-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LTjncZpLoTH2ewv8E2WIE4dt6LWG9yvGJWwC8vEWsWotRGr/z+tpjGPxdb4iXiOW wrQBpXIpF6wKT9LcFzcR+A== 0001193125-03-090777.txt : 20031208 0001193125-03-090777.hdr.sgml : 20031208 20031208154830 ACCESSION NUMBER: 0001193125-03-090777 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031208 EFFECTIVENESS DATE: 20031208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA INCOME FUNDS CENTRAL INDEX KEY: 0000795307 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04708 FILM NUMBER: 031042603 BUSINESS ADDRESS: STREET 1: 733 THIRD AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2123537651 MAIL ADDRESS: STREET 1: 733 THIRD AVENUE STREET 2: 3RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: SUNAMERICA INCOME PORTFOLIOS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: INTEGRATED INCOME PORTFOLIOS DATE OF NAME CHANGE: 19900306 N-CSRS 1 dncsrs.txt SUNAMERICA INCOME FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04708 --------------------------------------------- SunAmerica Income Funds - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Robert M. Zakem, Esq. Senior Vice President & General Counsel AIG SunAmerica Asset Management Corp. Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (201) 324-6363 ----------------------------- Date of fiscal year end: March 31 -------------------------- Date of reporting period: September 30, 2003 ------------------------- Item 1. Reports to Shareholders SunAmerica Income Funds, Semiannual Report at September 30, 2003. [GRAPHIC] SunAmerica THE RETIREMENT SPECIALIST Income Funds 2003 SEMIANNUAL REPORT [LOGO] AIG Sun America Mutual Funds September 30, 2003 SEMIANNUAL REPORT SUNAMERICA INCOME FUNDS SunAmerica Core Bond Fund (NAIBX) SunAmerica U.S. Government Securities Fund (SGTAX) SunAmerica GNMA Fund (GNMAX) SunAmerica Strategic Bond Fund (SDIAX) SunAmerica High Yield Bond Fund (SHNAX) SunAmerica Tax Exempt Insured Fund (STEAX) Table of Contents STATEMENT OF ASSETS AND LIABILITIES 1 STATEMENT OF OPERATIONS............ 3 STATEMENT OF CHANGES IN NET ASSETS. 5 FINANCIAL HIGHLIGHTS............... 8 PORTFOLIO OF INVESTMENTS........... 14 NOTES TO FINANCIAL STATEMENTS...... 53 TRUSTEE INFORMATION................ 74
SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2003 -- (unaudited)
Core U.S. Government GNMA Strategic High Yield Tax Exempt Bond Fund Securities Fund Fund Bond Fund Bond Fund Insured Fund ------------ --------------- ------------ ------------ ------------- ------------ ASSETS: Investment securities, at value*... $345,486,997 $253,640,150 $556,478,617 $ 87,214,022 $ 250,593,372 $88,249,330 Short-term securities*............. 59,986,311 14,950,000 134,859,152 1,497,000 -- 6,543,651 Repurchase agreements (cost equals market)........................... 29,232,000 47,352,000 174,392,000 1,665,000 19,505,000 -- Deposit with brokers for securities sold short............. -- -- -- -- 2,954,101 -- Cash............................... 846 384 799 1,443,571 324,735 73 Foreign cash*...................... -- -- -- 10,112 -- -- Receivable for shares of beneficial interest sold.......... 435,916 141,781 2,834,348 602,756 3,229,575 6,658 Interest and dividends receivable.. 2,732,182 1,381,417 1,961,251 1,671,679 6,127,189 1,420,999 Receivable due from adviser........ 19,937 170,051 142,378 9,477 5,128 1,776 Receivable for investments sold.... 22,544,885 9,845,804 10,304,280 390,614 14,518,074 1,183,901 Prepaid expenses................... 4,664 4,330 8,018 1,316 2,767 1,490 ------------ ------------ ------------ ------------ ------------- ----------- Total assets...................... 460,443,738 327,485,917 880,980,843 94,505,547 297,259,941 97,407,878 ------------ ------------ ------------ ------------ ------------- ----------- LIABILITIES: Payable for investments purchased.. 110,679,404 60,808,333 285,000,933 529,966 10,608,593 -- Payable for shares of beneficial interest redeemed................. 5,214,300 420,161 3,026,809 233,087 1,971,603 27,102 Interest payable on securities sold short........................ -- -- -- -- 73,666 -- Collateral due upon return of securities loaned................. -- -- -- 625,000 -- -- Dividends payable.................. 4,827 121,065 170,852 173,340 553,987 77,840 Investment advisory and management fees payable...................... 157,959 138,451 219,128 48,262 165,040 39,163 Distribution and service maintenance fees payable.......... 