuries of 6.14%. Within
investment grade corporate bonds, index spreads widened 29 basis points during
the annual period, leading to an underperformance of duration-matched U.S.
Treasuries of 1.72%. The Fund maintained overweight allocations to these two
sectors, as well as to emerging markets debt, and thus the Fund underperformed
the Barclays U.S. Aggregate Bond Index for the 12 months ended March 31, 2016.
Within the high yield bond sector, underweight allocations to commodity-related
energy, metals & mining (especially the coal industry), and basic industry
market segments contributed positively to Fund results, as spreads moved
sharply wider due to lower oil and other commodity prices. The Fund benefited
from overweight allocations to real estate investment trusts, consumer
non-cyclicals, brokerage and other industrial market segments. Underweight
exposure to the capital goods and banking industries and overweight exposure to
consumer cyclicals detracted. Within the investment grade corporate bond
sector, an overweight to financial issuers benefited Fund performance, as these
names maintained strong liquidity and appeared less susceptible to the merger
and acquisition risk present in many industrial market segments. An overweight
to basic industry names and underweights to consumer non-cyclicals and
supranational market segments detracted.
Security selection overall detracted from the Fund's returns relative to the
Barclays U.S. Aggregate Bond Index during the annual period. Within the high
yield bond sector, security selection among basic industry, banking,
transportation and capital goods names contributed positively. However, this
did not fully offset the negative impact of security selection within the
energy, consumer cyclicals, consumer non-cyclicals and finance company market
segments. Within the investment grade corporate bond sector, security selection
proved effective among consumer non-cyclicals, electric utilities and consumer
cyclicals names. However, this did not fully offset the detracting effect of
security selection within the energy, banking and technology market segments.
Within the emerging markets debt sector, security selection among Russian,
Chinese and South African names was beneficial but was more than offset by
security selection among Colombian and Brazilian issues, which detracted.
Within the non-U.S. dollar debt sector, security selection among insurance and
banking issues was strong but was more than offset by the negative impact of
security selection among basic industry names. Within the securitized sector,
effective security selection among conventional 30-year agency mortgage-backed
securities more than offset the relatively muted effect of security selections
made in other areas.
While the Fund remained U.S.-centric, portions of the Fund were allocated to
non-U.S. dollar denominated sovereign and emerging market bonds, which meant
country exposure had an impact on results during the annual period. Outside of
the U.S., positions in the sovereign debt of Venezuela and Croatia were
positive contributors to performance. Positions in the sovereign debt of
Zambia, Peru and Mexico detracted.
The Fund began the annual period with target allocations of 35% to investment
grade corporate bonds, 5% to securitized products, 40% to high yield bonds, 20%
to emerging markets debt and 0% to non-U.S. dollar denominated sovereign debt.
In June 2015, we reduced the Fund's target allocation to high yield bonds to
35% and increased its target allocation to investment grade corporate bonds to
40%. Later that month, we reduced the target weight to emerging markets debt to
15% and increased its target weight to investment grade corporate bonds to 45%.
This reduced the Fund's risk profile based on our view that volatility may
return to the market as investors gauged the prospect of a Greek exit from the
European Monetary Union. In September 2015, we reduced the Fund's target
allocation to emerging markets debt to 10% and increased its target allocation
to investment grade corporate bonds to 50% based on
97
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
our view that investors might see further stress in the sovereign and corporate
debt of emerging economies. In late February 2016, we reduced the Fund's
investment grade corporate bond target allocation to 45% in favor of
securitized products, as we sought higher quality and lower duration. In March
2016, as we sought to increase the Fund's credit quality further, we reduced
its target allocation to investment grade corporate bonds and high yield bonds
to 40% and 30%, respectively, in favor of securitized products. With these
changes, the Fund ended the annual period on March 31, 2016 with target
allocations of 40% to investment grade corporate bonds, 20% to securitized
products, 30% to high yield bonds, 10% to emerging markets debt and 0% to
non-U.S. dollar denominated sovereign debt.
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates. High-yield bonds tend
to have lower interest rate risk than higher-quality bonds of similar maturity
but carry greater credit and default risk. Investing internationally involves
special risks, such as currency fluctuations and economic and political
instability.
*The BARCLAYS U.S. AGGREGATE BOND INDEX represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for government
and corporate securities, mortgage pass-through securities and asset-backed
securities. The LIBOR 3-MONTH INDEX is a benchmark interest rate that some of
the world's leading banks charge each other for short-term loans. It serves as
the first step to calculating interest rates on various loans throughout the
world and is published each day in five currencies: the Swiss franc, the euro,
the pound sterling, the Japanese yen, and the U.S. dollar. The BARCLAYS U.S.
