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 5, 185 Hudson Street, Suite 3300, Jersey City, NJ 07311
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
John T. Genoy
Senior Vice President
SunAmerica Asset Management, LLC
Harborside 5,
185 Hudson Street, Suite 3300,
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, 2017
-------------------------
Item 1. Reports to Stockholders
ANNUAL REPORT 2017
SUNAMERICA
Income Funds
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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..... 81
TRUSTEE AND OFFICER INFORMATION............................. 82
SHAREHOLDER TAX INFORMATION................................. 85
COMPARISONS: PORTFOLIOS vs. INDICES......................... 86
SUPPLEMENTS TO THE PROSPECTUS............................... 94
Shareholder Letter -- (unaudited)
Dear Shareholders,
We are pleased to present this annual report for the SunAmerica Income Funds
(the "Income Funds") for the 12-month period ended March 31, 2017. Please note
that effective February 28, 2017, SunAmerica Mutual Funds was rebranded as AIG
Funds, and each Fund's name was changed accordingly. SunAmerica Asset
Management, LLC, the investment adviser to each Fund, continues to serve as
investment adviser of the Funds and retains its current name. In addition,
there was no change in the Funds' investment goals or strategies, portfolio
managers or ticker symbols in connection with the rebranding.
From a broad perspective, the 12 months ended March 31, 2017 was a period
wherein fixed income market performance was primarily driven by unexpected
political events in the U.S. and abroad as well as by shifting expectations
about global economic conditions and central bank monetary policy. Overall,
most spread, or non-U.S. Treasury, sectors outperformed U.S. Treasuries during
the annual period, as the rally sparked by the Federal Reserve's (the "Fed's")
dovish stance during the first quarter of 2016 persisted through the fiscal
year. For the annual period overall, the Bloomberg Barclays U.S. Aggregate Bond
Index,/*/ a broad measure of the U.S. fixed income market, returned 0.44%.
As the annual period began in April 2016, spread sectors rallied on
stabilization of commodities prices as well as on declining fears about slowing
economic growth in China and the potential for a U.S. economic recession.
Global interest rates broadly declined amid continued accommodative monetary
policy from the world's central banks. Late in June 2016, volatility spiked
briefly with fallout from the U.K.'s decision to leave the European Union,
popularly known as Brexit.
During the third calendar quarter, spread sectors continued to advance.
Overall, global interest rates remained low, as the world's central banks
remained broadly accommodative. Bond yields in the U.S., Japan and across
Europe fell to historic lows in early July 2016, as investors fled to the
perceived safety of bonds on global economic concerns fueled by the Brexit
decision. Markets recovered rather quickly, however, from the initial shock of
the Brexit vote. Easing by major central banks and a weaker U.S. dollar helped
to improve global risk sentiment and stabilize markets. September 2016 brought
heightened concerns about the ability and willingness of central banks to fight
chronic low inflation and weak economic growth. The decision by the European
Central Bank to leave interest rates and its stimulus program unchanged was a
precipitating factor in a widespread market sell-off, reinforced by fears that
the Bank of Japan had run out of quantitative easing tools. Hawkish signals
from the U.S. Fed added to the volatility. The Bank of Japan subsequently
decided not to change its rates but to shift its focus to stabilizing the
long-term end of its yield curve. This bolstered market sentiment as did the
Fed's eventual decision to not raise interest rates at its September meeting.
The unexpected election of Donald Trump as the 45/th/ U.S. President sparked
another bout of volatility in early November 2016. President-elect Trump's
campaign, which focused on regulatory reform, trade, tax cuts and
infrastructure spending, was largely perceived by the market as boding faster
economic growth and increased inflation expectations. This, in turn, caused the
yield on the 10-year U.S. Treasury to increase 52 basis points+ by the end of
the month. In late November, oil prices benefited from OPEC's decision to cut
production for the first time in eight years.
Post-U.S. election expectation of faster economic growth and rising inflation
persisted into the first quarter of 2017, as optimistic investors watched and
waited for clarity on President Trump's fiscal policies. As the quarter
progressed, however, support for the "Trump trade" weakened, as the new
administration experienced bumps in the road with its aggressive agenda and
visible opposition.
In a largely anticipated move, the Fed raised its target rate by 0.25% on two
separate occasions during the annual period - in December 2016 and in March
2017 - to a range of 0.75% - 1.00%. For the annual period overall, U.S.
Treasury securities posted negative returns, as yields rose across the spectrum
of maturities, though more so at the shorter-term and intermediate segments
than at the longer-term end of the yield curve. The yield on the bellwether
10-year U.S. Treasury rose approximately 61 basis points to end the annual
period at 2.39%. Non-U.S. Treasury sectors generated mostly positive
performance. High yield corporate bonds and
2
sovereign emerging market debt generated double-digit gains, outperforming U.S.
Treasuries by a wide margin. Investment grade corporate bonds also outpaced
U.S. Treasuries. In addition, commercial mortgage-backed securities, agency
securities, asset-backed securities and mortgage-backed securities outperformed
U.S. Treasuries, though more modestly.
On the following pages, you will find financial statements and portfolio
information for each of the Income Funds during the annual period ended
March 31, 2017.
We thank you for being a part of the 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
via our new website, www.aig.com/funds.
Sincerely,
The SunAmerica Income Funds Investment Professionals
Timothy Campion Robert Vanden Assem David L. Albrycht
Kara Murphy Anders Faergemann Frank Ossino
Jane Algieri Dana Burns Jonathan Stanley
Andrew Sheridan John Yovanovic
--------
Past performance is no guarantee of future results.
* The Bloomberg 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, 2017 -- (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, 2016 and held until March 31, 2017.
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, 2017" to estimate the expenses you paid on your account
during this period. The "Expenses Paid During the Six Months Ended March 31,
2017" 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, 2017" 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, 2017" 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, 2017"
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, 2017" 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, 2017" 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, 2017 -- (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 2016 2017 2017* 2016 2017 2017* Ratio*
---- ------------- -------------- ------------- ------------- -------------- ------------- ----------
AIG U.S. Government Securities@
Class A#...................... $1,000.00 $ 958.60 $ 4.83 $1,000.00 $1,020.00 $ 4.99 0.99%
Class C#...................... $1,000.00 $ 954.45 $ 7.99 $1,000.00 $1,016.75 $ 8.25 1.64%
AIG Strategic Bond Fund@
Class A....................... $1,000.00 $1,002.60 $ 6.59 $1,000.00 $1,018.35 $ 6.64 1.32%
Class B....................... $1,000.00 $ 999.20 $ 9.97 $1,000.00 $1,014.96 $10.05 2.00%
Class C....................... $1,000.00 $ 999.46 $ 9.77 $1,000.00 $1,015.16 $ 9.85 1.96%
Class W....................... $1,000.00 $1,000.46 $ 5.79 $1,000.00 $1,019.15 $ 5.84 1.16%
AIG Flexible Credit Fund@
Class A....................... $1,000.00 $1,028.87 $ 7.13 $1,000.00 $1,017.90 $ 7.09 1.41%
Class C....................... $1,000.00 $1,025.51 $10.45 $1,000.00 $1,014.61 $10.40 2.07%
Class W....................... $1,000.00 $1,026.86 $ 6.16 $1,000.00 $1,018.85 $ 6.14 1.22%
--------
@ See Note 1
* Expenses are equal to each Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 182 days then divided
by 365 days (to reflect the one-half year period). These ratios do not
reflect transaction costs, including sales charges on purchase payments,
contingent deferred sales charges, small account fees and administrative
fees, if applicable to your account. Please refer to your Prospectus, your
retirement plan documents and/or materials from your financial adviser for
more information.
# During the stated period, the investment advisor either waived a portion of
or all of the fees and assumed a portion of or all expenses for the Funds.
As a result, if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Six Months Ended March 31,
2017" and the "Annualized Expense Ratio" would have been higher.
5
SunAmerica Income Funds
STATEMENTS OF ASSETS AND LIABILITIES -- March 31, 2017
AIG U.S. Government AIG Strategic AIG Flexible
Securities Bond Credit
Fund@ Fund@ Fund@
------------------- ------------- ------------
ASSETS:
Investments at value (unaffiliated)*........................ $164,305,932 $353,453,886 $378,541,208
Repurchase agreements (cost approximates value)............. 3,450,000 8,991,000 --
------------ ------------ ------------
Total investments.......................................... 167,755,932 362,444,886 378,541,208
------------ ------------ ------------
Cash........................................................ 637 79,087 2,462,094
Foreign cash*............................................... -- 26,086 6,810
Receivable for:
Shares of beneficial interest sold......................... 20,372 1,528,107 3,760,001
Dividends and interest..................................... 600,838 4,471,857 3,967,046
Investments sold........................................... -- 3,346,407 1,994,802
Investments sold on an extended settlement basis........... -- 2,338,640 8,162,731
Prepaid expenses and other assets........................... 8,152 9,927 10,412
Due from investment adviser for expense reimbursements/fee
waivers.................................................... 44,894 -- --
Unrealized appreciation on forward foreign currency
contracts.................................................. -- 90,205 --
------------ ------------ ------------
Total assets................................................ 168,430,825 374,335,202 398,905,104
------------ ------------ ------------
LIABILITIES:
Payable for:
Shares of beneficial interest redeemed..................... 162,972 1,690,327 1,043,674
Investments purchased...................................... -- 4,861,488 3,114,401
Investments purchased on an extended settlement basis...... -- 5,314,549 17,396,651
Investment advisory and management fees.................... 93,025 199,060 231,899
Distribution and service maintenance fees.................. 61,078 189,504 125,359
Transfer agent fees and expenses........................... 38,311 75,565 77,752
Trustees' fees and expenses................................ 1,700 87 --
Other accrued expenses..................................... 98,996 175,204 139,930
Dividends payable........................................... -- 17,494 277,282
Unrealized depreciation on forward foreign currency
contracts.................................................. -- 142,748 --
------------ ------------ ------------
Total liabilities........................................... 456,082 12,666,026 22,406,948
------------ ------------ ------------
Net assets.................................................. $167,974,743 $361,669,176 $376,498,156
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $0.01........................ $ 183,647 $ 1,063,456 $ 1,093,699
Paid-in capital............................................. 182,621,031 436,692,623 423,937,158
------------ ------------ ------------
182,804,678 437,756,079 425,030,857
Accumulated undistributed net investment income (loss)...... 47,778 (1,256,884) 249,849
Accumulated undistributed net realized gain (loss) on
investments, futures contracts, options contracts,
securities sold short, and foreign exchange transactions... (18,375,926) (74,682,324) (49,900,856)
Unrealized appreciation (depreciation) on investments....... 3,498,213 (93,295) 1,119,494
Unrealized foreign exchange gain (loss) on other assets and
liabilities................................................ -- (54,400) (1,188)
------------ ------------ ------------
Net assets.................................................. $167,974,743 $361,669,176 $376,498,156
============ ============ ============
*Cost
Investments (unaffiliated)................................. $160,807,719 $353,547,181 $377,421,714
============ ============ ============
Foreign cash............................................... $ -- $ 26,388 $ 7,998
============ ============ ============
--------
@ See Note 1
See Notes to Financial Statements
6
SunAmerica Income Funds
STATEMENTS OF ASSETS AND LIABILITIES -- March 31, 2017 -- (continued)
AIG U.S. Government AIG Strategic AIG Flexible
Securities Bond Credit
Fund@ Fund@ Fund@
------------------- ------------- ------------
Class A (unlimited shares authorized):
Net assets............................................................ $148,382,497 $163,163,016 $144,880,235
Shares of beneficial interest issued and outstanding.................. 16,221,506 48,031,904 42,162,122
Net asset value and redemption price per share (excluding any
applicable contingent deferred sales charge)......................... $ 9.15 $ 3.40 $ 3.44
Maximum sales charge (4.75% of offering price)........................ 0.46 0.17 0.17
------------ ------------ ------------
Maximum offering price to public...................................... $ 9.61 $ 3.57 $ 3.61
============ ============ ============
Class B (unlimited shares authorized):
Net assets............................................................ $ -- $ 29,762,484 $ --
Shares of beneficial interest issued and outstanding.................. -- 8,766,315 --
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge)..................... $ -- $ 3.40 --
============ ============ ============
Class C (unlimited shares authorized):
Net assets............................................................ $ 19,592,246 $128,331,770 $ 74,241,361
Shares of beneficial interest issued and outstanding.................. 2,143,192 37,642,912 21,471,814
Net asset value, offering and redemption price per share (excluding
any applicable contingent deferred sales charge)..................... $ 9.14 $ 3.41 $ 3.46
============ ============ ============
Class W (unlimited shares authorized):
Net assets............................................................ $ -- $ 40,411,906 $157,376,560
Shares of beneficial interest issued and outstanding.................. -- 11,904,491 45,735,962
Net asset value, offering and redemption price per share.............. $ -- $ 3.39 $ 3.44
============ ============ ============
--------
@ See Note 1
See Notes to Financial Statements
7
SunAmerica Income Funds
STATEMENTS OF OPERATIONS -- For the year ended March 31, 2017
AIG U.S. Government AIG Strategic
Securities Bond
Fund@ Fund@
------------------- -------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ -- $ 207,383
Interest (unaffiliated)............................................................. 3,597,159 16,214,478
----------- -----------
Total investment income*........................................................... 3,597,159 16,421,861
----------- -----------
EXPENSES:
Investment advisory and management fees............................................. 1,231,457 2,456,084
Distribution and service maintenance fees:
Class A............................................................................ 568,247 599,765
Class B............................................................................ -- 306,691
Class C............................................................................ 271,529 1,447,670
Service fee -- Class W.............................................................. -- 50,074
Transfer agent fees:
Class A............................................................................ 383,819 402,574
Class B............................................................................ -- 71,663
Class C............................................................................ 65,516 330,182
Class W............................................................................ -- 74,521
Registration fees:
Class A............................................................................ 19,078 15,774
Class B............................................................................ -- 9,837
Class C............................................................................ 14,559 16,423
Class W............................................................................ -- 12,865
Custodian and accounting fees....................................................... 38,427 113,655
Reports to shareholders............................................................. 45,063 67,641
Audit and tax fees.................................................................. 47,032 68,330
Legal fees.......................................................................... 16,278 18,297
Trustees' fees and expenses......................................................... 10,284 17,447
Interest expense.................................................................... 257 --
Other expenses...................................................................... 16,342 29,219
----------- -----------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 2,727,888 6,108,712
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. (675,254) --
----------- -----------
Net expenses....................................................................... 2,052,634 6,108,712
----------- -----------
Net investment income (loss)....................................................... 1,544,525 10,313,149
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ (3,707,604) (2,911,234)
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- 1,416,398
----------- -----------
Net realized gain (loss) on investments and foreign currencies........................ (3,707,604) (1,494,836)
----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (4,357,250) 14,846,763
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- 1,539,838
----------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... (4,357,250) 16,386,601
----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... (8,064,854) 14,891,765
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... (6,520,329) 25,204,914
=========== ===========
* Net of foreign withholding taxes on interest and dividends of....................... $ -- $ 24
=========== ===========
AIG Flexible
Credit
Fund@
------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 414,890
Interest (unaffiliated)............................................................. 18,146,469
-----------
Total investment income*........................................................... 18,561,359
-----------
EXPENSES:
Investment advisory and management fees............................................. 2,428,145
Distribution and service maintenance fees:
Class A............................................................................ 487,117
Class B............................................................................ --
Class C............................................................................ 690,931
Service fee -- Class W.............................................................. 180,960
Transfer agent fees:
Class A............................................................................ 323,405
Class B............................................................................ --
Class C............................................................................ 156,716
Class W............................................................................ 267,155
Registration fees:
Class A............................................................................ 33,170
Class B............................................................................ --
Class C............................................................................ 17,182
Class W............................................................................ 17,905
Custodian and accounting fees....................................................... 79,882
Reports to shareholders............................................................. 48,987
Audit and tax fees.................................................................. 62,160
Legal fees.......................................................................... 24,109
Trustees' fees and expenses......................................................... 13,879
Interest expense.................................................................... 16,674
Other expenses...................................................................... 25,638
-----------
Total expenses before fee waivers, expense reimbursements and expense recoupments.. 4,874,015
Net (fees waived and expenses reimbursed)/recouped by investment advisor (Note 3).. --
-----------
Net expenses....................................................................... 4,874,015
-----------
Net investment income (loss)....................................................... 13,687,344
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)................................ 2,670,349
Net realized foreign exchange gain (loss) on other assets and liabilities............. 3,113
-----------
Net realized gain (loss) on investments and foreign currencies........................ 2,673,462
-----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 10,941,854
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... (454)
-----------
Net unrealized gain (loss) on investments and foreign currencies...................... 10,941,400
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 13,614,862
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... 27,302,206
===========
* Net of foreign withholding taxes on interest and dividends of....................... $ --
===========
@ See Note 1
See Notes to Financial Statements
8
SunAmerica Income Funds
STATEMENTS OF CHANGES IN NET ASSETS
AIG U.S. Government
Securities Fund@
--------------------------
For the Year For the year
ended ended
March 31, March 31,
2017 2016
------------ ------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income (loss)......................................... $ 1,544,525 $ 1,356,002
Net realized gain (loss) on investments and foreign currencies....... (3,707,604) 182,870
Net unrealized gain (loss) on investments and foreign currencies..... (4,357,250) (1,357,314)
------------ ------------
Net increase (decrease) in net assets resulting from operations....... (6,520,329) 181,558
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)...................................... (2,798,856) (2,895,384)
Net investment income (Class B)...................................... -- --
Net investment income (Class C)...................................... (290,749) (293,718)
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................................... (3,089,605) (3,189,102)
------------ ------------
Net increase (decrease) in net assets resulting from capital share
transactions (Note 6)................................................ (10,548,448) (20,275,343)
------------ ------------
Total increase (decrease) in net assets............................... (20,158,382) (23,282,887)
NET ASSETS:
Beginning of period................................................... 188,133,125 211,416,012
------------ ------------
End of period+........................................................ $167,974,743 $188,133,125
============ ============
+ Includes accumulated undistributed net investment income (loss)..... $ 47,778 $ (523,668)
============ ============
@ See Note 1
See Notes to Financial Statements
9
SunAmerica Income Funds
STATEMENTS OF CHANGES IN NET ASSETS -- (continued)
AIG Strategic Bond Fund@ AIG 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,
2017 2016 2017 2016
------------ ------------ ------------ ------------
INCREASE (DECREASE)
IN NET ASSETS
Operations:
Net investment
income (loss)...... $ 10,313,149 $ 13,804,186 $ 13,687,344 $ 9,204,013
Net realized gain
(loss) on
investments and
foreign currencies. (1,494,836) (17,240,406) 2,673,462 (5,156,658)
Net unrealized gain
(loss) on
investments and
foreign currencies. 16,386,601 (8,304,403) 10,941,400 (7,105,660)
------------ ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations...... 25,204,914 (11,740,623) 27,302,206 (3,058,305)
------------ ------------ ------------ ------------
Distributions to
shareholders from:
Net investment
income (Class A)... (5,554,446) (8,053,946) (5,974,085) (4,950,089)
Net investment
income (Class B)... (785,283) (1,193,570) -- --
Net investment
income (Class C)... (3,770,924) (5,817,628) (2,514,450) (2,058,159)
Net investment
income (Class W)... (1,129,107) (1,325,284) (5,460,071) (2,677,821)
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...... (11,239,760) (16,390,428) (13,948,606) (9,686,069)
------------ ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from capital share
transactions (Note 6) (39,982,323) (58,954,992) 85,037,339 104,299,983
------------ ------------ ------------ ------------
Total increase
(decrease) in net
assets............... (26,017,169) (87,086,043) 98,390,939 91,555,609
NET ASSETS:
Beginning of period... 387,686,345 474,772,388 278,107,217 186,551,608
------------ ------------ ------------ ------------
End of period+........ $361,669,176 $387,686,345 $376,498,156 $278,107,217
============ ============ ============ ============
+ Includes
accumulated
undistributed net
investment income
(loss)............... $ (1,256,884) $ (1,543,031) $ 249,849 $ 219,626
============ ============ ============ ============
@ See Note 1
See Notes to Financial Statements
10
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS
AIG U.S. GOVERNMENT SECURITIES FUND@
------------------------------------
Net gain
(loss) on
Net investments Distributions Net Net
Asset (both Dividends from net Asset Assets, Ratio of
Value, Net realized Total from from net realized Total Value, end of expenses
beginning investment and investment investment gains on Distri- end of Total period to average
Period Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) net assets(3)
------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- -------------
Class A
-------
03/31/13 $10.06 $0.14 $ 0.05 $ 0.19 $(0.21) $(0.13) $(0.34) $9.91 1.84% $121,807 0.99%
03/31/14 9.91 0.14 (0.45) (0.31) (0.17) -- (0.17) 9.43 (3.11) 106,747 0.99
03/31/15 9.43 0.12 0.34 0.46 (0.16) -- (0.16) 9.73 4.94 187,417 0.99
03/31/16 9.73 0.08 (0.05) 0.03 (0.17) -- (0.17) 9.59 0.33 156,468 0.99
03/31/17 9.59 0.09 (0.37) (0.28) (0.16) -- (0.16) 9.15 (2.93) 148,382 0.99
Class C
-------
03/31/13 $10.05 $0.08 $ 0.05 $ 0.13 $(0.14) $(0.13) $(0.27) $9.91 1.28% $ 12,226 1.64%
03/31/14 9.91 0.08 (0.46) (0.38) (0.11) -- (0.11) 9.42 (3.84) 7,295 1.64
03/31/15 9.42 0.06 0.34 0.40 (0.10) -- (0.10) 9.72 4.27 23,999 1.64
03/31/16 9.72 0.01 (0.03) (0.02) (0.11) -- (0.11) 9.59 (0.22) 31,665 1.64
03/31/17 9.59 0.02 (0.37) (0.35) (0.10) -- (0.10) 9.14 (3.66) 19,592 1.64
Ratio
of net
investment
income to
average Portfolio
net assets(3) Turnover
------------- ---------
1.40% 89%
1.42 122
1.24 57
0.81 36
0.91 95
0.76% 89%
0.77 122
0.61 57
0.16 36
0.26 95
--------
@ See Note 1
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/13 03/31/14 03/31/15 03/31/16 03/31/17
-------- -------- -------- -------- --------
AIG U.S. Government Securities Fund Class A 0.40% 0.40% 0.38% 0.37% 0.35%
AIG U.S. Government Securities Fund
Class C................................... 0.45 0.57 0.50 0.39 0.40
See Notes to Financial Statements
11
SunAmerica Income Funds
FINANCIAL HIGHLIGHTS -- (continued)
AIG 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
-------
03/31/13 $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
03/31/17 3.27 0.10 0.14 0.24 (0.11) -- (0.11) 3.40 7.38 163,163
Class B
-------
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
03/31/17 3.27 0.08 0.14 0.22 (0.09) -- (0.09) 3.40 6.66 29,762
Class C
-------
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
03/31/17 3.29 0.08 0.13 0.21 (0.09) -- (0.09) 3.41 6.35 128,332
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
03/31/17 3.27 0.11 0.13 0.24 (0.12) -- (0.12) 3.39 7.26 40,412
Ratio
of net
Ratio of investment
expenses income to
to average average Portfolio
net assets net assets Turnover
---------- ---------- ---------
1.30% 3.70% 166%
1.31 4.01 158
1.30 3.62 137
1.34 3.54 108
1.32 3.00 109
1.97% 3.02% 166%
1.97 3.35 158
1.97 2.95 137
2.01 2.87 108
1.99 2.33 109
1.94% 3.05% 166%
1.96 3.37 158
1.94 2.98 137
1.98 2.90 108
1.97 2.35 109
1.20%(3)(5) 2.73%(3)(5) 137%
1.15 3.71 108
1.14 3.20 109
--------
@ See Note 1
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/15
--------
AIG 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)
AIG 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
-------
03/31/13 $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
03/31/17 3.29 0.14 0.16 0.30 (0.15) -- (0.15) 3.44 9.11 144,880
Class C
-------
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
03/31/17 3.31 0.12 0.15 0.27 (0.12) -- (0.12) 3.46 8.38 74,241
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
03/31/17 3.29 0.15 0.15 0.30 (0.15) -- (0.15) 3.44 9.34 157,377
Ratio
of net
Ratio of investment
expenses income to
to average average Portfolio
net assets net assets Turnover
---------- ---------- ---------
1.36%(3) 5.82%(3) 44%
1.36(3) 5.41(3) 49
1.41(3) 4.50(3) 74
1.45(3) 3.92(3) 52
1.43 4.21 69
2.01%(3) 5.18%(3) 44%
2.01(3) 4.76(3) 49
2.06(3) 3.88(3) 74
2.10(3) 3.27(3) 52
2.07 3.57 69
1.25%(3)(5) 4.25%(3)(5) 74%
1.25(3) 4.11(3) 52
1.21 4.44 69
--------
@ See Note 1
(1)Calculated based upon average shares outstanding.
(2)Total return does not reflect sales load, but does include expense
reimbursements.
(3)Net of the following expense reimbursements, if applicable (based on average
net assets):
03/31/13 03/31/14 03/31/15 03/31/16
-------- -------- -------- --------
AIG Flexible Credit Fund Class A........ 0.16% 0.17% 0.19% 0.03%
AIG Flexible Credit Fund Class C........ 0.16 0.18 0.20 0.02
AIG Flexible Credit Fund Class W........ -- -- 1.12(5) 0.04
(4)Inception date of class.
(5)Annualized.
See Notes to Financial Statements
13
AIG U.S. Government Securities Fund@
PORTFOLIO PROFILE -- March 31, 2017 -- (unaudited)
Industry Allocation*
Government National Mtg. Assoc.. 35.2%
Federal Home Loan Bank.......... 18.0
Federal Farm Credit Bank........ 17.1
United States Treasury Bonds.... 9.4
Federal Home Loan Mtg. Corp..... 7.5
Federal National Mtg. Assoc..... 5.3
United States Treasury Notes.... 5.3
Repurchase Agreements........... 2.1
----
99.9%
====
Credit Quality+#
Aaa. 100.0%
=====
--------
@See Note 1
*Calculated as a percentage of net assets
+Source: Moody's
#Calculated as a percentage of total debt issues
14
AIG U.S. Government Securities Fund@
PORTFOLIO OF INVESTMENTS -- March 31, 2017
Principal Value
Security Description Amount (Note 2)
U.S. GOVERNMENT AGENCIES -- 83.1%
Federal Farm Credit Bank -- 17.1%
1.14% due 03/26/2018 FRS.............. $ 9,435,000 $ 9,465,720
2.36% due 06/16/2025.................. 20,000,000 19,363,140
-----------
28,828,860
-----------
Federal Home Loan Bank -- 18.0%
0.97% due 05/17/2018 FRS.............. 20,000,000 20,038,560
1.00% due 08/15/2019(1)............... 2,250,000 2,243,792
1.38% due 03/09/2018.................. 5,460,000 5,472,525
1.69% due 02/26/2021.................. 480,000 474,281
2.14% due 12/05/2022.................. 372,093 368,206
4.50% due 09/13/2019.................. 1,490,000 1,597,575
-----------
30,194,939
-----------
Federal Home Loan Mtg. Corp. -- 7.5%
3.50% due 08/01/2030.................. 3,604,318 3,763,452
3.50% due 12/01/2044.................. 4,641,610 4,768,126
4.00% due 04/01/2034.................. 1,812,958 1,924,984
Federal Home Loan Mtg. Corp. REMIC
Series 3747, Class WA
3.50% due 10/15/2030(2)............... 2,031,150 2,109,560
-----------
12,566,122
-----------
Federal National Mtg. Assoc. -- 5.3%
1.00% due 03/28/2018.................. 5,000,000 4,993,310
2.50% due 11/01/2027.................. 3,828,909 3,873,897
-----------
8,867,207
-----------
Government National Mtg. Assoc. -- 35.2%
3.50% due 11/15/2041.................. 511,825 531,947
3.50% due 03/15/2042.................. 389,751 405,074
3.50% due 06/15/2042.................. 2,012,790 2,087,777
3.50% due 07/15/2042.................. 691,725 717,634
3.50% due 02/20/2045.................. 1,129,462 1,172,434
4.00% due 03/15/2039.................. 217,206 229,457
4.00% due 04/15/2039.................. 132,575 140,886
4.00% due 06/15/2039.................. 544,600 575,140
4.00% due 12/15/2039.................. 283,634 299,540
4.00% due 08/15/2040.................. 246,240 260,739
4.00% due 09/15/2040.................. 385,270 407,613
4.00% due 11/15/2040.................. 432,979 458,591
4.00% due 12/15/2040.................. 791,993 838,588
4.00% due 02/15/2041.................. 290,766 307,550
4.00% due 03/15/2041.................. 207,845 219,767
4.00% due 07/15/2041.................. 410,942 434,729
4.00% due 08/15/2041.................. 910,546 963,353
4.00% due 09/15/2041.................. 1,637,169 1,732,012
4.00% due 10/15/2041.................. 694,776 734,795
4.00% due 11/15/2041.................. 2,514,381 2,663,358
4.00% due 12/15/2041.................. 991,641 1,048,785
4.00% due 01/15/2042.................. 2,007,431 2,129,056
4.00% due 02/15/2042.................. 1,130,633 1,197,449
4.00% due 03/15/2042.................. 261,273 276,650
4.00% due 06/15/2042.................. 441,250 466,621
4.50% due 05/15/2018.................. 43,602 44,017
4.50% due 08/15/2018.................. 44,750 45,256
4.50% due 09/15/2018.................. 187,282 190,224
4.50% due 10/15/2018.................. 260,323 264,463
4.50% due 09/15/2033.................. 392,200 422,414
4.50% due 03/15/2039.................. 106,489 113,769
Principal Value
Security Description Amount (Note 2)
Government National Mtg. Assoc. (continued)
4.50% due 04/15/2039..................... $ 83,107 $ 88,868
4.50% due 05/15/2039..................... 395,077 422,791
4.50% due 06/15/2039..................... 1,610,164 1,725,298
4.50% due 07/15/2039..................... 738,034 789,702
4.50% due 09/15/2039..................... 209,598 224,281
4.50% due 11/15/2039..................... 205,977 220,109
4.50% due 12/15/2039..................... 596,678 638,939
4.50% due 01/15/2040..................... 270,548 289,352
4.50% due 02/15/2040..................... 1,172,957 1,256,081
4.50% due 03/15/2040..................... 756,641 810,188
4.50% due 04/15/2040..................... 725,280 776,587
4.50% due 05/15/2040..................... 289,287 310,191
4.50% due 06/15/2040..................... 305,252 326,442
4.50% due 07/15/2040..................... 619,713 664,014
4.50% due 08/15/2040..................... 170,653 182,897
4.50% due 09/15/2040..................... 176,310 189,697
4.50% due 11/15/2040..................... 246,114 263,892
4.50% due 01/15/2041..................... 201,954 216,104
4.50% due 02/15/2041..................... 199,781 213,451
4.50% due 03/15/2041..................... 1,476,703 1,580,162
4.50% due 04/15/2041..................... 755,296 807,733
4.50% due 05/15/2041..................... 235,264 251,853
4.50% due 06/15/2041..................... 489,087 526,204
4.50% due 07/15/2041..................... 163,016 174,160
4.50% due 08/15/2041..................... 456,159 487,883
4.50% due 04/20/2044..................... 848,916 907,259
5.00% due 04/15/2018..................... 195,328 199,436
5.00% due 05/15/2018..................... 10,827 11,085
5.00% due 08/15/2033..................... 441,205 487,407
5.00% due 10/15/2033..................... 717,863 789,997
5.00% due 05/15/2035..................... 129,498 141,603
5.00% due 08/15/2035..................... 395,068 436,349
5.00% due 03/15/2036..................... 173,614 190,232
5.00% due 05/15/2036..................... 96,759 106,758
5.00% due 09/15/2036..................... 236,364 260,132
5.00% due 01/15/2037..................... 233,407 257,636
5.00% due 02/15/2037..................... 365,927 401,383
5.00% due 03/15/2037..................... 54,906 60,084
5.00% due 04/15/2037..................... 475,960 520,688
5.00% due 04/15/2038..................... 543,665 599,393
5.00% due 05/15/2038..................... 250,066 275,993
5.00% due 08/15/2038..................... 697,379 770,316
5.00% due 01/15/2039..................... 228,058 251,439
5.00% due 02/15/2039..................... 127,034 140,133
5.00% due 03/15/2039..................... 114,904 126,232
5.00% due 04/15/2039..................... 153,251 167,740
5.00% due 07/20/2039..................... 1,165,834 1,273,120
5.00% due 08/15/2039..................... 303,679 333,220
5.00% due 09/20/2039..................... 3,795,935 4,201,436
5.00% due 10/15/2039..................... 768,411 844,868
5.00% due 11/15/2039..................... 670,640 737,594
5.00% due 12/15/2039..................... 569,900 628,201
5.00% due 04/15/2040..................... 592,151 651,022
5.00% due 05/15/2040..................... 1,161,592 1,278,323
5.00% due 07/20/2045..................... 527,169 566,382
5.50% due 06/15/2033..................... 761,866 857,351
5.50% due 07/15/2033..................... 120,260 135,614
5.50% due 10/15/2033..................... 182,654 205,631
15
AIG U.S. Government Securities Fund@
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. GOVERNMENT AGENCIES (continued)
Government National Mtg. Assoc. (continued)
5.50% due 01/15/2034..................... $ 534,588 $ 601,576
5.50% due 02/15/2034..................... 258,077 289,483
5.50% due 04/20/2035..................... 526,153 589,663
5.50% due 09/15/2035..................... 457,622 525,614
5.50% due 10/15/2035..................... 350,850 394,945
5.50% due 02/15/2038..................... 161,025 179,954
5.50% due 04/15/2038..................... 94,367 105,136
5.50% due 05/15/2038..................... 101,169 112,769
5.50% due 09/15/2039..................... 82,566 92,161
5.50% due 03/15/2040..................... 152,321 171,122
5.50% due 08/15/2040..................... 122,948 136,979
6.00% due 04/15/2028..................... 170,201 195,949
6.00% due 08/15/2033..................... 279,483 323,175
6.00% due 12/15/2033..................... 118,223 134,327
6.00% due 07/15/2034..................... 56,716 64,237
6.00% due 12/15/2034..................... 55,663 63,055
6.00% due 09/20/2038..................... 1,229,108 1,393,985
6.50% due 10/15/2031..................... 84,160 95,452
------------
59,100,206
------------
Total U.S. Government Agencies
(cost $139,535,525)...................... 139,557,334
------------
U.S. GOVERNMENT TREASURIES -- 14.7%
United States Treasury Bonds -- 9.4%
2.50% due 02/15/2045..................... 1,000,000 898,555
4.25% due 11/15/2040..................... 8,000,000 9,764,376
4.75% due 02/15/2041..................... 4,000,000 5,236,720
------------
15,899,651
------------
Principal Value
Security Description Amount (Note 2)
United States Treasury Notes -- 5.3%
2.00% due 02/15/2025.......................... $5,000,000 $ 4,889,650
2.00% due 08/15/2025.......................... 3,000,000 2,921,250
3.13% due 05/15/2019.......................... 1,000,000 1,038,047
------------
8,848,947
------------
Total U.S. Government Treasuries
(cost $21,272,194)............................ 24,748,598
------------
Total Long-Term Investment Securities
(cost $160,807,719)........................... 164,305,932
------------
REPURCHASE AGREEMENTS -- 2.1%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.09%, dated 03/31/2017,
to be repurchased 04/03/2017 in the amount
$3,450,000 collateralized by $3,625,000 of
United States Treasury Bonds, bearing
interest at 2.88% due 08/15/2045 and
having an approximate value of $3,522,706
(cost $3,450,000)............................. 3,450,000 3,450,000
------------
TOTAL INVESTMENTS
(cost $164,257,719)(3)........................ 99.9% 167,755,932
Other assets less liabilities.................... 0.1 218,811
---------- ------------
NET ASSETS 100.0% $167,974,743
========== ============
--------
@ See Note 1
(1) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
(2) Collateralized Mortgage Obligation.
(3) See Note 5 for cost of investments on a tax basis.