31,571 111,138 317,695 51,939 118,402 40,219 Accrued expenses................... 228,638 249,835 39,351 230,180 194,216 132,712 Securities sold short, at value#... -- -- -- -- 1,879,000 -- Unrealized depreciation on forward foreign currency contracts........ -- -- -- 58,492 -- -- ------------ ------------ ------------ ------------ ------------- ----------- Total liabilities................. 116,316,699 61,848,983 288,774,768 1,950,266 15,564,507 317,036 ------------ ------------ ------------ ------------ ------------- ----------- Net assets....................... $344,127,039 $265,636,934 $592,206,075 $ 92,555,281 $ 281,695,434 $97,090,842 ============ ============ ============ ============ ============= =========== NET ASSETS WERE COMPOSED OF: Shares of beneficial interest, $.01 par value.................... $ 330,796 $ 277,246 $ 513,486 $ 280,583 $ 691,320 $ 71,845 Paid-in capital.................... 340,187,484 271,828,352 577,044,957 140,488,254 405,758,598 88,591,352 ------------ ------------ ------------ ------------ ------------- ----------- 340,518,280 272,105,598 577,558,443 140,768,837 406,449,918 88,663,197 Accumulated undistributed net investment income (loss).......... (681,543) (1,069,513) (1,269,532) (188,476) (151,386) 130,558 Accumulated net realized gain (loss) on investments and foreign currency.......................... (764,019) (11,045,054) 7,380,644 (52,359,548) (130,084,653) 2,873,266 Net unrealized appreciation (depreciation) on investments..... 5,054,321 5,645,903 8,536,520 4,390,443 5,562,055 5,423,821 Net unrealized foreign exchange gain (loss) on other assets and liabilities....................... -- -- -- (55,975) -- -- Net unrealized appreciation (depreciation) on securities sold short............................. -- -- -- -- (80,500) -- ------------ ------------ ------------ ------------ ------------- ----------- Net assets....................... $344,127,039 $265,636,934 $592,206,075 $ 92,555,281 $ 281,695,434 $97,090,842 ============ ============ ============ ============ ============= =========== *Identified cost Investment securities............. $340,432,676 $247,994,247 $547,942,097 $ 82,823,579 $ 245,031,317 $82,825,509 ============ ============ ============ ============ ============= =========== Short-term securities............. $ 59,986,311 $ 14,950,000 $134,859,152 $ 1,497,000 $ -- $ 6,543,651 ============ ============ ============ ============ ============= =========== Foreign cash...................... $ -- $ -- $ -- $ 10,017 $ -- $ -- ============ ============ ============ ============ ============= =========== #Proceeds from securities sold short............................. $ -- $ -- $ -- $ -- $ 1,798,500 $ -- ============ ============ ============ ============ ============= ===========
See Notes to Financial Statements 1 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2003 -- (unaudited) (continued)
Core U.S. Government GNMA Strategic High Yield Tax Exempt Bond Fund Securities Fund Fund Bond Fund Bond Fund Insured Fund ------------ --------------- ------------ ----------- ----------- ------------ Class A (unlimited shares authorized): Net assets................................... $ 65,179,307 $199,212,221 $301,816,040 $38,486,394 $91,720,279 $72,735,926 Shares of beneficial interest issued and outstanding................................. 6,269,416 20,792,423 26,210,038 11,673,777 22,549,017 5,382,322 Net asset value and redemption price per share....................................... $ 10.40 $ 9.58 $ 11.52 $ 3.30 $ 4.07 $ 13.51 Maximum sales charge (4.75% of offering price)...................................... 0.52 0.48 0.57 0.16 0.20 0.67 ------------ ------------ ------------ ----------- ----------- ----------- Maximum offering price to public............. $ 10.92 $ 10.06 $ 12.09 $ 3.46 $ 4.27 $ 14.18 ============ ============ ============ =========== =========== =========== Class B (unlimited shares authorized): Net assets................................... $ 6,867,510 $ 47,275,924 $166,347,091 $33,235,963 $72,273,661 $18,451,222 Shares of beneficial interest issued and outstanding................................. 