CORPORATE HIGH YIELD INDEX is comprised of fixed-rate, publicly issued,
non-investment grade debt. Indices are not managed and an investor cannot
invest directly into an index.
+A basis point is 1/100/th/ of a percentage point.
Securities listed may or may not be a part of current Fund construction.
98
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares
would have increased to $15,217. The same amount invested in securities
mirroring the performance of the Barclays U.S. Aggregate Bond Index and the
LIBOR 3-Month Index would be valued at $16,128 and $11,609, respectively.
[CHART]
Strategic Barclays
Date Bond Fund Class A/#/ U.S. Aggregate Bond Index/*/*/
--------- --------------------- --------------------------------
3/31/2005 $ 9,534 $10,000
4/30/2005 9,577 10,135
5/31/2005 9,675 10,245
6/30/2005 9,799 10,301
7/31/2005 9,840 10,207
8/31/2005 9,991 10,338
9/30/2005 9,977 10,231
10/31/2005 9,850 10,150
11/30/2005 9,921 10,195
12/31/2005 10,054 10,292
1/31/2006 10,191 10,293
2/28/2006 10,258 10,327
3/31/2006 10,187 10,226
4/30/2006 10,259 10,207
5/31/2006 10,130 10,196
6/30/2006 10,114 10,218
7/31/2006 10,334 10,356
8/31/2006 10,498 10,515
9/30/2006 10,542 10,607
10/31/2006 10,673 10,677
11/30/2006 10,834 10,801
12/31/2006 10,851 10,738
1/31/2007 10,834 10,734
2/28/2007 10,964 10,899
3/31/2007 11,008 10,900
4/30/2007 11,113 10,959
5/31/2007 11,097 10,875
6/30/2007 10,989 10,843
7/31/2007 10,851 10,934
8/31/2007 10,898 11,068
9/30/2007 11,157 11,152
10/31/2007 11,337 11,252
11/30/2007 11,228 11,454
12/31/2007 11,275 11,486
1/31/2008 11,261 11,679
2/29/2008 11,243 11,696
3/31/2008 11,261 11,735
4/30/2008 11,409 11,711
5/31/2008 11,397 11,625
6/30/2008 11,255 11,616
7/31/2008 11,180 11,606
8/31/2008 11,173 11,716
9/30/2008 10,569 11,559
10/31/2008 9,329 11,286
11/30/2008 9,150 11,654
12/31/2008 9,513 12,088
1/31/2009 9,605 11,982
2/28/2009 9,482 11,936
3/31/2009 9,609 12,102
4/30/2009 10,124 12,160
5/31/2009 10,576 12,248
6/30/2009 10,780 12,318
7/31/2009 11,237 12,517
8/31/2009 11,407 12,646
9/30/2009 11,830 12,779
10/31/2009 11,926 12,842
11/30/2009 12,092 13,009
12/31/2009 12,132 12,805
1/31/2010 12,227 13,001
2/28/2010 12,277 13,049
3/31/2010 12,521 13,033
4/30/2010 12,728 13,169
5/31/2010 12,369 13,280
6/30/2010 12,581 13,488
7/31/2010 12,988 13,632
8/31/2010 13,130 13,807
9/30/2010 13,385 13,822
10/31/2010 13,642 13,871
11/30/2010 13,391 13,792
12/31/2010 13,546 13,643
1/31/2011 13,683 13,659
2/28/2011 13,813 13,693
3/31/2011 13,869 13,701
4/30/2011 14,124 13,874
5/31/2011 14,182 14,056
6/30/2011 14,036 14,014
7/31/2011 14,257 14,237
8/31/2011 13,951 14,445
9/30/2011 13,563 14,550
10/31/2011 14,036 14,565
11/30/2011 13,806 14,553
12/31/2011 14,028 14,713
1/31/2012 14,377 14,842
2/29/2012 14,597 14,839
3/31/2012 14,562 14,757
4/30/2012 14,737 14,921
5/31/2012 14,661 15,056
6/30/2012 14,792 15,062
7/31/2012 15,182 15,270
8/31/2012 15,273 15,280
9/30/2012 15,450 15,300
10/31/2012 15,543 15,331
11/30/2012 15,635 15,355
12/31/2012 15,720 15,333
1/31/2013 15,726 15,226
2/28/2013 15,771 15,302
3/31/2013 15,820 15,314
4/30/2013 16,132 15,469
5/31/2013 15,786 15,193
6/30/2013 15,258 14,958
7/31/2013 15,398 14,979
8/31/2013 15,225 14,902
9/30/2013 15,453 15,043
10/31/2013 15,729 15,165
11/30/2013 15,691 15,108
12/31/2013 15,770 15,023
1/31/2014 15,823 15,245
2/28/2014 16,095 15,326
3/31/2014 16,190 15,299
4/30/2014 16,334 15,429
5/31/2014 16,572 15,604
6/30/2014 16,671 15,612
7/31/2014 16,541 15,573
8/31/2014 16,735 15,745
9/30/2014 16,414 15,638
10/31/2014 16,514 15,792
11/30/2014 16,470 15,904
12/31/2014 16,287 15,919
1/31/2015 16,479 16,253
2/28/2015 16,623 16,100
3/31/2015 16,628 16,175
STRATEGIC BOND FUND
Class A Class B Class C Class W
----------------- ------------------ ------------------ ------------------ ------------------
Average Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -6.86% -2.32% -6.72% -2.97% -3.57% -2.63% -2.14% -2.14%
---------------------------------------------------------------------------------------------
5 Year Return 2.29% 17.46% 2.18% 13.27% 2.61% 13.78% N/A N/A
---------------------------------------------------------------------------------------------
10 Year Return 4.29% 59.93% 4.25% 51.62% 4.14% 49.98% N/A N/A
---------------------------------------------------------------------------------------------
Since Inception* 6.00% 287.74% 6.32% 284.82% 5.90% 253.13% -1.00% -1.17%
---------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94; Class
W: 01/29/15.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class B and Class C shares have been deducted, as applicable.