REMIC --Real Estate Mortgage Investment Conduit
FRS --Floating Rate Security
The rates shown on FRS are the current rates at March 31, 2017 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, 2017 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- --------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
U.S. Government Agencies... $-- $139,557,334 $-- $139,557,334
U.S. Government Treasuries. -- 24,748,598 -- 24,748,598
Repurchase Agreements...... -- 3,450,000 -- 3,450,000
--- ------------ --- ------------
Total Investments at Value. $-- $167,755,932 $-- $167,755,932
=== ============ === ============
--------
* 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
16
AIG Strategic Bond Fund++
PORTFOLIO PROFILE -- March 31, 2017 -- (unaudited)
Industry Allocation*
Sovereign.............................. 8.3%
Federal National Mtg. Assoc............ 7.8
Federal Home Loan Mtg. Corp............ 6.3
Diversified Banking Institutions....... 4.8
Oil Companies-Exploration & Production. 3.2
Banks-Commercial....................... 3.1
Pipelines.............................. 2.9
Cable/Satellite TV..................... 2.9
Government National Mtg. Assoc......... 2.8
Repurchase Agreements.................. 2.5
Diversified Financial Services......... 1.9
Cellular Telecom....................... 1.9
Electric-Integrated.................... 1.8
Telephone-Integrated................... 1.5
Oil Companies-Integrated............... 1.4
Real Estate Investment Trusts.......... 1.4
Auto-Cars/Light Trucks................. 1.4
Time Deposits.......................... 1.3
Medical-Hospitals...................... 1.3
Paper & Related Products............... 1.1
Satellite Telecom...................... 1.1
Computers.............................. 0.9
SupraNational Banks.................... 0.8
Gambling (Non-Hotel)................... 0.8
Computer Services...................... 0.8
Casino Hotels.......................... 0.8
Banks-Super Regional................... 0.8
Oil-Field Services..................... 0.7
Finance-Consumer Loans................. 0.7
Finance-Leasing Companies.............. 0.7
Finance-Auto Loans..................... 0.7
Chemicals-Diversified.................. 0.7
Printing-Commercial.................... 0.7
Diversified Manufacturing Operations... 0.6
Savings & Loans/Thrifts................ 0.6
Metal-Copper........................... 0.6
United States Treasury Bonds........... 0.6
Insurance-Multi-line................... 0.6
United States Treasury Notes........... 0.5
Oil Refining & Marketing............... 0.5
Enterprise Software/Service............ 0.5
Food-Retail............................ 0.5
Aerospace/Defense-Equipment............ 0.5
Metal-Diversified...................... 0.5
Brewery................................ 0.5
Metal Processors & Fabrication......... 0.5
Steel-Producers........................ 0.5
Building-Residential/Commercial........ 0.5
Rental Auto/Equipment.................. 0.5
Hazardous Waste Disposal............... 0.5
Computers-Memory Devices............... 0.4
Insurance-Mutual....................... 0.4
Energy-Alternate Sources............... 0.4
Real Estate Management/Services........ 0.4
Airlines............................... 0.4
Investment Management/Advisor Services. 0.4
Cruise Lines........................... 0.4
Medical-Drugs.......................... 0.4
Retail-Appliances...................... 0.4
Auto-Heavy Duty Trucks................. 0.4
Internet Content-Entertainment....... 0.4%
Containers-Metal/Glass............... 0.4
Financial Guarantee Insurance........ 0.4
Telecom Services..................... 0.4
Coal................................. 0.3
Finance-Credit Card.................. 0.3
Internet Connectivity Services....... 0.3
Banks-Money Center................... 0.3
Metal-Iron........................... 0.3
Insurance-Life/Health................ 0.3
Marine Services...................... 0.3
Computers-Integrated Systems......... 0.3
Food-Dairy Products.................. 0.3
Security Services.................... 0.3
Building & Construction-Misc......... 0.3
Finance-Mortgage Loan/Banker......... 0.3
Medical-HMO.......................... 0.3
Independent Power Producers.......... 0.3
Medical-Biomedical/Gene.............. 0.3
Broadcast Services/Program........... 0.3
Finance-Investment Banker/Broker..... 0.3
Containers-Paper/Plastic............. 0.3
Building Products-Wood............... 0.3
Food-Wholesale/Distribution.......... 0.3
Electric-Generation.................. 0.3
Semiconductor Equipment.............. 0.3
Finance-Other Services............... 0.2
Batteries/Battery Systems............ 0.2
Sovereign Agency..................... 0.2
Airport Development/Maintenance...... 0.2
Multimedia........................... 0.2
Banks-Fiduciary...................... 0.2
Telecommunication Equipment.......... 0.2
Firearms & Ammunition................ 0.2
Applications Software................ 0.2
Office Automation & Equipment........ 0.2
Machinery-Construction & Mining...... 0.2
Real Estate Operations & Development. 0.2
Food-Flour & Grain................... 0.2
Wire & Cable Products................ 0.2
Hotels/Motels........................ 0.2
Home Furnishings..................... 0.2
Television........................... 0.2
Retail-Restaurants................... 0.2
Soap & Cleaning Preparation.......... 0.2
Agricultural Chemicals............... 0.2
E-Commerce/Services.................. 0.2
Chemicals-Specialty.................. 0.2
Retail-Drug Store.................... 0.2
Travel Services...................... 0.2
Building Products-Air & Heating...... 0.2
Oil Field Machinery & Equipment...... 0.2
Networking Products.................. 0.2
Building Products-Cement............. 0.2
Transport-Rail....................... 0.2
Machinery-General Industrial......... 0.1
Food-Meat Products................... 0.1
Oil & Gas Drilling................... 0.1
Radio................................ 0.1
Chemicals-Plastics................... 0.1
17
AIG Strategic Bond Fund++
PORTFOLIO PROFILE -- March 31, 2017 -- (unaudited) (continued)
Industry Allocation* (continued)
Tools-Hand Held.............................. 0.1%
Building & Construction Products-Misc........ 0.1
Beverages-Non-alcoholic...................... 0.1
Semiconductor Components-Integrated Circuits. 0.1
Industrial Gases............................. 0.1
Medical Labs & Testing Services.............. 0.1
Gas-Distribution............................. 0.1
Food-Misc./Diversified....................... 0.1
Petrochemicals............................... 0.1
Electric-Distribution........................ 0.1
Insurance-Reinsurance........................ 0.1
Advertising Agencies......................... 0.1
Cosmetics & Toiletries....................... 0.1
Beverages-Wine/Spirits....................... 0.1
Retail-Discount.............................. 0.1
Banks-Special Purpose........................ 0.1
Transport-Marine............................. 0.1
E-Commerce/Products.......................... 0.1
Aerospace/Defense............................ 0.1
Medical-Generic Drugs........................ 0.1
Building Societies........................... 0.1
Pharmacy Services............................ 0.1
Finance-Commercial........................... 0.1
Data Processing/Management................... 0.1
Tennessee Valley Authority................... 0.1
Transport-Equipment & Leasing................ 0.1
Gas-Transportation........................... 0.1
Retail-Major Department Stores............... 0.1
Power Converter/Supply Equipment............. 0.1
-----
100.2%
=====
Credit Quality+#
Aaa........ 21.9%
Aa......... 3.1
A.......... 9.2
Baa........ 15.6
Ba......... 13.6
B.......... 23.1
Caa........ 7.5
Not Rated@. 6.0
-----
100.0%
=====
--------
++ See Note 1
* Calculated as a percentage of net assets.
+ Source: Moodys
# Calculated as a percentage of total debt issues, excluding short-term
securities.
@ Represents debt issues that either have no rating or the rating is
unavailable from the data source.
18
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017
Principal Value
Security Description Amount** (Note 2)
ASSET BACKED SECURITIES -- 1.7%
Diversified Financial Services -- 1.7%
American Express Credit Account Master Trust FRS
Series 2014-1, Class A
1.28% due 12/15/2021............................. $ 49,000 $ 49,244
AmeriCredit Automobile Receivables Trust
Series 2016-4, Class A3
1.53% due 07/08/2021............................. 228,000 226,837
Capital One Multi-Asset Execution Trust
Series 2016-A4, Class A4
1.33% due 06/15/2022............................. 145,000 143,458
Carmax Auto Owner Trust
Series 2016-3, Class A4
1.60% due 01/18/2022............................. 150,000 148,085
Chase Issuance Trust
Series 2016-A2, Class A
1.37% due 06/15/2021............................. 200,000 198,668
Chase Mtg. Trust VRS
Series 2016-2, Class M2
3.75% due 12/25/2045*(1)......................... 419,790 419,368
Citibank Credit Card Issuance Trust
Series 2014-A6, Class A6
2.15% due 07/15/2021............................. 226,000 227,970
Citibank Credit Card Issuance Trust
Series 2014-A1, Class A1
2.88% due 01/23/2023............................. 78,000 80,142
Citigroup Commercial Mtg. Trust
Series 2016-SMPL, Class A
2.23% due 09/10/2031*(2)......................... 163,000 159,993
COMM Mtg. Trust
Series 2015-CR24, Class A2
3.02% due 08/10/2048(2).......................... 65,325 66,673
COMM Mtg. Trust
Series 2016-787S, Class A
3.55% due 02/10/2036*(2)......................... 329,000 335,598
COMM Mtg. Trust VRS
Series 2016-787S, Class B
3.83% due 02/10/2036*(2)......................... 132,000 136,801
Core Industrial Trust
Series 2015-CALW, Class A
3.04% due 02/10/2034*(2)......................... 685,000 699,420
CSAIL 2016-C7 Commercial Mortgage Trust
Series 2016-C7, Class A5
3.50% due 11/15/2049(2).......................... 100,000 100,919
Discover Card Execution Note Trust
Series 2015-A4, Class A4
2.19% due 04/17/2023............................. 117,000 117,485
Ford Credit Auto Owner Trust
Series 2014-C, Class B
1.97% due 04/15/2020............................. 81,000 81,235
Ford Credit Auto Owner Trust
Series 2015-2, Class A
2.44% due 01/15/2027*............................ 50,000 50,424
GS Mtg. Securities Corp. II
Series GC30, Class A2
2.73% due 05/10/2050(2).......................... 73,125 74,166
GS Mtg. Securities Trust
Series 2015-GC28, Class A2
2.90% due 02/10/2048(2).......................... 102,000 103,924
Principal Value
Security Description Amount** (Note 2)
Diversified Financial Services (continued)
Honda Auto Receivables 2016-2 Owner Trust
Series 2016-2, Class A4
1.62% due 08/15/2022....................... $ 104,000 $ 103,540
Hudson Yards 2016-10HY Mtg. Trust
Series 2016-10HY, Class A
2.84% due 08/10/2038*(2)................... 1,295,000 1,247,923
JPMDB Commercial Mtg Securities Trust
Series 2016-C2, Class A2
2.66% due 06/15/2049(2).................... 990,000 998,669
Morgan Stanley Capital Barclays Bank Trust
Series 2016-MART, Class A
2.20% due 09/13/2031*(2)................... 185,000 181,556
Santander Drive Auto Receivables Trust
Series 2014-5, Class C
2.46% due 06/15/2020....................... 26,000 26,166
Synchrony Credit Card Master Note Trust
Series 2016-2, Class A
2.21% due 05/15/2024....................... 100,000 99,592
Taco Bell Funding LLC
Series 2016-1A, Class A2I
3.83% due 05/25/2046*...................... 80,595 81,700
----------
Total Asset Backed Securities
(cost $6,298,022).......................... 6,159,556
----------
U.S. CORPORATE BONDS & NOTES -- 45.2%
Advertising Agencies -- 0.1%
Interpublic Group of Cos., Inc.
Senior Notes
4.20% due 04/15/2024....................... 176,000 181,580
Omnicom Group, Inc.
Company Guar. Notes
3.60% due 04/15/2026....................... 195,000 194,901
----------
376,481
----------
Aerospace/Defense-Equipment -- 0.5%
Harris Corp.
Senior Notes
4.85% due 04/27/2035....................... 245,000 261,719
Moog, Inc.
Company Guar. Notes
5.25% due 12/01/2022*...................... 578,000 592,450
Triumph Group, Inc.
Company Guar. Notes
4.88% due 04/01/2021....................... 240,000 231,600
Triumph Group, Inc.
Company Guar. Notes
5.25% due 06/01/2022....................... 763,000 732,480
----------
1,818,249
----------
Agricultural Chemicals -- 0.2%
CF Industries, Inc.
Senior Sec. Notes
3.40% due 12/01/2021*...................... 61,000 60,926
CF Industries, Inc.
Senior Sec. Notes
4.50% due 12/01/2026*...................... 230,000 233,611
Mosaic Co.
Senior Notes
4.88% due 11/15/2041....................... 172,000 159,523
19
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Agricultural Chemicals (continued)
Mosaic Co.
Senior Notes
5.45% due 11/15/2033................ $ 116,000 $ 121,685
----------
575,745
----------
Airlines -- 0.4%
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)............. 142,013 143,717
Delta Air Lines, Inc.
Senior Notes
2.88% due 03/13/2020................ 200,000 201,619
United Airlines Pass-Through Trust
Pass-Through Certs.
Series 2014-2, Class B
4.63% due 03/03/2024................ 643,220 657,692
United Airlines Pass-Through Trust
Pass-Through Certs.
Series 2013-1, Class B
5.38% due 02/15/2023................ 424,251 442,282
----------
1,474,984
----------
Appliances -- 0.0%
Whirlpool Corp.
Senior Notes
4.50% due 06/01/2046................ 137,000 136,416
----------
Applications Software -- 0.2%
Microsoft Corp.
Senior Notes
4.10% due 02/06/2037................ 228,000 235,308
Nuance Communications, Inc.
Company Guar. Notes
5.63% due 12/15/2026*............... 515,000 526,587
----------
761,895
----------
Auto-Cars/Light Trucks -- 1.1%
American Honda Finance Corp.
Senior Notes
1.20% due 07/12/2019................ 288,000 284,124
American Honda Finance Corp.
Senior Notes
1.30% due 03/21/2022................ GBP 365,000 457,103
American Honda Finance Corp.
Senior Notes
2.00% due 02/14/2020................ 310,000 310,761
BMW US Capital LLC Company
Guar. Notes
1.50% due 04/11/2019*............... 210,000 208,570
Daimler Finance North America LLC
Company Guar. Notes
1.50% due 07/05/2019*............... 290,000 285,904
Daimler Finance North America LLC
Company Guar. Notes
2.00% due 07/06/2021*............... 78,000 75,863
Principal Value
Security Description Amount** (Note 2)
Auto-Cars/Light Trucks (continued)
Daimler Finance North America LLC
Company Guar. Notes
2.30% due 01/06/2020*............. $ 162,000 $ 162,367
Daimler Finance North America LLC
Company Guar. Notes
2.45% due 05/18/2020*............. 427,000 427,538
Ford Motor Co.
Senior Notes
4.35% due 12/08/2026.............. 113,000 115,229
Ford Motor Co.
Senior Notes
5.29% due 12/08/2046.............. 157,000 156,639
Ford Motor Credit Co. LLC
Senior Notes
2.02% due 05/03/2019.............. 129,000 128,382
Ford Motor Credit Co. LLC
Senior Notes
3.10% due 05/04/2023.............. 328,000 320,014
Hyundai Capital America
Senior Notes
2.40% due 10/30/2018*............. 500,000 501,572
Toyota Motor Credit Corp.
Senior Notes
1.70% due 01/09/2019.............. 445,000 445,834
Toyota Motor Credit Corp.
Senior Notes
2.00% due 10/24/2018.............. 163,000 163,806
----------
4,043,706
----------
Auto-Heavy Duty Trucks -- 0.4%
JB Poindexter & Co., Inc.
Senior Notes
9.00% due 04/01/2022*............. 1,325,000 1,387,937
----------
Banks-Commercial -- 0.8%
BankUnited, Inc.
Senior Notes
4.88% due 11/17/2025.............. 485,000 487,616
Discover Bank
Senior Notes
3.45% due 07/27/2026.............. 250,000 239,984
Fifth Third Bank
Senior Notes
1.63% due 09/27/2019.............. 207,000 204,468
First Horizon National Corp.
Senior Notes
3.50% due 12/15/2020.............. 609,000 625,756
First Tennessee Bank NA
Senior Notes
2.95% due 12/01/2019.............. 445,000 450,208
Regions Financial Corp.
Senior Notes
3.20% due 02/08/2021.............. 16,000 16,271
Regions Financial Corp.
Sub. Notes
7.38% due 12/10/2037.............. 521,000 647,613
Santander Holdings USA, Inc.
Senior Notes
3.70% due 03/28/2022*............. 277,000 277,956
----------
2,949,872
----------
20
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Banks-Fiduciary -- 0.2%
Citizens Financial Group, Inc.
Sub. Notes
4.15% due 09/28/2022*............... $ 775,000 $ 796,506
----------
Banks-Super Regional -- 0.6%
Huntington National Bank
Senior Notes
2.38% due 03/10/2020................ 254,000 254,892
Wells Fargo & Co.
Senior Notes
1.50% due 09/12/2022................ EUR 400,000 445,391
Wells Fargo & Co.
Senior Notes
3.00% due 10/23/2026................ 606,000 580,216
Wells Fargo & Co.
Senior Notes
3.07% due 01/24/2023................ 365,000 367,220
Wells Fargo & Co.
Sub. Notes
4.30% due 07/22/2027................ 205,000 213,024
Wells Fargo & Co.
Sub. Notes
4.40% due 06/14/2046................ 35,000 33,897
Wells Fargo & Co.
Sub. Notes
4.75% due 12/07/2046................ 162,000 165,502
Wells Fargo & Co.
Sub. Notes
4.90% due 11/17/2045................ 46,000 47,961
----------
2,108,103
----------
Batteries/Battery Systems -- 0.2%
EnerSys
Company Guar. Notes
5.00% due 04/30/2023*............... 896,000 901,600
----------
Brewery -- 0.3%
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
1.90% due 02/01/2019................ 155,000 155,225
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
2.65% due 02/01/2021................ 291,000 293,188
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
3.65% due 02/01/2026................ 136,000 137,523
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
4.70% due 02/01/2036................ 304,000 321,620
Anheuser-Busch InBev Finance, Inc.
Company Guar. Notes
4.90% due 02/01/2046................ 170,000 183,723
----------
1,091,279
----------
Principal Value
Security Description Amount** (Note 2)
Broadcast Services/Program -- 0.3%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes
Series A
6.50% due 11/15/2022......................... $ 939,000 $ 953,085
----------
Building & Construction Products-Misc. -- 0.1%
Standard Industries, Inc.
Senior Notes
5.00% due 02/15/2027*........................ 479,000 469,420
----------
Building & Construction-Misc. -- 0.3%
Weekley Homes LLC/Weekley Finance Corp.
Senior Notes
6.00% due 02/01/2023......................... 1,089,000 1,056,330
----------
Building Products-Air & Heating -- 0.1%
Lennox International, Inc.
Company Guar. Notes
3.00% due 11/15/2023......................... 239,000 234,893
----------
Building Products-Cement -- 0.1%
Vulcan Materials Co.
Senior Notes
3.90% due 04/01/2027......................... 307,000 308,710
----------
Building Products-Wood -- 0.3%
Boise Cascade Co.
Company Guar. Notes
5.63% due 09/01/2024*........................ 580,000 588,700
Masco Corp.
Senior Notes
4.45% due 04/01/2025......................... 333,000 347,565
----------
936,265
----------
Building-Residential/Commercial -- 0.2%
Lennar Corp.
Company Guar. Notes
4.13% due 01/15/2022......................... 785,000 790,644
----------
Cable/Satellite TV -- 1.1%
Block Communications, Inc.
Senior Notes
6.88% due 02/15/2025*........................ 703,000 745,180
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Sec. Notes
3.58% due 07/23/2020......................... 168,000 172,811
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Sec. Notes
4.91% due 07/23/2025......................... 1,030,000 1,088,368
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Sec. Notes
5.38% due 05/01/2047*........................ 129,000 129,589
Charter Communications Operating LLC/Charter
Communications Operating Capital
Senior Sec. Notes
6.38% due 10/23/2035......................... 233,000 264,863
21
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Cable/Satellite TV (continued)
Charter Communications Operating LLC/
Charter Communications Operating Capital
Senior Sec. Notes
6.48% due 10/23/2045....................... $ 81,000 $ 93,258
CSC Holdings LLC
Senior Notes
5.25% due 06/01/2024....................... 715,000 712,319
DISH DBS Corp.
Company Guar. Notes
7.75% due 07/01/2026....................... 618,000 718,425
----------
3,924,813
----------
Casino Hotels -- 0.8%
Caesars Growth Properties Holdings LLC/
Caesars Growth Properties Finance, Inc.
Sec. Notes
9.38% due 05/01/2022....................... 990,000 1,064,250
Chester Downs & Marina LLC
Senior Sec. Notes
9.25% due 02/01/2020*...................... 1,067,000 1,091,007
Downstream Development Authority of the
Quapaw Tribe of Oklahoma
Senior Sec. Notes
10.50% due 07/01/2019*..................... 290,000 282,750
Golden Nugget Escrow, Inc.
Senior Notes
8.50% due 12/01/2021*...................... 477,000 505,620
----------
2,943,627
----------
Cellular Telecom -- 1.7%
Sprint Corp.
Company Guar. Notes
7.25% due 09/15/2021....................... 2,416,000 2,608,072
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023....................... 2,128,000 2,356,760
T-Mobile USA, Inc.
Company Guar. Notes
6.54% due 04/28/2020....................... 1,077,000 1,098,540
----------
6,063,372
----------
Chemicals-Diversified -- 0.5%
Eastman Chemical Co.
Senior Notes
1.50% due 05/26/2023....................... EUR 180,000 198,443
Eastman Chemical Co.
Senior Notes
1.88% due 11/23/2026....................... EUR 310,000 340,111
Eastman Chemical Co.
Senior Notes
4.65% due 10/15/2044....................... 153,000 153,983
Hexion, Inc.
Senior Sec. Notes
6.63% due 04/15/2020....................... 845,000 777,400
Westlake Chemical Corp.
Company Guar. Notes
3.60% due 08/15/2026*...................... 176,000 172,359
----------
1,642,296
----------
Principal Value
Security Description Amount** (Note 2)
Chemicals-Plastics -- 0.1%
A. Schulman, Inc.
Company Guar. Notes
6.88% due 06/01/2023........................ $ 464,000 $ 481,400
----------
Chemicals-Specialty -- 0.2%
HB Fuller Co.
Senior Notes
4.00% due 02/15/2027........................ 101,000 101,528
Kraton Polymers LLC/Kraton Polymers Capital
Corp. Company
Guar. Notes
7.00% due 04/15/2025*....................... 322,000 326,427
Lubrizol Corp.
Company Guar. Notes
6.50% due 10/01/2034........................ 176,000 226,362
----------
654,317
----------
Coal -- 0.3%
SunCoke Energy Partners LP/SunCoke Energy
Partners Finance Corp.
Company Guar. Notes
7.38% due 02/01/2020........................ 1,256,000 1,268,560
----------
Coatings/Paint -- 0.0%
RPM International, Inc.
Senior Notes
3.75% due 03/15/2027........................ 89,000 88,955
----------
Commercial Services-Finance -- 0.0%
Automatic Data Processing, Inc.
Senior Notes
2.25% due 09/15/2020........................ 124,000 125,424
----------
Computer Services -- 0.8%
Harland Clarke Holdings Corp.
Senior Notes
8.38% due 08/15/2022*....................... 705,000 722,625
Harland Clarke Holdings Corp.
Senior Notes
9.25% due 03/01/2021*....................... 1,150,000 1,119,813
Hewlett Packard Enterprise Co.
Senior Notes
6.20% due 10/15/2035........................ 428,000 448,719
Leidos Holdings, Inc.
Company Guar. Notes
4.45% due 12/01/2020........................ 679,000 706,160
----------
2,997,317
----------
Computers -- 0.9%
Apple, Inc.
Senior Notes
2.85% due 05/06/2021........................ 253,000 259,007
Apple, Inc.
Senior Notes
2.85% due 02/23/2023........................ 239,000 241,262
Diamond 1 Finance Corp./Diamond 2
Finance Corp.
Senior Sec. Notes
6.02% due 06/15/2026*....................... 2,084,000 2,271,937
22
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Computers (continued)
Diamond 1 Finance Corp./Diamond 2
Finance Corp.
Senior Sec. Notes
8.10% due 07/15/2036*......................... $266,000 $ 334,058
Diamond 1 Finance Corp./Diamond 2
Finance Corp.
Senior Sec. Notes
8.35% due 07/15/2046*......................... 178,000 229,886
----------
3,336,150
----------
Computers-Integrated Systems -- 0.3%
Diebold, Inc.
Company Guar. Notes
8.50% due 04/15/2024.......................... 982,000 1,085,110
----------
Computers-Memory Devices -- 0.2%
Western Digital Corp.
Company Guar. Notes
10.50% due 04/01/2024......................... 622,000 733,182
----------
Containers-Metal/Glass -- 0.4%
Crown Cork & Seal Co., Inc.
Company Guar. Notes
7.38% due 12/15/2026.......................... 667,000 765,382
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
5.38% due 01/15/2025*......................... 565,000 573,475
----------
1,338,857
----------
Containers-Paper/Plastic -- 0.3%
Amcor Finance USA, Inc.
Company Guar. Notes
3.63% due 04/28/2026*......................... 268,000 265,459
Brambles USA, Inc.
Company Guar. Notes
4.13% due 10/23/2025*......................... 101,000 103,495
Multi-Color Corp.
Company Guar. Notes
6.13% due 12/01/2022*......................... 546,000 569,205
----------
938,159
----------
Cosmetics & Toiletries -- 0.1%
Estee Lauder Cos., Inc.
Senior Bonds
4.15% due 03/15/2047.......................... 96,000 96,219
Procter & Gamble Co.
Senior Notes
1.70% due 11/03/2021.......................... 283,000 277,693
----------
373,912
----------
Data Processing/Management -- 0.1%
Fidelity National Information Services, Inc.
Senior Notes
4.50% due 08/15/2046.......................... 110,000 106,162
Fidelity National Information Services, Inc.
Senior Notes
5.00% due 10/15/2025.......................... 124,000 134,865
----------
241,027
----------
Principal Value
Security Description Amount** (Note 2)
Diagnostic Equipment -- 0.0%
Thermo Fisher Scientific, Inc.
Senior Notes
1.45% due 03/16/2027............ EUR 140,000 $149,235
--------
Distribution/Wholesale -- 0.0%
WW Grainger, Inc.
Senior Notes
3.75% due 05/15/2046............ 108,000 102,525
--------
Diversified Banking Institutions -- 2.7%
Bank of America Corp.
Senior Notes
2.50% due 07/27/2020............ EUR 450,000 514,344
Bank of America Corp.
Sub. Notes
3.95% due 04/21/2025............ 143,000 142,380
Bank of America Corp.
Sub. Notes
4.18% due 11/25/2027............ 896,000 899,256
Bank of America Corp.
Sub. Notes
4.25% due 10/22/2026............ 108,000 109,665
Bank of America Corp.
Sub. Notes
5.50% due 11/22/2021............ GBP 300,000 434,578
Citigroup, Inc.
Sub. Notes
3.88% due 03/26/2025............ 6,000 5,961
Citigroup, Inc.
Sub. Notes
4.40% due 06/10/2025............ 518,000 527,799
Citigroup, Inc.
Sub. Notes
4.45% due 09/29/2027............ 713,000 721,587
Citigroup, Inc.
Sub. Notes
6.00% due 10/31/2033............ 142,000 162,851
Goldman Sachs Group, Inc.
Senior Notes
2.13% due 09/30/2024............ EUR 400,000 452,621
Goldman Sachs Group, Inc.
Senior Notes
2.63% due 08/19/2020............ EUR 275,000 315,722
Goldman Sachs Group, Inc. FRS
Senior Notes
2.79% due 10/28/2027............ 194,000 199,664
Goldman Sachs Group, Inc.
Senior Notes
3.50% due 11/16/2026............ 210,000 205,300
Goldman Sachs Group, Inc.
Senior Notes
3.63% due 01/22/2023............ 129,000 132,243
Goldman Sachs Group, Inc.
Senior Notes
4.75% due 10/21/2045............ 90,000 94,819
Goldman Sachs Group, Inc.
Sub. Notes
5.15% due 05/22/2045............ 30,000 31,522
23
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Diversified Banking Institutions (continued)
Goldman Sachs Group, Inc.
Senior Notes
6.13% due 02/15/2033.................... $ 447,000 $ 539,664
Goldman Sachs Group, Inc.
Sub. Notes
6.75% due 10/01/2037.................... 226,000 278,870
JPMorgan Chase & Co.
Senior Notes
2.70% due 05/18/2023.................... 37,000 36,261
JPMorgan Chase & Co.
Senior Notes
2.75% due 06/23/2020.................... 312,000 316,069
JPMorgan Chase & Co.
Sub. Notes
3.63% due 12/01/2027.................... 273,000 264,857
JPMorgan Chase & Co. FRS
Senior Notes
4.26% due 02/22/2048.................... 210,000 209,391
Morgan Stanley
Senior Notes
1.75% due 03/11/2024.................... EUR 350,000 388,085
Morgan Stanley
Senior Notes
2.13% due 04/25/2018.................... 283,000 284,081
Morgan Stanley
Senior Notes
2.38% due 03/31/2021.................... EUR 350,000 401,383
Morgan Stanley
Senior Notes
2.63% due 03/09/2027.................... GBP 400,000 500,670
Morgan Stanley
Senior Notes
2.80% due 06/16/2020.................... 151,000 152,832
Morgan Stanley
Sub. Notes
4.10% due 05/22/2023.................... 548,000 565,969
Morgan Stanley
Senior Notes
4.38% due 01/22/2047.................... 138,000 138,100
Morgan Stanley
Sub. Notes
5.00% due 11/24/2025.................... 568,000 609,908
----------
9,636,452
----------
Diversified Financial Services -- 0.1%
USAA Capital Corp.
Senior Notes
2.13% due 06/03/2019*................... 270,000 271,304
----------
Diversified Manufacturing Operations -- 0.5%
General Electric Co.
Senior Notes
2.70% due 10/09/2022.................... 307,000 309,299
Illinois Tool Works, Inc.
Senior Notes
2.65% due 11/15/2026.................... 216,000 207,960
Ingersoll-Rand Global Holding Co., Ltd.
Company Guar. Notes
5.75% due 06/15/2043.................... 403,000 478,241
Principal Value
Security Description Amount** (Note 2)
Diversified Manufacturing Operations (continued)
Parker-Hannifin Corp.
Senior Notes
3.25% due 03/01/2027*....................... $ 128,000 $ 127,200
Parker-Hannifin Corp.
Senior Notes
4.10% due 03/01/2047*....................... 101,000 101,606
Textron, Inc.
Senior Notes
3.65% due 03/15/2027........................ 158,000 156,910
Textron, Inc.
Senior Notes
4.00% due 03/15/2026........................ 208,000 211,880
Trinity Industries, Inc.
Company Guar. Notes
4.55% due 10/01/2024........................ 243,000 242,707
----------
1,835,803
----------
Electric-Integrated -- 1.5%
AES Corp.
Senior Notes
5.50% due 03/15/2024........................ 566,000 574,490
Consolidated Edison Co. of New York, Inc.
Senior Notes
4.30% due 12/01/2056........................ 112,000 112,458
Dominion Resources, Inc.
Junior Sub. Notes
2.96% due 07/01/2019........................ 88,000 89,250
Dominion Resources, Inc.
Senior Notes
5.25% due 08/01/2033........................ 536,000 583,950
Duke Energy Corp.
Senior Notes
3.75% due 09/01/2046........................ 158,000 141,847
Duke Energy Progress LLC
1st Mtg. Notes
2.80% due 05/15/2022........................ 207,000 209,678
Exelon Corp.
Junior Sub. Notes
3.50% due 06/01/2022........................ 257,000 259,373
Exelon Generation Co. LLC
Senior Notes
2.95% due 01/15/2020........................ 219,000 222,010
FirstEnergy Corp.
Senior Notes
7.38% due 11/15/2031........................ 374,000 487,451
Great Plains Energy, Inc.
Senior Notes
4.85% due 04/01/2047........................ 215,000 220,411
Massachusetts Electric Co.
Notes
4.00% due 08/15/2046*....................... 456,000 443,785
Mirant Mid Atlantic LLC Pass Through Trust
Pass-Through Certs. Class B
9.13% due 06/30/2017........................ 126,600 116,472
Mirant Mid Atlantic LLC Pass Through Trust
Pass-Through Certs. Class C
10.06% due 12/30/2028....................... 1,051,264 951,394
24
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Electric-Integrated (continued)
Pacific Gas & Electric Co.
Senior Notes
4.00% due 12/01/2046................. $221,000 $ 217,075
South Carolina Electric & Gas Co.
1st Mtg. Bonds
5.10% due 06/01/2065................. 148,000 153,170
Southern California Edison Co.
1st Mtg. Bonds
1.13% due 05/01/2017................. 446,000 445,959
Southern Power Co.
Senior Notes
4.95% due 12/15/2046................. 7,000 6,921
Trans-Allegheny Interstate Line Co.
Senior Notes
3.85% due 06/01/2025*................ 105,000 107,552
----------
5,343,246
----------
Electric-Transmission -- 0.0%
AEP Transmission Co. LLC
Senior Notes
4.00% due 12/01/2046*................ 64,000 63,709
----------
Electronic Components-Misc. -- 0.0%
Corning, Inc.
Senior Notes
1.50% due 05/08/2018................. 163,000 162,752
----------
Electronic Measurement Instruments -- 0.0%
Keysight Technologies, Inc.
Senior Notes
4.60% due 04/06/2027................. 140,000 141,015
----------
Energy-Alternate Sources -- 0.4%
Pattern Energy Group, Inc.
Company Guar. Notes
5.88% due 02/01/2024*................ 835,000 845,437
TerraForm Power Operating LLC
Company Guar. Notes
6.38% due 02/01/2023*................ 650,000 675,188
----------
1,520,625
----------
Enterprise Software/Service -- 0.5%
CA, Inc.
Senior Notes
3.60% due 08/15/2022................. 185,000 187,720
Donnelley Financial Solutions, Inc.
Senior Notes
8.25% due 10/15/2024*................ 826,000 852,845
Oracle Corp.
Senior Notes
1.90% due 09/15/2021................. 289,000 283,977
Oracle Corp.
Senior Notes
3.85% due 07/15/2036................. 497,000 485,609
Oracle Corp.
Senior Notes
3.90% due 05/15/2035................. 67,000 66,163
----------
1,876,314
----------
Principal Value
Security Description Amount** (Note 2)
Finance-Auto Loans -- 0.7%
Ally Financial, Inc.
Sub. Notes
5.75% due 11/20/2025........................ $1,631,000 $1,669,736
Credit Acceptance Corp.
Company Guar. Notes
7.38% due 03/15/2023........................ 810,000 814,050
----------
2,483,786
----------
Finance-Commercial -- 0.1%
Jefferies Finance LLC/JFIN Co-Issuer Corp.
Senior Notes
6.88% due 04/15/2022*....................... 259,000 247,345
----------
Finance-Consumer Loans -- 0.7%
Enova International, Inc.
Company Guar. Notes
9.75% due 06/01/2021........................ 1,126,000 1,142,890
Navient Corp.
Senior Notes
5.63% due 08/01/2033........................ 611,000 475,052
OneMain Financial Holdings LLC
Company Guar. Notes
6.75% due 12/15/2019*....................... 916,000 957,220
----------
2,575,162
----------
Finance-Credit Card -- 0.3%
Alliance Data Systems Corp.
Company Guar. Notes
5.88% due 11/01/2021*....................... 750,000 776,250
American Express Credit Corp.
Senior Notes
1.70% due 10/30/2019........................ 191,000 189,837
American Express Credit Corp.
Senior Notes
2.25% due 05/05/2021........................ 296,000 293,351
----------
1,259,438
----------
Finance-Investment Banker/Broker -- 0.3%
Lehman Brothers Holdings, Inc.
Escrow Notes
6.75% due 12/28/2017+(3)(7)................. 280,000 28
Lehman Brothers Holdings, Inc.
Escrow Notes
7.50% due 05/11/2038+(3)(7)................. 361,000 36
LPL Holdings, Inc.
Company Guar. Notes
5.75% due 09/15/2025*....................... 740,000 747,400
TD Ameritrade Holding Corp.
Senior Notes
2.95% due 04/01/2022........................ 200,000 202,469
----------
949,933
----------
Finance-Leasing Companies -- 0.1%
International Lease Finance Corp.
Senior Notes
5.88% due 08/15/2022........................ 191,000 212,751
----------
Finance-Mortgage Loan/Banker -- 0.3%
Quicken Loans, Inc.
Company Guar. Notes
5.75% due 05/01/2025*....................... 1,050,000 1,031,625
----------
25
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Finance-Other Services -- 0.1%
National Rural Utilities Cooperative Finance Corp.
Senior Notes
0.95% due 04/24/2017................................ $ 137,000 $ 136,987
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
2.00% due 01/27/2020................................ 273,000 271,989
National Rural Utilities Cooperative Finance Corp.
Collateral Trust Bonds
2.30% due 11/01/2020................................ 118,000 118,173
----------
527,149
----------
Firearms & Ammunition -- 0.2%
FGI Operating Co. LLC/FGI Finance, Inc.
Sec. Notes
7.88% due 05/01/2020................................ 1,115,000 774,925
----------
Food-Flour & Grain -- 0.2%
Post Holdings, Inc.
Company Guar. Notes
5.50% due 03/01/2025*............................... 735,000 738,675
----------
Food-Meat Products -- 0.0%
Smithfield Foods, Inc.
Company Guar. Notes
4.25% due 02/01/2027*............................... 76,000 76,894
----------
Food-Misc./Diversified -- 0.1%
ConAgra Foods, Inc.
Senior Notes
3.20% due 01/25/2023................................ 109,000 109,461
Kraft Heinz Foods Co.
Sec. Notes
4.88% due 02/15/2025*............................... 286,000 305,729
----------
415,190
----------
Food-Retail -- 0.3%
Albertsons Cos. LLC/Safeway, Inc.
Senior Notes
5.75% due 03/15/2025*............................... 350,000 339,500
Albertsons Cos. LLC/Safeway, Inc.
Senior Notes
6.63% due 06/15/2024*............................... 721,000 737,222
----------
1,076,722
----------
Food-Wholesale/Distribution -- 0.3%
C&S Group Enterprises LLC
Senior Sec. Notes
5.38% due 07/15/2022*............................... 941,000 929,237
----------
Gambling (Non-Hotel) -- 0.8%
Mohegan Tribal Gaming Authority
Company Guar. Notes
7.88% due 10/15/2024*............................... 1,520,000 1,540,900
Scientific Games International, Inc.
Company Guar. Notes
10.00% due 12/01/2022............................... 1,405,000 1,498,081
Principal Value
Security Description Amount** (Note 2)
Gambling (Non-Hotel) (continued)
Waterford Gaming LLC/Waterford Gaming Financial Corp.
Escrow Notes
8.63% due 09/15/2014*+(3)(7).......................... $ 478,062 $ 6,454
----------
3,045,435
----------
Gas-Distribution -- 0.1%
Dominion Gas Holdings LLC
Senior Notes
4.80% due 11/01/2043.................................. 179,000 188,134
----------
Hazardous Waste Disposal -- 0.2%
Clean Harbors, Inc.
Company Guar. Notes
5.13% due 06/01/2021.................................. 543,000 554,403
----------
Home Furnishings -- 0.2%
Tempur Sealy International, Inc.
Company Guar. Notes
5.50% due 06/15/2026.................................. 725,000 714,850
----------
Hotels/Motels -- 0.2%
Hilton Grand Vacations Borrower LLC/Hilton
Grand Vacations Borrower, Inc.
Company Guar. Notes
6.13% due 12/01/2024*................................. 685,000 719,250
----------
Independent Power Producers -- 0.3%
Dynegy, Inc.
Company Guar. Notes
8.00% due 01/15/2025*................................. 1,025,000 981,437
----------
Industrial Gases -- 0.1%
Airgas, Inc.
Company Guar. Notes
3.05% due 08/01/2020.................................. 81,000 83,213
Praxair, Inc.