662,511 4,932,168 14,405,519 10,086,165 17,733,099 1,365,335 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)........... $ 10.37 $ 9.59 $ 11.55 $ 3.30 $ 4.08 $ 13.51 ============ ============ ============ =========== =========== =========== Class II (unlimited shares authorized): Net assets................................... $ 5,220,636 $ 19,148,789 $118,178,510 $17,343,376 $46,070,144 $ 5,903,694 Shares of beneficial interest issued and outstanding................................. 502,924 1,999,986 10,224,489 5,240,503 11,266,040 436,803 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................... $ 10.38 $ 9.57 $ 11.56 $ 3.31 $ 4.09 $ 13.52 Maximum sales charge (1.00% of offering price)...................................... 0.10 0.10 0.12 0.03 0.04 0.14 ------------ ------------ ------------ ----------- ----------- ----------- Maximum offering price to public............. $ 10.48 $ 9.67 $ 11.68 $ 3.34 $ 4.13 $ 13.66 ============ ============ ============ =========== =========== =========== Class I (unlimited shares authorized): Net assets................................... $ 23,541,216 $ -- $ 30,226 $ 3,489,548 $ 15,915 $ -- Shares of beneficial interest issued and outstanding................................. 2,261,696 -- 2,625 1,057,882 3,914 -- Net asset value, offering and redemption price per share............................. $ 10.41 $ -- $ 11.51 $ 3.30 $ 4.07 $ -- ============ ============ ============ =========== =========== =========== Class Z (unlimited shares authorized): Net assets................................... $243,318,370 $ -- $ -- $ -- $71,615,435 $ -- Shares of beneficial interest issued and outstanding................................. 23,383,059 -- -- -- 17,579,943 -- Net asset value, offering and redemption price per share............................. $ 10.41 $ -- $ -- $ -- $ 4.07 $ -- ============ ============ ============ =========== =========== =========== Class X (unlimited shares authorized): Net assets................................... $ -- $ -- $ 5,834,208 $ -- $ -- $ -- Shares of beneficial interest issued and outstanding................................. -- -- 505,933 -- -- -- Net asset value, offering and redemption price per share............................. $ -- $ -- $ 11.53 $ -- $ -- $ -- ============ ============ ============ =========== =========== ===========
See Notes to Financial Statements 2 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the six months ended September 30, 2003 -- (unaudited)
Core U.S. Government GNMA Bond Fund Securities Fund Fund ---------- --------------- ----------- INVESTMENT INCOME: Income: Interest.......................................... $5,919,179 $ 5,491,442 $ 8,334,533 Dividends......................................... -- -- -- ---------- ----------- ----------- Total investment income......................... 5,919,179 5,491,442 8,334,533 ---------- ----------- ----------- Expenses: Investment advisory and management fees........... 951,212 914,609 1,406,792 Distribution and service maintenance fees -- Class A................................. 71,057 360,982 515,959 Distribution and service maintenance fees -- Class B................................. 36,948 282,099 915,308 Distribution and service maintenance fees -- Class II................................ 26,957 113,316 669,904 Service fees -- Class I........................... 27,803 -- 40 Transfer agent fees and expenses -- Class A....... 47,592 271,738 355,061 Transfer agent fees and expenses -- Class B....... 11,606 77,800 228,452 Transfer agent fees and expenses -- Class II...... 7,029 29,687 157,993 Transfer agent fees and expenses -- Class I....... 28,126 -- 123 Transfer agent fees and expenses -- Class Z....... 48,678 -- -- Transfer agent fees and expenses -- Class X....... -- -- 5,500 Custodian fees and expenses....................... 59,544 50,625 78,907 Printing expense.................................. 23,607 29,097 52,155 Audit and tax fees................................ 37,881 18,483 20,324 Trustees' fees and expenses....................... 17,699 14,836 27,277 Legal fees and expenses........................... 7,869 4,026 7,869 Registration fees -- Class A...................... 9,333 9,516 15,189 Registration fees -- Class B...................... 9,150 4,026 13,359 Registration fees -- Class II..................... 5,124 7,503 11,895 Registration fees -- Class I...................... 23,424 -- 10,065 Registration fees -- Class Z...................... -- -- -- Registration fees -- Class X...................... -- -- -- Interest expense.................................. -- -- -- Interest expense on securities sold short......... -- -- -- Miscellaneous expenses............................ 