For the 12-month period ending March 31, 2016, the SunAmerica Strategic Bond
Fund Class A returned -6.86%, compared to 1.96% for the Barclays U.S. Aggregate
Bond Index and 0.41% for the LIBOR 3-Month Index. (The performance table and
graph do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent
Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund
convert automatically to Class A shares approximately eight years after
purchase. The fund's daily net asset values are not guaranteed and shares are
not insured by the FDIC, the Federal Reserve Board or any other agency. The
investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be higher or lower than the original
cost. Current performance may be higher or lower than that shown. Performance
as of the most recent month end is available at www.safunds.com.
** The Barclays U.S. Aggregate Bond Index represents securities that are
SEC-registered, taxable and dollar denominated. The index covers the U.S.
investment-grade fixed-rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and
asset-backed securities. Indices are not managed and an investor cannot
invest directly into an index.
***The LIBOR 3-Month Index is a benchmark interest rate that some of the
world's leading banks charge each other for short-term loans. It serves as
the first step to calculating interest rates on various loans throughout the
world and is published each day in five currencies: the Swiss franc, the
euro, the pound sterling, the Japanese yen, and the U.S. dollar.
99
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
SUNAMERICA FLEXIBLE CREDIT FUND
The SunAmerica Flexible Credit Fund Class A shares returned -0.93% (before
maximum sales charge) for the 12-month period ended March 31, 2016. The Fund
posted disappointing absolute returns but outperformed the Flexible Credit
Blended Benchmark (the "Blended Index"), composed 50% of the Barclays U.S. High
Yield 2% Issuer Capped Index/*/ and 50% of the S&P/LSTA Leveraged Loan
Index/*/, which returned -2.43% during the same period. The Fund underperformed
the BofA ML USD 3-Month LIBOR Constant Maturity Index*, a broad measure of
market performance, which returned 0.33% for the same annual period.
The Fund actively invests in high yield bonds and floating rate loans and has
the flexibility to allocate 0% to 100% of its portfolio to either sector of the
leveraged finance market. Under normal circumstances, at least 80% of the Fund
is invested in credit instruments, derivative instruments and exchange-traded
funds that provide investment exposure to credit instruments. Amid an
environment generally prone to risk aversion during the annual period ended
March 31, 2016, the Fund's allocation to high yield bonds drove negative
absolute returns. The high yield bond sector was weak through mid-February
2016, when the Federal Reserve (the "Fed") changed its tone to a more
conservative one, setting off a robust rally. However, the Fund's underweighted
allocation compared to the Blended Index in high yield bonds and its
overweighted exposure to floating rate loans - a gradual reversal in weightings
from the start of the annual period - helped the Fund outperform on a relative
basis, as floating rate loans performed relatively better than high yield bonds
during the annual period. Additionally, upgrades made in credit quality across
both the high yield bond and floating rate loan sectors helped relative
results, as higher-rated credits outperformed lower-rated credits during the
annual period.
From an industry perspective, allocation contributed positively to relative
results. Tactical underweights to two of the worst performing industries -
energy and metals & mining - within both the high yield bond and floating rate
loan sectors contributed significantly. The Fund's overweight to health care,
gaming and consumer cyclical services also boosted the Fund's relative results,
as these were among the best performing industries during the annual period.
These positive contributors were only partially offset by overweights to the
pharmaceuticals and environmental industries and underweights to finance
companies and the wirelines and wireless industries, which detracted.