Senior Notes
1.20% due 02/12/2024.................................. EUR 320,000 352,891
----------
436,104
----------
Insurance Brokers -- 0.0%
Marsh & McLennan Cos., Inc.
Senior Notes
4.35% due 01/30/2047.................................. 44,000 44,562
----------
Insurance-Life/Health -- 0.2%
Aflac, Inc.
Senior Notes
4.00% due 10/15/2046.................................. 142,000 134,273
Pacific LifeCorp
Senior Notes
6.00% due 02/10/2020*................................. 210,000 227,959
Pricoa Global Funding I
Senior Sec. Notes
1.35% due 08/18/2017*................................. 344,000 343,501
Unum Group
Senior Notes
5.75% due 08/15/2042.................................. 90,000 100,629
----------
806,362
----------
26
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Insurance-Multi-line -- 0.2%
Assurant, Inc.
Senior Notes
6.75% due 02/15/2034....................... $ 222,000 $ 267,952
MetLife, Inc.
Senior Notes
4.60% due 05/13/2046....................... 134,000 141,144
Metropolitan Life Global Funding I
Sec. Notes
2.30% due 04/10/2019*...................... 200,000 201,169
----------
610,265
----------
Insurance-Mutual -- 0.4%
Massachusetts Mutual Life Insurance Co.
Sub. Notes
4.50% due 04/15/2065*...................... 172,000 166,815
Massachusetts Mutual Life Insurance Co.
Sub. Notes
4.90% due 04/01/2077*...................... 44,000 44,197
MassMutual Global Funding II
Senior Sec. Notes
2.35% due 04/09/2019*...................... 872,000 880,758
MassMutual Global Funding II
Senior Sec. Notes
2.50% due 10/17/2022*...................... 145,000 142,265
New York Life Global Funding
Sec. Notes
2.10% due 01/02/2019*...................... 300,000 301,773
----------
1,535,808
----------
Insurance-Reinsurance -- 0.1%
Berkshire Hathaway, Inc.
Senior Notes
0.63% due 01/17/2023....................... EUR 190,000 203,095
Berkshire Hathaway, Inc.
Senior Notes
1.15% due 08/15/2018....................... 196,000 195,014
----------
398,109
----------
Internet Connectivity Services -- 0.3%
Cogent Communications Group, Inc.
Senior Sec. Notes
5.38% due 03/01/2022*...................... 480,000 492,600
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
6.38% due 05/15/2025....................... 685,000 739,368
----------
1,231,968
----------
Internet Content-Entertainment -- 0.4%
Netflix, Inc.
Senior Notes
5.88% due 02/15/2025....................... 1,257,000 1,351,275
----------
Investment Management/Advisor Services -- 0.3%
Drawbridge Special Opportunities Fund LP/
Drawbridge Special Opportunities Finance
Senior Notes
5.00% due 08/01/2021*...................... 1,106,000 1,088,113
----------
Principal Value
Security Description Amount** (Note 2)
Machinery-Construction & Mining -- 0.2%
Terex Corp.
Company Guar. Notes
5.63% due 02/01/2025*................. $ 734,000 $ 745,010
----------
Machinery-Farming -- 0.0%
John Deere Capital Corp.
Senior Notes
2.65% due 01/06/2022.................. 178,000 178,643
----------
Machinery-General Industrial -- 0.0%
Roper Technologies, Inc.
Senior Notes
3.80% due 12/15/2026.................. 73,000 73,320
----------
Marine Services -- 0.3%
Great Lakes Dredge & Dock Corp.
Company Guar. Notes
7.38% due 02/01/2019.................. 1,129,000 1,119,121
----------
Medical Labs & Testing Services -- 0.1%
Laboratory Corp. of America Holdings
Senior Notes
3.20% due 02/01/2022.................. 85,000 85,385
Quest Diagnostics, Inc.
Senior Notes
3.45% due 06/01/2026.................. 155,000 152,670
Roche Holdings, Inc.
Company Guar. Notes
1.75% due 01/28/2022*................. 204,000 196,950
----------
435,005
----------
Medical-Biomedical/Gene -- 0.3%
Amgen, Inc.
Senior Notes
1.25% due 02/25/2022.................. EUR 225,000 247,177
Amgen, Inc.
Senior Notes
2.00% due 02/25/2026.................. EUR 100,000 113,528
Amgen, Inc.
Senior Notes
4.40% due 05/01/2045.................. 101,000 98,035
Baxalta, Inc.
Company Guar. Notes
3.60% due 06/23/2022.................. 214,000 218,757
Celgene Corp.
Senior Notes
3.63% due 05/15/2024.................. 203,000 205,480
Gilead Sciences, Inc.
Senior Notes
4.00% due 09/01/2036.................. 76,000 72,232
----------
955,209
----------
Medical-Drugs -- 0.2%
Forest Laboratories LLC
Company Guar. Notes
4.88% due 02/15/2021*................. 346,000 372,274
27
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Medical-Drugs (continued)
Johnson & Johnson
Senior Notes
3.63% due 03/03/2037................................ $ 320,000 $ 317,336
----------
689,610
----------
Medical-HMO -- 0.3%
Centene Corp.
Senior Notes
4.75% due 01/15/2025................................ 540,000 543,040
UnitedHealth Group, Inc.
Senior Notes
1.40% due 12/15/2017................................ 281,000 281,002
UnitedHealth Group, Inc.
Senior Notes
2.13% due 03/15/2021................................ 205,000 203,469
----------
1,027,511
----------
Medical-Hospitals -- 1.3%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
6.25% due 03/31/2023................................ 885,000 900,487
HCA, Inc.
Senior Sec. Notes
5.25% due 06/15/2026................................ 719,000 756,748
HCA, Inc.
Company Guar. Notes
7.50% due 11/15/2095................................ 1,128,000 1,101,210
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019................................ 1,092,000 1,045,590
Tenet Healthcare Corp.
Senior Sec. Notes
4.50% due 04/01/2021................................ 870,000 870,000
----------
4,674,035
----------
Metal Processors & Fabrication -- 0.4%
Grinding Media, Inc./MC Grinding Media Canada, Inc.
Senior Sec. Notes
7.38% due 12/15/2023*............................... 805,000 845,250
Novelis Corp.
Company Guar. Notes
5.88% due 09/30/2026*............................... 300,000 306,375
Novelis Corp.
Company Guar. Notes
6.25% due 08/15/2024*............................... 396,000 412,830
----------
1,564,455
----------
Metal-Diversified -- 0.1%
Glencore Funding LLC
Company Guar. Notes
4.00% due 03/27/2027*............................... 277,000 273,467
----------
Metal-Iron -- 0.2%
Cliffs Natural Resources, Inc.
Company Guar. Bonds
5.75% due 03/01/2025*............................... 755,000 732,350
----------
Principal Value
Security Description Amount** (Note 2)
Mining -- 0.0%
Renco Metals, Inc.
Escrow Notes
11.50% due 07/01/2003+(3)(7)..................... $ 500,000 $ 70,000
----------
Multimedia -- 0.1%
Time Warner, Inc.
Company Guar. Notes
4.85% due 07/15/2045............................. 220,000 213,966
Viacom, Inc.
Senior Notes
5.25% due 04/01/2044............................. 73,000 71,596
Viacom, Inc.
Senior Notes
5.85% due 09/01/2043............................. 103,000 108,482
Walt Disney Co.
Senior Notes
1.65% due 01/08/2019............................. 100,000 100,198
----------
494,242
----------
Networking Products -- 0.2%
Cisco Systems, Inc.
Senior Notes
2.13% due 03/01/2019............................. 322,000 325,359
Cisco Systems, Inc.
Senior Notes
2.20% due 02/28/2021............................. 228,000 228,099
----------
553,458
----------
Office Automation & Equipment -- 0.2%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
5.00% due 09/01/2025............................. 735,000 749,700
----------
Oil Companies-Exploration & Production -- 2.3%
Anadarko Petroleum Corp.
Senior Notes
6.45% due 09/15/2036............................. 494,000 583,063
Carrizo Oil & Gas, Inc.
Company Guar. Notes
6.25% due 04/15/2023............................. 600,000 601,500
Concho Resources, Inc.
Company Guar. Notes
4.38% due 01/15/2025............................. 217,000 218,356
Denbury Resources, Inc.
Company Guar. Notes
5.50% due 05/01/2022............................. 484,000 377,520
Denbury Resources, Inc.
Sec. Notes
9.00% due 05/15/2021*............................ 1,255,000 1,324,025
EP Energy LLC/Everest Acquisition Finance, Inc.
Senior Sec. Notes
8.00% due 11/29/2024*............................ 310,000 325,500
Hess Corp.
Senior Notes
4.30% due 04/01/2027............................. 138,000 135,545
28
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Oil Companies-Exploration & Production (continued)
Hess Corp.
Senior Notes
5.60% due 02/15/2041..................... $253,000 $ 253,390
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
5.00% due 12/01/2024*.................... 685,000 642,187
Hilcorp Energy I LP/Hilcorp Finance Co.
Senior Notes
5.75% due 10/01/2025*.................... 43,000 41,495
Marathon Oil Corp.
Senior Notes
5.20% due 06/01/2045..................... 79,000 77,873
Newfield Exploration Co.
Senior Notes
5.38% due 01/01/2026..................... 559,000 583,820
Noble Energy, Inc.
Senior Notes
3.90% due 11/15/2024..................... 84,000 85,143
Noble Energy, Inc.
Senior Notes
5.05% due 11/15/2044..................... 122,000 124,755
Rex Energy Corp.
Sec. Notes
8.00% due 10/01/2020(14)................. 646,815 333,110
RSP Permian, Inc.
Company Guar. Notes
5.25% due 01/15/2025*.................... 600,000 604,500
Sanchez Energy Corp.
Company Guar. Notes
6.13% due 01/15/2023..................... 481,000 446,128
SM Energy Co.
Senior Notes
5.63% due 06/01/2025..................... 506,000 484,242
SM Energy Co.
Senior Notes
6.50% due 01/01/2023..................... 116,000 117,740
WPX Energy, Inc.
Senior Notes
7.50% due 08/01/2020..................... 750,000 795,000
----------
8,154,892
----------
Oil Companies-Integrated -- 0.2%
Chevron Corp.
Senior Notes
1.37% due 03/02/2018..................... 324,000 323,813
Chevron Corp.
Senior Notes
1.96% due 03/03/2020..................... 178,000 177,869
Chevron Corp.
Senior Bonds
1.99% due 03/03/2020..................... 162,000 162,205
Exxon Mobil Corp.
Senior Notes
1.31% due 03/06/2018..................... 199,000 198,841
----------
862,728
----------
Principal Value
Security Description Amount** (Note 2)
Oil Field Machinery & Equipment -- 0.2%
Forum Energy Technologies, Inc.
Company Guar. Notes
6.25% due 10/01/2021.......................... $ 610,000 $ 600,850
----------
Oil Refining & Marketing -- 0.2%
PBF Holding Co. LLC/PBF Finance Corp.
Senior Sec. Notes
7.00% due 11/15/2023.......................... 880,000 882,200
----------
Oil-Field Services -- 0.4%
Bristow Group, Inc.
Company Guar. Notes
6.25% due 10/15/2022.......................... 1,180,000 949,900
SESI LLC
Company Guar. Notes
7.13% due 12/15/2021.......................... 548,000 554,850
----------
1,504,750
----------
Paper & Related Products -- 0.7%
Domtar Corp.
Company Guar. Notes
6.75% due 02/15/2044.......................... 260,000 272,888
Georgia-Pacific LLC
Senior Notes
3.60% due 03/01/2025*......................... 492,000 502,502
Georgia-Pacific LLC
Senior Notes
3.73% due 07/15/2023*......................... 672,000 699,189
Georgia-Pacific LLC
Company Guar. Notes
5.40% due 11/01/2020*......................... 275,000 302,167
International Paper Co.
Senior Notes
4.40% due 08/15/2047.......................... 101,000 95,344
PH Glatfelter Co.
Company Guar. Notes
5.38% due 10/15/2020.......................... 620,000 633,950
----------
2,506,040
----------
Pharmacy Services -- 0.1%
Express Scripts Holding Co.
Company Guar. Notes
3.00% due 07/15/2023.......................... 107,000 103,427
Express Scripts Holding Co.
Company Guar. Notes
4.80% due 07/15/2046.......................... 163,000 156,169
----------
259,596
----------
Pipelines -- 2.6%
Antero Midstream Partners LP/Antero Midstream
Finance Corp.
Company Guar. Notes
5.38% due 09/15/2024*......................... 507,000 514,605
Cheniere Corpus Christi Holdings LLC
Senior Sec. Notes
7.00% due 06/30/2024*......................... 1,240,000 1,365,550
29
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Pipelines (continued)
Colorado Interstate Gas Co. LLC/Colorado Interstate
Issuing Corp.
Company Guar. Notes
4.15% due 08/15/2026*............................... $ 89,000 $ 86,984
Columbia Pipeline Group, Inc.
Company Guar. Notes
2.45% due 06/01/2018................................ 59,000 59,281
Energy Transfer Partners LP
Senior Notes
4.90% due 03/15/2035................................ 115,000 110,053
Energy Transfer Partners LP
Senior Notes
6.05% due 06/01/2041................................ 29,000 30,019
Energy Transfer Partners LP
Senior Notes
6.63% due 10/15/2036................................ 366,000 406,758
EnLink Midstream Partners LP
Senior Notes
4.85% due 07/15/2026................................ 189,000 195,026
EnLink Midstream Partners LP
Senior Notes
5.05% due 04/01/2045................................ 186,000 175,152
Enterprise Products Operating LLC
Company Guar. Notes
4.85% due 03/15/2044................................ 77,000 77,877
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
5.63% due 06/15/2024................................ 990,000 967,725
Genesis Energy LP/Genesis Energy Finance Corp.
Company Guar. Notes
6.00% due 05/15/2023................................ 532,000 534,660
Holly Energy Partners LP/Holly Energy Finance Corp.
Company Guar. Notes
6.00% due 08/01/2024*............................... 672,000 703,920
Kinder Morgan Energy Partners LP
Company Guar. Notes
4.70% due 11/01/2042................................ 159,000 144,188
Kinder Morgan Energy Partners LP
Company Guar. Notes
5.63% due 09/01/2041................................ 92,000 92,083
Kinder Morgan, Inc.
Company Guar. Notes
5.55% due 06/01/2045................................ 88,000 89,914
MPLX LP
Senior Notes
4.13% due 03/01/2027................................ 140,000 139,393
MPLX LP
Senior Notes
5.20% due 03/01/2047................................ 76,000 76,476
Phillips 66 Partners LP
Senior Notes
4.90% due 10/01/2046................................ 87,000 82,833
Plains All American Pipeline LP/PAA Finance Corp.
Senior Notes
3.60% due 11/01/2024................................ 90,000 87,117
Principal Value
Security Description Amount** (Note 2)
Pipelines (continued)
Plains All American Pipeline LP/PAA Finance Corp.
Senior Notes
3.85% due 10/15/2023............................... $ 108,000 $ 108,296
Rose Rock Midstream LP/Rose Rock Finance Corp.
Company Guar. Notes
5.63% due 07/15/2022............................... 756,000 747,026
Summit Midstream Holdings LLC/Summit
Midstream Finance Corp.
Company Guar. Notes
5.50% due 08/15/2022............................... 742,000 742,000
Tallgrass Energy Partners LP/Tallgrass Energy
Finance Corp.
Company Guar. Notes
5.50% due 09/15/2024*.............................. 580,000 582,900
Tesoro Logistics LP/Tesoro Logistics Finance Corp.
Company Guar. Notes
6.13% due 10/15/2021............................... 1,116,000 1,167,615
Western Gas Partners LP
Senior Notes
4.65% due 07/01/2026............................... 202,000 208,043
----------
9,495,494
----------
Power Converter/Supply Equipment -- 0.1%
Hubbell, Inc.
Senior Notes
3.35% due 03/01/2026............................... 183,000 181,923
----------
Printing-Commercial -- 0.3%
Quad/Graphics, Inc.
Company Guar. Notes
7.00% due 05/01/2022............................... 942,000 942,000
----------
Radio -- 0.1%
Sirius XM Radio, Inc.
Company Guar. Notes
5.38% due 07/15/2026*.............................. 497,000 508,183
----------
Real Estate Investment Trusts -- 1.3%
American Tower Corp.
Senior Notes
3.13% due 01/15/2027............................... 221,000 206,857
American Tower Corp.
Senior Notes
3.38% due 10/15/2026............................... 156,000 148,736
CTR Partnership LP/CareTrust Capital Corp.
Company Guar. Notes
5.88% due 06/01/2021............................... 781,000 800,525
CyrusOne LP/CyrusOne Finance Corp.
Company Guar. Notes
5.00% due 03/15/2024*.............................. 547,000 562,043
CyrusOne LP/CyrusOne Finance Corp.
Company Guar. Notes
5.38% due 03/15/2027*.............................. 182,000 183,820
ESH Hospitality, Inc.
Company Guar. Notes
5.25% due 05/01/2025*.............................. 445,000 448,613
30
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Real Estate Investment Trusts (continued)
iStar, Inc.
Senior Notes
6.00% due 04/01/2022................................. $1,035,000 $1,050,525
Simon Property Group LP
Senior Notes
4.25% due 11/30/2046................................. 132,000 127,719
Starwood Property Trust, Inc.
Senior Notes
5.00% due 12/15/2021*................................ 1,238,000 1,284,425
----------
4,813,263
----------
Real Estate Management/Services -- 0.4%
Kennedy-Wilson, Inc.
Company Guar. Notes
5.88% due 04/01/2024................................. 905,000 927,625
Realogy Group LLC/Realogy Co-Issuer Corp.
Company Guar. Notes
4.88% due 06/01/2023*................................ 590,000 576,725
----------
1,504,350
----------
Real Estate Operations & Development -- 0.2%
Howard Hughes Corp.
Senior Notes
5.38% due 03/15/2025*................................ 750,000 742,500
----------
Rental Auto/Equipment -- 0.5%
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.
Company Guar. Notes
5.25% due 03/15/2025*................................ 704,000 651,200
ERAC USA Finance LLC
Company Guar. Notes
4.20% due 11/01/2046*................................ 305,000 277,319
Hertz Corp.
Company Guar. Notes
5.50% due 10/15/2024*................................ 872,000 757,550
----------
1,686,069
----------
Retail-Appliances -- 0.4%
Conn's, Inc.
Company Guar. Notes
7.25% due 07/15/2022................................. 1,668,000 1,405,290
----------
Retail-Building Products -- 0.0%
Home Depot, Inc.
Senior Notes
2.00% due 04/01/2021................................. 17,000 16,923
Home Depot, Inc.
Senior Notes
3.50% due 09/15/2056................................. 104,000 90,792
----------
107,715
----------
Retail-Discount -- 0.1%
Costco Wholesale Corp.
Senior Notes
2.25% due 02/15/2022................................. 344,000 342,903
----------
Principal Value
Security Description Amount** (Note 2)
Retail-Drug Store -- 0.2%
CVS Pass-Through Trust
Pass-Through Certs.
4.70% due 01/10/2036*................ $ 183,191 $ 190,372
CVS Pass-Through Trust
Pass-Through Certs.
5.77% due 01/10/2033*................ 148,009 165,988
CVS Pass-Through Trust
Pass-Through Certs.
5.93% due 01/10/2034*................ 236,460 270,083
----------
626,443
----------
Retail-Restaurants -- 0.2%
Brinker International, Inc.
Company Guar. Notes
5.00% due 10/01/2024*................ 685,000 676,438
McDonald's Corp.
Senior Notes
4.70% due 12/09/2035................. 33,000 34,579
----------
711,017
----------
Rubber/Plastic Products -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(3)(7)(8)(9)... 100,000 0
----------
Satellite Telecom -- 0.2%
Hughes Satellite Systems Corp.
Company Guar. Notes
7.63% due 06/15/2021................. 671,000 739,777
----------
Savings & Loans/Thrifts -- 0.6%
First Niagara Financial Group, Inc.
Senior Notes
6.75% due 03/19/2020................. 1,195,000 1,338,829
First Niagara Financial Group, Inc.
Sub. Notes
7.25% due 12/15/2021................. 714,000 840,739
----------
2,179,568
----------
Semiconductor Equipment -- 0.1%
Applied Materials, Inc.
Senior Notes
4.35% due 04/01/2047................. 193,000 195,389
----------
Soap & Cleaning Preparation -- 0.2%
Kronos Acquisition Holdings, Inc.
Company Guar. Notes
9.00% due 08/15/2023*................ 695,000 707,163
----------
Steel-Producers -- 0.2%
AK Steel Corp.
Senior Sec. Notes
7.50% due 07/15/2023................. 710,000 770,350
----------
Telecom Services -- 0.2%
Embarq Corp.
Senior Notes
8.00% due 06/01/2036................. 550,000 547,250
----------
Telecommunication Equipment -- 0.2%
Plantronics, Inc.
Company Guar. Notes
5.50% due 05/31/2023*................ 782,000 788,842
----------
31
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Telephone-Integrated -- 1.0%
AT&T, Inc.
Senior Notes
3.00% due 06/30/2022.............. $450,000 $ 447,658
AT&T, Inc.
Senior Notes
4.35% due 06/15/2045.............. 300,000 264,054
AT&T, Inc.
Senior Notes
4.50% due 05/15/2035.............. 368,000 347,402
AT&T, Inc.
Senior Notes
5.25% due 03/01/2037.............. 151,000 153,937
AT&T, Inc.
Senior Notes
5.80% due 02/15/2019.............. 129,000 137,752
Sprint Capital Corp.
Company Guar. Notes
8.75% due 03/15/2032.............. 880,000 1,058,200
Verizon Communications, Inc.
Senior Notes
3.00% due 11/01/2021.............. 405,000 406,635
Verizon Communications, Inc.
Senior Notes
4.40% due 11/01/2034.............. 148,000 140,051
Verizon Communications, Inc.
Senior Notes
4.67% due 03/15/2055.............. 222,000 198,246
Verizon Communications, Inc.
Senior Notes
5.25% due 03/16/2037.............. 357,000 369,092
----------
3,523,027
----------
Television -- 0.1%
Belo Corp.
Company Guar. Notes
7.75% due 06/01/2027.............. 231,000 250,058
----------
Transport-Equipment & Leasing -- 0.1%
GATX Corp.
Senior Notes
3.25% due 09/15/2026.............. 95,000 90,482
GATX Corp.
Senior Notes
3.85% due 03/30/2027.............. 144,000 142,853
----------
233,335
----------
Transport-Rail -- 0.1%
Burlington Northern Santa Fe LLC
Senior Notes
3.90% due 08/01/2046.............. 102,000 97,902
CSX Corp.
Senior Notes
4.25% due 11/01/2066.............. 104,000 94,374
----------
192,276
----------
Transport-Services -- 0.0%
FedEx Corp.
Company Guar. Notes
4.40% due 01/15/2047.............. 102,000 99,167
----------
Principal Value
Security Description Amount** (Note 2)
Travel Services -- 0.2%
Sabre GLBL, Inc.
Senior Sec. Notes
5.38% due 04/15/2023*......................... $ 610,000 $ 623,725
------------
Trucking/Leasing -- 0.0%
Penske Truck Leasing Co. LP/PTL Finance Corp.
Senior Notes
3.38% due 02/01/2022*......................... 125,000 126,837
------------
Wire & Cable Products -- 0.2%
General Cable Corp.
Company Guar. Notes
5.75% due 10/01/2022.......................... 740,000 722,373
------------
Total U.S. Corporate Bonds & Notes
(cost $160,670,958)........................... 163,388,964
------------
FOREIGN CORPORATE BONDS & NOTES -- 19.2%
Aerospace/Defense -- 0.1%
BAE Systems PLC
Senior Notes
4.13% due 06/08/2022.......................... GBP 150,000 212,158
Embraer Netherlands Finance BV
Company Guar. Notes
5.40% due 02/01/2027.......................... 66,000 68,078
------------
280,236
------------
Agricultural Chemicals -- 0.0%
Potash Corp. of Saskatchewan, Inc.
Senior Notes
4.00% due 12/15/2026.......................... 96,000 98,281
------------
Airport Development/Maintenance -- 0.2%
Heathrow Funding, Ltd.
Senior Sec. Notes
1.88% due 05/23/2024.......................... EUR 600,000 682,380
Heathrow Funding, Ltd.
Senior Sec. Notes
6.75% due 12/03/2028.......................... GBP 100,000 172,849
------------
855,229
------------
Auto-Cars/Light Trucks -- 0.3%
FCE Bank PLC
Senior Notes
1.53% due 11/09/2020.......................... EUR 200,000 220,300
FCE Bank PLC
Senior Notes
1.62% due 05/11/2023.......................... EUR 300,000 326,806
RCI Banque SA
Senior Notes
2.25% due 03/29/2021.......................... EUR 350,000 395,156
------------
942,262
------------
Banks-Commercial -- 2.2%
Australia & New Zealand Banking Group, Ltd.
Senior Notes
1.60% due 07/15/2019.......................... 253,000 250,876
32
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Banks-Commercial (continued)
Banco de Credito del Peru/Panama
Senior Notes
5.38% due 09/16/2020.............. $ 200,000 $216,750
Banco Macro SA VRS
Sub. Notes
6.75% due 11/04/2026*............. 200,000 200,136
Bank of China, Ltd.
Sub. Notes
5.00% due 11/13/2024.............. 200,000 212,529
Bank of Montreal
Senior Notes
2.10% due 12/12/2019.............. 115,000 115,416
Barclays Bank PLC
Sub. Notes
6.63% due 03/30/2022.............. EUR 350,000 462,861
BPCE SA
Senior Notes
2.88% due 01/16/2024.............. EUR 200,000 241,582
Credit Suisse AG
Senior Notes
3.00% due 10/29/2021.............. 254,000 256,316
Credit Suisse AG VRS
Sub. Notes
5.75% due 09/18/2025.............. EUR 300,000 358,445
Danske Bank A/S VRS
Sub. Notes
3.88% due 10/04/2023.............. EUR 300,000 336,784
Dexia Credit Local SA
Government Guar. Notes
2.25% due 02/18/2020*............. 355,000 354,311
HBOS PLC
Sub. Notes
5.37% due 06/30/2021.............. EUR 600,000 755,301
HSBC Bank PLC VRS
Sub. Notes
5.00% due 03/20/2023.............. GBP 400,000 517,692
ICICI Bank, Ltd.
Senior Notes
5.75% due 11/16/2020.............. 200,000 219,160
ING Bank NV VRS
Sub. Notes
3.00% due 04/11/2028.............. EUR 300,000 337,540
Intesa Sanpaolo SpA
Senior Notes
1.13% due 01/14/2020.............. EUR 400,000 433,224
Mizuho Bank, Ltd.
Company Guar. Notes
2.15% due 10/20/2018*............. 15,000 15,024
Mizuho Bank, Ltd.
Company Guar. Notes
2.45% due 04/16/2019*............. 275,000 276,393
National Bank of Canada
Bank Guar. Notes
2.10% due 12/14/2018.............. 269,000 269,988
Santander Issuances SAU
Company Guar. Notes
3.25% due 04/04/2026.............. EUR 400,000 443,948
Principal Value
Security Description Amount** (Note 2)
Banks-Commercial (continued)
Shinhan Bank
Sub. Bonds
3.88% due 03/24/2026*........... $ 200,000 $ 200,405
Standard Chartered PLC
Sub. Notes
3.13% due 11/19/2024............ EUR 450,000 509,949
Sumitomo Mitsui Banking Corp.
Company Guar. Notes
1.97% due 01/11/2019............ 476,000 476,122
Toronto-Dominion Bank
Senior Notes
1.80% due 07/13/2021............ 289,000 281,602
Union National Bank PJSC
Senior Notes
2.75% due 10/05/2021............ 200,000 195,632
Westpac Banking Corp. VRS
Sub. Notes
4.32% due 11/23/2031............ 133,000 134,398
----------
8,072,384
----------
Banks-Money Center -- 0.3%
ABN AMRO Bank NV
Senior Notes
2.50% due 11/29/2023............ EUR 200,000 239,619
ABN AMRO Bank NV
Sub. Notes
7.13% due 07/06/2022............ EUR 360,000 491,775
Lloyds Bank PLC
Sub. Notes
9.63% due 04/06/2023............ GBP 285,000 487,411
----------
1,218,805
----------
Banks-Special Purpose -- 0.1%
Nederlandse Waterschapsbank NV
Senior Notes
1.13% due 01/28/2019............ EUR 300,000 328,826
----------
Beverages-Non-alcoholic -- 0.1%
Coca-Cola Femsa SAB de CV
Company Guar. Notes
2.38% due 11/26/2018............ 442,000 444,549
----------
Beverages-Wine/Spirits -- 0.1%
Diageo Capital PLC
Company Guar. Notes
5.75% due 10/23/2017............ 346,000 354,072
----------
Brewery -- 0.2%
Anheuser-Busch InBev SA/NV
Company Guar. Notes
2.75% due 03/17/2036............ EUR 500,000 569,310
Heineken NV
Senior Notes
4.35% due 03/29/2047*........... 120,000 120,260
----------
689,570
----------
33
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Building Products-Air & Heating -- 0.1%
Johnson Controls International PLC
Senior Notes
1.00% due 09/15/2023....................... EUR 350,000 $ 371,840
----------
Building Products-Cement -- 0.1%
St Marys Cement, Inc.
Company Guar. Notes
5.75% due 01/28/2027*...................... 200,000 199,310
----------
Building-Residential/Commercial -- 0.3%
Mattamy Group Corp.
Company Guar. Notes
6.50% due 11/15/2020*...................... 575,000 590,813
Mattamy Group Corp.
Senior Notes
6.88% due 12/15/2023*...................... 340,000 352,750
----------
943,563
----------
Cable/Satellite TV -- 1.8%
Altice Financing SA
Senior Sec. Notes
7.50% due 05/15/2026*...................... 1,380,000 1,466,250
Altice Luxembourg SA
Company Guar. Notes
7.63% due 02/15/2025*...................... 1,400,000 1,479,625
Numericable-SFR SA
Senior Sec. Notes
7.38% due 05/01/2026*...................... 2,134,000 2,198,020
UPCB Finance IV, Ltd.
Senior Sec. Notes
5.38% due 01/15/2025*...................... 497,000 500,106
Ziggo Secured Finance BV
Senior Sec. Notes
5.50% due 01/15/2027*...................... 800,000 799,920
----------
6,443,921
----------
Cellular Telecom -- 0.2%
Empresa Nacional de Telecomunicaciones SA
Senior Notes
4.88% due 10/30/2024....................... 200,000 206,726
GTH Finance BV
Company Guar. Notes
7.25% due 04/26/2023*...................... 200,000 220,060
VimpelCom Holdings BV
Company Guar. Notes
5.95% due 02/13/2023....................... 200,000 213,000
----------
639,786
----------
Chemicals-Diversified -- 0.2%
Israel Chemicals, Ltd.
Senior Notes
4.50% due 12/02/2024*...................... 200,000 199,500
LYB International Finance II BV
Company Guar. Notes
3.50% due 03/02/2027....................... 199,000 195,291
NOVA Chemicals Corp.
Senior Notes
5.00% due 05/01/2025*...................... 420,000 427,350
----------
822,141
----------
Principal Value
Security Description Amount** (Note 2)
Computers-Memory Devices -- 0.2%
Seagate HDD Cayman
Company Guar. Notes
4.25% due 03/01/2022*................. $ 188,000 $ 186,195
Seagate HDD Cayman
Company Guar. Notes
4.75% due 01/01/2025.................. 750,000 734,531
----------
920,726
----------
Cruise Lines -- 0.4%
NCL Corp., Ltd.
Senior Notes
4.75% due 12/15/2021*................. 655,000 664,825
Silversea Cruise Finance, Ltd.
Senior Sec. Notes
7.25% due 02/01/2025*................. 730,000 766,500
----------
1,431,325
----------
Diversified Banking Institutions -- 1.3%
Barclays PLC
Senior Notes
4.95% due 01/10/2047.................. 208,000 207,774
BNP Paribas SA
Senior Notes
2.88% due 09/26/2023.................. EUR 400,000 482,053
BNP Paribas SA
Senior Notes
3.80% due 01/10/2024*................. 302,000 300,528
Credit Agricole SA
Sub. Notes
3.90% due 04/19/2021.................. EUR 350,000 421,486
Credit Agricole SA
Senior Notes
4.13% due 01/10/2027*................. 262,000 259,914
Credit Agricole SA
Senior Notes
5.50% due 12/17/2021.................. GBP 250,000 374,353
Credit Suisse Group AG
Senior Notes
4.28% due 01/09/2028*................. 448,000 446,052
HSBC Holdings PLC
Senior Notes
2.65% due 01/05/2022.................. 228,000 225,096
HSBC Holdings PLC FRS
Senior Notes
4.04% due 03/13/2028.................. 201,000 203,175
HSBC Holdings PLC
Sub. Notes
4.38% due 11/23/2026.................. 204,000 205,584
Lloyds Banking Group PLC
Sub. Notes
4.58% due 12/10/2025.................. 336,000 341,266
Mitsubishi UFJ Financial Group, Inc.
Senior Notes
2.95% due 03/01/2021.................. 314,000 316,830
Mizuho Financial Group, Inc.
Senior Notes
2.27% due 09/13/2021.................. 208,000 203,265
34
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Diversified Banking Institutions (continued)
Royal Bank of Scotland Group PLC
Senior Notes
3.88% due 09/12/2023....................... $ 201,000 $ 198,098
UBS AG VRS
Sub. Notes
4.75% due 02/12/2026....................... EUR 600,000 702,513
----------
4,887,987
----------
Diversified Financial Services -- 0.1%
GE Capital International Funding Co. ULC
Company Guar. Notes
4.42% due 11/15/2035....................... 513,000 541,704
----------
Diversified Manufacturing Operations -- 0.1%
Ingersoll-Rand Luxembourg Finance SA
Company Guar. Notes
4.65% due 11/01/2044....................... 137,000 142,067
Siemens Financieringsmaatschappij NV
Company Guar. Notes
2.20% due 03/16/2020*...................... 400,000 401,473
----------
543,540
----------
E-Commerce/Products -- 0.1%
Alibaba Group Holding, Ltd.
Senior Notes
3.60% due 11/28/2024....................... 280,000 282,008
----------
Electric-Distribution -- 0.1%
State Grid Overseas Investment 2014, Ltd.
Company Guar. Notes
4.13% due 05/07/2024*...................... 200,000 211,699
----------
Electric-Generation -- 0.2%
Comision Federal de Electricidad
Senior Notes
4.75% due 02/23/2027*...................... 200,000 200,500
Electricite de France SA
Senior Notes
2.35% due 10/13/2020*...................... 202,000 201,895
Electricite de France SA
Senior Notes
6.00% due 01/22/2114*...................... 167,000 169,746
----------
572,141
----------
Electric-Integrated -- 0.2%
Enel Finance International NV
Company Guar. Notes
5.00% due 09/14/2022....................... EUR 400,000 525,885
Iberdrola International BV
Company Guar. Notes
2.50% due 10/24/2022....................... EUR 300,000 352,481
----------
878,366
----------
Finance-Leasing Companies -- 0.6%
Aircastle, Ltd.
Senior Notes
5.00% due 04/01/2023....................... 1,225,000 1,289,312
Principal Value
Security Description Amount** (Note 2)
Finance-Leasing Companies (continued)
Fly Leasing, Ltd.
Senior Notes
6.38% due 10/15/2021............... $ 1,035,000 $1,063,463
----------
2,352,775
----------
Food-Meat Products -- 0.1%
BRF SA
Senior Notes
7.75% due 05/22/2018*(7)........... BRL 1,000,000 304,255
Minerva Luxembourg SA
Company Guar. Notes
6.50% due 09/20/2026*.............. 200,000 195,426
----------
499,681
----------
Food-Retail -- 0.2%
Casino Guichard-Perrachon SA
Senior Notes
5.98% due 05/26/2021............... EUR 600,000 747,191
----------
Gas-Distribution -- 0.0%
Gas Natural Capital Markets SA
Company Guar. Notes
5.13% due 11/02/2021............... EUR 100,000 129,422
----------
Gas-Transportation -- 0.1%
Transportadora de Gas del Peru SA
Senior Notes
4.25% due 04/30/2028............... 200,000 201,500
----------
Gold Mining -- 0.0%
Goldcorp, Inc.
Senior Notes
5.45% due 06/09/2044............... 106,000 112,046
----------
Hazardous Waste Disposal -- 0.3%
Tervita Escrow Corp.
Sec. Notes
7.63% due 12/01/2021*.............. 970,000 1,001,525
----------
Insurance-Life/Health -- 0.1%
Manulife Financial Corp. VRS
Sub. Notes
4.06% due 02/24/2032............... 225,000 225,418
----------
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 175,000 214,193
XLIT, Ltd.
Company Guar. Notes
4.45% due 03/31/2025............... 137,000 138,639
XLIT, Ltd.
Company Guar. Notes
5.50% due 03/31/2045............... 254,000 253,831
----------
606,663
----------
Insurance-Property/Casualty -- 0.0%
Enstar Group, Ltd.
Senior Notes
4.50% due 03/10/2022............... 98,000 99,233
----------
35
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Investment Management/Advisor Services -- 0.1%
China Cinda Finance 2015 I, Ltd.
Company Guar. Notes
4.25% due 04/23/2025*.......................... $ 380,000 $ 381,822
----------
Machinery-General Industrial -- 0.1%
ATS Automation Tooling Systems, Inc.
Senior Notes
6.50% due 06/15/2023*.......................... 544,000 568,480
----------
Medical-Drugs -- 0.2%
Teva Pharmaceutical Finance Netherlands III BV
Company Guar. Notes
2.80% due 07/21/2023........................... 198,000 188,062
Valeant Pharmaceuticals International, Inc.
Senior Sec. Notes
7.00% due 03/15/2024*.......................... 538,000 552,123
----------
740,185
----------
Medical-Generic Drugs -- 0.1%
Actavis Funding SCS
Company Guar. Notes
3.00% due 03/12/2020........................... 273,000 277,660
----------
Metal Processors & Fabrication -- 0.1%
Elementia SAB de CV
Company Guar. Notes
5.50% due 01/15/2025........................... 200,000 200,200
----------
Metal-Copper -- 0.6%
First Quantum Minerals, Ltd.