8,541 8,017 9,700 ---------- ----------- ----------- Total expenses before reimbursements and custody credits................................ 1,459,180 2,196,360 4,501,872 Expenses reimbursed by investment adviser....... (28,978) (525,797) (424,027) Custody credits earned on cash balances......... (801) (1,032) (34) ---------- ----------- ----------- Net expenses.................................... 1,429,401 1,669,531 4,077,811 ---------- ----------- ----------- Net investment income.............................. 4,489,778 3,821,911 4,256,722 ---------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments............ 3,846,460 520,331 (1,817,615) Net realized foreign exchange gain (loss) on other assets and liabilities...................... -- -- -- Net realized gain (loss) on securities sold short.. -- -- -- Net change in unrealized appreciation (depreciation) on investments..................... (708,962) (2,537,920) (450,373) Net change in unrealized foreign exchange gain (loss) on other assets and liabilities............ -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short........... -- -- -- ---------- ----------- ----------- Net realized and unrealized gain (loss) on investments....................................... 3,137,498 (2,017,589) (2,267,988) ---------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................... $7,627,276 $ 1,804,322 $ 1,988,734 ========== =========== ===========
- -------- See Notes to Financial Statements 3 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the six months ended September 30, 2003 -- (unaudited) (continued)
Strategic High Yield Tax Exempt Bond Fund Bond Fund Insured Fund ---------- ----------- ------------ INVESTMENT INCOME: Income: Interest.......................................... $3,552,562 $12,888,061 $2,026,445 Dividends......................................... 29,555 116,799 255 ---------- ----------- ---------- Total investment income......................... 3,582,117 13,004,860 2,026,700 ---------- ----------- ---------- Expenses: Investment advisory and management fees........... 290,322 934,238 247,952 Distribution and service maintenance fees -- Class A................................. 67,781 137,889 129,876 Distribution and service maintenance fees -- Class B................................. 156,009 333,012 94,341 Distribution and service maintenance fees -- Class II................................ 80,284 192,776 30,481 Service fees -- Class I........................... 4,174 37 -- Transfer agent fees and expenses -- Class A....... 56,879 105,156 88,956 Transfer agent fees and expenses -- Class B....... 44,021 86,255 24,232 Transfer agent fees and expenses -- Class II...... 27,545 58,149 7,987 Transfer agent fees and expenses -- Class I....... 3,673 947 -- Transfer agent fees and expenses -- Class Z....... -- 6,405 -- Transfer agent fees and expenses -- Class X....... -- -- -- Custodian fees and expenses....................... 147,088 28,063 26,944 Printing expense.................................. 23,424 42,273 5,307 Audit and tax fees................................ 17,934 17,202 18,200 Trustees' fees and expenses....................... 2,683 11,975 6,379 Legal fees and expenses........................... 915 15,006 4,941 Registration fees -- Class A...................... 9,516 8,601 12,078 Registration fees -- Class B...................... 8,784 6,954 9,516 Registration fees -- Class II..................... -- 2,196 6,771 Registration fees -- Class I...................... 10,065 10,248 -- Registration fees -- Class Z...................... -- -- -- Registration fees -- Class X...................... -- -- -- Interest expenses................................. -- 6,051 -- Interest expense on securities sold short......... -- 63,455 -- Miscellaneous expenses............................ 7,731 4,059 3,051 ---------- ----------- ---------- Total expenses before reimbursements and custody credits................................ 958,828 2,070,947 717,012 Expenses reimbursed by investment adviser....... (28,136) (14,263) (4,997) Custody credits earned on cash balances......... (8,008) (2,443) (43) ---------- ----------- ---------- Net expenses.................................... 