Security selection generated mixed results. Effective issue selection in
independent energy, health care and technology was broadly offset by weaker
issue selection in the consumer products, midstream and construction machinery
industries. Among individual securities, our decision to overweight improving
credits, including Hilton Worldwide Finance, First Data and Argos Merger,
benefited the Fund, as these credits outperformed the Blended Index. Most of
the underperforming credits were tied to energy, such as Texas Competitive
Electric Holdings, EP Energy, Bonanza Creek Energy and NGL Energy Partners.
Other detractors were deteriorating credits, such as Clear Channel Worldwide
Holdings, which is heavily levered as a result of a debt-laden management
buyout from the last credit cycle.
A newly-established, albeit minimal, allocation to out-of-benchmark sectors,
including asset-backed securities, residential mortgage-backed securities and
emerging markets debt, contributed positively to the Fund's relative results as
well, since each of these sectors outpaced the Blended Index during the annual
period.
--------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
Interest rates and bond prices typically move inversely to each other;
therefore, as with any bond fund, the value of an investment in this Fund may
go up or down in response to changes in interest rates. High-yield bonds tend
to have lower interest-rate risk but may be subject to greater market
fluctuations and risk of default or loss of income and principal than
securities in higher rating categories. High-yield debt instruments carry a
greater default risk, may be more volatile, less liquid, more difficult to
value and more susceptible to adverse economic conditions or investor
perceptions than other debt instruments. Investments in floating rate loans
involve certain risks, including, among others risks of nonpayment of principal
and interest; collateral impairment; non-diversification and borrower industry
concentration; and lack of full liquidity.
*The BARCLAYS U.S. HIGH YIELD 2% ISSUER CAPPED INDEX is a component of the U.S.
Corporate High-Yield Bond Index, which covers the universe of fixed-rate,
non-investment grade corporate debt of issuers in non-emerging market
countries. It is not market capitalization-weighted and each issuer is capped
at 2% of the index. The S&P/LSTA LEVERAGED LOAN INDEX (LLI) reflects the
market-weighted performance of U.S. dollar-denominated institutional leveraged
loan portfolios. The LLI is the only domestic leveraged loan index that
utilizes real-time market weightings spreads and interest payments. The BANK
OF AMERICA MERRILL LYNCH (BOFA ML) USD 3-MONTH LIBOR CONSTANT MATURITY INDEX
tracks the performance of a synthetic asset paying LIBOR to a stated maturity.
Indices are not managed and an investor cannot invest directly into an index.
Securities listed may or may not be a part of current Fund construction.
100
SUNAMERICA INCOME FUNDS
COMPARISONS: PORTFOLIOS VS. INDICES -- (UNAUDITED) (CONTINUED)
Over the past ten years, $10,000 invested in Flexible Credit Fund Class A
shares would have increased to $13,803. The same amount invested in securities
mirroring the performance of the Blended Benchmark (50% Barclays U.S.
High-Yield 2% Issuer Capped Index/50% S&P/LSTA Leveraged Loan Index), the
Barclays U.S. High-Yield 2% Issuer Capped Index, the S&P/LSTA Leveraged Loan
Index and the Bank of America Merrill Lynch USD 3-Month Constant Maturity Index
would be valued at $17,372, $19,727, $15,192, and $11,754, respectively.
[CHART]
Blended Benchmark
(50% Barclays U.S.