Company Guar. Notes
7.25% due 04/01/2023*.......................... 870,000 879,787
First Quantum Minerals, Ltd.
Company Guar. Notes
7.50% due 04/01/2025*.......................... 210,000 211,575
Hudbay Minerals, Inc.
Company Guar. Notes
7.63% due 01/15/2025*.......................... 862,000 935,270
----------
2,026,632
----------
Metal-Diversified -- 0.4%
Glencore Canada Financial Corp.
Company Guar. Notes
7.38% due 05/27/2020........................... GBP 200,000 292,423
Glencore Finance Europe SA
Company Guar. Notes
3.75% due 04/01/2026........................... EUR 325,000 387,620
Glencore Finance Europe SA
Company Guar. Notes
6.00% due 04/03/2022........................... GBP 300,000 435,292
Rio Tinto Finance USA, Ltd.
Company Guar. Notes
3.75% due 06/15/2025........................... 197,000 204,794
Vedanta Resources PLC
Senior Notes
6.38% due 07/30/2022*.......................... 200,000 201,000
----------
1,521,129
----------
Principal Value
Security Description Amount** (Note 2)
Metal-Iron -- 0.1%
NLMK Group
Senior Notes
4.50% due 06/15/2023............................ $ 200,000 $ 203,248
Vale Overseas, Ltd.
Company Guar. Notes
6.25% due 08/10/2026............................ 218,000 236,803
----------
440,051
----------
Oil & Gas Drilling -- 0.1%
Pacific Drilling SA
Senior Sec. Notes
5.38% due 06/01/2020*........................... 1,050,000 511,875
----------
Oil Companies-Exploration & Production -- 0.9%
Anadarko Finance Co.
Company Guar. Notes
7.50% due 05/01/2031............................ 117,000 148,589
Empresa Nacional del Petroleo
Senior Notes
3.75% due 08/05/2026*........................... 200,000 193,566
MEG Energy Corp.
Company Guar. Notes
6.38% due 01/30/2023*........................... 2,054,000 1,835,763
MEG Energy Corp.
Sec. Notes
6.50% due 01/15/2025*........................... 531,000 531,000
Novatek OAO via Novatek Finance, Ltd.
Senior Notes
6.60% due 02/03/2021............................ 200,000 219,516
Tengizchevroil Finance Co. International, Ltd.
Senior Sec. Notes
4.00% due 08/15/2026*........................... 200,000 191,620
----------
3,120,054
----------
Oil Companies-Integrated -- 0.9%
BP Capital Markets PLC
Company Guar. Notes
1.38% due 11/06/2017............................ 302,000 301,722
BP Capital Markets PLC
Company Guar. Notes
1.68% due 05/03/2019............................ 197,000 196,029
Ecopetrol SA
Senior Notes
4.13% due 01/16/2025............................ 200,000 193,700
Lukoil International Finance BV
Company Guar. Notes
4.56% due 04/24/2023............................ 200,000 205,226
Lukoil International Finance BV
Company Guar. Notes
4.75% due 11/02/2026*........................... 200,000 202,940
Pertamina Persero PT
Senior Notes
4.88% due 05/03/2022*........................... 300,000 317,645
Petrobras Global Finance BV
Company Guar. Notes
7.38% due 01/17/2027............................ 150,000 158,580
Petrobras Global Finance BV
Company Guar. Notes
8.75% due 05/23/2026............................ 155,000 179,413
36
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Oil Companies-Integrated (continued)
Petroleos Mexicanos
Company Guar. Notes
5.50% due 06/27/2044............ $157,000 $ 138,560
Petroleos Mexicanos
Company Guar. Notes
6.75% due 09/21/2047............ 486,000 492,998
Petronas Capital, Ltd.
Company Guar. Notes
3.50% due 03/18/2025............ 275,000 279,389
Shell International Finance BV
Company Guar. Notes
1.25% due 11/10/2017............ 201,000 200,972
Shell International Finance BV
Company Guar. Notes
2.13% due 05/11/2020............ 219,000 219,004
Shell International Finance BV
Company Guar. Notes
2.25% due 11/10/2020............ 232,000 232,834
----------
3,319,012
----------
Oil Refining & Marketing -- 0.3%
Cosan Luxembourg SA
Company Guar. Notes
7.00% due 01/20/2027*........... 200,000 207,260
Raizen Fuels Finance SA
Company Guar. Notes
5.30% due 01/20/2027*........... 200,000 202,500
Reliance Industries, Ltd.
Senior Notes
4.13% due 01/28/2025*........... 250,000 255,926
Thai Oil PCL
Senior Notes
3.63% due 01/23/2023*........... 200,000 203,706
Ultrapar International SA
Company Guar. Notes
5.25% due 10/06/2026*........... 200,000 199,000
----------
1,068,392
----------
Oil-Field Services -- 0.3%
KCA Deutag UK Finance PLC
Senior Sec. Notes
9.88% due 04/01/2022*........... 725,000 744,031
Trinidad Drilling, Ltd.
Company Guar. Notes
6.63% due 02/15/2025*........... 502,000 501,373
----------
1,245,404
----------
Paper & Related Products -- 0.4%
Cascades, Inc.
Company Guar. Notes
5.50% due 07/15/2022*........... 275,000 274,313
Cascades, Inc.
Company Guar. Notes
5.75% due 07/15/2023*........... 753,000 753,000
Klabin Finance SA
Company Guar. Notes
5.25% due 07/16/2024*........... 200,000 201,160
Principal Value
Security Description Amount** (Note 2)
Paper & Related Products (continued)
Suzano Austria GmbH
Company Guar. Notes
5.75% due 07/14/2026*............. $ 200,000 $ 203,700
----------
1,432,173
----------
Petrochemicals -- 0.1%
Alpek SAB de CV
Company Guar. Notes
5.38% due 08/08/2023*............. 200,000 209,300
Equate Petrochemical BV
Company Guar. Notes
4.25% due 11/03/2026*............. 200,000 200,008
----------
409,308
----------
Pipelines -- 0.2%
Enbridge, Inc.
Senior Notes
5.50% due 12/01/2046.............. 133,000 141,405
Southern Gas Corridor CJSC
Government Guar. Notes
6.88% due 03/24/2026*............. 500,000 548,250
----------
689,655
----------
Printing-Commercial -- 0.4%
Cimpress NV
Company Guar. Notes
7.00% due 04/01/2022*............. 1,420,000 1,469,700
----------
Real Estate Investment Trusts -- 0.1%
Trust F/1401
Senior Notes
5.25% due 01/30/2026*............. 200,000 201,000
----------
Retail-Major Department Stores -- 0.1%
El Puerto de Liverpool SAB de CV
Company Guar. Notes
3.88% due 10/06/2026*............. 200,000 191,500
----------
Satellite Telecom -- 0.9%
Intelsat Jackson Holdings SA
Company Guar. Notes
5.50% due 08/01/2023.............. 2,060,000 1,699,500
Telesat Canada/Telesat LLC
Company Guar. Notes
8.88% due 11/15/2024*............. 1,365,000 1,494,675
----------
3,194,175
----------
Security Services -- 0.3%
Garda World Security Corp.
Company Guar. Notes
7.25% due 11/15/2021*............. 1,099,000 1,060,535
----------
Semiconductor Components-Integrated Circuits -- 0.1%
NXP BV/NXP Funding LLC
Company Guar. Notes
4.63% due 06/01/2023*............. 415,000 439,381
----------
Semiconductor Equipment -- 0.2%
Sensata Technologies BV
Company Guar. Notes
5.00% due 10/01/2025*............. 655,000 659,913
----------
37
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Sovereign Agency -- 0.2%
European Stability Mechanism
Senior Notes
0.88% due 10/15/2019............................. EUR 750,000 $ 827,588
-----------
Special Purpose Entity -- 0.0%
Hellas Telecommunications Luxembourg II SCA FRS
Sub. Notes
8.46% due 01/15/2015*+(3)(7)(8)(9)............... 1,330,000 0
-----------
Steel-Producers -- 0.3%
ArcelorMittal
Senior Notes
6.13% due 06/01/2025............................. 870,000 965,700
-----------
SupraNational Banks -- 0.5%
European Investment Bank
Senior Notes
0.38% due 04/14/2026............................. EUR 1,325,000 1,394,368
North American Development Bank
Senior Notes
2.30% due 10/10/2018............................. 434,000 438,034
-----------
1,832,402
-----------
Telecom Services -- 0.1%
Bharti Airtel International Netherlands BV
Company Guar. Notes
5.35% due 05/20/2024............................. 200,000 211,686
-----------
Telephone-Integrated -- 0.3%
Koninklijke KPN NV
Senior Notes
5.75% due 09/17/2029............................. GBP 200,000 321,114
Oi SA
Senior Notes
9.75% due 09/15/2016*+(7)(8)(9).................. BRL 575,000 38,571
Telecom Italia Capital SA
Company Guar. Notes
7.72% due 06/04/2038............................. 341,000 377,657
Telefonica Emisiones SAU
Company Guar. Notes
4.10% due 03/08/2027............................. 151,000 152,066
Telefonica Emisiones SAU
Company Guar. Notes
5.21% due 03/08/2047............................. 205,000 207,514
-----------
1,096,922
-----------
Transport-Marine -- 0.1%
PT Pelabuhan Indonesia II
Senior Notes
4.25% due 05/05/2025*............................ 300,000 298,632
-----------
Transport-Rail -- 0.1%
Canadian Pacific Railway Co.
Senior Notes
6.13% due 09/15/2115............................. 152,000 183,465
-----------
Total Foreign Corporate Bonds & Notes
(cost $71,526,312)............................... 69,534,356
-----------
Principal Value
Security Description Amount** (Note 2)
FOREIGN GOVERNMENT OBLIGATIONS -- 8.4%
Sovereign -- 8.1%
Dominican Republic
Senior Bonds
5.50% due 01/27/2025*........ $ 415,000 $421,744
Dominican Republic
Senior Bonds
5.88% due 04/18/2024......... 380,000 397,575
Dominican Republic
Senior Bonds
5.95% due 01/25/2027*........ 250,000 255,312
Dominican Republic
Senior Bonds
8.63% due 04/20/2027......... 350,000 412,842
Federal Republic of Germany
Bonds
2.50% due 08/15/2046......... EUR 405,000 581,807
Federal Republic of Germany
Bonds
6.25% due 01/04/2030......... EUR 385,000 703,357
Government of Egypt
Senior Notes
5.75% due 04/29/2020......... 380,000 395,200
Government of Egypt
Senior Notes
6.13% due 01/31/2022*........ 300,000 312,000
Government of Egypt
Senior Notes
6.88% due 04/30/2040......... 200,000 187,748
Government of Finland
Senior Bonds
2.63% due 07/04/2042*........ EUR 130,000 184,388
Government of Jamaica
Senior Notes
6.75% due 04/28/2028......... 200,000 222,138
Government of Jamaica
Senior Notes
8.00% due 03/15/2039......... 600,000 687,378
Government of Romania
Senior Notes
6.13% due 01/22/2044......... 180,000 221,148
Government of Ukraine
Senior Notes
7.75% due 09/01/2021......... 600,000 591,048
Government of Ukraine
Senior Notes
7.75% due 09/01/2023......... 400,000 378,000
Government of Ukraine
Senior Notes
7.75% due 09/01/2027......... 400,000 367,000
Kingdom of Bahrain
Senior Notes
7.00% due 10/12/2028*........ 200,000 208,718
Kingdom of Belgium
Senior Notes
3.75% due 06/22/2045......... EUR 80,000 122,997
Kingdom of Belgium
Bonds
5.00% due 03/28/2035*........ EUR 255,000 432,931
38
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN GOVERNMENT OBLIGATIONS (continued)
Sovereign (continued)
Kingdom of Jordan
Senior Notes
5.75% due 01/31/2027*.... $850,000 $833,000
Kingdom of Morocco
Senior Notes
5.50% due 12/11/2042..... 200,000 213,500
Republic of Argentina
Senior Notes
5.63% due 01/26/2022*.... 640,000 655,360
Republic of Argentina
Senior Notes
7.63% due 04/22/2046*.... 309,000 314,407
Republic of Argentina
Senior Notes
7.63% due 04/22/2046..... 170,000 172,975
Republic of Argentina
Senior Notes
8.28% due 12/31/2033..... 350,510 374,169
Republic of Azerbaijan
Senior Notes
4.75% due 03/18/2024..... 300,000 301,944
Republic of Chile
Senior Notes
3.13% due 01/21/2026..... 380,000 385,890
Republic of Costa Rica
Senior Bonds
7.16% due 03/12/2045..... 300,000 305,250
Republic of Ecuador
Senior Notes
9.65% due 12/13/2026*.... 750,000 776,250
Republic of El Salvador
Senior Bonds
8.63% due 02/28/2029*.... 316,000 326,270
Republic of Ghana
Senior Bonds
7.88% due 08/07/2023..... 800,000 774,760
Republic of Guatemala
Senior Notes
5.75% due 06/06/2022..... 240,000 262,879
Republic of Indonesia
Senior Notes
3.70% due 01/08/2022*.... 200,000 203,943
Republic of Ivory Coast
Senior Notes
5.38% due 07/23/2024..... 400,000 380,260
Republic of Kenya
Senior Notes
6.88% due 06/24/2024..... 800,000 796,096
Republic of Lebanon
Senior Notes
5.80% due 04/14/2020..... 390,000 397,655
Republic of Lebanon
Senior Notes
6.60% due 11/27/2026..... 900,000 910,107
Principal Value
Security Description Amount** (Note 2)
Sovereign (continued)
Republic of Lebanon
Senior Notes
8.25% due 04/12/2021......... $ 190,000 $210,055
Republic of Lithuania
Senior Notes
6.63% due 02/01/2022......... 500,000 586,083
Republic of Lithuania
Senior Notes
7.38% due 02/11/2020......... 550,000 625,790
Republic of Namibia
Senior Notes
5.25% due 10/29/2025......... 570,000 574,161
Republic of Panama
Senior Notes
3.75% due 03/16/2025......... 600,000 612,750
Republic of Paraguay
Senior Notes
6.10% due 08/11/2044......... 550,000 589,875
Republic of Peru
Senior Notes
6.55% due 03/14/2037......... 300,000 387,375
Republic of Poland
Senior Notes
3.00% due 03/17/2023......... 560,000 559,020
Republic of Poland
Senior Notes
5.13% due 04/21/2021......... 50,000 54,768
Republic of Serbia
Senior Notes
7.25% due 09/28/2021......... 750,000 855,000
Republic of Sri Lanka
Senior Notes
6.83% due 07/18/2026*........ 265,000 273,907
Republic of Sri Lanka
Senior Notes
6.83% due 07/18/2026......... 350,000 361,764
Republic of Sri Lanka
Senior Notes
6.85% due 11/03/2025*........ 400,000 413,730
Republic of Sri Lanka
Senior Notes
6.85% due 11/03/2025......... 400,000 413,730
Republic of the Philippines
Senior Notes
4.00% due 01/15/2021......... 700,000 744,096
Republic of Turkey
Senior Notes
3.25% due 03/23/2023......... 1,040,000 953,680
Republic of Turkey
Senior Notes
6.00% due 03/25/2027......... 400,000 415,500
Republic of Turkey
Senior Notes
11.88% due 01/15/2030........ 220,000 340,921
Republic of Venezuela
Senior Notes
8.25% due 10/13/2024......... 960,000 429,600
39
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
FOREIGN GOVERNMENT OBLIGATIONS (continued)
Sovereign (continued)
Republic of Venezuela
Senior Notes
9.25% due 05/07/2028.............. $ 650,000 $ 276,250
Republic of Venezuela
Senior Notes
9.38% due 01/13/2034.............. 817,000 367,650
Sultanate of Oman
Senior Bonds
6.50% due 03/08/2047*............. 490,000 516,950
United Kingdom Gilt Treasury
Bonds
3.50% due 01/22/2045.............. GBP 125,000 216,132
United Kingdom Gilt Treasury
Bonds
4.50% due 09/07/2034.............. GBP 450,000 813,080
United Mexican States
Senior Notes
4.13% due 01/21/2026.............. 200,000 205,600
United Mexican States
Senior Notes
4.15% due 03/28/2027.............. 205,000 208,485
United Mexican States
Senior Notes
4.35% due 01/15/2047.............. 628,000 577,760
United Mexican States
Senior Bonds
4.75% due 03/08/2044.............. 69,000 67,103
United Mexican States
Senior Notes
6.05% due 01/11/2040.............. 900,000 1,028,250
-----------
29,147,111
-----------
SupraNational Banks -- 0.3%
European Investment Bank
Senior Notes
4.25% due 04/15/2019.............. EUR 1,065,000 1,246,223
-----------
Total Foreign Government Obligations
(cost $30,734,751)................ 30,393,334
-----------
U.S. GOVERNMENT AGENCIES -- 17.0%
Federal Home Loan Mtg. Corp. -- 6.3%
2.50% due 01/01/2028.............. 267,850 271,220
2.50% due 04/01/2028.............. 90,264 91,345
2.50% due 03/01/2031.............. 144,096 144,310
2.78% due 02/01/2037 FRS.......... 21,687 22,520
3.00% due 08/01/2043.............. 983,486 978,562
3.00% due 07/01/2045.............. 2,493,822 2,472,572
3.21% due 11/01/2037 FRS.......... 144,357 153,497
3.50% due 03/01/2042.............. 354,685 364,354
3.50% due 04/01/2042.............. 355,900 365,578
3.50% due 09/01/2043.............. 361,611 371,775
3.50% due 07/01/2045.............. 3,522,689 3,610,817
3.50% due 08/01/2045.............. 156,647 160,847
4.00% due 12/01/2043.............. 2,615,550 2,760,958
4.00% due 10/01/2045.............. 1,775,208 1,863,482
4.00% due 11/01/2045.............. 1,039,860 1,091,568
4.00% due 01/01/2046.............. 430,658 454,411
4.50% due 02/01/2020.............. 5,617 5,770
Principal Value
Security Description Amount** (Note 2)
Federal Home Loan Mtg. Corp. (continued)
4.50% due 08/01/2020.................... $ 12,854 $ 13,162
4.50% due 03/01/2039.................... 1,677,278 1,816,737
4.50% due 12/01/2039.................... 9,791 10,611
4.50% due 07/01/2040.................... 209,271 226,686
4.50% due 04/01/2044.................... 564,808 605,383
4.50% due 07/01/2044.................... 1,417,496 1,524,645
4.50% due 03/01/2046.................... 1,455,176 1,560,092
5.00% due 02/01/2034.................... 25,644 28,206
5.00% due 05/01/2034.................... 38,169 42,255
5.00% due 11/01/2043.................... 264,710 289,616
5.50% due 05/01/2037.................... 64,556 71,525
6.00% due 03/01/2040.................... 50,582 57,190
6.50% due 02/01/2035.................... 21,066 23,688
Federal Home Loan Mtg. Corp. Structured
Agency Credit Risk
Series 2015-DNA1, Class M2
2.83% due 10/25/2027 FRS(1)............. 200,000 204,485
Series 2014-DN1, Class M2
3.18% due 02/25/2024 FRS(1)............. 72,000 74,052
Series 2014-HQ2, Class M2
3.18% due 09/25/2024 FRS(1)............. 150,000 154,338
Series 2015-HQ1, Class M2
3.18% due 03/25/2025 FRS(1)............. 277,950 281,838
Series 2014-HQ3, Class M2
3.63% due 10/25/2024 FRS(1)............. 265,143 267,489
Series 2015-HQA1, Class M2
3.63% due 03/25/2028 FRS(1)............. 332,919 341,137
Federal Home Loan Mtg. Corp. REMIC FRS
Series 3572, Class JS
5.89% due 09/15/2039(1)(10)(11)......... 580,997 82,401
Series 1103, Class N
11.50% due 06/15/2021(1)(10)............ 462 47
-----------
22,859,169
-----------
Federal National Mtg. Assoc. -- 7.8%
2.50% due 12/01/2026.................... 650,288 657,906
2.50% due 09/01/2027.................... 511,211 517,161
2.50% due 02/01/2031.................... 238,280 238,552
2.50% due 05/01/2031.................... 1,514,293 1,516,018
2.77% due 10/01/2035 FRS................ 104,949 110,853
2.79% due 09/01/2035 FRS................ 90,128 94,783
2.80% due 11/01/2036 FRS................ 57,542 61,049
2.92% due 05/01/2037 FRS................ 35,232 37,188
3.00% due 04/01/2027.................... 572,944 589,523
3.00% due 10/01/2027.................... 288,447 296,803
3.00% due 11/01/2027.................... 357,934 368,326
3.00% due 10/01/2030.................... 239,168 245,447
3.00% due 07/01/2039 FRS................ 90,698 96,048
3.00% due 03/01/2042.................... 152,612 152,140
3.00% due 12/01/2042.................... 156,497 156,013
3.00% due 05/01/2043.................... 814,676 812,111
3.00% due 06/01/2045.................... 45,725 45,580
3.00% due 08/01/2045.................... 1,792,622 1,778,870
3.00% due 09/01/2046.................... 334,872 332,172
3.09% due 10/01/2040 FRS................ 36,792 38,984
3.19% due 08/01/2035 FRS................ 81,274 86,954
3.27% due 10/01/2040 FRS................ 62,491 66,226
3.28% due 05/01/2040 FRS................ 115,588 122,291
40
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
U.S. GOVERNMENT AGENCIES (continued)
Federal National Mtg. Assoc. (continued)
3.50% due 08/01/2026................ $ 115,969 $ 120,823
3.50% due 08/01/2027................ 103,618 107,875
3.50% due 10/01/2028................ 43,890 45,946
3.50% due 02/01/2043................ 138,759 143,273
3.50% due 07/01/2045................ 120,047 122,867
3.50% due 08/01/2045................ 233,174 239,014
3.50% due 09/01/2045................ 134,058 137,207
3.50% due 10/01/2045................ 285,064 292,277
3.50% due 11/01/2045................ 274,233 280,675
3.50% due 12/01/2045................ 2,395,664 2,451,938
3.50% due 02/01/2046................ 889,890 910,794
3.50% due 03/01/2046................ 3,045,816 3,117,363
3.50% due 07/01/2046................ 190,186 195,258
3.50% due April TBA................. 1,936,000 2,014,515
3.50% due 08/01/2042................ 145,517 149,562
4.00% due 11/01/2025................ 187,471 197,412
4.00% due 06/01/2039................ 358,805 381,005
4.00% due 10/01/2040................ 302,736 318,184
4.00% due 11/01/2041................ 257,733 271,406
4.00% due 01/01/2043................ 1,386,479 1,465,514
4.00% due 12/01/2043................ 10,777 11,422
4.00% due 02/01/2045................ 2,228,497 2,355,258
4.00% due 06/01/2046................ 1,445,576 1,516,927
4.50% due 06/01/2019................ 14,167 14,529
4.50% due 11/01/2022................ 41,725 43,113
4.50% due 06/01/2023................ 21,285 22,473
4.50% due 08/01/2045................ 2,218,899 2,414,602
5.00% due 06/01/2019................ 11,379 11,719
5.00% due 01/01/2023................ 12,631 13,466
5.00% due 03/01/2034................ 22,833 24,998
5.00% due 05/01/2035................ 13,722 15,014
5.00% due 05/01/2040................ 103,790 113,606
5.00% due 07/01/2040................ 104,707 114,549
5.50% due 06/01/2038................ 32,608 36,437
6.00% due 02/01/2032................ 4,997 5,642
6.00% due 05/01/2034................ 2,117 2,407
6.00% due 10/01/2034................ 20,494 23,139
7.50% due 01/01/2030................ 1,257 1,290
8.00% due 11/01/2028................ 3,970 4,480
Federal National Mtg. Assoc., REMIC
Series 1989-2, Class D
8.80% due 01/25/2019(1)............. 2,090 2,177
-----------
28,131,154
-----------
Government National Mtg. Assoc. -- 2.8%
3.00% due 02/20/2045................ 159,921 161,512
3.00% due 05/20/2045................ 107,902 108,976
3.00% due 07/20/2045................ 42,552 42,975
3.00% due 11/20/2045................ 1,563,315 1,578,863
3.00% due 04/20/2046................ 2,455,014 2,479,431
3.50% due 03/20/2045................ 116,373 120,801
3.50% due 04/20/2045................ 159,014 165,064
3.50% due 07/20/2045................ 216,329 224,560
3.50% due 10/20/2045................ 3,238,072 3,361,269
3.50% due 05/20/2046................ 1,641,270 1,703,714
4.00% due 10/20/2045................ 250,132 264,572
-----------
10,211,737
-----------
Shares/
Principal Value
Security Description Amount** (Note 2)
Tennessee Valley Authority -- 0.1%
1.75% due 10/15/2018.............. $ 238,000 $ 239,839
-----------
Total U.S. Government Agencies
(cost $62,610,847)................ 61,441,899
-----------
U.S. GOVERNMENT TREASURIES -- 1.3%
United States Treasury Bonds -- 0.6%
2.50% due 05/15/2046.............. 2,000,000 1,791,172
2.88% due 11/15/2046.............. 220,000 213,460
-----------
2,004,632
-----------
United States Treasury Notes -- 0.7%
0.50% due 04/30/2017.............. 400 400
1.13% due 06/30/2021.............. 278,000 269,953
1.63% due 05/15/2026.............. 550,000 515,904
1.88% due 02/28/2022.............. 679,000 677,542
2.25% due 02/15/2027.............. 1,200,000 1,184,673
-----------
2,648,472
-----------
Total U.S. Government Treasuries
(cost $4,930,209)................. 4,653,104
-----------
LOANS(4)(5)(6) -- 0.2%
E-Commerce/Services -- 0.2%
RentPath LLC FRS
2nd Lien
10.15% due 12/17/2022
(cost $675,444)................... 697,906 666,500
-----------
COMMON STOCKS -- 0.1%
Television -- 0.1%
ION Media Networks, Inc.+(3)(7)
(cost $6)......................... 655 463,786
-----------
PREFERRED SECURITIES -- 0.1%
Electric-Distribution -- 0.0%
Entergy Louisiana LLC
4.70%............................. 8,600 196,940
-----------
Sovereign Agency -- 0.0%
Federal Home Loan Mtg. Corp. FRS
Series Z
8.38%+............................ 9,675 60,469
-----------
Telecom Services -- 0.1%
Qwest Corp.
6.13%............................. 10,225 253,580
-----------
Total Preferred Securities
(cost $620,007)................... 510,989
-----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 3.2%
Banks-Commercial -- 0.1%
Macquarie Bank, Ltd. FRS
6.13% due 03/08/2027*(12)......... 476,000 478,380
-----------
Banks-Super Regional -- 0.2%
Fifth Third Bancorp VRS
Series J
4.90% due 09/30/2019(12).......... 396,000 388,080
Wells Fargo Capital X
5.95% due 12/01/2086.............. 159,000 170,329
-----------
558,409
-----------
41
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Shares/
Principal Value
Security Description Amount** (Note 2)
PREFERRED SECURITIES/CAPITAL SECURITIES (continued)
Building Societies -- 0.1%
Nationwide Building Society FRS
6.88% due 06/20/2019(12)...................... GBP 215,000 $ 273,414
----------
Diversified Banking Institutions -- 0.8%
BAC Capital Trust XIII FRS
Series F
4.00% due 04/21/2017(12)...................... 761,000 615,459
Citigroup, Inc. FRS
Series P
5.95% due 05/15/2025(12)...................... 762,000 793,440
Deutsche Bank AG VRS
7.50% due 04/30/2025(12)...................... 600,000 583,500
JPMorgan Chase & Co. FRS
Series U
6.13% due 04/30/2024(12)...................... 511,000 541,660
Societe Generale SA VRS
7.88% due 12/18/2023*(12)..................... 356,000 358,670
----------
2,892,729
----------
Electric-Generation -- 0.1%
Electricite de France SA VRS
4.13% due 01/22/2022(12)...................... EUR 300,000 322,768
----------
Electric-Integrated -- 0.1%
Dominion Resources, Inc. FRS
5.75% due 10/01/2054.......................... 224,000 231,840
Southern Co. FRS
Series B
5.50% due 03/15/2057.......................... 172,000 177,464
----------
409,304
----------
Finance-Investment Banker/Broker -- 0.0%
Lehman Brothers Holdings Capital Trust VII
Escrow Security
0.00%+(3)(7).................................. 222,000 22
----------
Finance-Other Services -- 0.1%
National Rural Utilities Cooperative Finance
Corp. FRS
4.75% due 04/30/2043.......................... 388,000 396,730
----------
Financial Guarantee Insurance -- 0.4%
Assured Guaranty Municipal Holdings, Inc. FRS
6.40% due 12/15/2066*......................... 1,371,000 1,218,986
----------
Food-Dairy Products -- 0.3%
Land O'Lakes Capital Trust I
7.45% due 03/15/2028*......................... 975,000 1,082,250
----------
Gas-Distribution -- 0.0%
Centrica PLC VRS
3.00% due 04/10/2076.......................... EUR 100,000 107,325
----------
Insurance-Life/Health -- 0.0%
Prudential Financial, Inc. FRS
5.38% due 05/15/2045.......................... 93,000 97,325
----------
Principal Value
Security Description Amount** (Note 2)
Insurance-Multi-line -- 0.2%
MetLife, Inc.
6.40% due 12/15/2036....................... $ 379,000 $ 415,953
Zurich Finance UK PLC VRS
6.63% due 10/02/2022(12)................... GBP 225,000 328,137
------------
744,090
------------
Multimedia -- 0.1%
Viacom, Inc. FRS
5.88% due 02/28/2057....................... 238,000 242,760
Viacom, Inc. FRS
6.25% due 02/28/2057....................... 108,000 108,864
------------
351,624
------------
Oil Companies-Integrated -- 0.3%
TOTAL SA VRS
2.63% due 02/26/2025(12)................... EUR 285,000 291,262
TOTAL SA VRS
3.88% due 05/18/2022(12)................... EUR 485,000 549,150
------------
840,412
------------
Pipelines -- 0.1%
Transcanada Trust FRS
5.30% due 03/15/2077....................... 269,000 265,806
TransCanada Trust FRS
5.63% due 05/20/2075....................... 118,000 121,540
------------
387,346
------------
Telephone-Integrated -- 0.2%
Orange SA VRS
4.00% due 10/01/2021(12)................... EUR 250,000 280,817
Telefonica Europe BV VRS
4.20% due 12/04/2019(12)................... EUR 500,000 557,536
------------
838,353
------------
Tools-Hand Held -- 0.1%
Stanley Black & Decker, Inc. FRS
5.75% due 12/15/2053....................... 447,000 469,931
------------
Total Preferred Securities/Capital Securities
(cost $10,708,625)......................... 11,469,398
------------
Total Long-Term Investment Securities
(cost $348,775,181)......................... 348,681,886
------------
SHORT-TERM INVESTMENT SECURITIES -- 1.3%
Time Deposits -- 1.3%
Euro Time Deposit with State Street Bank
and Trust Co.
0.09% due 04/03/2017
(cost $4,772,000).......................... 4,772,000 4,772,000
------------
42
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount** (Note 2)
REPURCHASE AGREEMENTS -- 2.5%
Agreement with Fixed Income Clearing Corp.,
bearing interest at 0.09%, dated
03/31/2017, to be repurchased 04/03/2017
in the amount of $8,991,000 collateralized
by $9,545,000 of United States Treasury
Notes, bearing interest at 2.75% due
11/15/2042 and having an approximate
value of $9,172,029
(cost $8,991,000)........................... $8,991,000 $ 8,991,000
------------
TOTAL INVESTMENTS
(cost $362,538,181)(13)..................... 100.2% 362,444,886
Liabilities in excess of other assets.......... (0.2) (775,710)
---------- ------------
NET ASSETS 100.0% $361,669,176
========== ============
--------
* 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, 2017, the
aggregate value of these securities was $101,137,807 representing 28.0% of
net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
** Denominated in United States Dollars unless otherwise indicated.
+ Non-income producing security
++ See Note 1
(1) Collateralized Mortgage Obligation
(2) Commercial Mortgage Backed Security
(3) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs (see Note 2).
(4) All loans in the Fund were purchased through assignment agreements unless
otherwise indicated
(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, repayments 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) Illiquid security. At March 31, 2017, the aggregate value of these
securities was $883,152 representing 0.2% of net assets.
(8) Company has filed for bankruptcy protection.
(9) Security in default of interest and principal at maturity.
(10) Interest Only
(11) Inverse Floating Rate Security that pays interest that varies inversely to
changes in the market interest rates. The interest rate shown is the
current interest rate at March 31, 2017.
(12) Perpetual maturity -- maturity date reflects the next call date.
(13) See Note 5 for cost of investments on a tax basis.
(14) "Step-up" security where the rate increases ("steps-up") at a
predetermined rate. Rate shown reflects the increased rate.
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.
ULC --Unlimited Liability Corp.
FRS --Floating Rate Security
VRS --Variable Rate Security
The rates shown on FRS and VRS are the current rates at March 31, 2017 and
unless noted otherwise, the dates shown are the original maturity dates.
BRL --Brazilian Real
EUR --Euro Currency
GBP --Pound Sterling
Forward Foreign Currency Contracts
Contract to In Exchange Delivery Unrealized Unrealized
Counterparty Deliver For Date Appreciation Depreciation
--------------------------------------------------------------------------------------------
JPMorgan Chase Bank N.A EUR 10,925,000 USD 11,555,504 04/12/2017 $ -- $(103,312)
EUR 12,301,000 USD 13,229,479 05/12/2017 84,177 --
GBP 4,985,000 USD 6,221,245 04/12/2017 -- (25,608)
USD 1,374,468 EUR 1,275,000 04/12/2017 -- (13,828)
USD 317,281 GBP 258,000 04/12/2017 6,028 --
------- ---------
Net Unrealized Appreciation/(Depreciation)...... $90,205 $(142,748)
======= =========
--------
EUR --Euro Currency
GBP --Pound Sterling
USD --United States Dollar
43
AIG Strategic Bond Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2017 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 -- Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
--------------------- ----------------- ---------------------- ------------
ASSETS:
Investments at Value:*
Asset Backed Securities.................. $ -- $ 6,159,556 $ -- $ 6,159,556
U.S. Corporate Bonds & Notes:
Airlines............................... -- 1,301,593 173,391 1,474,984
Finance-Investment Banker/Broker....... -- 949,869 64 949,933
Gambling (Non-Hotel)................... -- 3,038,981 6,454 3,045,435
Mining................................. -- -- 70,000 70,000
Retail-Drug Store...................... -- 436,071 190,372 626,443
Rubber/Plastic Products................ -- -- 0 0
Other Industries....................... -- 157,222,169 -- 157,222,169
Foreign Corporate Bonds & Notes:
Special Purpose Entity................. -- -- 0 0
Other Industries....................... -- 69,534,356 -- 69,534,356
Foreign Government Obligation............ -- 30,393,334 -- 30,393,334
U.S. Government Agencies................. -- 61,441,899 -- 61,441,899
U.S. Government Treasuries............... -- 4,653,104 -- 4,653,104
Loans.................................... -- 666,500 -- 666,500
Common Stocks............................ -- -- 463,786 463,786
Preferred Securities..................... 510,989 -- -- 510,989
Preferred Securities/Capital Securities:
Finance-Investment Banker/Broker....... -- -- 22 22
Other Industries....................... -- 11,469,376 -- 11,469,376
Short-Term Investment Securities......... -- 4,772,000 -- 4,772,000
Repurchase Agreements.................... -- 8,991,000 -- 8,991,000
-------- ------------ -------- ------------
Total Investments at Value............... $510,989 $361,029,808 $904,089 $362,444,886
======== ============ ======== ============
Other Financial Instruments:+
Forward Foreign Currency Contracts....... $ -- $ 90,205 $ -- $ 90,205
======== ============ ======== ============
LIABILITIES:
Other Financial Instruments:+
Forward Foreign Currency Contracts....... $ -- $ 142,748 $ -- $ 142,748
======== ============ ======== ============
--------
* 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.