922,684 2,054,241 711,972 ---------- ----------- ---------- Net investment income.............................. 2,659,433 10,950,619 1,314,728 ---------- ----------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) on investments............ 2,511,818 5,165,612 835,289 Net realized foreign exchange gain (loss) on other assets and liabilities...................... 91,876 -- -- Net realized gain (loss) on securities sold short.. -- 181,735 -- Net change in unrealized appreciation (depreciation) on investments..................... 3,408,930 20,314,951 393,085 Net change in unrealized foreign exchange gain (loss) on other assets and liabilities............ (58,682) -- -- Net change in unrealized appreciation (depreciation) on securities sold short........... -- (70,000) -- ---------- ----------- ---------- Net realized and unrealized gain (loss) on investments....................................... 5,953,942 25,592,298 1,228,374 ---------- ----------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................... $8,613,375 $36,542,917 $2,543,102 ========== =========== ==========
See Notes to Financial Statements 4 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS
Core Bond Fund U.S. Government Securities Fund -------------------------- ------------------------------ For the For the six months six months ended For the year ended For the year September 30, ended September 30, ended 2003 March 31, 2003 March 31, (unaudited) 2003 (unaudited) 2003 ------------- ------------ ------------- ------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income................................ $ 4,489,778 $ 14,216,026 $ 3,821,911 $ 10,214,465 Net realized gain (loss) on investments.............. 3,846,460 5,090,925 520,331 13,675,462 Net realized foreign exchange gain (loss) on other assets and liabilities............................. -- -- -- -- Net realized gain (loss) on securities sold short.... -- -- -- Net increase from payment by affiliates (Note 4)..... -- -- -- -- Net change in unrealized appreciation (depreciation) on investments..................................... (708,962) 12,127,059 (2,537,920) 10,528,243 Net change in unrealized foreign exchange gain (loss) on other assets and liabilities............. -- -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short........................... -- -- -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations........................................... 7,627,276 31,434,010 1,804,322 34,418,170 ------------ ------------ ------------ ------------ Dividends and distributions to shareholders from: Net investment income (Class A)...................... (521,641) (320,620) (3,069,480) (8,637,623) Net investment income (Class B)...................... (74,011) (171,529) (658,198) (1,881,087) Net investment income (Class II)..................... (54,137) (145,853) (270,684) (652,207) Net investment income (Class I)...................... (304,922) (899,952) -- -- Net investment income (Class Z)...................... (4,246,487) (13,648,311) -- -- Net investment income (Class X)...................... -- -- -- -- Net realized gain on investments (Class A)........... -- -- -- -- Net realized gain on investments (Class B)........... -- -- -- -- Net realized gain on investments (Class II).......... -- -- -- -- Net realized gain on investments (Class I)........... -- -- -- -- Net realized gain on investments (Class Z)........... -- -- -- -- Net realized gain on investments (Class X)........... -- -- -- -- ------------ ------------ ------------ ------------ Total dividends and distributions to shareholders..... (5,201,198) (15,186,265) (3,998,362) (11,170,917) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 7).................. 18,801,588 (24,440,061) (29,934,288) 35,816,062 ------------ ------------ ------------ ------------ Total increase (decrease) in net assets............... 21,227,666 (8,192,316) (32,128,328) 59,063,315 NET ASSETS: Beginning of period................................... 322,899,373 331,091,689 297,765,262 238,701,947 ------------ ------------ ------------ ------------ End of period......................................... $344,127,039 $322,899,373 $265,636,934 $297,765,262 ============ ============ ============ ============ Accumulated undistributed net investment income (loss) $ (681,543) $ 29,877 $ (1,069,513) $ (893,062) ============ ============ ============ ============