High-Yield 2% S&P/LSTA
Issuer Capped Leveraged
Citigroup Index/50% Barclays U.S. Loan Bank of America
Flexible High Yield S&P/LSTA High-Yield 2% Index Merrill Lynch USD
Credit Fund Market Leveraged Issuer /DAGGER/ 3-Month LIBOR Constant
Date Class A/#/ Index/*/*/ Loan Index) Capped@ /DAGGER/ Maturity Index
---------- ----------- ----------- ------------------ ------------- ---------- -------------------------
3/31/2005 $ 9,527 $10,000 $10,000 $10,000 $10,000 $10,000
4/30/2005 9,370 9,862 9,948 9,903 9,993 10,023
5/31/2005 9,556 10,065 10,039 10,078 9,999 10,049
6/30/2005 9,791 10,234 10,162 10,260 10,063 10,073
7/31/2005 10,048 10,382 10,281 10,422 10,140 10,097
8/31/2005 10,259 10,425 10,327 10,454 10,201 10,128
9/30/2005 10,186 10,321 10,302 10,361 10,242 10,156
10/31/2005 10,052 10,244 10,272 10,268 10,273 10,187
11/30/2005 10,165 10,270 10,331 10,348 10,312 10,219
12/31/2005 10,303 10,361 10,406 10,443 10,366 10,256
1/31/2006 10,527 10,524 10,504 10,567 10,438 10,292
2/28/2006 10,553 10,577 10,588 10,670 10,504 10,326
3/31/2006 10,633 10,653 10,642 10,715 10,568 10,365
4/30/2006 10,783 10,711 10,702 10,782 10,619 10,402
5/31/2006 10,772 10,704 10,708 10,768 10,646 10,448
6/30/2006 10,737 10,658 10,693 10,708 10,676 10,488
7/31/2006 10,869 10,773 10,769 10,799 10,736 10,538
8/31/2006 11,097 10,953 10,882 10,959 10,803 10,588
9/30/2006 11,228 11,104 10,986 11,110 10,861 10,634
10/31/2006 11,386 11,263 11,098 11,262 10,933 10,685
11/30/2006 11,472 11,451 11,215 11,440 10,991 10,732
12/31/2006 11,607 11,589 11,317 11,567 11,069 10,778
1/31/2007 11,666 11,698 11,431 11,699 11,165 10,831
2/28/2007 11,794 11,860 11,554 11,870 11,242 10,875
3/31/2007 11,804 11,878 11,587 11,890 11,287 10,923
4/30/2007 11,961 12,039 11,697 12,045 11,354 10,973
5/31/2007 11,998 12,129 11,773 12,129 11,423 11,023
6/30/2007 11,832 11,897 11,679 11,909 11,449 11,070
7/31/2007 11,415 11,508 11,281 11,495 11,065 11,122
8/31/2007 11,526 11,648 11,378 11,666 11,091 11,167
9/30/2007 11,810 11,955 11,631 11,956 11,308 11,225
10/31/2007 11,906 12,032 11,725 12,037 11,416 11,287
11/30/2007 11,684 11,766 11,521 11,784 11,257 11,326
12/31/2007 11,712 11,802 11,560 11,829 11,292 11,386
1/31/2008 11,274 11,653 11,285 11,648 10,928 11,470
2/29/2008 11,069 11,502 11,074 11,504 10,654 11,500
3/31/2008 11,105 11,453 11,056 11,477 10,644 11,537
4/30/2008 11,541 11,958 11,488 11,949 11,038 11,560
5/31/2008 11,633 12,021 11,566 11,997 11,142 11,590
6/30/2008 11,508 11,625 11,437 11,701 11,170 11,615
7/31/2008 11,223 11,451 11,322 11,554 11,085 11,642
8/31/2008 11,211 11,481 11,332 11,590 11,070 11,668
9/30/2008 10,314 10,561 10,548 10,700 10,389 11,664
10/31/2008 8,441 8,941 9,003 8,978 9,016 11,734
11/30/2008 7,413 8,069 8,225 8,190 8,249 11,779
12/31/2008 7,437 8,744 8,393 8,767 8,006 11,822
1/31/2009 7,676 9,217 8,983 9,351 8,599 11,841
2/28/2009 7,501 8,869 8,897 9,098 8,666 11,850
3/31/2009 7,478 9,176 9,083 9,347 8,791 11,865
4/30/2009 8,169 10,290 10,013 10,449 9,555 11,881
5/31/2009 8,724 10,910 10,655 11,150 10,138 11,900
6/30/2009 8,949 11,245 11,045 11,478 10,583 11,908
7/31/2009 9,484 11,934 11,638 12,167 11,084 11,917
8/31/2009 9,533 12,091 11,881 12,401 11,335 11,925
9/30/2009 9,982 12,788 12,411 13,109 11,698 11,930
10/31/2009 10,185 12,988 12,557 13,346 11,762 11,933
11/30/2009 10,291 13,128 12,635 13,477 11,793 11,937
12/31/2009 10,615 13,570 13,028 13,919 12,139 11,939
1/31/2010 10,724 13,721 13,246 14,101 12,387 11,942
2/28/2010 10,760 13,714 13,274 14,119 12,423 11,944
3/31/2010 11,100 14,118 13,624 14,547 12,702 11,946
4/30/2010 11,373 14,435 13,887 14,894 12,889 11,947
5/31/2010 10,883 13,960 13,482 14,361 12,599 11,946
6/30/2010 10,989 14,129 13,533 14,538 12,540 11,952
7/31/2010 11,371 14,613 13,875 15,049 12,733 11,959