++ See Note 1
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
44
AIG Flexible Credit Fund++
PORTFOLIO PROFILE -- March 31, 2017 -- (unaudited)
Industry Allocation*
Oil Companies-Exploration & Production. 5.6%
Medical-Hospitals...................... 4.5
Cable/Satellite TV..................... 3.9
Enterprise Software/Service............ 3.1
Broadcast Services/Program............. 2.5
Auto/Truck Parts & Equipment-Original.. 2.1
Medical-Drugs.......................... 2.0
Chemicals-Specialty.................... 1.9
Real Estate Investment Trusts.......... 1.9
Commercial Services.................... 1.9
Casino Hotels.......................... 1.8
Oil & Gas Drilling..................... 1.7
Machinery-General Industrial........... 1.6
Distribution/Wholesale................. 1.5
Building-Residential/Commercial........ 1.5
Building Products-Cement............... 1.5
Containers-Metal/Glass................. 1.5
Pipelines.............................. 1.5
Aerospace/Defense-Equipment............ 1.4
Gambling (Non-Hotel)................... 1.3
Cellular Telecom....................... 1.2
Data Processing/Management............. 1.2
Telecom Services....................... 1.1
Retail-Sporting Goods.................. 1.1
Building & Construction Products-Misc.. 1.1
Telephone-Integrated................... 1.0
Dialysis Centers....................... 1.0
Sovereign.............................. 1.0
Independent Power Producers............ 1.0
Educational Software................... 1.0
Chemicals-Diversified.................. 0.9
Food-Misc./Diversified................. 0.9
Coal................................... 0.9
Containers-Paper/Plastic............... 0.9
Computer Services...................... 0.8
Security Services...................... 0.8
Electric-Generation.................... 0.8
Investment Management/Advisor Services. 0.8
Finance-Consumer Loans................. 0.8
Finance-Mortgage Loan/Banker........... 0.7
Steel-Producers........................ 0.7
Food-Retail............................ 0.7
Finance-Auto Loans..................... 0.7
Diagnostic Equipment................... 0.7
Computer Software...................... 0.7
Oil-Field Services..................... 0.7
Real Estate Management/Services........ 0.6
Retail-Building Products............... 0.6
Non-Hazardous Waste Disposal........... 0.6
Extended Service Contracts............. 0.6
Medical Products....................... 0.6
Diversified Banking Institutions....... 0.6
Metal-Copper........................... 0.6
Hotels/Motels.......................... 0.6
Medical Labs & Testing Services........ 0.6
Medical-HMO............................ 0.5
Pharmacy Services...................... 0.5
Investment Companies................... 0.5
Electric-Integrated.................... 0.5
Metal-Aluminum......................... 0.5
Diversified Financial Services............... 0.5%
Diagnostic Kits.............................. 0.5
Schools...................................... 0.5
Diversified Manufacturing Operations......... 0.5
Oil Companies-Integrated..................... 0.5
Auto-Heavy Duty Trucks....................... 0.5
Oil Refining & Marketing..................... 0.5
Miscellaneous Manufacturing.................. 0.5
Television................................... 0.5
Casino Services.............................. 0.4
Networking Products.......................... 0.4
Food-Flour & Grain........................... 0.4
Finance-Leasing Companies.................... 0.4
Gas-Distribution............................. 0.4
Retail-Arts & Crafts......................... 0.4
Disposable Medical Products.................. 0.4
Finance-Other Services....................... 0.4
Metal-Iron................................... 0.4
Commercial Services-Finance.................. 0.4
Retail-Pet Food & Supplies................... 0.4
Human Resources.............................. 0.4
Retail-Auto Parts............................ 0.4
Food-Meat Products........................... 0.4
Telecommunication Equipment.................. 0.4
Paper & Related Products..................... 0.3
Private Equity............................... 0.3
Machinery-Pumps.............................. 0.3
Metal-Diversified............................ 0.3
Professional Sports.......................... 0.3
Retail-Drug Store............................ 0.3
Food-Dairy Products.......................... 0.3
Banks-Mortgage............................... 0.3
Radio........................................ 0.3
Metal Processors & Fabrication............... 0.3
Tools-Hand Held.............................. 0.3
Auction Houses/Art Dealers................... 0.3
Food-Baking.................................. 0.3
Banks-Super Regional......................... 0.3
Cruise Lines................................. 0.3
Satellite Telecom............................ 0.3
Medical-Generic Drugs........................ 0.3
Airlines..................................... 0.3
Food-Catering................................ 0.3
Retail-Bedding............................... 0.3
Office Automation & Equipment................ 0.3
Soap & Cleaning Preparation.................. 0.3
Food-Confectionery........................... 0.3
Retail-Floor Coverings....................... 0.3
Insurance-Multi-line......................... 0.2
Regional Authority........................... 0.2
Internet Connectivity Services............... 0.2
Consulting Services.......................... 0.2
Retail-Misc./Diversified..................... 0.2
Semiconductor Components-Integrated Circuits. 0.2
Cosmetics & Toiletries....................... 0.2
Publishing-Books............................. 0.2
Retail-Leisure Products...................... 0.2
Retail-Automobile............................ 0.2
Bloodstock Services.......................... 0.2
Motion Pictures & Services................... 0.2
45
AIG Flexible Credit Fund++
PORTFOLIO PROFILE -- March 31, 2017 -- (unaudited) (continued)
Industry Allocation* (continued)
Energy-Alternate Sources............. 0.2%
Machinery-Farming.................... 0.2
Diversified Minerals................. 0.2
Transport-Equipment & Leasing........ 0.2
Rubber/Plastic Products.............. 0.2
Rental Auto/Equipment................ 0.2
Banks-Commercial..................... 0.2
Bicycle Manufacturing................ 0.2
Theaters............................. 0.2
Finance-Investment Banker/Broker..... 0.2
Physicians Practice Management....... 0.2
Housewares........................... 0.1
Rubber-Tires......................... 0.1
Retail-Hypermarkets.................. 0.1
Retail-Propane Distribution.......... 0.1
Advertising Services................. 0.1
Research & Development............... 0.1
Financial Guarantee Insurance........ 0.1
Retail-Perfume & Cosmetics........... 0.1
Printing-Commercial.................. 0.1
Consumer Products-Misc............... 0.1
Medical-Outpatient/Home Medical...... 0.1
Computers............................ 0.1
Real Estate Operations & Development. 0.1
Filtration/Separation Products....... 0.1
Building-Heavy Construction.......... 0.1
Finance-Commercial................... 0.1
Building Products-Wood............... 0.1
Medical Information Systems.......... 0.1
Retail-Restaurants................... 0.1
Medical-Biomedical/Gene.............. 0.1
Resorts/Theme Parks.................. 0.1
Electronic Components-Semiconductors. 0.1
Semiconductor Equipment.............. 0.1
Hazardous Waste Disposal............. 0.1
-----
100.5%
=====
Credit Quality+#
Baa........ 0.4%
Ba......... 26.4
B.......... 54.6
Caa........ 12.3
Not Rated@. 6.3
-----
100.0%
=====
--------
* Calculated as a percentage of net assets.
+ Source: Moodys
++ See Note 1
# 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.
46
SunAmerica Income Funds AIG Flexible Credit Fund
PORTFOLIO OF INVESTMENTS -- March 31, 2017
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017
Principal Value
Security Description Amount (Note 2)
ASSET BACKED SECURITIES -- 0.5%
Diversified Financial Services -- 0.5%
Home Equity Loan Trust VRS
Series 2007-HSA3, Class AI4
6.11% due 06/25/2037........................ $1,073,378 $1,078,060
Leaf Receivables Funding LLC
Series 2015-1, Class E2
6.00% due 06/15/2023*....................... 590,000 578,715
Leaf Receivables Funding LLC
Series 2016-1, Class E2
6.00% due 06/15/2024*....................... 290,000 267,619
----------
Total Asset Backed Securities
(cost $1,900,209)........................... 1,924,394
----------
U.S. CORPORATE BONDS & NOTES -- 38.6%
Aerospace/Defense-Equipment -- 0.4%
TransDigm, Inc.
Company Guar. Notes
6.50% due 05/15/2025........................ 1,530,000 1,543,388
----------
Auto-Heavy Duty Trucks -- 0.2%
Navistar International Corp.
Company Guar. Notes
8.25% due 11/01/2021........................ 780,000 779,992
----------
Auto/Truck Parts & Equipment-Original -- 0.7%
Cooper-Standard Automotive, Inc.
Company Guar. Notes
5.63% due 11/15/2026*....................... 1,015,000 1,015,000
MPG Holdco I, Inc.
Company Guar. Notes
7.38% due 10/15/2022........................ 340,000 368,900
Tenneco, Inc.
Company Guar. Notes
5.00% due 07/15/2026........................ 605,000 592,519
TI Group Automotive Systems, LLC
Company Guar. Notes
8.75% due 07/15/2023*....................... 570,000 604,673
----------
2,581,092
----------
Banks-Mortgage -- 0.3%
Provident Funding Associates LP/PFG Finance
Corp.
Company Guar. Notes
6.75% due 06/15/2021*....................... 1,205,000 1,229,100
----------
Broadcast Services/Program -- 1.1%
Clear Channel Worldwide Holdings, Inc.
Company Guar. Notes
7.63% due 03/15/2020........................ 1,480,000 1,491,100
iHeartCommunications, Inc.
Senior Sec. Notes
9.00% due 12/15/2019........................ 1,075,000 919,663
iHeartCommunications, Inc.
Senior Sec. Notes
9.00% due 03/01/2021........................ 515,000 391,400
Univision Communications, Inc.
Senior Sec. Notes
5.13% due 05/15/2023*....................... 1,195,000 1,180,062
----------
3,982,225
----------
Principal Value
Security Description Amount (Note 2)
Building & Construction Products-Misc. -- 0.6%
NCI Building Systems, Inc.
Company Guar. Notes
8.25% due 01/15/2023*....................... $1,000,000 $1,085,000
Standard Industries, Inc.
Senior Notes
5.50% due 02/15/2023*....................... 385,000 393,662
Standard Industries, Inc.
Senior Notes
6.00% due 10/15/2025*....................... 690,000 712,425
----------
2,191,087
----------
Building Products-Cement -- 0.3%
Cemex Finance LLC
Senior Sec. Notes
6.00% due 04/01/2024*....................... 920,000 967,380
----------
Building Products-Wood -- 0.1%
Boise Cascade Co.
Company Guar. Notes
5.63% due 09/01/2024*....................... 355,000 360,325
----------
Building-Heavy Construction -- 0.1%
New Enterprise Stone & Lime Co., Inc.
Senior Notes
10.13% due 04/01/2022*...................... 360,000 380,700
----------
Building-Residential/Commercial -- 1.5%
Beazer Homes USA, Inc.
Company Guar. Notes
5.75% due 06/15/2019........................ 310,000 324,338
Beazer Homes USA, Inc.
Company Guar. Notes
6.75% due 03/15/2025*....................... 690,000 693,450
CalAtlantic Group, Inc.
Company Guar. Notes
5.25% due 06/01/2026........................ 1,160,000 1,155,650
CalAtlantic Group, Inc.
Company Guar. Notes
5.88% due 11/15/2024........................ 159,000 166,950
M/I Homes, Inc.
Company Guar. Notes
6.75% due 01/15/2021........................ 475,000 497,296
MDC Holdings, Inc.
Company Guar. Notes
5.50% due 01/15/2024........................ 755,000 777,650
PulteGroup, Inc.
Company Guar. Notes
5.50% due 03/01/2026........................ 675,000 698,625
Taylor Morrison Communities, Inc./Monarch
Communities, Inc.
Company Guar. Notes
5.63% due 03/01/2024*....................... 270,000 279,450
TRI Pointe Group Inc./TRI Pointe Homes Inc.
Company Guar. Notes
5.88% due 06/15/2024........................ 1,070,000 1,102,100
----------
5,695,509
----------
47
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Cable/Satellite TV -- 1.6%
Altice US Finance I Corp
Senior Sec. Notes
5.38% due 07/15/2023*.......................... $ 830,000 $ 855,937
Cablevision Systems Corp.
Senior Notes
5.88% due 09/15/2022........................... 1,965,000 1,982,194
Cequel Communications Holdings I LLC/Cequel
Capital Corp.
Senior Notes
5.13% due 12/15/2021*.......................... 570,000 577,837
CSC Holdings LLC
Senior Notes
5.25% due 06/01/2024........................... 595,000 592,769
DISH DBS Corp.
Company Guar. Notes
6.75% due 06/01/2021........................... 1,320,000 1,424,775
DISH DBS Corp.
Company Guar. Notes
7.75% due 07/01/2026........................... 530,000 616,125
----------
6,049,637
----------
Casino Hotels -- 0.9%
Boyd Gaming Corp.
Company Guar. Notes
6.88% due 05/15/2023........................... 520,000 560,300
Caesars Entertainment Resort Properties LLC
Senior Sec. Notes
8.00% due 10/01/2020........................... 265,000 276,262
Caesars Growth Properties Holdings LLC/Caesars
Growth Properties Finance, Inc.
Sec. Notes
9.38% due 05/01/2022........................... 1,285,000 1,381,375
MGM Resorts International
Company Guar. Notes
4.63% due 09/01/2026........................... 1,085,000 1,052,450
----------
3,270,387
----------
Cellular Telecom -- 1.2%
Sprint Communications, Inc.
Senior Notes
6.00% due 11/15/2022........................... 985,000 1,007,162
Sprint Corp.
Company Guar. Notes
7.88% due 09/15/2023........................... 1,710,000 1,893,825
T-Mobile USA, Inc.
Company Guar. Notes
6.38% due 03/01/2025........................... 320,000 344,800
T-Mobile USA, Inc.
Company Guar. Notes
6.50% due 01/15/2026........................... 315,000 344,925
T-Mobile USA, Inc.
Company Guar. Notes
6.73% due 04/28/2022........................... 955,000 988,043
----------
4,578,755
----------
Principal Value
Security Description Amount (Note 2)
Chemicals-Diversified -- 0.2%
Hexion 2 US Finance Corp.
Sec. Notes
13.75% due 02/01/2022*...................... $ 400,000 $ 383,000
Hexion, Inc.
Senior Sec. Notes
10.38% due 02/01/2022*...................... 560,000 558,600
----------
941,600
----------
Chemicals-Specialty -- 0.4%
Kraton Polymers LLC/Kraton Polymers Capital
Corp.
Company Guar. Notes
7.00% due 04/15/2025*....................... 1,360,000 1,378,700
W.R. Grace & Co.
Company Guar. Notes
5.13% due 10/01/2021*....................... 135,000 141,581
----------
1,520,281
----------
Coal -- 0.3%
Peabody Securities Finance Corp.
Senior Sec. Notes
6.00% due 03/31/2022*....................... 1,210,000 1,203,194
----------
Commercial Services -- 0.2%
ServiceMaster Co. LLC
Company Guar. Notes
5.13% due 11/15/2024*....................... 695,000 712,375
----------
Computer Services -- 0.1%
Harland Clarke Holdings Corp.
Senior Sec. Notes
6.88% due 03/01/2020*....................... 350,000 355,250
----------
Computer Software -- 0.4%
Rackspace Hosting, Inc.
Company Guar. Notes
8.63% due 11/15/2024*....................... 1,430,000 1,506,791
----------
Computers -- 0.1%
Diamond 1 Finance Corp./Diamond 2 Finance
Corp.
Senior Sec. Notes
5.45% due 06/15/2023*....................... 155,000 167,247
Diamond 1 Finance Corp./Diamond 2 Finance
Corp.
Senior Sec. Notes
6.02% due 06/15/2026*....................... 110,000 119,920
Diamond 1 Finance Corp./Diamond 2 Finance
Corp.
Senior Sec. Notes
8.10% due 07/15/2036*....................... 140,000 175,820
----------
462,987
----------
Consulting Services -- 0.2%
CEB, Inc.
Company Guar. Notes
5.63% due 06/15/2023*....................... 860,000 934,175
----------
48
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Containers-Metal/Glass -- 0.3%
Owens-Brockway Glass Container, Inc.
Company Guar. Notes
6.38% due 08/15/2025*....................... $ 750,000 $ 801,563
Silgan Holdings, Inc.
Senior Notes
4.75% due 03/15/2025*....................... 215,000 215,806
----------
1,017,369
----------
Containers-Paper/Plastic -- 0.5%
Berry Plastics Corp.
Sec. Notes
5.13% due 07/15/2023........................ 680,000 697,000
Flex Acquisition Co, Inc.
Senior Notes
6.88% due 01/15/2025*....................... 485,000 495,476
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Senior Sec. Notes
5.13% due 07/15/2023*....................... 635,000 652,462
Reynolds Group Issuer, Inc./Reynolds Group
Issuer LLC
Company Guar. Notes
7.00% due 07/15/2024*....................... 40,000 42,825
----------
1,887,763
----------
Data Processing/Management -- 0.2%
First Data Corp.
Senior Sec. Notes
5.00% due 01/15/2024*....................... 685,000 696,988
----------
Diagnostic Equipment -- 0.2%
Ortho-Clinical Diagnostics, Inc.
Senior Notes
6.63% due 05/15/2022*....................... 635,000 590,550
----------
Diagnostic Kits -- 0.2%
Alere, Inc.
Company Guar. Notes
6.50% due 06/15/2020........................ 735,000 740,513
----------
Dialysis Centers -- 0.2%
DaVita HealthCare Partners, Inc.
Company Guar. Notes
5.13% due 07/15/2024........................ 720,000 727,200
----------
Disposable Medical Products -- 0.2%
Sterigenics-Nordion Holdings LLC
Senior Notes
6.50% due 05/15/2023*....................... 720,000 736,200
----------
Educational Software -- 0.1%
Blackboard, Inc.
Sec. Notes
9.75% due 10/15/2021*....................... 365,000 365,000
----------
Electric-Integrated -- 0.0%
Texas Competitive Electric Holdings Co. LLC/
TCEH Finance, Inc.
Escrow Notes
11.50% due 10/01/2020+(4)................... 1,667,835 12,509
----------
Principal Value
Security Description Amount (Note 2)
Energy-Alternate Sources -- 0.2%
TerraForm Power Operating LLC
Company Guar. Notes
6.38% due 02/01/2023*........................ $ 760,000 $ 789,450
----------
Enterprise Software/Service -- 0.3%
BMC Software Finance, Inc.
Senior Notes
8.13% due 07/15/2021*........................ 765,000 770,738
Infor US, Inc.
Company Guar. Notes
6.50% due 05/15/2022......................... 310,000 318,556
----------
1,089,294
----------
Finance-Auto Loans -- 0.7%
Ally Financial, Inc.
Senior Notes
4.13% due 03/30/2020......................... 1,910,000 1,948,200
Ally Financial, Inc.
Sub. Notes
5.75% due 11/20/2025......................... 700,000 716,625
----------
2,664,825
----------
Finance-Consumer Loans -- 0.8%
Navient Corp.
Senior Notes
6.50% due 06/15/2022......................... 691,000 697,046
Navient Corp.
Senior Notes
7.25% due 09/25/2023......................... 205,000 206,025
Springleaf Finance Corp.
Company Guar. Notes
5.25% due 12/15/2019......................... 1,390,000 1,402,163
TMX Finance LLC/TitleMax Finance Corp.
Senior Sec. Notes
8.50% due 09/15/2018*........................ 600,000 552,000
----------
2,857,234
----------
Finance-Investment Banker/Broker -- 0.2%
LPL Holdings, Inc.
Company Guar. Notes
5.75% due 09/15/2025*........................ 645,000 651,450
----------
Finance-Mortgage Loan/Banker -- 0.1%
Ladder Capital Finance Holdings LLLP/Ladder
Capital Finance Corp.
Senior Notes
5.25% due 03/15/2022*........................ 420,000 423,150
----------
Finance-Other Services -- 0.4%
Nationstar Mtg. LLC/Nationstar Capital Corp.
Company Guar. Notes
6.50% due 07/01/2021......................... 415,000 420,188
Vertiv Intermediate Holding Corp.
Senior Notes
12.00% due 02/15/2022*(1).................... 930,000 971,264
----------
1,391,452
----------
Food-Catering -- 0.3%
AdvancePierre Foods Holdings, Inc.
Company Guar. Notes
5.50% due 12/15/2024*........................ 1,000,000 1,011,250
----------
49
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Food-Flour & Grain -- 0.4%
Post Holdings, Inc.
Company Guar. Notes
5.00% due 08/15/2026*....................... $ 650,000 $ 622,375
Post Holdings, Inc.
Company Guar. Notes
5.50% due 03/01/2025*....................... 490,000 492,450
Post Holdings, Inc.
Company Guar. Notes
5.75% due 03/01/2027*....................... 475,000 473,812
----------
1,588,637
----------
Food-Misc./Diversified -- 0.6%
Dole Food Co., Inc.
Senior Sec. Notes
7.25% due 06/15/2025*....................... 1,400,000 1,396,500
Lamb Weston Holdings, Inc.
Company Guar. Notes
4.88% due 11/01/2026*....................... 740,000 754,800
Pinnacle Foods Finance LLC/Pinnacle Foods
Finance Corp.
Company Guar. Notes
5.88% due 01/15/2024........................ 130,000 135,525
----------
2,286,825
----------
Food-Retail -- 0.4%
Albertsons Cos. LLC/Safeway, Inc.
Senior Notes
5.75% due 03/15/2025*....................... 785,000 761,450
Safeway, Inc.
Senior Notes
7.25% due 02/01/2031........................ 760,000 736,250
----------
1,497,700
----------
Gambling (Non-Hotel) -- 0.6%
Eagle II Acquisition Co., LLC
Senior Notes
6.00% due 04/01/2025*....................... 240,000 247,200
Pinnacle Entertainment, Inc.
Senior Notes
5.63% due 05/01/2024*....................... 935,000 946,687
Scientific Games International, Inc.
Company Guar. Notes
6.63% due 05/15/2021........................ 495,000 464,063
Scientific Games International, Inc.
Senior Sec. Notes
7.00% due 01/01/2022*....................... 690,000 736,575
----------
2,394,525
----------
Gas-Distribution -- 0.4%
AmeriGas Partners LP/AmeriGas Finance Corp.
Senior Notes
5.50% due 05/20/2025........................ 505,000 501,213
NGL Energy Partners LP/NGL Energy Finance
Corp
Company Guar. Notes
5.13% due 07/15/2019........................ 935,000 937,337
----------
1,438,550
----------
Principal Value
Security Description Amount (Note 2)
Hotels/Motels -- 0.1%
Diamond Resorts International, Inc.
Senior Sec. Notes
7.75% due 09/01/2023*......................... $ 90,000 $ 94,050
Hilton Worldwide Finance LLC/Hilton Worldwide
Finance Corp.
Senior Notes
4.63% due 04/01/2025*......................... 320,000 323,904
Hilton Worldwide Finance LLC/Hilton Worldwide
Finance Corp.
Senior Notes
4.88% due 04/01/2027*......................... 100,000 101,000
----------
518,954
----------
Housewares -- 0.1%
American Greetings Corp.
Senior Notes
7.88% due 02/15/2025*......................... 545,000 572,250
----------
Independent Power Producers -- 1.0%
Calpine Corp.
Senior Notes
5.38% due 01/15/2023.......................... 1,487,000 1,500,086
Dynegy, Inc.
Company Guar. Notes
7.38% due 11/01/2022.......................... 1,580,000 1,564,200
NRG Energy, Inc.
Company Guar. Notes
7.25% due 05/15/2026.......................... 630,000 648,900
----------
3,713,186
----------
Insurance-Multi-line -- 0.1%
Genworth Holdings, Inc.
Company Guar. Notes
4.90% due 08/15/2023.......................... 400,000 333,000
----------
Internet Connectivity Services -- 0.2%
Cogent Communications Group, Inc.
Senior Sec. Notes
5.38% due 03/01/2022*......................... 170,000 174,462
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
5.75% due 01/15/2027*......................... 35,000 36,918
Zayo Group LLC/Zayo Capital, Inc.
Company Guar. Notes
6.38% due 05/15/2025.......................... 670,000 723,178
----------
934,558
----------
Medical Information Systems -- 0.1%
Change Healthcare Holdings LLC/Change
Healthcare Finance, Inc.
Senior Bonds
5.75% due 03/01/2025*......................... 345,000 353,625
----------
Medical Labs & Testing Services -- 0.5%
Tennessee Merger Sub, Inc.
Company Guar. Notes
6.38% due 02/01/2025*......................... 1,835,000 1,798,300
----------
50
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Medical Products -- 0.2%
Hill-Rom Holdings, Inc.
Company Guar. Notes
5.00% due 02/15/2025*.......................... $ 760,000 $ 759,050
----------
Medical-Drugs -- 0.5%
Endo Finance LLC/Endo Finco, Inc.
Company Guar. Notes
5.38% due 01/15/2023*.......................... 460,000 397,035
inVentiv Group Holdings, Inc./inVentiv Health,
Inc./inVentiv Health Clinical, Inc.
Company Guar. Notes
7.50% due 10/01/2024*.......................... 270,000 277,762
PRA Holdings, Inc.
Senior Notes
9.50% due 10/01/2023*.......................... 421,000 467,310
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
6.38% due 10/15/2020*.......................... 505,000 457,025
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
7.25% due 07/15/2022*.......................... 295,000 251,488
----------
1,850,620
----------
Medical-HMO -- 0.4%
MPH Acquisition Holdings LLC
Company Guar. Notes
7.13% due 06/01/2024*.......................... 1,000,000 1,075,125
WellCare Health Plans, Inc.
Senior Notes
5.25% due 04/01/2025........................... 525,000 537,232
----------
1,612,357
----------
Medical-Hospitals -- 2.3%
CHS/Community Health Systems, Inc.
Senior Sec. Notes
5.13% due 08/01/2021........................... 580,000 573,475
CHS/Community Health Systems, Inc.
Senior Sec. Notes
6.25% due 03/31/2023........................... 195,000 198,413
CHS/Community Health Systems, Inc.
Company Guar. Notes
6.88% due 02/01/2022........................... 730,000 627,800
Envision Healthcare Corp.
Company Guar. Notes
6.25% due 12/01/2024*.......................... 345,000 362,250
HCA, Inc.
Senior Sec. Notes
4.50% due 02/15/2027........................... 380,000 380,000
HCA, Inc.
Senior Sec. Notes
5.25% due 06/15/2026........................... 705,000 742,012
HCA, Inc.
Company Guar. Notes
5.38% due 02/01/2025........................... 1,595,000 1,662,787
IASIS Healthcare LLC/IASIS Capital Corp.
Company Guar. Notes
8.38% due 05/15/2019........................... 615,000 588,863
Principal Value
Security Description Amount (Note 2)
Medical-Hospitals (continued)
Surgery Center Holdings, Inc.
Company Guar. Notes
8.88% due 04/15/2021*.................... $ 420,000 $ 444,150
Surgical Care Affiliates, Inc.
Company Guar. Notes
6.00% due 04/01/2023*.................... 734,000 787,215
Tenet Healthcare Corp. FRS
Senior Sec. Notes
4.63% due 06/15/2020..................... 315,000 316,575
Tenet Healthcare Corp.
Senior Notes
5.00% due 03/01/2019..................... 760,000 761,163
Tenet Healthcare Corp.
Senior Sec. Notes
6.00% due 10/01/2020..................... 750,000 793,125
Tenet Healthcare Corp.
Senior Notes
8.13% due 04/01/2022..................... 355,000 370,531
----------
8,608,359
----------
Metal Processors & Fabrication -- 0.3%
Novelis Corp.
Company Guar. Notes
5.88% due 09/30/2026*.................... 1,015,000 1,036,569
Novelis Corp.
Company Guar. Notes
6.25% due 08/15/2024*.................... 90,000 93,825
----------
1,130,394
----------
Metal-Aluminum -- 0.2%
Aleris International, Inc.
Senior Sec. Notes
9.50% due 04/01/2021*.................... 763,000 820,225
----------
Metal-Copper -- 0.5%
Freeport-McMoRan Copper & Gold, Inc.
Company Guar. Notes
3.88% due 03/15/2023..................... 1,480,000 1,361,038
Freeport-McMoRan, Inc.
Company Guar. Notes
3.55% due 03/01/2022..................... 445,000 412,737
----------
1,773,775
----------
Networking Products -- 0.4%
Radiate Holdco LLC/Radiate Finance, Inc.
Senior Notes
6.63% due 02/15/2025*.................... 1,700,000 1,677,687
----------
Non-Hazardous Waste Disposal -- 0.2%
Advanced Disposal Services, Inc.
Company Guar. Notes
5.63% due 11/15/2024*.................... 660,000 666,600
----------
Office Automation & Equipment -- 0.3%
CDW LLC/CDW Finance Corp.
Company Guar. Notes
5.00% due 09/01/2023..................... 885,000 894,956
51
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Office Automation & Equipment (continued)
CDW LLC/CDW Finance Corp.
Company Guar. Notes
5.00% due 09/01/2025............................ $ 75,000 $ 76,500
----------
971,456
----------
Oil & Gas Drilling -- 0.2%
Rowan Cos., Inc.
Company Guar. Notes
5.40% due 12/01/2042............................ 870,000 652,500
----------
Oil Companies-Exploration & Production -- 4.5%
Alta Mesa Holdings LP/Alta Mesa Finance
Services Corp.
Company Guar. Notes
7.88% due 12/15/2024*........................... 910,000 948,675
Antero Resources Corp.
Company Guar. Notes
5.38% due 11/01/2021............................ 130,000 133,522
Antero Resources Corp.
Company Guar. Notes
5.63% due 06/01/2023............................ 190,000 194,275
Bonanza Creek Energy, Inc.
Company Guar. Notes
6.75 due 04/15/2021(2)(3)....................... 425,000 342,125
Callon Petroleum Co
Company Guar. Notes
6.13% due 10/01/2024*........................... 473,000 491,920
Carrizo Oil & Gas, Inc.
Company Guar. Notes
6.25% due 04/15/2023............................ 1,550,000 1,553,875
Chesapeake Energy Corp.
Company Guar. Notes
5.75% due 03/15/2023............................ 220,000 200,200
Chesapeake Energy Corp.
Company Guar. Notes
6.63% due 08/15/2020............................ 1,100,000 1,098,625
Continental Resources, Inc.
Company Guar. Notes
4.50% due 04/15/2023............................ 420,000 408,710
Denbury Resources, Inc.
Company Guar. Notes
5.50% due 05/01/2022............................ 655,000 510,900
Diamondback Energy, Inc.
Company Guar. Notes
5.38% due 05/31/2025*........................... 775,000 794,375
EP Energy LLC/Everest Acquisition Finance, Inc.
Senior Sec. Notes
8.00% due 11/29/2024*........................... 410,000 430,500
EP Energy LLC/Everest Acquisition Finance, Inc.
Sec. Bonds
8.00% due 02/15/2025*........................... 270,000 251,100
EP Energy LLC/Everest Acquisition Finance, Inc.
Company Guar. Notes
9.38% due 05/01/2020............................ 1,284,000 1,210,427
Laredo Petroleum, Inc.
Company Guar. Notes
5.63% due 01/15/2022............................ 470,000 468,825
Principal Value
Security Description Amount (Note 2)
Oil Companies-Exploration & Production (continued)
Matador Resources Co.
Company Guar. Notes
6.88% due 04/15/2023*.................... $1,240,000 $ 1,295,800
Newfield Exploration Co.
Senior Notes
5.75% due 01/30/2022..................... 590,000 626,138
Oasis Petroleum, Inc.
Company Guar. Notes
6.88% due 01/15/2023..................... 865,000 880,137
Parsley Energy LLC/Parsley Finance Corp.
Company Guar. Notes
6.25% due 06/01/2024*.................... 515,000 545,900
QEP Resources, Inc.
Senior Notes
5.25% due 05/01/2023..................... 1,105,000 1,083,331
Range Resources Corp.
Company Guar. Notes
5.00% due 03/15/2023*.................... 955,000 940,675
RSP Permian, Inc.
Company Guar. Notes
5.25% due 01/15/2025*.................... 665,000 669,987
SM Energy Co.
Senior Notes
6.13% due 11/15/2022..................... 340,000 342,550
SM Energy Co.
Senior Notes
6.50% due 01/01/2023..................... 720,000 730,800
Whiting Petroleum Corp.
Company Guar. Notes
5.75% due 03/15/2021..................... 720,000 712,800
-----------
16,866,172
-----------
Oil Refining & Marketing -- 0.5%
Sunoco LP/Sunoco Finance Corp.
Company Guar. Notes
6.38% due 04/01/2023..................... 1,755,000 1,781,325
-----------
Oil-Field Services -- 0.1%
FTS International, Inc. FRS
Senior Sec. Notes
8.63% due 06/15/2020*.................... 475,000 481,531
-----------
Paper & Related Products -- 0.0%
Mercer International, Inc.
Senior Notes
6.50% due 02/01/2024*.................... 135,000 135,338
-----------
Physicians Practice Management -- 0.2%
MEDNAX, Inc.
Company Guar. Notes
5.25% due 12/01/2023*.................... 620,000 632,400
-----------
Pipelines -- 1.5%
American Midstream Partners LP/American
Midstream Finance Corp.
Company Guar. Notes
8.50% due 12/15/2021*.................... 685,000 698,700
52
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Pipelines (continued)
Blue Racer Midstream LLC/Blue Racer Finance
Corp.
Company Guar. Notes
6.13% due 11/15/2022*.......................... $ 875,000 $ 885,938
Cheniere Corpus Christi Holdings LLC
Senior Sec. Notes
5.88% due 03/31/2025*.......................... 1,815,000 1,892,137
Crestwood Midstream Partners LP/Crestwood
Midstream Finance Corp.
Company Guar. Notes
5.75% due 04/01/2025*.......................... 415,000 423,819
Crestwood Midstream Partners LP/Crestwood
Midstream Finance Corp.
Company Guar. Notes
6.25% due 04/01/2023........................... 600,000 622,500
Energy Transfer Equity LP
Senior Sec. Notes
7.50% due 10/15/2020........................... 571,000 636,665
Holly Energy Partners LP/Holly Energy Finance
Corp.
Company Guar. Notes
6.00% due 08/01/2024*.......................... 100,000 104,750
Summit Midstream Holdings LLC/Summit
Midstream Finance Corp.
Company Guar. Notes
5.75% due 04/15/2025........................... 245,000 243,775
----------
5,508,284
----------
Private Equity -- 0.3%
Icahn Enterprises LP/Icahn Enterprises Finance
Corp.
Company Guar. Notes
5.88% due 02/01/2022........................... 1,120,000 1,136,800
Icahn Enterprises LP/Icahn Enterprises Finance
Corp.
Senior Notes
6.25% due 02/01/2022*.......................... 180,000 182,700
----------
1,319,500
----------
Radio -- 0.2%
Sirius XM Radio, Inc.
Company Guar. Notes
5.38% due 07/15/2026*.......................... 835,000 853,788
----------
Real Estate Investment Trusts -- 1.3%
Corrections Corp. of America
Company Guar. Notes
5.00% due 10/15/2022........................... 615,000 634,987
CyrusOne LP/CyrusOne Finance Corp.
Company Guar. Notes
5.00% due 03/15/2024*.......................... 150,000 154,125
CyrusOne LP/CyrusOne Finance Corp.
Company Guar. Notes
5.38% due 03/15/2027*.......................... 155,000 156,550
ESH Hospitality, Inc.
Company Guar. Notes
5.25% due 05/01/2025*.......................... 780,000 786,334
Principal Value
Security Description Amount (Note 2)
Real Estate Investment Trusts (continued)
iStar Financial, Inc.
Senior Notes
5.00% due 07/01/2019............................... $1,000,000 $1,006,250
iStar, Inc.
Senior Notes
6.00% due 04/01/2022............................... 215,000 218,225
MGM Growth Properties Operating Partnership
LP/MGP Finance Co-Issuer, Inc.
Company Guar. Notes
5.63% due 05/01/2024............................... 280,000 295,400
MPT Operating Partnership LP/MPT Finance
Corp.
Company Guar. Notes
6.38% due 03/01/2024............................... 315,000 338,625
Starwood Property Trust, Inc.
Senior Notes
5.00% due 12/15/2021*.............................. 325,000 337,188
Uniti Group, Inc./CSL Capital LLC
Company Guar. Notes
7.13% due 12/15/2024*.............................. 1,065,000 1,080,975
----------
5,008,659
----------
Rental Auto/Equipment -- 0.2%
United Rentals North America, Inc.
Company Guar. Notes
5.50% due 07/15/2025............................... 675,000 695,250
----------
Resort/Theme Parks -- 0.1%
Six Flags Entertainment Corp.
Company Guar. Notes
4.88% due 07/31/2024*.............................. 330,000 326,700
----------
Retail-Automobile -- 0.2%
Sonic Automotive, Inc.
Company Guar. Notes
6.13% due 03/15/2027*.............................. 800,000 801,000
----------
Retail-Drug Store -- 0.2%
Rite Aid Corp.
Company Guar. Notes
6.75% due 06/15/2021............................... 730,000 733,194
----------
Retail-Hypermarkets -- 0.1%
Tops Holding LLC /Tops Markets II Corp.
Senior Sec. Notes
8.00% due 06/15/2022*.............................. 670,000 549,400
----------
Retail-Perfume & Cosmetics -- 0.1%
Sally Holdings LLC/Sally Capital, Inc.
Company Guar. Notes
5.63% due 12/01/2025............................... 500,000 499,375
----------
Retail-Pet Food & Supplies -- 0.2%
PetSmart, Inc.
Senior Notes
7.13% due 03/15/2023*.............................. 860,000 817,000
----------
Retail-Propane Distribution -- 0.1%
Ferrellgas Partners LP/Ferrellgas Partners Finance
Corp.
Senior Notes
8.63% due 06/15/2020*.............................. 570,000 545,775
----------
53
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
U.S. CORPORATE BONDS & NOTES (continued)
Retail-Restaurants -- 0.1%
Landry's, Inc.
Senior Notes
6.75% due 10/15/2024*...................... $340,000 $ 352,750
----------
Rubber-Tires -- 0.1%
Goodyear Tire & Rubber Co.
Company Guar. Notes
4.88% due 03/15/2027....................... 550,000 550,000
----------
Rubber/Plastic Products -- 0.0%
Venture Holdings Co. LLC
Company Guar. Notes
11.00% due 06/01/2007+(3)(4)(5)(6)......... 550,000 0
----------
Security Services -- 0.7%
ADT Corp.
Senior Sec. Notes
6.25% due 10/15/2021....................... 845,000 918,430
Altegrity, Inc.
Senior Sec. Notes
9.50% due 07/01/2019*...................... 865,000 914,738
Prime Security Services Borrower LLC/Prime
Finance, Inc.
Sec. Notes
9.25% due 05/15/2023*...................... 785,000 860,556
----------
2,693,724
----------
Soap & Cleaning Preparation -- 0.3%
Kronos Acquisition Holdings, Inc.
Company Guar. Notes
9.00% due 08/15/2023*...................... 940,000 956,450
----------
Steel-Producers -- 0.4%
AK Steel Corp.
Company Guar. Notes
7.00% due 03/15/2027....................... 745,000 741,737
AK Steel Corp.
Senior Sec. Notes
7.50% due 07/15/2023....................... 495,000 537,075
Steel Dynamics, Inc.
Company Guar. Notes
5.00% due 12/15/2026*...................... 110,000 111,375
----------
1,390,187
----------
Telecom Services -- 0.1%
Qwest Corp.
Senior Notes
7.25% due 09/15/2025....................... 415,000 453,601
----------
Telecommunication Equipment -- 0.1%
CommScope Technologies LLC
Company Guar. Notes
5.00% due 03/15/2027*...................... 200,000 199,690
----------
Telephone-Integrated -- 1.0%
CenturyLink, Inc.
Senior Notes
7.50% due 04/01/2024....................... 650,000 687,174
Frontier Communications Corp.
Senior Notes
6.25% due 09/15/2021....................... 495,000 460,350
Principal Value
Security Description Amount (Note 2)
Telephone-Integrated (continued)
Frontier Communications Corp.
Senior Notes
10.50% due 09/15/2022............ $2,095,000 $ 2,121,187
Level 3 Financing, Inc.
Company Guar. Notes
5.25% due 03/15/2026............. 580,000 582,900
------------
3,851,611
------------
Television -- 0.1%
Sinclair Television Group, Inc.