8/31/2010 11,381 14,592 13,901 15,054 12,776 11,968
9/30/2010 11,730 15,024 14,204 15,500 12,955 11,971
10/31/2010 11,978 15,400 14,497 15,896 13,158 11,974
11/30/2010 11,840 15,226 14,440 15,714 13,205 11,976
12/31/2010 12,065 15,514 14,660 15,998 13,369 11,979
1/31/2011 12,312 15,865 14,967 16,352 13,632 11,982
2/28/2011 12,483 16,074 15,100 16,567 13,695 11,985
3/31/2011 12,552 16,135 15,123 16,621 13,693 11,989
4/30/2011 12,691 16,364 15,288 16,878 13,781 11,992
5/31/2011 12,762 16,436 15,319 16,961 13,768 11,996
6/30/2011 12,611 16,285 15,216 16,796 13,717 11,998
7/31/2011 12,753 16,484 15,315 16,990 13,737 12,000
8/31/2011 12,125 15,845 14,670 16,307 13,132 12,001
9/30/2011 11,821 15,382 14,460 15,770 13,189 12,004
10/31/2011 12,406 16,278 15,103 16,717 13,570 12,006
11/30/2011 12,207 15,932 14,903 16,356 13,503 12,008
12/31/2011 12,513 16,369 15,140 16,792 13,572 12,012
1/31/2012 12,842 16,841 15,535 17,301 13,868 12,019
2/29/2012 13,093 17,226 15,779 17,713 13,975 12,026
3/31/2012 13,081 17,216 15,830 17,690 14,083 12,031
4/30/2012 13,221 17,387 15,970 17,872 14,187 12,036
5/31/2012 13,054 17,168 15,809 17,634 14,091 12,041
6/30/2012 13,309 17,533 16,031 18,006 14,188 12,045
7/31/2012 13,530 17,847 16,276 18,349 14,352 12,051
8/31/2012 13,634 18,049 16,463 18,564 14,514 12,056
9/30/2012 13,816 18,291 16,669 18,822 14,675 12,061
10/31/2012 13,844 18,439 16,768 18,987 14,721 12,066
11/30/2012 13,988 18,558 16,861 19,139 14,767 12,070
12/31/2012 14,178 18,853 17,060 19,441 14,883 12,073
1/31/2013 14,326 19,094 17,266 19,702 15,041 12,076
2/28/2013 14,346 19,167 17,327 19,802 15,073 12,079
3/31/2013 14,575 19,386 17,487 20,003 15,197 12,082
4/30/2013 14,762 19,750 17,697 20,365 15,288 12,086
5/31/2013 14,625 19,646 17,663 20,247 15,316 12,088
6/30/2013 14,276 19,139 17,379 19,716 15,226 12,091
7/31/2013 14,547 19,499 17,630 20,090 15,376 12,094
8/31/2013 14,403 19,366 17,573 19,968 15,370 12,097
9/30/2013 14,547 19,540 17,681 20,166 15,408 12,100
10/31/2013 14,862 20,024 17,967 20,670 15,520 12,103
11/30/2013 14,883 20,104 18,057 20,775 15,597 12,105
12/31/2013 14,946 20,213 18,148 20,887 15,670 12,108
1/31/2014 15,053 20,359 18,271 21,034 15,772 12,110
2/28/2014 15,369 20,759 18,471 21,458 15,800 12,113
3/31/2014 15,391 20,816 18,526 21,509 15,857 12,115
4/30/2014 15,497 20,946 18,595 21,645 15,875 12,118
5/31/2014 15,604 21,131 18,745 21,843 15,985 12,120
6/30/2014 15,752 21,299 18,877 22,026 16,077 12,122
7/31/2014 15,469 21,009 18,749 21,734 16,072 12,124
8/31/2014 15,707 21,331 18,913 22,079 16,097 12,127
9/30/2014 15,374 20,870 18,658 21,616 16,001 12,129
10/31/2014 15,611 21,108 18,793 21,872 16,042 12,132
11/30/2014 15,490 20,933 18,771 21,714 16,122 12,134
12/31/2014 15,268 20,584 18,518 21,400 15,920 12,136
1/31/2015 15,320 20,675 18,610 21,541 15,973 12,139
2/28/2015 15,636 21,209 18,965 22,060 16,198 12,141
3/31/2015 15,600 21,077 18,949 21,940 16,258 12,143
FLEXIBLE CREDIT FUND
Class A/##/ Class C Class W
----------------- ------------------ ------------------ ------------------
Average Average Average
Annual Cumulative Annual Cumulative Annual Cumulative
Return Return+ Return Return+ Return Return+
----------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -5.57% -0.93% -2.49% -1.54% -1.02% -1.02%
--------------------------------------------------------------------------
5 Year Return 3.15% 22.77% 3.52% 18.91% N/A N/A
--------------------------------------------------------------------------
10 Year Return 3.28% 44.93% 3.13% 36.07% N/A N/A
--------------------------------------------------------------------------
Since Inception* 4.59% 129.24% 4.42% 96.43% 0.36% 0.53%
--------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would be lower.
* Inception Date - Class A: 11/2/98; Class C: 08/21/00; Class W: 10/01/14.
# For the purposes of the graph, it has been assumed that the maximum sales
charge of 4.75% of offering price was deducted from the initial $10,000
investment in the Fund. For purposes of the table, it has been assumed that
the maximum sales charge with respect to the Class A shares, was deducted
from the initial investment in the Fund and that the CDSCs with respect to
the Class C shares has been deducted, as applicable.
## As of the close of business on December 2, 2014, Class B shares of the Fund
were no longer offered to new or existing shareholders, except that
dividends and/or capital gain distributions received by a shareholder from
the Fund continued to be automatically reinvested in additional Class B
shares of the Fund, at the net asset value per share in effect on the
payable date, unless the shareholder had elected to receive them in cash or
automatically reinvest them in any retail fund distributed by AIG Capital
Services, Inc. As of the close of business on January 27, 2015, all
outstanding Class B shares of the Funds were converted to Class A shares.
For the 12 month period ending March 31, 2016, the SunAmerica Flexible Credit
Fund Class A returned -5.57%, compared to -2.43% for the Blended Benchmark (50%
Barclays U.S. High-Yield 2% Issuer Capped Index/50% S&P/LSTA Leveraged Loan
Index), -3.66% for the Barclays U.S. High-Yield 2% Issuer Capped Index, -1.25%
for the S&P/LSTA Leveraged Loan Index and 0.33% for the Bank of America Merrill
Lynch USD 3-Month LIBOR Constant Maturity Index. (The performance data and
graph do not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares.)
--------
Performance data quoted represents past performance and is no guarantee of
future results. Maximum Sales Charge: Class A: 4.75%, Class C: 1.00% CDSC. The
fund's daily net asset values are not guaranteed and shares are not insured by
the FDIC, the Federal Reserve Board or any other agency. The investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be higher or lower than the original cost. Current
performance may be higher or lower than that shown. Performance as of the most
recent month end is available at www.safunds.com.
@ The Barclays U.S. High Yield 2% Issuer Capped Index is a component of the
U.S. Corporate High-Yield Bond Index, which covers the universe of
fixed-rate, non-investment grade corporate debt of issuers in non-emerging
market countries. It is not market capitalization-weighted and each issuer
is capped at 2% of the index.
++ The S&P/LSTA Leveraged Loan Index (LLI) reflects the market-weighted
performance of U.S. dollar-denominated institutional leveraged loan
portfolios. The LLI is the only domestic leveraged loan index that utilizes
real-time market weightings spreads and interest payments.
*** The Bank of America Merrill Lynch USD 3-Month LIBOR Constant Maturity Index
is an unmanaged index that tracks the performance of a synthetic asset
paying LIBOR to a stated maturity.
Indices are not managed and an investor cannot invest directly into an index.
101
[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
James Nichols, Vice secu-rities held in a for its first and
President Fund's portfolio, third fiscal quarters
Katherine Stoner, Vice which is available in on Form N-Q. The
President and Chief the Trust's Statement Trust's Forms N-Q are
Compliance Officer of Additional available on the
Gregory N. Bressler, Information, may be U.S. Securities and
Secretary ob-tained without Exchange Commis-sion
Kathleen Fuentes, Chief charge upon request, website at
Legal Officer and by calling (800) www.sec.gov. You can
Assistant Secretary 858-8850. The also review and obtain
Gregory R. Kingston, in-formation is also copies of the Forms
Treasurer available from the N-Q at the U.S.
Donna McManus, Vice EDGAR database on the Securities and
President and U.S. Secu-rities and Exchange Commission
Assistant Treasurer Exchange Commission's Public Refer-ence Room
Shawn Parry, Vice website at in Washington DC
President and http://www.sec.gov. (information on the
Assistant Treasurer DELIVERY OF operation of the
Matthew J. Hackethal, SHAREHOLDER DOCUMENTS Public Reference Room
Anti-Money Laundering The Funds have adopted may be ob-tained by
Compliance Officer a policy that allows calling
INVESTMENT ADVISER them to send only one 1-800-SEC-0330).
SunAmerica Asset copy of a Fund's PROXY VOTING RECORD ON
Management, LLC prospectus, proxy SUNAMERICA INCOME FUNDS
Harborside Financial material, annual Information regarding
Center report and semi-annual how the Funds voted
3200 Plaza 5 report (the proxies relating to
Jersey City, NJ "shareholder securities held in the
07311-4992 documents") to Funds during the most
DISTRIBUTOR shareholders with recent twelve month
AIG Capital Services, multiple accounts period ended June 30
Inc. residing at the same is available, once
Harborside Financial "household." This filed with the U.S.