Company Guar. Notes
5.13% due 02/15/2027*............ 300,000 289,500
------------
Theaters -- 0.1%
AMC Entertainment Holdings, Inc.
Company Guar. Notes
5.88% due 11/15/2026*............ 195,000 197,194
------------
Total U.S. Corporate Bonds & Notes
(cost $143,495,885).............. 145,340,958
------------
FOREIGN CORPORATE BONDS & NOTES -- 9.9%
Building Products-Cement -- 0.2%
Cemex SAB de CV
Senior Sec. Notes
5.70% due 01/11/2025*............ 510,000 529,125
Cemex SAB de CV
Senior Sec. Notes
7.75% due 04/16/2026*............ 200,000 225,042
------------
754,167
------------
Cable/Satellite TV -- 2.0%
Altice Financing SA
Senior Sec. Notes
6.63% due 02/15/2023*............ 1,025,000 1,067,025
Altice Luxembourg SA
Company Guar. Notes
7.63% due 02/15/2025*............ 1,390,000 1,469,056
Numericable-SFR SA
Senior Sec. Notes
6.00% due 05/15/2022*............ 1,200,000 1,243,500
Numericable-SFR SA
Senior Sec. Notes
7.38% due 05/01/2026*............ 910,000 937,300
UPCB Finance IV, Ltd.
Senior Sec. Notes
5.38% due 01/15/2025*............ 360,000 362,250
Videotron, Ltd./Videotron Ltee
Senior Notes
5.13% due 04/15/2027*............ 317,000 317,000
Virgin Media Finance PLC
Company Guar. Notes
6.00% due 10/15/2024*............ 400,000 414,500
VTR Finance BV
Senior Sec. Notes
6.88% due 01/15/2024*............ 1,030,000 1,071,200
Ziggo Secured Finance BV
Senior Sec. Notes
5.50% due 01/15/2027*............ 750,000 749,925
------------
7,631,756
------------
54
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Casino Services -- 0.2%
Gateway Casinos & Entertainment, Ltd.
Sec. Notes
8.25% due 03/01/2024*........................ $ 860,000 $ 870,750
----------
Chemicals-Diversified -- 0.2%
INEOS Group Holdings SA
Company Guar. Notes
5.63% due 08/01/2024*........................ 955,000 957,388
----------
Chemicals-Specialty -- 0.1%
Alpha 3 BV/Alpha US Bidco, Inc.
Company Guar. Notes
6.25% due 02/01/2025*........................ 280,000 283,500
----------
Containers-Metal/Glass -- 0.3%
Ardagh Packaging Finance PLC/Ardagh Holdings
USA, Inc.
Company Guar. Notes
6.00% due 06/30/2021*........................ 365,000 375,950
Ardagh Packaging Finance PLC/Ardagh Holdings
USA, Inc.
Company Guar. Notes
6.00% due 02/15/2025*........................ 350,000 353,937
Ardagh Packaging Finance PLC/Ardagh Holdings
USA, Inc.
Company Guar. Notes
7.25% due 05/15/2024*........................ 260,000 278,200
----------
1,008,087
----------
Cruise Lines -- 0.3%
NCL Corp., Ltd.
Senior Notes
4.75% due 12/15/2021*........................ 1,035,000 1,050,525
----------
Diversified Manufacturing Operations -- 0.5%
Bombardier, Inc.
Senior Notes
4.75% due 04/15/2019*........................ 585,000 593,044
Bombardier, Inc.
Senior Notes
6.13% due 01/15/2023*........................ 305,000 298,900
Bombardier, Inc.
Senior Notes
8.75% due 12/01/2021*........................ 850,000 930,750
----------
1,822,694
----------
Diversified Minerals -- 0.2%
FMG Resources August 2006 Pty, Ltd.
Senior Sec. Notes
9.75% due 03/01/2022*........................ 410,000 469,963
Teck Resources, Ltd.
Company Guar. Notes
8.50% due 06/01/2024*........................ 240,000 276,900
----------
746,863
----------
Finance-Commercial -- 0.1%
Dana Financing Luxembourg SARL
Company Guar. Notes
5.75% due 04/15/2025*........................ 180,000 181,575
Principal Value
Security Description Amount (Note 2)
Finance-Commercial (continued)
Dana Financing Luxembourg SARL
Company Guar. Notes
6.50% due 06/01/2026*....................... $ 185,000 $ 192,863
----------
374,438
----------
Finance-Leasing Companies -- 0.4%
Aircastle, Ltd.
Senior Notes
5.00% due 04/01/2023........................ 1,425,000 1,499,812
----------
Food-Meat Products -- 0.1%
MARB BondCo PLC
Company Guar. Notes
7.00% due 03/15/2024*....................... 200,000 198,500
----------
Gambling (Non-Hotel) -- 0.2%
International Game Technology PLC
Senior Sec. Notes
6.25% due 02/15/2022*....................... 900,000 960,750
----------
Hazardous Waste Disposal -- 0.1%
Tervita Escrow Corp.
Sec. Notes
7.63% due 12/01/2021*....................... 185,000 191,013
----------
Machinery-Farming -- 0.2%
CNH Industrial NV
Senior Notes
4.50% due 08/15/2023........................ 750,000 760,313
----------
Medical Products -- 0.1%
Mallinckrodt International Finance SA/
Mallinckrodt CB LLC
Company Guar. Notes
5.63% due 10/15/2023*....................... 465,000 442,913
----------
Medical-Biomedical/Gene -- 0.1%
Concordia International Corp.
Senior Notes
7.00% due 04/15/2023*....................... 801,000 156,195
Concordia International Corp.
Senior Sec. Notes
9.00% due 04/01/2022*....................... 245,000 176,706
----------
332,901
----------
Medical-Drugs -- 0.3%
Capsugel SA
Company Guar. Notes
7.00% due 05/15/2019+*(1)................... 573,000 571,567
Valeant Pharmaceuticals International, Inc.
Senior Sec. Notes
6.50% due 03/15/2022*....................... 85,000 87,444
Valeant Pharmaceuticals International, Inc.
Company Guar. Notes
6.75% due 08/15/2018*....................... 127,000 127,159
Valeant Pharmaceuticals International, Inc.
Senior Sec. Notes
7.00% due 03/15/2024*....................... 185,000 189,856
----------
976,026
----------
55
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
FOREIGN CORPORATE BONDS & NOTES (continued)
Metal-Aluminum -- 0.3%
Rusal Capital DAC
Company Guar. Notes
5.13% due 02/02/2022*............. $1,100,000 $1,106,090
----------
Metal-Copper -- 0.1%
Hudbay Minerals, Inc.
Company Guar. Notes
7.25% due 01/15/2023*............. 400,000 424,000
----------
Metal-Diversified -- 0.3%
Vedanta Resources PLC
Senior Notes
6.38% due 07/30/2022*............. 405,000 407,025
Vedanta Resources PLC
Senior Notes
8.25% due 06/07/2021*............. 800,000 859,600
----------
1,266,625
----------
Metal-Iron -- 0.4%
Vale Overseas, Ltd.
Company Guar. Notes
5.88% due 06/10/2021.............. 460,000 492,945
Vale Overseas, Ltd.
Company Guar. Notes
6.25% due 08/10/2026.............. 820,000 890,725
----------
1,383,670
----------
Oil & Gas Drilling -- 0.9%
Noble Holding International, Ltd.
Company Guar. Notes
7.75% due 01/15/2024.............. 995,000 955,200
Precision Drilling Corp.
Company Guar. Notes
7.75% due 12/15/2023*............. 620,000 652,550
Transocean, Inc.
Company Guar. Notes
6.80% due 03/15/2038.............. 520,000 427,700
Transocean, Inc.
Company Guar. Notes
9.00% due 07/15/2023*............. 1,235,000 1,318,362
----------
3,353,812
----------
Oil Companies-Exploration & Production -- 0.3%
Alberta Energy Co., Ltd.
Senior Notes
8.13% due 09/15/2030.............. 480,000 610,478
MEG Energy Corp.
Sec. Notes
6.50% due 01/15/2025*............. 725,000 725,000
----------
1,335,478
----------
Oil Companies-Integrated -- 0.5%
Petrobras Global Finance BV
Company Guar. Notes
8.38% due 05/23/2021.............. 645,000 728,527
Petrobras Global Finance BV
Company Guar. Notes
8.75% due 05/23/2026.............. 940,000 1,088,050
----------
1,816,577
----------
Principal Value
Security Description Amount (Note 2)
Oil-Field Services -- 0.2%
Weatherford International, Ltd.
Company Guar. Notes
8.25% due 06/15/2023.......................... $ 485,000 $ 527,438
Weatherford International, Ltd.
Company Guar. Notes
9.88% due 02/15/2024*......................... 140,000 162,050
-----------
689,488
-----------
Paper & Related Products -- 0.3%
Cascades, Inc.
Company Guar. Notes
5.50% due 07/15/2022*......................... 675,000 673,312
Cascades, Inc.
Company Guar. Notes
5.75% due 07/15/2023*......................... 530,000 530,000
-----------
1,203,312
-----------
Regional Authority -- 0.2%
Provincia de Buenos Aires
Senior Notes
6.50% due 02/15/2023*......................... 935,000 937,057
-----------
Satellite Telecom -- 0.3%
Intelsat Jackson Holdings SA
Company Guar. Notes
5.50% due 08/01/2023.......................... 240,000 198,000
Intelsat Jackson Holdings SA
Company Guar. Notes
7.25% due 04/01/2019.......................... 695,000 662,856
Intelsat Jackson Holdings SA
Senior Sec. Notes
8.00% due 02/15/2024*......................... 175,000 185,500
-----------
1,046,356
-----------
Special Purpose Entity -- 0.0%
Hellas Telecommunications Luxembourg II SCA
FRS
Sub. Notes
6.00% due 01/15/2015+*(3)(4)(5)(6)............ 1,025,000 0
-----------
Steel-Producers -- 0.3%
ArcelorMittal
Senior Notes
6.13% due 06/01/2025.......................... 745,000 826,950
BlueScope Steel Finance, Ltd./BlueScope Steel
Finance USA LLC
Company Guar. Notes
6.50% due 05/15/2021*......................... 490,000 514,500
-----------
1,341,450
-----------
Transport-Equipment & Leasing -- 0.2%
Park Aerospace Holdings, Ltd.
Company Guar. Notes
5.25% due 08/15/2022*......................... 130,000 135,200
Park Aerospace Holdings, Ltd.
Company Guar. Notes
5.50% due 02/15/2024*......................... 520,000 540,800
-----------
676,000
-----------
Total Foreign Corporate Bonds & Notes
(cost $37,873,595)............................ 37,442,311
-----------
56
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS(7)(8)(9) -- 48.9%
Advertising Services -- 0.1%
Advantage Sales & Marketing, Inc. FRS
2nd Lien
7.50% due 07/25/2022....................... $ 563,000 $ 543,295
----------
Aerospace/Defense-Equipment -- 1.0%
Silver II Borrower SCA FRS
BTL
4.15% due 12/13/2019....................... 1,835,000 1,724,900
TransDigm, Inc. FRS
BTL-F
3.98% due 06/09/2023....................... 472,735 470,076
TransDigm, Inc. FRS
BTL-D
3.98% -- 4.15% due 06/04/2021.............. 1,462,406 1,457,836
----------
3,652,812
----------
Airlines -- 0.3%
Air Canada FRS
BTL-B
3.76% due 10/06/2023....................... 482,000 486,338
United Airlines, Inc. FRS
BTL-B
2.50% due 03/21/2024....................... 550,000 551,375
----------
1,037,713
----------
Auction Houses/Art Dealers -- 0.3%
KAR Auction Services, Inc. FRS
BTL-B3
4.50% due 03/09/2023....................... 1,081,080 1,093,242
----------
Auto-Heavy Duty Trucks -- 0.3%
Navistar, Inc. FRS
BTL-B
5.00% due 08/07/2020....................... 1,019,836 1,030,035
----------
Auto/Truck Parts & Equipment-Original -- 1.4%
Accuride Corp. FRS
BTL-B
8.15% due 10/21/2023....................... 997,500 991,266
Cooper-Standard Automotive, Inc. FRS
BTL-B1
3.90% due 11/02/2023....................... 363,578 366,608
Federal-Mogul Holdings Corp. FRS
BTL-C
4.75% due 04/15/2021....................... 2,638,102 2,628,868
MPG Holdco I, Inc. FRS
BTL-B
3.75% due 10/20/2021....................... 688,178 688,780
TI Group Automotive Systems LLC FRS
BTL-B
3.73% due 06/30/2022....................... 698,365 701,420
----------
5,376,942
----------
Bicycle Manufacturing -- 0.2%
SRAM LLC FRS
BTL-B
4.50% -- 6.50% due 03/15/2024.............. 672,344 674,025
----------
Principal Value
Security Description Amount (Note 2)
Bloodstock Services -- 0.2%
NVA Holdings, Inc. FRS
BTL-B2
4.50% due 08/14/2021.......................... $ 312,195 $ 314,536
NVA Holdings, Inc. FRS
2nd Lien
8.15% due 08/14/2022.......................... 482,382 485,196
----------
799,732
----------
Broadcast Services/Program -- 1.4%
iHeartCommunications, Inc. FRS
BTL-D
7.73% due 01/30/2019.......................... 1,555,000 1,334,708
Nexstar Broadcasting, Inc. FRS
BTL-B
3.94% due 01/17/2024.......................... 683,093 686,223
Univision Communications, Inc. FRS
BTL
3.75% due 03/15/2024.......................... 3,357,872 3,331,640
----------
5,352,571
----------
Building & Construction Products-Misc. -- 0.5%
CPG International, Inc. FRS
BTL-B
4.90% due 09/30/2020.......................... 723,779 726,493
Summit Materials Co. I LLC FRS
BTL-B
3.75% due 07/17/2022.......................... 1,034,573 1,043,625
----------
1,770,118
----------
Building Products-Cement -- 1.0%
Headwaters, Inc. FRS
BTL-B1
4.00% due 03/24/2022.......................... 1,702,632 1,705,612
Quikrete Holdings, Inc. FRS
BTL-B
4.23% due 11/15/2023.......................... 2,149,612 2,170,661
----------
3,876,273
----------
Building-Residential/Commercial -- 0.0%
TOUSA, Inc.
Escrow Loans
12.25% due 08/15/2011+(4)(5).................. 2,037,810 0
----------
Cable/Satellite TV -- 0.3%
CSC Holdings FRS
1st Lien
3.94% due 07/09/2025.......................... 649,688 647,793
Virgin Media Bristol LLC FRS
BTL
3.66% due 01/31/2025.......................... 405,000 405,911
----------
1,053,704
----------
Casino Hotels -- 0.9%
Boyd Gaming Corp. FRS
BTL-B2
2.50% due 09/15/2023.......................... 330,000 331,072
Caesars Entertainment Operating Co., Inc. FRS
BTL-B5
1.50% due 03/01/2022(3)....................... 260,000 291,417
57
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Casino Hotels (continued)
Caesars Entertainment Resort Properties LLC FRS
BTL-B
7.00% due 10/11/2020............................ $ 997,269 $1,003,918
CityCenter Holdings LLC FRS
BTL-B
3.73% due 10/16/2020............................ 1,044,331 1,054,775
Eldorado Resorts LLC FRS
BTL-B
2.25% due 03/13/2024............................ 485,000 485,202
Eldorado Resorts, Inc. FRS
BTL-B
4.25% due 07/23/2022............................ 328,155 328,155
----------
3,494,539
----------
Casino Services -- 0.2%
Gateway Casinos & Entertainment, Ltd. FRS
BTL-B1
4.80% due 02/22/2023............................ 515,000 519,828
Graton Economic Development Authority FRS
BTL-B
4.75% due 09/01/2022............................ 310,882 312,631
----------
832,459
----------
Chemicals-Diversified -- 0.5%
Ineos US Finance LLC FRS
BTL-B
3.73% due 03/31/2022............................ 1,197,041 1,201,716
Ineos US Finance LLC FRS
BTL-B
3.73% due 03/31/2024............................ 314,213 315,110
New Arclin US Holding Corp. FRS
1st Lien
5.67% due 02/14/2024............................ 430,000 434,032
----------
1,950,858
----------
Chemicals-Specialty -- 1.4%
Atotech BC FRS
BTL-B1
4.15% due 01/31/2024............................ 470,000 472,203
Duke Finance LLC FRS
BTL
6.15% due 02/21/2024............................ 385,000 387,888
Huntsman International LLC FRS
BTL-B
3.98% due 04/01/2023............................ 817,761 824,916
KRATON Polymers LLC FRS
BTL-B
5.00% due 01/06/2022............................ 623,944 629,403
MacDermid, Inc. FRS
BTL-B5
4.50% due 06/07/2020............................ 525,359 529,518
Omnova Solutions, Inc. FRS
BTL-B
5.25% due 08/28/2023............................ 1,570,110 1,585,811
PQ Corp. FRS
BTL-B
5.29% due 11/04/2022............................ 301,724 304,472
Principal Value
Security Description Amount (Note 2)
Chemicals-Specialty (continued)
Royal Holdings, Inc. FRS
1st Lien
4.40% due 06/19/2022......................... $ 686,841 $ 691,649
----------
5,425,860
----------
Coal -- 0.6%
Blackhawk Mining LLC FRS
BTL
10.65% due 02/14/2022........................ 430,189 417,283
Contura Energy, Inc. FRS
BTL-B
6.00% due 03/18/2024......................... 1,875,000 1,851,563
----------
2,268,846
----------
Commercial Services -- 1.7%
Brickman Group, Ltd. FRS
BTL-B
4.00% -- 4.02% due 12/18/2020................ 1,378,114 1,380,268
Brickman Group, Ltd. FRS
2nd Lien
7.50% -- 7.52% due 12/18/2021................ 776,000 778,522
CPI Acquisition, Inc. FRS
BTL-B
5.83% due 08/17/2022......................... 2,470,685 2,270,972
PAE Holding Corp. FRS
1st Lien
6.50% due 10/20/2022......................... 477,950 480,937
ServiceMaster Co. LLC FRS
BTL-B
3.48% due 11/08/2023......................... 1,425,610 1,431,847
----------
6,342,546
----------
Commercial Services-Finance -- 0.4%
TransUnion LLC FRS
BTL-B2
3.48% due 04/09/2023......................... 1,361,091 1,370,959
----------
Computer Services -- 0.7%
Harland Clarke Holdings Corp. FRS
BTL-B6
6.65% due 02/09/2022......................... 268,000 269,005
Harland Clarke Holdings Corp. FRS
BTL-B5
7.15% due 12/31/2019......................... 413,300 417,261
Neustar, Inc. FRS
BTL-B1
3.25% due 08/28/2019......................... 235,000 237,497
Neustar, Inc. FRS
BTL-B2
4.75% due 02/28/2024......................... 725,000 733,383
Presidio LLC FRS
1st Lien
4.25% due 02/02/2022......................... 548,862 552,407
Science Applications International Corp. FRS
BTL-B
3.56% due 05/04/2022......................... 548,235 551,148
----------
2,760,701
----------
58
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Computer Software -- 0.3%
Rackspace Hosting, Inc. FRS
BTL-B
4.53% due 11/03/2023............... $1,097,250 $1,104,565
----------
Computers-Integrated Systems -- 0.0%
Cologix, Inc. FRS
2nd Lien
8.00% due 03/20/2025............... 110,000 109,725
----------
Computers-Memory Devices -- 0.0%
Western Digital Corp. FRS
BTL-B2
3.73% due 04/29/2023............... 130,219 131,033
----------
Consumer Products-Misc. -- 0.1%
Prestige Brands, Inc. FRS
BTL-B4
3.73% due 01/26/2024............... 464,863 468,447
----------
Containers-Metal/Glass -- 0.9%
Anchor Glass Container Corp. FRS
1st Lien
4.25% due 12/07/2023............... 590,520 594,211
Anchor Glass Container Corp. FRS
2nd Lien
8.75% due 12/07/2024............... 796,000 810,925
Berlin Packaging LLC FRS
BTL-B
4.50% due 10/01/2021............... 867,153 871,489
BWAY Holding Co. FRS
BTL-B
3.25% due 04/03/2024............... 1,270,000 1,267,354
----------
3,543,979
----------
Containers-Paper/Plastic -- 0.4%
Reynolds Group Holdings, Inc. FRS
BTL
3.98% due 02/05/2023............... 1,450,834 1,456,500
----------
Cosmetics & Toiletries -- 0.2%
Coty, Inc. FRS
BTL-B
3.31% due 10/27/2022............... 288,757 289,479
Galleria Co. FRS
BTL-B
3.81% due 09/29/2023............... 583,333 586,068
----------
875,547
----------
Data Processing/Management -- 1.0%
CCC Information Services, Inc. FRS
BTL-B
4.00% due 12/17/2019............... 1,032,447 1,032,447
First Data Corp. FRS
BTL-C
3.98% due 03/24/2021............... 2,207,421 2,223,057
First Data Corp. FRS
BTL-C
3.98% due 07/10/2022............... 607,353 611,992
----------
3,867,496
----------
Principal Value
Security Description Amount (Note 2)
Diagnostic Equipment -- 0.5%
Ortho-Clinical Diagnostics, Inc. FRS
BTL-B
4.75% due 06/30/2021........................ $2,051,359 $2,032,641
----------
Diagnostic Kits -- 0.3%
Alere, Inc. FRS
BTL-B
4.25% due 06/18/2022........................ 1,132,015 1,131,668
----------
Dialysis Centers -- 0.8%
DaVita HealthCare Partners, Inc. FRS
BTL-B
3.73% due 06/24/2021........................ 1,462,406 1,477,292
U.S. Renal Care, Inc. FRS
BTL
5.40% due 12/31/2022........................ 1,733,411 1,620,739
----------
3,098,031
----------
Disposable Medical Products -- 0.2%
Sterigenics-Nordion Holdings LLC FRS
BTL-B
4.15% due 05/15/2022........................ 380,000 380,000
Sterigenics-Nordion Holdings LLC FRS
BTL-B
4.40% due 05/15/2022........................ 289,590 289,590
----------
669,590
----------
Distribution/Wholesale -- 1.5%
American Builders & Contractors Supply Co.,
Inc. FRS
BTL-B
3.73% due 10/31/2023........................ 2,032,324 2,039,183
HD Supply, Inc. FRS
BTL-B
3.73% due 08/13/2021........................ 810,535 815,854
HD Supply, Inc. FRS
BTL-B
3.73% due 10/17/2023........................ 679,585 683,691
Spin Holdco, Inc. FRS
BTL-B
4.28% -- 6.25% due 11/08/2019............... 1,172,783 1,172,050
Univar USA, Inc. FRS
BTL-B2
3.73% due 07/01/2022........................ 1,030,343 1,030,858
----------
5,741,636
----------
Educational Software -- 0.9%
Blackboard, Inc. FRS
BTL-B4
6.02% due 06/18/2021........................ 3,241,617 3,227,840
----------
Electric-Generation -- 0.7%
APLP Holdings LP FRS
BTL
6.00% due 04/12/2023........................ 1,247,312 1,254,588
Helix Gen Funding LLC FRS
BTL-B
4.75% due 02/23/2024........................ 80,000 80,950
TEX Operations Co. LLC FRS
BTL-C
3.73% due 08/04/2023........................ 179,082 178,522
59
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Electric-Generation (continued)
TEX Operations Co. LLC FRS
BTL-B
3.73% due 08/04/2023........................... $ 781,714 $ 779,271
Vistra Operations Co. LLC FRS
BTL-B
4.19% due 08/04/2023........................... 229,425 229,712
-----------
2,523,043
-----------
Electric-Integrated -- 0.5%
Dayton Power & Light Co. FRS
BTL-B
4.24% due 08/24/2022........................... 153,615 154,127
Energy Future Intermediate Holding Co. LLC FRS
DIP
4.30% due 06/30/2017........................... 1,150,000 1,149,042
Talen Energy Supply LLC FRS
BTL
6.06% due 10/18/2023........................... 619,448 627,965
-----------
1,931,134
-----------
Electronic Components-Semiconductors -- 0.1%
On Semiconductor Corp. FRS
BTL-B
4.23% due 03/31/2023........................... 219,450 220,508
-----------
Enterprise Software/Service -- 2.8%
Applied Systems, Inc. FRS
BTL-B
7.65% due 01/23/2022........................... 467,388 469,336
BMC Software Finance, Inc. FRS
BTL-B
5.00% due 09/10/2020........................... 1,708,066 1,708,066
Donnelley Financial Solutions, Inc. FRS
BTL-B
5.00% due 09/27/2023........................... 308,571 311,143
Infor US, Inc. FRS
BTL-6
3.90% due 02/01/2022........................... 1,710,946 1,708,502
Kronos, Inc. FRS
BTL-B
5.03% due 11/01/2023........................... 2,222,430 2,233,195
Kronos, Inc. FRS
2nd Lien
9.28% due 11/01/2024........................... 440,000 452,925
Mitchell International, Inc. FRS
BTL-B
4.50% -- 4.54% due 10/11/2020.................. 867,590 871,747
Mitchell International, Inc. FRS
2nd Lien
8.50% due 10/11/2021........................... 160,000 160,133
Sophia LP FRS
BTL
4.40% due 09/30/2022........................... 822,771 822,771
Veritas US, Inc. FRS
BTL-B1
6.77% due 01/27/2023........................... 1,922,382 1,908,765
-----------
10,646,583
-----------
Principal Value
Security Description Amount (Note 2)
Extended Service Contracts -- 0.6%
Sedgwick Claims Management Services, Inc. FRS
1st Lien
3.75% due 03/01/2021.......................... $1,132,058 $1,133,000
Sedgwick Claims Management Services, Inc. FRS
BTL
4.40% due 02/28/2021.......................... 129,025 129,394
Sedgwick Claims Management Services, Inc. FRS
2nd Lien
6.75% due 02/28/2022.......................... 970,000 970,000
----------
2,232,394
----------
Filtration/Separation Products -- 0.1%
Filtration Group, Inc. FRS
BTL-B
4.30% due 11/21/2020.......................... 405,925 409,139
----------
Finance-Mortgage Loan/Banker -- 0.6%
Walter Investment Management Corp. FRS
BTL-B
4.75% due 12/18/2020.......................... 2,823,760 2,421,374
----------
Financial Guarantee Insurance -- 0.1%
VF Holdings Corp. FRS
BTL-B1
4.25% due 06/17/2023.......................... 533,320 535,701
----------
Food-Baking -- 0.3%
Hostess Brands LLC FRS
BTL
4.00% due 08/03/2022.......................... 1,052,577 1,062,051
----------
Food-Confectionery -- 0.3%
Amplify Snack Brands, Inc. FRS
1st Lien
6.50% due 09/02/2023.......................... 975,100 949,910
----------
Food-Dairy Products -- 0.3%
ASP MSG Acquisition Co., Inc. FRS
BTL-B
5.15% due 08/16/2023.......................... 1,001,965 1,008,227
Chobani LLC FRS
BTL-B
5.25% due 10/07/2023.......................... 236,495 238,565
----------
1,246,792
----------
Food-Meat Products -- 0.3%
JBS USA LLC FRS
BTL-B
3.29% due 10/30/2022.......................... 1,015,000 1,016,903
----------
Food-Misc./Diversified -- 0.3%
Dole Food Co., Inc. FRS
BTL-B
4.00% due 04/06/2024.......................... 685,000 689,281
Dole Food Co., Inc. FRS
BTL-B
4.50% -- 6.50% due 11/01/2018................. 527,624 528,834
----------
1,218,115
----------
60
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Food-Retail -- 0.3%
Albertsons LLC FRS
BTL-B
3.98% due 08/22/2021..................... $ 718,825 $ 721,745
Albertsons LLC FRS
BTL-B
4.40% due 12/22/2022..................... 465,491 468,110
----------
1,189,855
----------
Gambling (Non-Hotel) -- 0.5%
Greektown Holdings LLC FRS
BTL-B
3.75% due 03/21/2024..................... 519,091 518,226
Mohegan Tribal Gaming Authority FRS
BTL-B
5.50% due 10/13/2023..................... 847,875 850,630
Scientific Games International, Inc. FRS
BTL-B3
4.85% -- 4.94% due 10/01/2021............ 564,594 571,298
----------
1,940,154
----------
Hotels/Motels -- 0.5%
Hilton Worldwide Finance LLC FRS
BTL-B2
2.98% due 10/25/2023..................... 1,662,317 1,674,785
----------
Human Resources -- 0.4%
CHG Healthcare Services, Inc. FRS
BTL-B1
4.75% due 06/07/2023..................... 209,940 211,776
Team Health, Inc. FRS
1st Lien
3.75% due 02/06/2024..................... 1,158,065 1,151,406
----------
1,363,182
----------
Investment Companies -- 0.5%
Masergy Communications FRS
1st Lien
5.50% due 12/12/2023..................... 374,063 376,400
TKC Holdings, Inc. FRS
BTL
4.75% due 02/01/2023..................... 840,000 846,300
UFC Holdings LLC FRS
BTL-B
4.25% due 08/18/2023..................... 760,180 763,981
----------
1,986,681
----------
Investment Management/Advisor Services -- 0.8%
AlixPartners LLP FRS
BTL-B
4.00% due 07/28/2022..................... 1,308,582 1,315,359
AlixPartners LLP FRS
BTL-B
4.00% due 04/29/2024..................... 1,590,000 1,595,963
----------
2,911,322
----------
Principal Value
Security Description Amount (Note 2)
Machinery-General Industrial -- 1.6%
Aspen Merger Sub, Inc. FRS
BTL-B
5.25% due 09/27/2023............................ $ 458,695 $ 462,135
Gardner Denver, Inc. FRS
BTL
4.25% -- 4.57% due 07/30/2020................... 1,914,858 1,909,474
Husky Injection Molding Systems, Ltd. FRS
BTL-B
4.25% due 06/30/2021............................ 1,600,613 1,608,415
Rexnord LLC FRS
BTL-B
3.75% -- 3.90% due 08/21/2023................... 1,039,324 1,042,356
Zodiac Pool Solutions FRS
1st Lien
5.65% due 12/20/2023............................ 1,022,438 1,026,911
----------
6,049,291
----------
Machinery-Pumps -- 0.3%
NN, Inc. FRS
BTL
3.75% due 03/22/2021............................ 565,000 564,650
NN, Inc. FRS
BTL-B
5.23% due 10/19/2022............................ 722,500 721,597
----------
1,286,247
----------
Medical Labs & Testing Services -- 0.1%
American Renal Holdings, Inc. FRS
BTL-B
4.65% due 09/20/2019............................ 215,807 214,566
----------
Medical Products -- 0.3%
DJO Finance LLC FRS
BTL-B
4.25% due 06/07/2020............................ 372,330 360,307
Greatbatch, Ltd. FRS
BTL-B
4.50% due 10/27/2022............................ 653,160 653,160
----------
1,013,467
----------
Medical-Drugs -- 1.2%
Capsugel Holdings US, Inc. FRS
BTL-B
4.00% due 07/31/2021............................ 782,428 782,008
HLF Financing SARL FRS
BTL-B
6.48% due 02/13/2023............................ 570,000 567,268
inVentiv Group Holdings, Inc. FRS
BTL
4.80% due 11/09/2023............................ 1,098,248 1,101,582
Valeant Pharmaceuticals International, Inc. FRS
BTL-BF1
5.57% due 04/01/2022............................ 1,966,117 1,970,486
----------
4,421,344
----------
61
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Medical-Generic Drugs -- 0.3%
Amneal Pharmaceuticals LLC FRS
BTL-B2
4.65% -- 6.50% due 11/02/2019.......... $1,040,400 $1,040,400
----------
Medical-HMO -- 0.1%
MultiPlan, Inc. FRS
BTL-B
4.90% due 06/07/2023................... 397,677 402,400
----------
Medical-Hospitals -- 2.2%
Acadia Healthcare Co., Inc. FRS
BTL-B2
3.98% due 02/16/2023................... 609,620 613,989
Ardent Legacy Acquisitions, Inc. FRS
BTL-B
6.65% due 07/31/2021................... 497,425 496,803
CHS/Community Health Systems, Inc. FRS
BTL-H
4.00% -- 4.05% due 01/27/2021.......... 1,786,358 1,759,191
Envision Healthcare Corp. FRS
BTL-C
4.15% due 12/01/2023................... 1,698,940 1,712,479
IASIS Healthcare LLC FRS
BTL-B2
4.50% due 05/03/2018................... 987,113 983,941
National Surgical Hospitals, Inc. FRS
BTL-B
4.50% due 06/01/2022................... 288,855 288,855
Quorum Health Corp. FRS
BTL
6.79% due 04/29/2022................... 558,246 545,267
Select Medical Corp. FRS
BTL-B
4.50% due 03/06/2024................... 960,000 967,600
Surgery Center Holdings, Inc. FRS
1st Lien
4.75% due 11/03/2020................... 724,616 730,051
----------
8,098,176
----------
Medical-Outpatient/Home Medical -- 0.1%
21st Century Oncology, Inc. FRS
BTL-B
7.28% due 04/30/2022................... 363,039 327,643
National Mentor Holdings, Inc. FRS
BTL-B
4.40% due 01/31/2021................... 138,781 138,983
----------
466,626
----------
Miscellaneous Manufacturing -- 0.5%
Gates Global LLC FRS
BTL-B
4.40% due 07/06/2021................... 1,694,600 1,696,247
----------
Motion Pictures & Services -- 0.2%
Lions Gate Entertainment Corp. FRS
BTL-B
3.98% due 12/08/2023................... 792,800 795,971
----------
Principal Value
Security Description Amount (Note 2)
Non-Hazardous Waste Disposal -- 0.4%
Casella Waste Systems, Inc. FRS
BTL-B
4.00% -- 6.00% due 10/17/2023............... $ 691,268 $ 696,020
Waste Industries USA, Inc. FRS
BTL-B
3.73% due 02/27/2020........................ 950,531 953,699
----------
1,649,719
----------
Oil & Gas Drilling -- 0.6%
Jonah Energy LLC FRS
2nd Lien
7.50% due 05/12/2021........................ 400,000 376,000
Paragon Offshore Finance Co. FRS
BTL-B
5.75% due 07/18/2021(3)..................... 263,655 102,331
Seadrill Operating LP FRS
BTL-B
4.15% due 02/21/2021........................ 2,500,000 1,690,625
----------
2,168,956
----------
Oil Companies-Exploration & Production -- 0.7%
Chesapeake Energy Corp. FRS
BTL
8.55% due 08/23/2021........................ 181,000 191,860
Fieldwood Energy LLC FRS
1st Lien
8.00% due 08/31/2020........................ 480,382 450,759
Fieldwood Energy LLC FRS
2nd Lien
8.38% due 09/30/2020........................ 211,234 151,032
Fieldwood Energy LLC FRS
1st Lien
8.38% due 09/30/2020........................ 128,766 110,739
Gavilan Resources LLC FRS
2nd Lien
7.00% due 03/01/2024........................ 470,000 467,062
MEG Energy Corp. FRS
BTL
4.54% due 12/31/2023........................ 1,155,635 1,155,016
----------
2,526,468
----------
Oil-Field Services -- 0.4%
McJunkin Red Man Corp. FRS
BTL-B
5.00% due 11/09/2019........................ 1,406,846 1,415,638
----------
Pharmacy Services -- 0.5%
Change Healthcare Holdings LLC FRS
BTL-B
3.75% due 03/01/2024........................ 1,985,000 1,988,309
----------
Printing-Commercial -- 0.1%
Fort Dearborn Co. FRS
1st Lien
5.00% -- 7.00% due 10/19/2023............... 494,760 497,852
----------
Professional Sports -- 0.3%
Delta 2 Luxembourg SARL FRS
BTL-B3
4.57% due 02/01/2024........................ 1,260,000 1,258,875
----------
62
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Publishing-Books -- 0.2%
McGraw-Hill Global Education Holdings LLC FRS
BTL
5.00% due 05/04/2022.......................... $ 873,400 $ 862,664
----------
Radio -- 0.1%
CBS Radio, Inc. FRS
BTL-B
4.50% due 10/17/2023.......................... 323,331 325,999
----------
Real Estate Investment Trusts -- 0.6%
Geo Group, Inc. FRS
BTL-B
3.00% due 03/17/2024.......................... 695,000 695,869
MGM Growth Properties Operating Partnership
LP FRS
BTL-B
3.48% due 04/25/2023.......................... 598,950 601,346
Uniti Group, Inc. FRS
BTL
4.00% due 10/24/2022.......................... 773,063 770,743
----------
2,067,958
----------
Real Estate Management/Services -- 0.6%
Capital Automotive LP FRS
1st Lien
4.00% due 03/24/2024.......................... 320,000 321,334
Capital Automotive LP FRS
2nd Lien
7.00% due 03/24/2025.......................... 600,000 606,000
DTZ US Borrower LLC FRS
BTL-B
4.29% -- 4.40% due 11/04/2021................. 1,473,750 1,481,487
----------
2,408,821
----------
Real Estate Operations & Development -- 0.1%
Lightstone Generation LLC FRS
BTL-B
5.54% due 01/30/2024.......................... 422,853 425,285
Lightstone Generation LLC FRS
BTL-C
5.54% due 01/30/2024.......................... 26,087 26,237
----------
451,522
----------
Research & Development -- 0.1%
Pharmaceutical Product Development LLC FRS
BTL-B
4.25% -- 4.40% due 08/18/2022................. 534,371 535,841
----------
Retail-Arts & Crafts -- 0.4%
Michaels Stores, Inc. FRS
BTL-B1
3.75% due 01/30/2023.......................... 1,421,938 1,416,013
----------
Retail-Auto Parts -- 0.4%
Harbor Freight Tools USA, Inc. FRS
BTL
4.23% due 08/19/2023.......................... 1,351,210 1,349,709
----------
Principal Value
Security Description Amount (Note 2)
Retail-Bedding -- 0.3%
Serta Simmons Bedding LLC FRS
1st Lien
4.54% due 11/08/2023....................... $ 977,550 $ 981,216
----------
Retail-Building Products -- 0.6%
84 Lumber Co. FRS
BTL-B
6.75% due 10/25/2023....................... 1,619,813 1,636,011
SiteOne Supply Holding LLC FRS
BTL-B
5.50% due 04/29/2022....................... 692,580 696,042
----------
2,332,053
----------
Retail-Drug Store -- 0.1%
Rite Aid Corp. FRS
BTL-2
4.88% due 06/21/2021....................... 520,000 520,650
----------
Retail-Floor Coverings -- 0.3%
Floor & Decor Outlets of America, Inc. FRS
BTL
5.25% due 09/30/2024....................... 915,400 919,977
----------
Retail-Leisure Products -- 0.2%
Party City Holdings, Inc. FRS
BTL-B
3.86% -- 4.03% due 08/19/2022.............. 845,859 842,687
----------
Retail-Misc./Diversified -- 0.2%
Leslie's Poolmart, Inc. FRS
BTL-B
4.77% due 08/16/2023....................... 899,892 902,891
----------
Retail-Pet Food & Supplies -- 0.2%
PetSmart, Inc. FRS
BTL-B
4.02% due 03/10/2022....................... 578,693 552,651
----------
Retail-Sporting Goods -- 1.1%
Bass Pro Group LLC FRS
BTL
5.90% due 05/16/2018....................... 2,110,000 2,110,880
Bass Pro Group LLC FRS
BTL-B
6.15% due 12/16/2023....................... 2,085,000 2,006,812
----------
4,117,692
----------
Rubber/Plastic Products -- 0.2%
U.S. Farathane, LLC FRS
BTL-3
4.40% due 12/23/2021....................... 713,051 716,319
----------
Schools -- 0.5%
Laureate Education, Inc. FRS
BTL-B
8.51% due 03/23/2021....................... 1,606,255 1,619,809
St George's University Scholastic Services
LLC FRS
BTL
6.27% -- 6.40% due 07/06/2022.............. 212,753 214,880
----------
1,834,689
----------
63
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
LOANS (continued)
Security Services -- 0.1%
Prime Security Services Borrower LLC FRS
BTL-B1
4.25% due 05/02/2022..................... $ 289,275 $ 291,703
------------
Semiconductor Components-Integrated Circuits -- 0.2%
Cypress Semiconductor Corp. FRS
BTL-B
4.58% due 07/05/2021..................... 877,500 884,356
------------
Semiconductor Equipment -- 0.1%
MKS Instruments, Inc. FRS
BTL-B2
3.73% due 04/29/2023..................... 216,744 218,843
------------
Telecom Services -- 1.0%
Sable International Finance, Ltd. FRS
BTL-B1
5.73% due 01/03/2023..................... 892,500 901,425
Securus Technologies Holdings, Inc. FRS
BTL-B2
5.40% due 04/17/2020..................... 987,500 986,883
UPC Financing Partnership FRS
BTL-AN
3.74% due 04/15/2025..................... 1,780,000 1,783,560
------------
3,671,868
------------
Telecommunication Equipment -- 0.3%
RCN Grande FRS
1st Lien
3.98% due 02/01/2024..................... 931,428 935,253
------------
Television -- 0.2%
Mission Broadcasting, Inc. FRS
BTL-B
3.94% due 01/17/2024..................... 66,225 66,529
Tribune Media Co. FRS
BTL-B
3.98% due 12/27/2020..................... 56,552 57,012
Tribune Media Co. FRS
BTL-C
3.98% due 01/27/2024..................... 706,607 711,023
------------
834,564
------------
Theaters -- 0.1%
CDS US Intermediate Holdings Inc. FRS
BTL
5.15% due 07/08/2022..................... 463,935 467,298
------------
Tools-Hand Held -- 0.3%
Apex Tool Group LLC FRS
BTL-B
4.50% due 02/01/2020..................... 1,112,980 1,103,241
------------
Transport-Equipment & Leasing -- 0.0%
Avolon Holdings, Ltd. FRS
BTL-B
3.50% due 03/20/2022..................... 45,000 45,594
------------
Total Loans
(cost $183,837,052)...................... 184,228,178
------------
Principal Value
Security Description Amount (Note 2)
FOREIGN GOVERNMENT OBLIGATIONS -- 1.0%
Sovereign -- 1.0%
City of Buenos Aires Argentina
Senior Notes
7.50% due 06/01/2027*....................... $ 250,000 $ 258,750
Republic of Argentina
Senior Notes
5.63% due 01/26/2022*....................... 1,335,000 1,367,040
Republic of Argentina
Senior Notes
6.88% due 01/26/2027*....................... 1,350,000 1,368,900
Republic of Argentina
Senior Notes
7.13% due 07/06/2036*....................... 755,000 730,840
----------
Total Foreign Government Obligations
(cost $3,677,602)........................... 3,725,530
----------
COMMON STOCKS -- 0.4%
Electric-Generation -- 0.1%
Vistra Energy Corp........................... 27,942 455,455
Vistra Energy Corp. CVR+..................... 27,942 300
----------
455,755
----------
Multimedia -- 0.0%
Haights Cross Communication, Inc.+(4)(5)..... 19,388 0
----------
Oil Companies-Exploration & Production -- 0.1%
Linn Energy, Inc.+........................... 13,945 404,405
----------
Television -- 0.2%
ION Media Networks, Inc.+(4)(5)(10).......... 660 467,326
----------
Total Common Stocks
(cost $2,125,913)........................... 1,327,486
----------
PREFERRED SECURITIES -- 0.3%
Diversified Banking Institutions -- 0.3%
GMAC Capital Trust I FRS
Series 2
6.69%
(cost $1,191,988)........................... 46,500 1,182,495
----------
PREFERRED SECURITIES/CAPITAL SECURITIES -- 0.9%
Banks-Commercial -- 0.2%
Macquarie Bank, Ltd.
6.13% due 03/08/2027*(11)................... 675,000 678,375
----------
Banks-Super Regional -- 0.3%
KeyCorp. FRS
Junior Sub. Notes
5.00% due 09/15/2026(11).................... 950,000 940,500
SunTrust Banks, Inc. FRS
Junior Sub. Notes
5.63% due 12/15/2019(11).................... 110,000 114,950
----------
1,055,450
----------
Diversified Banking Institutions -- 0.3%
Citigroup, Inc. FRS
Series T
6.25% due 08/15/2026(11).................... 845,000 911,544
64
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
Principal Value
Security Description Amount (Note 2)
PREFERRED SECURITIES/CAPITAL SECURITIES (continued)
Diversified Banking Institutions (continued)
JPMorgan Chase & Co. FRS
Series Z
5.30% due 05/01/2020(11)................... $110,000 $ 113,987
------------
1,025,531
------------
Insurance-Multi-line -- 0.1%
Voya Financial, Inc. FRS
Company Guar. Notes
5.65% due 05/15/2053....................... 600,000 610,500
------------
Total Preferred Securities/Capital Securities
(cost $3,319,470).......................... 3,369,856
------------
Total Long-Term Investment Securities
(cost $377,421,714)........................ 378,541,208
------------
TOTAL INVESTMENTS
(cost $377,421,714)(12).................... 100.5% 378,541,208
Liabilities in excess of other assets......... (0.5) (2,043,052)
-------- ------------
NET ASSETS 100.0% $376,498,156
======== ============
--------
* 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, 2017, the
aggregate value of these securities was $102,318,389 representing 27.2% of
net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
+ Non-income producing security
++ See Note 1
(1) 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.
(2) Security in default of interest.
(3) Company has filed for bankruptcy protection.
(4) Illiquid security. At March 31, 2017, the aggregate value of these
securities was $479,835 representing 0.1% of net assets.
(5) Fair valued security. Securities are classified as Level 3 based on the
securities valuation inputs (see Note 2).
(6) Security in default of interest and principal at maturity.
(7) 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.
(8) The Fund invests in senior loans which generally pay interest at rates
which are periodically re-determined by reference to a base lending rate
plus a premium. These base lending rates are generally either the lending
rate offered by one or more major 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.
(9) All loans in the Fund were purchased through assignment agreements unless
otherwise indicated.
(10) Denotes a restricted security that: (a) cannot be offered for public sale
without first being registered, or being able to take advantage of an
exemption from registration, under the Securities Act of 1933, as amended
(the "1933 Act"); (b) is subject to a contractual restriction on public
sales; or (c) is otherwise subject to a restriction on sales by operation
of applicable law. Restricted securities are valued pursuant to Note
2. Certain restricted securities held by the Fund may not be sold except
in exempt transactions or in a public offering registered under the 1933
Act. The Fund has no right to demand registration of these securities. The
risk of investing in certain restricted securities is greater than the
risk of investing in the securities of widely held, publicly traded
companies. To the extent applicable, lack of a secondary market and resale
restrictions may result in the inability of a Fund to sell a security at a
fair price and may substantially delay the sale of the security. In
addition, certain restricted securities may exhibit greater price
volatility than securities for which secondary markets exist. As of
March 31, 2017, the Fund held the following restricted securities:
Shares/ Value % of
Acquisition Principal Acquisition Per Net
Description Date Amount Cost Value Share Assets
----------- ----------- --------- ----------- -------- ------- ------
Common
Stocks
ION Media
Networks,
Inc........ 12/21/2016 660 6 $467,326 $708.07 0.12%
======== ====
(11) Perpetual maturity--maturity date reflects the next call date.
(12) See Note 5 for cost of investments on a tax basis.
BTL --Bank Term Loan
CVR --Contingent Value Rights
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, 2017
and unless noted otherwise, the dates shown are the original maturity dates.
65
AIG Flexible Credit Fund++
PORTFOLIO OF INVESTMENTS -- March 31, 2017 -- (continued)
The following is a summary of the inputs used to value the Fund's net assets as
of March 31, 2017 (see Note 2):
Level 1 -- Unadjusted Level 2 -- Other Level 3 --Significant
Quoted Prices Observable Inputs Unobservable Inputs Total
- --------------------- ----------------- --------------------- ------------
ASSETS:
Investments at Value:*
Asset Backed Securities................. $ -- $ 1,924,394 $ -- $ 1,924,394
U.S. Corporate Bonds & Notes:
Rubber/Plastic Products............... -- -- 0 0
Other Industries...................... -- 145,340,958 -- 145,340,958
Foreign Corporate Bonds & Notes:
Special Purpose Entity................ -- -- 0 0
Other Industries...................... -- 37,442,311 -- 37,442,311
Loans:
Building-Residential/Commercial....... -- -- 0 0
Oil & Gas Drilling.................... -- 2,066,625 102,331 2,168,956
Other Industries...................... -- 182,059,222 -- 182,059,222
Foreign Government Obligations.......... -- 3,725,530 -- 3,725,530
Common Stocks:
Electric-Generation................... 455,455 300 -- 455,755
Multimedia............................ -- -- 0 0
Television............................ -- -- 467,326 467,326
Other Industries...................... 404,405 -- -- 404,405
Preferred Securities.................... 1,182,495 -- -- 1,182,495
Preferred Securities/Capital Securities. -- 3,369,856 -- 3,369,856
---------- ------------ -------- ------------
Total Investments at Value.............. $2,042,355 $375,929,196 $569,657 $378,541,208
========== ============ ======== ============
--------
* For a detailed presentation of investments, please refer to the Portfolio of
Investments.
++ See Note 1
The Fund's policy is to recognize transfers between Levels as of the end of the
reporting period. There were no transfers between Levels during the reporting
period.
At the beginning and end of the reporting period, Level 3 investments were not
considered a material portion of the Fund.
See Notes to Financial Statements
66
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017
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: AIG
U.S. Government Securities Fund ("U.S. Government Securities Fund"), AIG
Strategic Bond Fund ("Strategic Bond Fund"), and AIG Flexible Credit Fund
("Flexible Credit Fund"). The Funds are considered to be separate entities
for financial and tax reporting purposes.
On November 18, 2016, the Board of Directors approved a change in the names
of the SunAmerica U.S Government Securities Fund, SunAmerica Strategic Bond
Fund and SunAmerica Flexible Credit Fund, to the AIG U.S Government
Securities Fund, AIG Strategic Bond Fund and AIG Flexible Credit Fund,
respectively, effective February 28, 2017. SunAmerica Asset Management, LLC,
the investment adviser to each Fund, continues to serve as investment
adviser of the Funds and retains its current name. In addition, there was no
change in the Funds' investment goals or strategies, portfolio managers or
ticker symbols in connection with the rebranding.
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, 2017 -- (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. 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.
68
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
The summary of each Fund's asset and liabilities classified in the fair
value hierarchy as of March 31, 2017 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.
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
69
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
Trust's fair valuation procedures. Securities for which market quotations
are not readily available or the values of which may be significantly
impacted by the occurrence of developments or significant events are
generally categorized as Level 3. There is no single standard for making
fair value determinations, which may result in prices that vary from those
of other funds.
Derivative Instruments:
Forward Foreign Currency Contracts: 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.
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.
70
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
The following tables represent the value of derivatives held as of March 31,
2017, 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, 2017. The
derivative contracts held during the period are not accounted for as hedging
instruments under GAAP. For a detailed presentation of derivatives held as
of March 31, 2017, 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. $90,205 $142,748
======= ========
--------
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. $1,588,422 $1,548,067
========== ==========
--------
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, 2017:
Average Amount
Outstanding
During the Year
---------------
Foreign Forward
Exchange
Fund Contracts(1)
---- ---------------
Strategic Bond. $42,995,794
===========
--------
(1)Amounts represent notional amounts in US dollars.
There were no derivative assets and liabilities subject to Master Agreements
outstanding at March 31, 2017. The repurchase agreements held by the Funds
as of March 31, 2017, 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.
71
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
Mortgage-Backed Dollar Rolls: During the year ended March 31, 2017, 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. 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 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, 2017, 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
72
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
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.
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.
Securities purchased or sold on a when-issued or forward commitment basis
are included in investments purchased/sold on an extended settlement basis
in the Statement of Assets and Liabilities.
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.
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
2013 -- 2015 or expected to be taken in each Fund's 2016 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 2013.
73
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
Foreign Currency Translation: The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies and commitments under forward foreign currency contracts are
translated into U.S. dollars based on the exchange rate of such currencies
against U.S. dollars on the date of valuation.
The Funds do not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the period. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities located in the Statements of Operations include realized
foreign exchange gains and losses from currency gains or losses between the
trade and the settlement dates of securities transactions, the difference
between the amounts of interest, dividends and foreign withholding taxes
recorded on the Funds' books and the U.S. dollar equivalent amounts actually
received or paid and changes in the unrealized foreign exchange gains and
losses relating to the other assets and liabilities arising as a result of
changes in the exchange rates and realized gains and losses on forward
foreign currency contracts.
Note 3. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SunAmerica. Under the Agreement, SunAmerica
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SunAmerica furnishes the Funds with office facilities, maintains
certain of the Funds' books and records, and pays the salaries and expenses
of all personnel, including officers of the Funds, who are employees of
SunAmerica and its affiliates.
The Funds pay SunAmerica a monthly investment advisory and management fee
calculated daily at the following annual percentages of each Fund's average
daily net assets:
Management
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.
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
74
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
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, 2017, 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......... $190,664
Class Specific
Fund Expenses
---- --------------
U.S. Government Securities Class A. $402,860
U.S. Government Securities Class C. 81,730
At March 31, 2017, expenses previously waived or reimbursed by SunAmerica
that are subject to recoupment and expire during the time period indicated
are as follows:
Other Expenses Reimbursed
-----------------------------
Fund March 31, 2018 March 31, 2019
---- -------------- --------------
U.S. Government Securities......... $216,436 $190,664
Class Specific Expenses
Reimbursed
-----------------------------
Fund March 31, 2018 March 31, 2019
---- -------------- --------------
U.S. Government Securities Class A. $412,070 $402,860
U.S. Government Securities Class C. 72,293 81,730
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.
75
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
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 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, 2017, 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,
2017, 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, 2017, 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. $ 58,743 $ 12,477 $ 36,424 $2,458 $ -- $14,873
Strategic Bond............. 347,838 147,678 145,708 1,422 81,100 5,681
Flexible Credit............ 462,759 60,268 328,320 4,689 -- 10,438
The Trust has entered into a Service Agreement with AIG Fund Services, Inc.
("AFS"), an affiliate of the Adviser. Under the Service Agreement, AFS
performs certain shareholder account functions by assisting the Funds'
transfer agent, State Street Bank and Trust Company ("State Street") in
connection with the services that it offers to the shareholders of the
Funds. The Service Agreement permits the Funds to compensate AFS 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, 2017, the Funds incurred the following expenses which are included
in transfer agent fees and expenses in the Statements of Operations to
compensate AFS pursuant to the terms of the Service Agreement:
Payable at
Fund Expenses March 31, 2017
---- -------- --------------
US Government Securities Class A. $354,413 $27,767
US Government Securities Class C. 59,424 3,719
Strategic Bond Class A........... 376,157 30,440
Strategic Bond Class B........... 67,472 5,584
Strategic Bond Class C........... 318,253 24,383
Strategic Bond Class W........... 73,442 7,132
Flexible Credit Class A.......... 305,201 26,951
Flexible Credit Class C.......... 151,957 13,875
Flexible Credit Class W.......... 265,408 28,476
76
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
At March 31, 2017, AIG Active Allocation Fund and AIG Multi-Asset Allocation
Fund, each a series of SunAmerica Series, Inc., owned a percentage of the
outstanding shares of the following Funds:
Holder
------------------------------
AIG Active AIG Multi-Asset
Fund Allocation Fund Allocation Fund
---- --------------- ---------------
U.S. Government Securities. 6.17% 14.56%
Strategic Bond............. 3.14 --
Flexible Credit............ 2.86 3.45
Note 4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the year ended March 31, 2017 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. $ -- $ 1,553,631 $ 176,804,172 $163,929,804
Strategic Bond............. 307,199,749 357,109,203 97,170,703 65,798,010
Flexible Credit............ 319,446,760 231,314,642 -- --
Note 5. Federal Income Taxes
The following details the tax basis of distributions as well as the
components of distributable earnings. The tax basis components of
distributable earnings differ from the amounts reflected in the Statements
of Assets and Liabilities by temporary book/tax differences primarily
arising from wash sales, post October capital losses, late year ordinary
losses, distributions payable, straddle loss deferrals, amortization of
premium/discount and treatment of defaulted securities.
Distributable Earnings Tax Distributions
For the year ended March 31, 2017 For the year ended March 31, 2017
---------------------------------------- ---------------------------------
Long-term Unrealized
Ordinary Gains/Capital Appreciation Ordinary Long-Term
Fund Income Loss Carryover (Depreciation)* Income Capital Gains
---- ---------- -------------- --------------- ----------- -------------
U.S. Government Securities. $ 530,181 $(13,576,279) $ 2,897,985 $ 3,089,605 $ --
Strategic Bond............. 670,627 (74,079,874) (1,215,751) 11,239,760 --
Flexible Credit............ 1,074,824 (49,857,256) 654,033 13,948,606 --
--------
* Unrealized appreciation (depreciation) includes amounts for derivatives and
other assets and liabilities denominated in foreign currency.
Tax Distributions
For the year ended March 31, 2016
---------------------------------
Ordinary Long-Term
Fund Income Capital Gains
---- ----------- -------------
U.S. Government Securities. $ 3,189,102 $ --
Strategic Bond............. 16,390,428 --
Flexible Credit............ 9,686,069 --
As of March 31, 2017, 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 2018 ST LT
---- ------------- ---------- -----------
U.S. Government Securities............. $ -- $8,871,280 $ 4,704,999
Strategic Bond......................... 49,688,392 2,697,374 21,694,108
Flexible Credit........................ 41,322,811 984,379 7,550,066
--------
+ 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.
77
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
The Funds indicated below had expired capital loss carryforwards in the year
ended March 31, 2017:
Capital Loss
Carryforward
Fund Expired
---- ------------
U.S. Government Securities. $ --
Strategic Bond............. --
Flexible Credit............ 9,384,737
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, 2017, 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............. $ -- $4,219,268 $ 462,553
Strategic Bond......................... 759,467 619,329 (110,017)
Flexible Credit........................ -- -- --
For the period ended March 31, 2017, 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 Net Undistributed Net
Investment Income Realized Gain
Fund (Loss) (Loss) Capital Paid-in
---- ----------------- ----------------- ---------------
U.S. Government Securities. $2,116,526 $(2,116,526) $ --
Strategic Bond............. 1,212,758 (1,212,758) --
Flexible Credit............ 291,485 9,093,252 (9,384,737)
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....... $5,844,538 $ (2,946,553) $ 2,897,985 $164,857,947
Strategic Bond................... 8,963,497 (10,177,391) (1,213,894) 363,658,780
Flexible Credit Bond............. 7,848,019 (7,192,798) 655,221 377,885,987
Note 6. Capital Share Transactions
Transactions in capital shares of each class of each Fund were as follows:
U.S. Government Securities
--------------------------------------------------
Class A
--------------------------------------------------
For the For the
year ended year ended
March 31, 2017 March 31, 2016
------------------------ ------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
Shares
sold...... 4,055,893 $ 39,020,448 3,180,760 $ 30,402,860
Reinvested
dividends. 266,885 2,514,822 270,193 2,586,420
Shares
redeemed.. (4,412,102) (41,347,823) (6,403,106) (61,225,580)
---------- ------------ ---------- ------------
Net
increase
(decrease) (89,324) $ 187,447 (2,952,153) $(28,236,300)
========== ============ ========== ============
78
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
U.S. Government Securities
----------------------------------------------------
Class C
----------------------------------------------------
For the For the
year ended year ended
March 31, 2017 March 31, 2016
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
Shares
sold.......... 496,877 $ 4,737,214 2,452,847 $ 23,409,209
Reinvested
dividends..... 25,679 242,231 25,490 243,879
Shares
redeemed...... (1,682,466) (15,715,340) (1,643,682) (15,692,131)
----------- ------------ ----------- ------------
Net
increase
(decrease).... (1,159,910) $(10,735,895) 834,655 $ 7,960,957
=========== ============ =========== ============
Strategic Bond
--------------------------------------------------------------------------------------------------------
Class A Class B
---------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016
------------------------- ------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Shares
sold(1)(2).... 6,511,015 $ 22,000,676 11,811,127 $ 39,450,903 1,716,827 $ 5,807,472 1,109,451 $ 3,647,483
Reinvested
dividends..... 1,469,857 4,968,423 2,121,593 7,060,743 193,765 654,711 287,331 954,645
Shares
redeemed(1)(2) (13,504,442) (45,597,698) (27,771,848) (93,474,978) (2,625,938) (8,845,950) (3,308,675) (11,047,375)
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease).... (5,523,570) $(18,628,599) (13,839,128) $(46,963,332) (715,346) $ (2,383,767) (1,911,893) $ (6,445,247)
=========== ============ =========== ============ ========== ============ ========== ============
Strategic Bond
--------------------------------------------------------------------------------------------------------
Class C Class W
---------------------------------------------------- --------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016
------------------------- ------------------------- ------------------------ ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Shares
sold.......... 3,384,955 $ 11,494,689 4,799,228 $ 15,900,642 7,913,680 $ 26,786,702 9,165,702 $ 31,407,808
Reinvested
dividends..... 769,650 2,610,522 1,188,650 3,965,886 210,770 711,987 253,845 842,281
Shares
redeemed...... (12,514,751) (42,349,618) (12,615,217) (42,009,648) (5,405,846) (18,224,239) (4,726,445) (15,653,382)
----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease).... (8,360,146) $(28,244,407) (6,627,339) $(22,143,120) 2,718,604 $ 9,274,450 4,693,102 $ 16,596,707
=========== ============ =========== ============ ========== ============ ========== ============
--------
(1)For the year ended March 31, 2017, includes automatic conversion of 157,947
shares of Class B shares in the amount of $532,049 to 157,920 shares of
Class A shares in the amount of $532,049.
(2)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.
Flexible Credit
----------------------------------------------------
Class A
----------------------------------------------------
For the For the
year ended year ended
March 31, 2017 March 31, 2016
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
Shares
sold...... 22,917,210 $ 77,775,794 28,006,173 $ 94,181,643
Reinvested
dividends. 1,592,354 5,426,357 1,280,817 4,286,740
Shares
redeemed.. (20,582,379) (69,973,319) (27,862,342) (94,089,799)
----------- ------------ ----------- ------------
Net
increase
(decrease) 3,927,185 $ 13,228,832 1,424,648 $ 4,378,584
=========== ============ =========== ============
Flexible Credit
----------------------------------------------------------------------------------------------------------
Class C Class W
---------------------------------------------------- ----------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016
------------------------- ------------------------- ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
Shares
sold...... 7,200,951 $ 24,617,203 11,931,449 $ 40,650,007 32,285,891 $110,087,850 34,047,527 $115,125,832
Reinvested
dividends. 543,420 1,863,435 448,842 1,510,779 855,066 2,917,568 377,753 1,259,129
Shares
redeemed.. (4,970,934) (16,999,023) (6,713,380) (22,403,219) (14,858,846) (50,678,526) (10,903,475) (36,221,129)
----------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
Net
increase
(decrease) 2,773,437 $ 9,481,615 5,666,911 $ 19,757,567 18,282,111 $ 62,326,892 23,521,805 $ 80,163,832
=========== ============ =========== ============ =========== ============ =========== ============
79
SunAmerica Income Funds
NOTES TO FINANCIAL STATEMENTS -- March 31, 2017 -- (continued)
Note 7. Line of Credit
The Trust has access to a $75 million committed unsecured line of credit
and, along with certain other funds managed by the Adviser, a $50 million
uncommitted unsecured line of credit. The committed and uncommitted lines of
credit are renewable on an annual basis with State Street, 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's discretionary bid rate on the
uncommitted line of credit. The Trust, on behalf of each of the Funds, has
paid State Street for its own account, such Fund's ratable portion of an
upfront fee in an amount equal to $100,000 in the aggregate for the
committed and uncommitted lines of credit and the committed line of credit
made available by State Street to certain other funds managed by the
Adviser, which are also party to the uncommitted line of credit. The
$100,000 upfront fee is inclusive of a closing fee of 5 basis points on the
uncommitted line of credit. There is also a commitment fee of 25 basis
points per annum on the daily unused portion of the committed line of
credit. Borrowings under the line of credit will commence when the
respective Fund's cash shortfall exceeds $100,000.00.
For the year ended March 31, 2017, the following Funds had borrowings:
Days Interest Debt Average
Fund Outstanding Charges Utilized Interest
---- ----------- -------- ---------- --------
U.S. Government Securities. 2 $ 257 $2,647,390 1.76%
Flexible Credit............ 132 16,674 2,282,064 1.89
At March 31, 2017, there were no borrowings outstanding.
Note 8. Interfund Lending Agreement
Pursuant to the exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by SunAmerica or an affiliate.
The interfund lending program allows the participating Funds to borrow money
from and lend money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the period
ended March 31, 2017, none of the Funds participated in this program.
Note 9. 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.
80
SunAmerica Income Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of SunAmerica Income Funds and Shareholders of the AIG
U.S. Government Securities Fund, AIG Strategic Bond Fund and AIG Flexible
Credit Fund
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio 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 the AIG U.S. Government Securities
Fund, AIG Strategic Bond Fund and AIG Flexible Credit Fund (three of the funds
constituting the SunAmerica Income Funds, hereafter referred to as the "Funds")
as of March 31, 2017, 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 periods
presented, 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
Funds' 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 audit 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 as of March 31, 2017 by correspondence with the custodian,
brokers and the application of alternative auditing procedures where securities
purchased had not been received, provide a reasonable basis for our opinion
expressed above.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
May 26, 2017
81
SunAmerica Income Funds
TRUSTEE AND OFFICER INFORMATION -- March 31, 2017 -- (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
Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* 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. 78 Director, Sysco Corporation
Age: 71 present (1996 to present); Director,
Luby's Inc. (1998 to
present).
William F. Devin Trustee 2001 to Retired. 78 None
Age: 78 present
Richard W. Grant Trustee; 2011 to Retired. Prior to that, 29 None
Age: 71 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 29 None
Age: 73 present Associate Broker, The
Corcoran Group (real estate)
(2002 to present); President,
SJG Marketing, Inc. (2009
to present).
82
SunAmerica Income Funds
TRUSTEE AND OFFICER INFORMATION -- March 31, 2017 -- (unaudited)
(continued)
Number of
Term of Funds in
Position(s) Office and Fund Complex
Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* 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 148 None
Age: 63 present Director, SunAmerica,
(1995 to present); Director,
AIG Capital Services, Inc.
("ACS") (1993 to present).
Officers
John T. Genoy President 2007 to Chief Financial Officer, N/A N/A
Age: 48 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: 51 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: 56 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: 44 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).
83
SunAmerica Income Funds
TRUSTEE AND OFFICER INFORMATION -- March 31, 2017 -- (unaudited)
(continued)
Number of
Term of Funds in
Position(s) Office and Fund Complex
Held With the Length of Principal Occupation(s) Overseen by Other Trusteeship(s)
Name and Age* Fund Time Served(4) During Past 5 years Trustee(1) Held by Trustee(2)
-------------------- ------------- -------------- ----------------------------- ------------ --------------------
Kara Murphy Vice 2014 to Director of Research,
Age: 44 President present SunAmerica (2007 to 2013);
Chief Investment Officer,
SunAmerica (2013 to
present).
Christopher Joe Chief 2017 to Chief Compliance Officer, N/A N/A
Age: 47 Compliance present AIG Funds, Seasons Series
Officer Trust, SunAmerica Series
Trust, VALIC Company I
and VALIC Company II
(2017 to present); Chief
Compliance Officer,
VALIC Retirement Services
Company (2017 to present);
Chief Compliance Officer,
Invesco PowerShares (2012
to 2017); Chief Compliance
Officer, Invesco Investment
Advisers, LLC (2010 to
2013); U.S. Compliance
Director, Invesco Ltd. (2006
to 2014); Deputy Chief
Compliance Officer,
Invesco Advisers, LLC
(2014 to 2015).
Kathleen D. Fuentes Chief Legal 2013 to Vice President and Deputy N/A N/A
Age: 48 Officer and present General Counsel,
Assistant SunAmerica (2006 to
Secretary present).
Matthew J. Hackethal Anti- 2006 to Acting Chief Compliance N/A N/A
Age: 45 Money present Officer (2016 to 2017);
Laundering Chief Compliance Officer,
Compliance SunAmerica (2006 to
Officer present).
--------
* The business address for each Trustee and Officer is Harborside 5, 185
Hudson Street, Suite 3300, Jersey City, NJ 07311.
(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 (50 portfolios), VALIC
Company I (34 funds), VALIC Company II (15 funds), Seasons Series Trust
(20 portfolios) and SunAmerica Specialty Series (8 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. 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.
84
SunAmerica Income Funds
SHAREHOLDER TAX INFORMATION -- March 31, 2017 -- (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, 2017. The information and distributions reported herein
may differ from the information and distributions taxable to the shareholders
for the calendar year ending December 31, 2017. 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 2018.
For the year ended March 31, 2017, 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............. -- 1.45
Strategic Bond Fund Class B............. -- 1.45
Strategic Bond Fund Class C............. -- 1.45
Strategic Bond Fund Class W............. -- 1.45
Flexible Credit Fund Class A............ -- 1.61
Flexible Credit Fund Class C............ -- 1.61
Flexible Credit Fund Class W............ -- 1.61
For the year ended March 31, 2017, 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.. $207,383
Flexible Credit Fund. 414,890
85
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.
86
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
AIG U.S. Government Securities Fund
The AIG U.S. Government Securities Fund Class A shares returned -2.93% (before
maximum sales charge) for the 12-month period ended March 31, 2017. The Fund
trailed its benchmark, the Bank of America Merrill Lynch ("BofA ML") U.S.
Treasury Master Index,/*/ which returned -1.47% during the same period.
The U.S. Treasury market performed negatively during the annual period. Such
performance is attributable almost entirely to the last five months of the
annual period when expectations that Mr. Trump's proposed policies would lead
to significant fiscal spending. Many investors anticipated that such spending
would require the U.S. government to issue new bonds, which, in turn, led to
falling demand for long-term U.S. Treasuries. In turn, prices of U.S.
Treasuries with maturities of 10 years to 30 years declined. Further, the
Federal Reserve (the "Fed") raised the targeted federal funds rate by 0.25% in
both December 2016 and March 2017, to a range of 0.75% - 1.00%. The rate hikes
pushed U.S. Treasury yields higher and prices lower, especially on shorter-term
maturities. All told, yields on U.S. Treasuries rose across the yield curve, or
spectrum of maturities, during the annual period.
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 the first half of the annual period, which hurt as
yields on maturities of four years and longer fell. The Fund then held a longer
duration than the BofA ML U.S. Treasury Master Index during the second half of
the annual period, which detracted as interest rates then rose across the yield
curve. Further, the Fund was hurt by its significantly overweight exposure to
the long-term end of the U.S. Treasury yield curve, as long-term U.S.
Treasuries experienced the largest price declines during the second half of the
annual period.
Partially mitigating these detractors was the positive effect of the Fund's
exposure to agency mortgage-backed securities, which are not components of the
BofA ML U.S. Treasury Master Index and which outperformed U.S. Treasuries
during the annual period. More specifically, the Fund held positions in FNMAs,
FHLBs and GNMAs. Positions in GNMAs detracted from absolute Fund returns due to
the paydown effect, wherein returned cash had to be reinvested in lower coupon
rate securities given the low interest rate environment. However, holdings in
GNMAs still outperformed U.S. Treasuries on a relative basis during the annual
period. Exposure to intermediate-maturity Federal Farm Credit bonds also
boosted the Fund's relative results. The one exception within the agency
mortgage-backed securities sector was holdings in long-maturity Federal Farm
Credit bonds, which detracted from the Fund's relative results, as these
securities' prices declined during the annual period.
At the end of the annual period, the Fund had a longer duration than that of
the BofA ML U.S. Treasury Master Index, although the Fund's relative duration
had been reduced since the summer of 2016 by increasing exposure to short-term
U.S. Treasury bills and notes with maturities of less than three years in the
belief that the Fed may raise interest rates again in 2017. At the end of the
annual period, the Fund had approximately 15% of its total net assets invested
in U.S. Treasuries, 35% in GNMAs, 42% in government-related agency securities
and 8% 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.
87
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in AIG U.S. Government Securities
Fund Class A shares would have increased to $12,370. The same amount invested
in securities mirroring the performance of the BofA Merrill Lynch U.S. Treasury
Master Index would be valued at $14,742.
[CHART]
AIG U.S. Government BofA Merrill Lynch
Date Securities Fund Class A/ U.S. Treasury Master Index/*/*/
---------- -------------------------- -------------------------------
3/31/2007 9,526 10,000
4/30/2007 9,569 10,053
5/31/2007 9,469 9,965
6/30/2007 9,419 9,960
7/31/2007 9,547 10,125
8/31/2007 9,666 10,285
9/30/2007 9,718 10,340
10/31/2007 9,797 10,421
11/30/2007 10,053 10,738
12/31/2007 10,053 10,751
1/31/2008 10,255 11,022
2/29/2008 10,315 11,142
3/31/2008 10,365 11,223
4/30/2008 10,231 11,033
5/31/2008 10,087 10,900
6/30/2008 10,158 10,991
7/31/2008 10,165 11,035
8/31/2008 10,313 11,174
9/30/2008 10,395 11,247
10/31/2008 10,323 11,230
11/30/2008 10,850 11,834
12/31/2008 11,211 12,254
1/31/2009 10,901 11,876
2/28/2009 10,843 11,812
3/31/2009 11,063 12,079
4/30/2009 10,887 11,849
5/31/2009 10,777 11,730
6/30/2009 10,790 11,707
7/31/2009 10,867 11,754
8/31/2009 10,955 11,863
9/30/2009 11,053 11,956
10/31/2009 11,064 11,949
11/30/2009 11,149 12,118
12/31/2009 10,890 11,798
1/31/2010 11,020 11,985
2/28/2010 11,045 12,032
3/31/2010 10,980 11,929
4/30/2010 11,088 12,055
5/31/2010 11,287 12,263
6/30/2010 11,474 12,492
7/31/2010 11,500 12,577
8/31/2010 11,723 12,834
9/30/2010 11,632 12,834
10/31/2010 11,542 12,812
11/30/2010 11,501 12,724
12/31/2010 11,351 12,492
1/31/2011 11,265 12,493
2/28/2011 11,310 12,482
3/31/2011 11,323 12,475
4/30/2011 11,443 12,619
5/31/2011 11,600 12,818
6/30/2011 11,538 12,779
7/31/2011 11,716 13,012
8/31/2011 12,055 13,377
9/30/2011 12,293 13,591
10/31/2011 12,207 13,488
11/30/2011 12,313 13,587
12/31/2011 12,423 13,715
1/31/2012 12,432 13,777
2/29/2012 12,367 13,679
3/31/2012 12,267 13,538
4/30/2012 12,423 13,745
5/31/2012 12,604 13,996
6/30/2012 12,564 13,944
7/31/2012 12,682 14,092
8/31/2012 12,666 14,073
9/30/2012 12,624 14,025
10/31/2012 12,585 14,001
11/30/2012 12,618 14,081
12/31/2012 12,578 14,012
1/31/2013 12,437 13,878
2/28/2013 12,495 13,961
3/31/2013 12,493 13,976
4/30/2013 12,628 14,123
5/31/2013 12,296 13,839
6/30/2013 12,090 13,665
7/31/2013 12,009 13,638
8/31/2013 11,952 13,565
9/30/2013 11,994 13,668
10/31/2013 12,061 13,743
11/30/2013 11,987 13,685
12/31/2013 11,889 13,542
1/31/2014 12,072 13,759
2/28/2014 12,125 13,801
3/31/2014 12,103 13,763
4/30/2014 12,184 13,849
5/31/2014 12,277 14,000
6/30/2014 12,280 13,978
7/31/2014 12,272 13,957
8/31/2014 12,445 14,127
9/30/2014 12,372 14,037
10/31/2014 12,505 14,190
11/30/2014 12,574 14,321
12/31/2014 12,570 14,358
1/31/2015 12,706 14,771
2/28/2015 12,644 14,513
3/31/2015 12,702 14,609
4/30/2015 12,667 14,519
5/31/2015 12,633 14,485
6/30/2015 12,519 14,340
7/31/2015 12,565 14,475
8/31/2015 12,558 14,483
9/30/2015 12,602 14,613
10/31/2015 12,581 14,561
11/30/2015 12,547 14,500
12/31/2015 12,541 14,477
1/31/2016 12,680 14,795
2/29/2016 12,738 14,941
3/31/2016 12,743 14,962
4/30/2016 12,748 14,944
5/31/2016 12,766 14,949
6/30/2016 12,904 15,297
7/31/2016 12,936 15,362
8/31/2016 12,900 15,274
9/30/2016 12,905 15,246
10/31/2016 12,750 15,070
11/30/2016 12,393 14,659
12/31/2016 12,344 14,642
1/31/2017 12,335 14,675
2/28/2017 12,378 14,751
3/31/2017 12,370 14,742
AIG U.S. Government Securities Fund
Class A@ Class C
----------------- ------------------ ------------------
Average Average
Annual Cumulative Annual Cumulative
Return Return+ Return Return+
----------------- ------- ---------- ------- ----------
1 Year Return -7.55% -2.93% -4.62% -3.66%
-------------------------------------------------------
5 Year Return -0.80% 0.84% -0.48% -2.39%
-------------------------------------------------------
10 Year Return 2.15% 29.86% 1.98% 21.71%
-------------------------------------------------------
Since Inception* 3.99% 163.05% 3.16% 74.22%
-------------------------------------------------------
+ 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 ended March 31, 2017, the AIG U.S. Government
Securities Fund Class A returned -7.55%, compared to -1.47% 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.aig.com/funds.