Center practice is called Securities and
3200 Plaza 5 householding and Exchange Commission,
Jersey City, NJ reduces Fund expenses, without charge, upon
07311-4992 which benefits you and request, by calling
SHAREHOLDER SERVICING other shareholders. (800) 858-8850 or on
AGENT Unless the Funds the U.S. Securities
SunAmerica Fund receive instructions and Exchange
Services, Inc. to the con-trary, you Commission's website
Harborside Financial will only receive one at http://www.sec.gov.
Center copy of the This report is
3200 Plaza 5 shareholder documents. submitted solely for
Jersey City, NJ The Funds will the general
07311-4992 continue to household information of
CUSTODIAN AND TRANSFER the share-holder shareholders of the
AGENT documents Funds. Distribution of
State Street Bank and indefinitely, until we this report to persons
Trust Company are instructed other than
One Lincoln Street otherwise. If you do shareholders of the
Boston, MA 02111 not wish to Funds is authorized
participate in only in con-nection
householding please with a currently
contact Shareholder effective pro-spectus,
Services at (800) setting forth details
858-8850 ext. 6010 or of the Funds, which
send a written request must precede or
with your name, the accom-pany this report.
name of your fund(s)
and your account
number(s) to
SunAmerica Mutual
Funds c/o BFDS, P.O.
Box 219186, Kansas
City MO, 64121-9186.
We will resume
individual mailings
for your account
within thirty (30)
days of receipt of
your request.
[GRAPHIC]
GO PAPERLESS!!
DID YOU KNOW THAT YOU HAVE THE OPTION TO
RECEIVE YOUR SHAREHOLDER REPORTS ONLINE?
By choosing this convenient service, you will no longer receive paper copies of
Fund documents such as annual reports, semi-annual reports, prospectuses and
proxy statements in the mail. Instead, you are provided with quick and easy
access to this information via the Internet.
Why Choose Electronic Delivery?
IT'S QUICK -- Fund documents will be received faster than via traditional mail.
IT'S CONVENIENT -- Elimination of bulky documents from personal files.
IT'S COST EFFECTIVE -- Reduction of your Fund's printing and mailing costs.
TO SIGN UP FOR ELECTRONIC DELIVERY, FOLLOW
THESE SIMPLE STEPS:
1 GO TO WWW.SAFUNDS.COM
2 CLICK ON THE LINK TO "GO PAPERLESS!!"
The email address you provide will be kept strictly confidential. Once your
enrollment has been processed, you will begin receiving email notifications
when anything you receive electronically is available online.
You can return to www.safunds.com at any time to change your email
address, edit your preferences or to cancel this service if you choose to
resume physical delivery of your Fund documents.
Please note - this option is only available to accounts opened through the
Funds.
FOR INFORMATION ON RECEIVING THIS REPORT ONLINE, SEE INSIDE BACK COVER.
DISTRIBUTED BY:
AIG CAPITAL SERVICES, INC.
This fund report must be preceded by or accompanied by a prospectus.
Investors should carefully consider a Fund's investment objectives, risks,
charges and expenses before investing. The prospectus, containing this and
other important information, can be obtained from your financial adviser, the
SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.safunds.com. Read
the prospectus carefully before investing.
WWW.SAFUNDS.COM
INANN - 3/16
[LOGO]
Sun America
Mutual Funds
Item 2. Code of Ethics.
The SunAmerica Income Funds (the "registrant") has adopted a Code of
Ethics applicable to its Principal Executive and Principal Accounting
Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.
During the fiscal year ended 2016, there were no reportable amendments,
waivers or implicit waivers to a provision of the Code of Ethics that
applies to the registrant's Principal Executive and Principal
Accounting Officers.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in Item 3(b) of Form N-CSR.
Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2)
of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2015 2016
(a) Audit Fees ....................$ 140,171 $ 149,656
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 54,837 $ 48,469
(d) All Other Fees ................$ 0 $ 0
Audit Fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
principal accountant in connection with statutory and regulatory
filings. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
Aggregate fees billed to the investment adviser and Adviser Affiliates
(as defined below in Item 4(e)) that are required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for
the last two fiscal years for services rendered by the registrant's
principal accountant were as follows:
2015 2016
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 17,640 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2015 and 2016 were $91,502 and $48,469, respectively.
(h) Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders
may recommend nominees to the registrant's Board of Trustees that were
implemented after the registrant last provided disclosure in response
to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a-
101), or this Item 10.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based
on that evaluation, the registrant's management, including the
President and Treasurer, concluded that the registrant's disclosure
controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's
last fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certifications pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company
Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes-
Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Income Funds
By: /s/ John T. Genoy
-----------------------
John T. Genoy
President
Date: June 8, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ John T. Genoy
-----------------------
John T. Genoy
President
Date: June 8, 2016
By: /s/ Gregory R. Kingston
-----------------------
Gregory R. Kingston
Treasurer
Date: June 8, 2016