** 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.
88
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
AIG Strategic Bond Fund
The AIG Strategic Bond Fund Class A shares returned 7.38% (before maximum sales
charge) for the 12-month period ended March 31, 2017. The Fund outperformed its
benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index,/*/ which returned
0.44% during the same annual period. The Fund also outperformed the LIBOR
3-Month Index,/*/ a widely-recognized benchmark of interest rate performance,
which returned 0.85% for the same annual period.
The Fund's outperformance relative to its benchmark can be attributed primarily
to positioning among risk asset classes, as credit spreads, or yield
differentials to U.S. Treasuries, tightened significantly in most spread, or
non-U.S. Treasury, sectors. For example, U.S. high yield bond spreads, as
measured by the option-adjust spread of the Bloomberg Barclays U.S. Corporate
High Yield Index,/*/ tightened 273 basis points+ during the annual period,
leading to an outperformance of duration-matched U.S. Treasuries of 16.98%.
Within investment grade corporate bonds, index spreads tightened 29 basis
points during the annual period, leading to an outperformance of
duration-matched U.S. Treasuries of 4.60%. The Fund maintained overweight
allocations to these two sectors, as well as to emerging markets debt, thus
driving the Fund's outperformance versus its benchmark index.
Within the high yield bond sector, underweight allocations to the retail and
pharmaceuticals market segments contributed most positively to Fund results.
The retail industry has been challenged by increased competition from
e-commerce and consumers' favoring of deeper discounting. The pharmaceuticals
industry has come under pressure as politicians have focused efforts on slowing
the increase in drug prices. 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. In both the high
yield and investment grade sectors, underweight allocations to energy,
including oil field services names, detracted. Oil prices traded higher during
the annual period, as OPEC agreed to production cuts, which, in turn, drove
energy-related credits to gain ground. Having an average 1.2% position in cash
during the annual period also detracted from the Fund's results amid the sharp
rally across the corporate bond markets. So, too, did exposure to agency
mortgage-backed securities and U.S. Treasuries, which were a drag on relative
performance, as these higher quality assets did not keep pace with higher
yielding spread sectors during the annual period.
Security selection overall contributed positively to the Fund's returns
relative to its benchmark index during the annual period. Within the high yield
bond sector, security selection among wireless communications, finance company,
gaming and health care names contributed most positively. Only partially
offsetting these positive contributors was security selection among basic
industrials and transportation names, which detracted. Within the investment
grade corporate bond sector, security selection proved most effective among
banking, electric utilities and capital goods names. Security selection among
investment grade basic industrials names detracted. Elsewhere, security
selection within the emerging markets debt sector added value, but security
selection among agency mortgage-backed securities detracted.
While the Fund remained U.S.-centric, portions of the Fund were allocated to
issuers domiciled outside of the United States, which meant country exposure
had an impact on results during the annual period. Outside of the U.S.,
positions in the sovereign debt of Kenya, Egypt and Brazil were positive
contributors to performance. Positions in the sovereign debt of Turkey
detracted due to heightened geopolitical volatility in the country.
Duration positioning around U.S. dollar-denominated assets contributed
positively to the Fund's results during the annual period, as the Fund
maintained a duration that was shorter than that of the Bloomberg Barclays U.S.
Aggregate Bond Index, and U.S. Treasury rates traded higher. Within the Fund,
we favored high yield corporate bonds, a sector that comes with a lower
duration. The Fund was underweight securitized products relative to the
Bloomberg Barclays U.S. Aggregate Bond Index, a sector where the duration
extended longer. Yield curve positioning did not have a material impact on the
Fund's results during the annual period.
The Fund began the annual period 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. In April 2016, we reduced the Fund's target allocation to investment
grade corporate bonds to 35% and increased its target allocation to securitized
products to 25%, as we sought a higher quality profile for the Fund. We thought
the overhang of the Brexit vote in June 2016, coupled with the potential for a
more hawkish Fed tone could lead to spans of heightened volatility during the
summer. In July 2016, we further reduced the Fund's target allocation to
investment grade corporate bonds to 30% and increased its target allocation to
89
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
securitized products to 30%, as we expected Fed-related volatility to impact
the investment grade corporate bond sector with the potential to take credit
spreads wider. In November 2016, we reduced the Fund's target allocation to
securitized products to 25% and increased its target allocation to high yield
corporate bonds to 35%. Subsequent to the U.S. presidential election, sharply
higher U.S. Treasury rates and heavy outflows from retail mutual funds and
exchange-traded funds ("ETFs") had pressured high yield corporate bond prices.
This made for, in our view, an attractive entry point given what we considered
to be the improved backdrop for economic growth. In January 2017, we reduced
the Fund's target allocation to securitized products to 20% and increased its
target allocation to high yield corporate bonds to 40%. Solid economic data, an
upturn in year-over-year earnings comparisons, and substantial fund flows into
mutual funds and ETFs were likely, we thought, to support high yield corporate
bond prices. Finally, in March 2017, we increased the Fund's target allocation
to emerging markets debt to 15% and reduced its target allocation to
securitized products to 15%. We maintained Fund target allocations to high
yield and investment grade corporate bonds of 40% and 30%, respectively. In our
view, spreads on emerging markets debt appeared relatively attractive,
particularly on investment grade corporate bonds within the sector, and in the
context of positively trending fundamentals. Meanwhile, we believed
mortgage-backed securities' spreads could be pressured as the looming tapering
of Fed balance sheet assets could again become a concern for investors.
--------
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 Bloomberg 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 Bloomberg
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.
90
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in AIG Strategic Bond Fund Class A
shares would have increased to $15,094. The same amount invested in securities
mirroring the performance of the Bloomberg Barclays U.S. Aggregate Bond Index
and the LIBOR 3-Month Index would be valued at $15,197 and $11,118,
respectively.
[CHART]
AIG Strategic Bloomberg Barclays
Bond Fund U.S. Aggregate LIBOR
Date Class A/#/ Bond Index/*/*/ 3-Month Index/*/*/*/
---------- ------------- ------------------ --------------------
3/31/2007 9,528 10,000 10,000
4/30/2007 9,618 10,054 10,044
5/31/2007 9,604 9,978 10,089
6/30/2007 9,511 9,948 10,131
7/31/2007 9,391 10,031 10,177
8/31/2007 9,432 10,154 10,223
9/30/2007 9,656 10,231 10,266
10/31/2007 9,812 10,323 10,313
11/30/2007 9,718 10,509 10,354
12/31/2007 9,758 10,538 10,398
1/31/2008 9,746 10,715 10,438
2/29/2008 9,731 10,730 10,464
3/31/2008 9,746 10,767 10,491
4/30/2008 9,874 10,744 10,513
5/31/2008 9,864 10,665 10,538
6/30/2008 9,740 10,657 10,562
7/31/2008 9,676 10,648 10,586
8/31/2008 9,670 10,749 10,609
9/30/2008 9,147 10,605 10,635
10/31/2008 8,074 10,355 10,671
11/30/2008 7,919 10,692 10,696
12/31/2008 8,233 11,090 10,717
1/31/2009 8,313 10,993 10,729
2/28/2009 8,206 10,951 10,739
3/31/2009 8,316 11,103 10,751
4/30/2009 8,762 11,156 10,761
5/31/2009 9,153 11,237 10,770
6/30/2009 9,330 11,301 10,776
7/31/2009 9,725 11,484 10,781
8/31/2009 9,873 11,602 10,786
9/30/2009 10,239 11,724 10,789
10/31/2009 10,321 11,782 10,791
11/30/2009 10,465 11,935 10,794
12/31/2009 10,500 11,748 10,796
1/31/2010 10,582 11,928 10,799
2/28/2010 10,625 11,972 10,801
3/31/2010 10,837 11,958 10,803
4/30/2010 11,016 12,082 10,806
5/31/2010 10,705 12,184 10,809
6/30/2010 10,888 12,375 10,814
7/31/2010 11,241 12,507 10,818
8/31/2010 11,364 12,668 10,823
9/30/2010 11,584 12,681 10,825
10/31/2010 11,807 12,726 10,828
11/30/2010 11,590 12,653 10,831
12/31/2010 11,724 12,517 10,833
1/31/2011 11,842 12,531 10,836
2/28/2011 11,955 12,563 10,839
3/31/2011 12,004 12,570 10,842
4/30/2011 12,224 12,729 10,844
5/31/2011 12,274 12,895 10,847
6/30/2011 12,148 12,858 10,849
7/31/2011 12,339 13,062 10,851
8/31/2011 12,075 13,252 10,854
9/30/2011 11,738 13,349 10,857
10/31/2011 12,147 13,363 10,861
11/30/2011 11,948 13,352 10,865
12/31/2011 12,141 13,498 10,870
1/31/2012 12,443 13,617 10,875
2/29/2012 12,633 13,614 10,880
3/31/2012 12,603 13,539 10,884
4/30/2012 12,755 13,689 10,888
5/31/2012 12,689 13,813 10,892
6/30/2012 12,802 13,818 10,896
7/31/2012 13,139 14,009 10,901
8/31/2012 13,219 14,018 10,905
9/30/2012 13,371 14,037 10,908
10/31/2012 13,452 14,065 10,912
11/30/2012 13,531 14,087 10,914
12/31/2012 13,605 14,067 10,917
1/31/2013 13,611 13,969 10,920
2/28/2013 13,649 14,039 10,922
3/31/2013 13,692 14,050 10,925
4/30/2013 13,962 14,192 10,927
5/31/2013 13,662 13,939 10,930
6/30/2013 13,205 13,723 10,932
7/31/2013 13,326 13,742 10,935
8/31/2013 13,177 13,672 10,937
9/30/2013 13,374 13,801 10,939
10/31/2013 13,613 13,913 10,942
11/30/2013 13,580 13,861 10,944
12/31/2013 13,649 13,782 10,946
1/31/2014 13,694 13,986 10,948
2/28/2014 13,930 14,060 10,950
3/31/2014 14,012 14,036 10,953
4/30/2014 14,136 14,155 10,955
5/31/2014 14,342 14,316 10,957
6/30/2014 14,429 14,323 10,959
7/31/2014 14,316 14,288 10,961
8/31/2014 14,484 14,445 10,963
9/30/2014 14,206 14,347 10,965
10/31/2014 14,292 14,488 10,967
11/30/2014 14,254 14,591 10,969
12/31/2014 14,096 14,605 10,972
1/31/2015 14,262 14,911 10,974
2/28/2015 14,386 14,771 10,976
3/31/2015 14,391 14,839 10,979
4/30/2015 14,478 14,786 10,981
5/31/2015 14,442 14,750 10,984
6/30/2015 14,240 14,590 10,986
7/31/2015 14,202 14,691 10,989
8/31/2015 14,039 14,670 10,992
9/30/2015 13,872 14,769 10,995
10/31/2015 14,085 14,772 10,998
11/30/2015 13,959 14,733 11,001
12/31/2015 13,709 14,685 11,006
1/31/2016 13,625 14,887 11,012
2/29/2016 13,667 14,993 11,018
3/31/2016 14,100 15,130 11,024
4/30/2016 14,361 15,188 11,029
5/31/2016 14,407 15,192 11,035
6/30/2016 14,583 15,465 11,041
7/31/2016 14,841 15,563 11,047
8/31/2016 15,014 15,545 11,055
9/30/2016 15,055 15,536 11,063
10/31/2016 14,965 15,417 11,071
11/30/2016 14,651 15,053 11,079
12/31/2016 14,772 15,074 11,088
1/31/2017 14,894 15,103 11,098
2/28/2017 15,103 15,205 11,107
3/31/2017 15,094 15,197 11,118
AIG 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 2.37% 7.38% 2.66% 6.66% 5.35% 6.35% 7.26% 7.26%
---------------------------------------------------------------------------------------------
5 Year Return 2.68% 19.76% 2.63% 15.83% 2.95% 15.65% N/A N/A
---------------------------------------------------------------------------------------------
10 Year Return 4.20% 58.42% 4.15% 50.17% 4.04% 48.57% N/A N/A
---------------------------------------------------------------------------------------------
Since Inception* 6.05% 315.07% 6.35% 311.95% 5.92% 275.56% 2.72% 6.00%
---------------------------------------------------------------------------------------------
+ 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 ended March 31, 2017, the AIG Strategic Bond Fund Class
A returned 2.37%, compared to 0.44% for the Bloomberg Barclays U.S. Aggregate
Bond Index and 0.85% 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.aig.com/funds.
** The Bloomberg 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.
Indices are not managed and an investor cannot invest directly into an index.
91
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
AIG Flexible Credit Fund
The AIG Flexible Credit Fund Class A shares returned 9.11% (before maximum
sales charge) for the 12-month period ended March 31, 2017. The Fund posted
solid absolute returns but underperformed its benchmark, the Flexible Credit
Blended Benchmark, composed 50% of the Bloomberg Barclays U.S. High Yield 2%
Issuer Capped Index/*/ and 50% of the S&P/LSTA Leveraged Loan Index,/*/ which
returned 13.02% during the same annual period. The Fund outperformed the Bank
of America Merrill Lynch ("BofA ML") USD 3-Month LIBOR Constant Maturity
Index,/*/ a broad measure of market performance, which returned 0.74% 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. During the annual period, lower quality credit
sectors generally outperformed higher quality, and industries such as energy
and metals & mining, which were among the weakest performers in the prior
fiscal year, rallied with the rebound in commodities prices. We incrementally
added credit risk to the Fund's portfolio throughout the annual period,
primarily by increasing high yield bond exposure and adding modestly to the
energy and metals & mining allocations, thereby mitigating its relative
results. Still, the Fund's higher credit quality positioning, including an
overweight to bank loans, drove its underperformance to the Flexible Credit
Blended Benchmark as did its tactical underweights to the strongly performing
energy and metals & mining industries. To a lesser extent, the Fund's
overweights to the consumer cyclical and consumer non-cyclical industries
detracted from its relative results as did its underweight to basic industry
companies. Partially offsetting these detractors were the positive
contributions of having overweights to the broadcasting, telecommunications and
gaming industries, which each performed well, and underweights to the
technology, capital goods and retail industries, which were weaker.
Security selection generated mixed results. Effective issue selection in
communications, consumer cyclicals and electric utilities was broadly offset by
weaker issue selection in the basic industry, services and information
technology industries. Among individual securities, positions in broadcasting
company iHeart Media, communications company Sprint, gaming company Caesar's
and electric utilities Dynegy, Talen and Calpine were among the best
performers. Detractors included positions in asset management company Walter
Investment Management, exploration & production company Linn Energy, specialty
pharmaceuticals company Concordia International Corp., hospital operator Quorum
Health Corp. and offshore driller Seadrill Partners.
The Fund began the annual period with an overweight to bank loans, as the yield
gap between high yield and loans was tightening, thus making loans more
attractive on a risk/reward basis, in our view, with interest rate protection
an additional benefit. We added incremental risk throughout the annual period,
migrating the Fund's portfolio toward a 50/50 mix given what we considered to
be attractive valuation levels and a better comfort level with credit
fundamentals and strong technical, or supply/demand, factors. The Fund's
increased high yield bond exposure contributed positively to its relative
results during the first quarter of 2017. As of March 31, 2017, the Fund had a
48.9% allocation to loans and 49.3% to high yield bonds.
--------
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 Bloomberg 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.
92
SunAmerica Income Funds
COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued)
Over the past ten years, $10,000 invested in AIG Flexible Credit Fund Class A
shares would have increased to $13,562. The same amount invested in securities
mirroring the performance of the Blended Benchmark (50% Bloomberg Barclays U.S.
High-Yield 2% Issuer Capped Index/50% S&P/LSTA Leveraged Loan Index), the
Bloomberg 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 $18,033, $20,690, $15,607, and $11,234,
respectively.
[CHART]
Blended Benchmark
(50% Bloomberg
Barclays U.S.
High-Yield 2% S&P/LSTA
Issuer Capped Bloomberg Leveraged
Index/50% Barclays U.S. Loan Bank of America
AIG Flexible S&P/LSTA High-Yield 2% Index Merrill Lynch USD
Credit Fund Leveraged Issuer /DAGGER/ 3-Month LIBOR Constant
Date Class A/#/ Loan Index) Capped Index@ /DAGGER/ Maturity Index***
---------- ------------ ------------------ ------------- ---------- ------------------------
3/31/2007 $ 9521 $10000 $10000 $10000 $10000
4/30/2007 9648 10095 10130 10059 10044
5/31/2007 9678 10161 10200 10121 10090
6/30/2007 9544 10080 10016 10143 10134
7/31/2007 9207 9736 9667 9804 10181
8/31/2007 9297 9820 9812 9826 10222
9/30/2007 9526 10038 10056 10018 10278
10/31/2007 9603 10120 10124 10114 10331
11/30/2007 9425 9943 9911 9974 10367
12/31/2007 9447 9977 9948 10005 10422
1/31/2008 9094 9740 9796 9682 10499
2/29/2008 8928 9558 9675 9439 10526
3/31/2008 8957 9542 9652 9430 10561
4/30/2008 9309 9915 10049 9780 10581
5/31/2008 9383 9982 10090 9872 10610
6/30/2008 9283 9871 9841 9896 10631
7/31/2008 9053 9771 9717 9821 10657
8/31/2008 9043 9780 9747 9808 10682
9/30/2008 8319 9104 8999 9205 10677
10/31/2008 6808 7770 7551 7988 10741
11/30/2008 5979 7098 6888 7309 10783
12/31/2008 5999 7244 7374 7093 10821
1/31/2009 6192 7753 7864 7619 10839
2/28/2009 6050 7678 7651 7678 10847
3/31/2009 6032 7839 7861 7789 10861
4/30/2009 6589 8642 8788 8466 10876
5/31/2009 7037 9196 9378 8982 10893
6/30/2009 7219 9532 9653 9376 10900
7/31/2009 7650 10044 10233 9820 10908
8/31/2009 7689 10254 10429 10043 10916
9/30/2009 8051 10711 11025 10364 10920
10/31/2009 8215 10838 11225 10421 10923
11/30/2009 8301 10905 11335 10448 10926
12/31/2009 8562 11244 11706 10755 10929
1/31/2010 8650 11432 11860 10975 10931
2/28/2010 8679 11456 11875 11006 10933
3/31/2010 8953 11758 12235 11254 10934
4/30/2010 9174 11985 12526 11420 10936
5/31/2010 8778 11636 12078 11162 10935
6/30/2010 8864 11680 12227 11110 10940
7/31/2010 9172 11975 12657 11281 10947
8/31/2010 9180 11998 12661 11319 10955
9/30/2010 9462 12259 13036 11478 10957
10/31/2010 9661 12512 13369 11658 10960
11/30/2010 9551 12463 13216 11699 10962
12/31/2010 9732 12653 13455 11844 10965
1/31/2011 9931 12917 13752 12078 10968
2/28/2011 10069 13032 13933 12134 10971
3/31/2011 10124 13052 13979 12132 10974
4/30/2011 10237 13195 14195 12209 10977
5/31/2011 10294 13221 14264 12198 10980
6/30/2011 10172 13132 14126 12153 10982
7/31/2011 10287 13218 14289 12171 10985
8/31/2011 9780 12661 13714 11635 10985
9/30/2011 9535 12480 13263 11685 10987
10/31/2011 10007 13035 14059 12023 10990
11/30/2011 9847 12862 13756 11964 10991
12/31/2011 10093 13066 14122 12025 10995
1/31/2012 10358 13407 14551 12287 11002
2/29/2012 10561 13618 14897 12382 11008
3/31/2012 10552 13662 14878 12477 11012
4/30/2012 10664 13783 15031 12569 11017
5/31/2012 10529 13644 14831 12484 11021
6/30/2012 10736 13836 15144 12570 11026
7/31/2012 10914 14047 15432 12716 11030
8/31/2012 10998 14208 15613 12859 11035
9/30/2012 11144 14386 15830 13001 11040
10/31/2012 11167 14472 15969 13042 11045
11/30/2012 11283 14552 16097 13083 11048
12/31/2012 11436 14724 16350 13186 11051
1/31/2013 11555 14901 16570 13326 11054
2/28/2013 11571 14955 16654 13354 11057
3/31/2013 11756 15092 16823 13464 11060
4/30/2013 11908 15274 17128 13544 11062
5/31/2013 11797 15244 17028 13570 11065
6/30/2013 11516 14999 16582 13490 11068
7/31/2013 11734 15215 16896 13623 11070
8/31/2013 11617 15166 16793 13618 11073
9/30/2013 11734 15260 16960 13651 11076
10/31/2013 11988 15506 17384 13751 11078
11/30/2013 12005 15584 17472 13819 11080
12/31/2013 12056 15662 17567 13883 11082
1/31/2014 12142 15769 17690 13974 11085
2/28/2014 12397 15942 18047 13999 11087
3/31/2014 12415 15989 18090 14049 11089
4/30/2014 12500 16049 18204 14065 11092
5/31/2014 12586 16178 18371 14162 11094
6/30/2014 12706 16292 18525 14244 11096
7/31/2014 12477 16182 18279 14240 11098
8/31/2014 12670 16323 18569 14262 11100
9/30/2014 12401 16103 18180 14177 11102
10/31/2014 12592 16219 18395 14213 11105
11/30/2014 12495 16201 18262 14284 11107
12/31/2014 12315 15982 17998 14105 11108
1/31/2015 12357 16061 18117 14151 11111
2/28/2015 12612 16368 18553 14351 11113
3/31/2015 12583 16354 18452 14404 11115
4/30/2015 12696 16528 18675 14537 11118
5/31/2015 12702 16568 18732 14564 11120
6/30/2015 12634 16411 18453 14503 11123
7/31/2015 12639 16362 18346 14502 11125
8/31/2015 12497 16162 18025 14401 11127
9/30/2015 12317 15902 17562 14307 11131
10/31/2015 12471 16105 18043 14281 11133
11/30/2015 12363 15857 17645 14156 11135
12/31/2015 12197 15574 17201 14008 11134
1/31/2016 12126 15398 16924 13916 11140
2/29/2016 12164 15402 17021 13843 11145
3/31/2016 12430 15956 17777 14224 11151
4/30/2016 12695 16427 18473 14507 11157
5/31/2016 12738 16551 18587 14636 11162
6/30/2016 12779 16629 18758 14639 11169
7/31/2016 12977 16972 19266 14848 11173
8/31/2016 13137 17214 19669 14960 11178
9/30/2016 13182 17345 19800 15089 11186
10/31/2016 13229 17450 19876 15214 11193
11/30/2016 13158 17432 19782 15254 11200
12/31/2016 13339 17694 20147 15430 11208
1/31/2017 13467 17872 20439 15517 11217
2/28/2017 13590 18046 20737 15595 11225
3/31/2017 13562 18033 20690 15607 11234
AIG 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 4.05% 9.11% 7.38% 8.38% 9.34% 9.34%
--------------------------------------------------------------------------
5 Year Return 4.13% 28.53% 4.47% 24.43% N/A N/A
--------------------------------------------------------------------------
10 Year Return 3.09% 42.45% 2.93% 33.44% N/A N/A
--------------------------------------------------------------------------
Since Inception* 4.83% 150.12% 4.65% 112.89% 3.86% 9.93%
--------------------------------------------------------------------------
+ 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 ended March 31, 2017, the AIG Flexible Credit Fund
Class A returned 4.05%, compared to 13.02% for the Blended Benchmark (50%
Bloomberg Barclays U.S. High-Yield 2% Issuer Capped Index/50% S&P/LSTA
Leveraged Loan Index), 16.39% for the Bloomberg Barclays U.S. High-Yield 2%
Issuer Capped Index, 9.72% for the S&P/LSTA Leveraged Loan Index and 0.74% 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.aig.com/funds.
@ The Bloomberg 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.
93
SunAmerica Income Funds
SUPPLEMENTS TO THE PROSPECTUS
THE SUPPLEMENTS ARE NOT PART OF THE ANNUAL REPORT
SUNAMERICA INCOME FUNDS
AIG Flexible Credit Fund
AIG Strategic Bond Fund
AIG U.S. Government Securities Fund
(each, a "Fund," and collectively, the "Funds")
Supplement dated April 7, 2017 to the Funds' Prospectus ("Prospectus")
and Statement of Additional Information ("SAI"), as supplemented and amended to
date
Effective immediately, the following changes are made to the Prospectus and SAI.
The first paragraph under the subsection entitled "Fees and Expenses of the
Fund" in each Fund's "Fund Highlights" section of the Prospectus is amended to
add a cross-reference to the "Financial Intermediary-Specific Sales Charge
Waiver Policies" section of the Prospectus.
The following paragraph is added after the first paragraph under the section of
the Prospectus entitled "Shareholder Account Information -- Sales Charge
Reductions and Waivers":
The availability of certain sales charge waivers and reductions will depend on
whether you purchase your shares through a financial intermediary or directly
through a Fund. Financial intermediaries may have different policies and
procedures regarding the availability of front-end sales charge waivers and
reductions or CDSC waivers, as referenced below. For waivers and reductions not
available through a particular financial intermediary, shareholders will have
to purchase Fund shares through another financial intermediary or directly
through a Fund to receive these waivers or reductions. If Merrill Lynch is your
financial intermediary, please see the section entitled "Financial Intermediary
-- Specific Sales Charge Waiver Policies" on page A-1 of this Prospectus for
additional information about sales charge waivers and reductions that may be
available to you.
The last paragraph under the section of the Prospectus entitled "Shareholder
Account Information - Sales Charge Reductions and Waivers" is amended to add a
cross-reference to the "Financial Intermediary-Specific Sales Charge Waiver
Policies" section of the Prospectus.
The following section is added after the section entitled "Financial
Highlights" in the Prospectus:
FINANCIAL INTERMEDIARY-SPECIFIC SALES CHARGE WAIVER POLICIES
MERRILL LYNCH
Effective April 10, 2017, shareholders purchasing fund shares through a Merrill
Lynch platform or account will be eligible only for the following sales charge
waivers (front-end sales charge waivers and CDSC waivers) and reductions, which
may differ from those disclosed elsewhere in this Prospectus or SAI.
Front-End Sales Charge Waivers for Class A Shares available at Merrill Lynch
.. Employer-sponsored retirement, deferred compensation and employee benefit
plans (including health savings accounts) and trusts used to fund those
plans, provided that the shares are not held in a commission-based brokerage
account and shares are held for the benefit of the plan
.. Shares purchased by or through a 529 Plan
.. Shares purchased through a Merrill Lynch affiliated investment advisory
program
94
SunAmerica Income Funds
SUPPLEMENTS TO THE PROSPECTUS -- (continued)
.. Shares purchased by third party investment advisers on behalf of their
advisory clients through Merrill Lynch's platform
.. Shares of funds purchased through the Merrill Edge Self-Directed platform
(if applicable)
.. Shares purchased through reinvestment of capital gains distributions and
dividend reinvestment when purchasing shares of the same fund (but not any
other fund within AIG Funds)
.. Shares exchanged from Class C (i.e., level-load) shares of the same fund in
the month of or following the 10-year anniversary of the purchase date
.. Employees and registered representatives of Merrill Lynch or its affiliates
and their family members
.. Trustees of the Trust, and employees of the Adviser or any of its
affiliates, as described in this Prospectus
.. Shares purchased from the proceeds of redemptions within AIG Funds, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares
were subject to a front-end or deferred sales charge (known as rights of
reinstatement)
CDSC Waivers on Class A, B and C Shares available at Merrill Lynch
.. Death or disability of the shareholder
.. Shares sold as part of a systematic withdrawal plan as described in the
Funds' Prospectus
.. Return of excess contributions from an IRA Account
.. Shares sold as part of a required minimum distribution for IRA and
retirement accounts due to the shareholder reaching age 70 1/2
.. Shares sold to pay Merrill Lynch fees but only if the transaction is
initiated by Merrill Lynch
.. Shares acquired through a right of reinstatement
.. Shares held in retirement brokerage accounts that are exchanged for a lower
cost share class due to a transfer to certain fee-based accounts or
platforms (applicable to Class A and C shares only)
Front-End Sales Charge Discounts Available at Merrill Lynch: Breakpoints,
Rights of Accumulation & Letters of Intent
.. Breakpoints as described in this Prospectus
.. Rights of Accumulation ("ROA") that entitle shareholders to breakpoint
discounts will be automatically calculated based on the aggregated holding
of AIG Funds assets held by accounts within the purchaser's household at
Merrill Lynch. Eligible AIG Funds assets not held at Merrill Lynch may be
included in the ROA calculation only if the shareholder notifies his or her
financial advisor about such assets
.. Letters of Intent which allow for breakpoint discounts based on anticipated
purchases within AIG Funds, through Merrill Lynch, over a 13-month period of
time (if applicable)
The first paragraph under each of the sections of the SAI entitled "Additional
Information Regarding Purchase of Shares -- Waiver of CDSCs," "Additional
Information Regarding Purchase of Shares -- Waiver of Sales Charges with
Respect to Certain Purchases of Class A Shares" and "Additional Information
Regarding Purchase of Shares -- Reduced Sales Charges (Class A Shares only)" is
amended to add a cross-reference to the "Financial Intermediary-Specific Sales
Charge Waiver Policies" section of the Prospectus.
Capitalized terms used herein but not defined shall have the meanings assigned
to them in the Prospectus or SAI.
95
SunAmerica Income Funds
SUPPLEMENTS TO THE PROSPECTUS -- (continued)
THE SUPPLEMENTS ARE NOT PART OF THE ANNUAL REPORT
SUNAMERICA INCOME FUNDS
AIG U.S. Government Securities Fund
(the "Fund")
Supplement dated April 21, 2017,
to the Fund's Prospectus dated April 3, 2017,
as supplemented and amended to date
In the section entitled "Fund Highlights: U.S. Government Securities Fund," the
table under the heading "Portfolio Managers" on page 5 of the Prospectus is
deleted in its entirety and replaced with the following:
Portfolio Manager
Name of the Fund Since Title
---------------- ----------------- -----------------------------------------------------------------
Kara Murphy..... 2014 Senior Vice President and Chief Investment Officer at SunAmerica
Timothy Campion. 2014 Vice President and Portfolio Manager at SunAmerica
Jane Algieri.... 2017 Vice President and Portfolio Manager at SunAmerica
In the section entitled "Fund Management -- Portfolio Managers," the
information with respect to the Fund on page 36 of the prospectus is amended by
deleting all reference to Andrew Doulos, Vice President and Portfolio Manager
at SunAmerica, and inserting the following information:
Jane Algieri
Vice President and Portfolio Manager at SunAmerica
Ms. Algieri joined SunAmerica in 2004. Previously at SunAmerica, Ms. Algieri
was an equity analyst and assistant portfolio manager on fixed income funds.
Ms. Algieri received her B.A. from Baruch College and her M.B.A. from
Rutgers School of Business.
Capitalized terms used herein but not defined shall have the meanings
assigned to them in the Prospectus.
96
[LOGO]
AIG Funds
Harborside 5
185 Hudson Street, Suite 3300
Jersey City, NJ 07311
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
Officers Trust uses to holdings with the U.S.
John T. Genoy, President determine how to vote Securities and
James Nichols, Vice proxies relating to Exchange Commission
President secu-rities held in a for its first and
Kara Murphy, Vice Fund's portfolio, third fiscal quarters
President which is available in on Form N-Q. The
Christopher C. Joe, the Trust's Statement Trust's Forms N-Q are
Chief Compliance of Additional available on the
Officer Information, may be U.S. Securities and
Gregory N. Bressler, ob-tained without Exchange Commis-sion
Secretary charge upon request, website at
Kathleen Fuentes, Chief by calling (800) www.sec.gov. You can
Legal Officer and 858-8850. The also review and obtain
Assistant Secretary in-formation is also copies of the Forms
Gregory R. Kingston, available from the N-Q at the U.S.
Treasurer EDGAR database on the Securities and
Donna McManus, Vice U.S. Secu-rities and Exchange Commission
President and Exchange Commission's Public Refer-ence Room
Assistant Treasurer website at in Washington DC
Shawn Parry, Vice http://www.sec.gov. (information on the
President and DELIVERY OF operation of the
Assistant Treasurer SHAREHOLDER DOCUMENTS Public Reference Room
Matthew J. Hackethal, The Funds have adopted may be ob-tained by
Anti-Money Laundering a policy that allows calling
Compliance Officer them to send only one 1-800-SEC-0330).
Investment Adviser copy of a Fund's PROXY VOTING RECORD ON
SunAmerica Asset prospectus, proxy SUNAMERICA INCOME FUNDS
Management, LLC material, annual Information regarding
Harborside 5 report and semi-annual how the Funds voted
185 Hudson Street, Suite report (the proxies relating to
3300 "shareholder securities held in the
Jersey City, NJ 07311 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 5 "household." This filed with the U.S.
185 Hudson Street, Suite practice is called Securities and
3300 householding and Exchange Commission,
Jersey City, NJ 07311 reduces Fund expenses, without charge, upon
Shareholder Servicing which benefits you and request, by calling
Agent other shareholders. (800) 858-8850 or on
AIG Fund Services, Inc. Unless the Funds the U.S. Securities
Harborside 5 receive instructions and Exchange
185 Hudson Street, Suite to the con-trary, you Commission's website
3300 will only receive one at http://www.sec.gov.
Jersey City, NJ 07311 copy of the This report is
Custodian and Transfer shareholder documents. submitted solely for
Agent The Funds will the general
State Street Bank and continue to household information of
Trust Company the share-holder shareholders of the
One Lincoln Street documents Funds. Distribution of
Boston, MA 02111 indefinitely, until we this report to persons
are instructed other than
otherwise. If you do shareholders of the
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 AIG Funds
c/o BFDS, P.O. Box
219186, Kansas City
MO, 64121-9186. We
will resume
in-dividual mailings
for your account
within thirty (30)
days of receipt of
your request.
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.aig.com/funds
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.aig.com/funds 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.
AIG Funds are advised by SunAmerica Asset Management, LLC (SAAMCo) and
distributed by AIG Capital Services, Inc. (ACS), Member FINRA. Harborside 5,
185 Hudson Street, Suite 3300, Jersey City, NJ 07311, 800-858-8850. SAAMCo and
ACS are members of American International Group, Inc. (AIG).
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
AIG Funds Sales Desk at 800-858-8850, ext. 6003, or at aig.com/funds. Read the
prospectus carefully before investing.
aig.com/funds
INANN - 3/17
[LOGO]
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
(the "Code"). During the fiscal year ended March 31, 2017, there were
no reportable waivers or implicit waivers to a provision of the Code
that applies to the registrant's Principal Executive and Principal
Accounting Officers (the "Covered Officers"). During the fiscal year
ended March 31, 2017, however, there were reportable amendments to the
Code that apply to the Covered Officers, and that relate to one or
more of the items set forth in paragraph (b) of Item 2 of Form N-CSR.
In particular, the Code has been amended to provide an enhanced
description of the Covered Officers' responsibilities, which include a
responsibility to observe the ethical principles contained in the
Code.
Item 3. Audit Committee Financial Expert.
Currently, the registrant does not have an Audit Committee member who
possesses all of the attributes required to be an "audit committee
financial expert," as defined in instruction 2(b) of Item 3 of
Form N-CSR. However, the Board of Trustees believes that the members
of the Audit Committee have substantial experience relating to the
review of financial statements and the operations of audit committees.
Accordingly, the Board believes that the members are qualified to
evaluate the registrant's financial statements, supervise the
registrant's preparation of its financial statements, and oversee the
work of the registrant's independent auditors.
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:
2016 2017
(a) Audit Fees ....................$ 149,656 $ 154,143
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 48,469 $ 49,924
(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:
2016 2017
(b) Audit-Related Fees ............$ 0 $ 0
(c) Tax Fees ......................$ 0 $ 0
(d) All Other Fees ................$ 0 $ 0
(e) (1) The registrant's audit committee pre-approves all audit services
provided by the registrant's principal accountant for the registrant
and all non-audit services provided by the registrant's principal
accountant for the registrant, its investment adviser and any entity
controlling, controlled by, or under common control with the
investment adviser ("Adviser Affiliates") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliates relates directly to the operations and
financial reporting of the registrant. The audit committee has not
presently established any pre-approval policies and procedures that
permit the pre-approval of the above services other than by the full
audit committee. Certain de minimis exceptions are allowed for non-
audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation
S-X as set forth in the registrant's audit committee charter.
(2) No services included in (b)-(d) above in connection with fees
billed to the registrant or the investment adviser or Adviser
Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-
01 of Regulation S-X.
(f) Not applicable.
(g) The aggregate fees billed for the most recent fiscal year and the
preceding fiscal year by the registrant's principal accountant for
non-audit services rendered to the registrant, its investment adviser,
and Adviser Affiliates that provides ongoing services to the registrant
for 2016 and 2017 were $48,469, and $49,924 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 08, 2017
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 08, 2017
By: /s/ Gregory R. Kingston
-----------------------
Gregory R. Kingston
Treasurer
Date: June 08, 2017