See Notes to Financial Statements 5 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund Strategic Bond Fund -------------------------- ------------------------- For the For the six months six months ended For the year ended For the year September 30, ended September 30, ended 2003 March 31, 2003 March 31, (unaudited) 2003 (unaudited) 2003 ------------- ------------ ------------- ------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income....................... $ 4,256,722 $ 12,837,322 $ 2,659,433 $ 5,132,006 Net realized gain (loss) on investments..... (1,817,615) 16,538,167 2,511,818 (5,545,727) Net realized foreign exchange gain (loss) on other assets and liabilities........... -- -- 91,876 137,052 Net realized gain (loss) on securities sold short..................................... -- -- -- Net increase from payment by affiliates (Note 4).................................. -- -- -- 12,000 Net change in unrealized appreciation (depreciation) on investments............. (450,373) 12,469,714 3,408,930 6,796,966 Net change in unrealized foreign exchange gain (loss) on other assets and liabilities............................... -- -- (58,682) 2,526 Net change in unrealized appreciation (depreciation) on securities sold short... -- -- -- -- ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 1,988,734 41,845,203 8,613,375 6,534,823 ------------ ------------ ----------- ----------- Dividends and distributions to shareholders from: Net investment income (Class A)............. (2,972,072) (7,006,789) (1,275,569) (2,134,446) Net investment income (Class B)............. (1,272,280) (4,139,556) (925,805) (1,417,388) Net investment income (Class II)............ (931,342) (2,377,356) (492,449) (771,300) Net investment income (Class I)............. (338) (1,520) (115,505) (184,184) Net investment income (Class Z)............. -- -- -- -- Net investment income (Class X)............. (56,273) (72,532) -- -- Net realized gain on investments (Class A).. -- (2,283,804) -- -- Net realized gain on investments (Class B).. -- (1,663,779) -- -- Net realized gain on investments (Class II). -- (1,112,326) -- -- Net realized gain on investments (Class I).. -- (394) -- -- Net realized gain on investments (Class Z).. -- -- -- -- Net realized gain on investments (Class X).. -- (27,923) -- -- ------------ ------------ ----------- ----------- Total dividends and distributions to shareholders................................ (5,232,305) (18,685,979) (2,809,328) (4,507,318) ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from capital share transactions (Note 7).................................... 9,709,690 317,715,065 4,168,232 1,137,195 ------------ ------------ ----------- ----------- Total increase (decrease) in net assets...... 6,466,119 340,874,289 9,972,279 3,164,700 NET ASSETS: Beginning of period.......................... 585,739,956 244,865,667 82,583,002 79,418,302 ------------ ------------ ----------- ----------- End of period................................ $592,206,075 $585,739,956 $92,555,281 $82,583,002 ============ ============ =========== =========== Accumulated undistributed net investment income (loss)............................... $ (1,269,532) $ (293,949) $ (188,476) $ (38,581) ============ ============ =========== ===========
See Notes to Financial Statements 6 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
High Yield Bond Tax Exempt Insured Fund -------------------------- -------------------------- For the six For the six months ended For the year months ended For the year September 30, ended September 30, ended 2003 March 31, 2003 March 31, (unaudited) 2003 (unaudited) 2003 ------------- ------------ ------------- ------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income.................................. $ 10,950,619 $ 18,665,069 $ 1,314,728 $ 2,975,322 Net realized gain (loss) on investments................ 5,165,612 (25,417,328) 835,289 3,277,158 Net realized foreign exchange gain (loss) on other assets and liabilities............................... -- -- -- -- Net realized gain (loss) on securities sold short...... 181,735 (320,650) -- -- Net increase from payment by affiliates (Note 4)....... -- -- -- -- Net change in unrealized appreciation (depreciation) on investments....................................... 20,314,951 3,758,281 393,085 2,350,133 Net change in foreign exchange gain (loss) on other assets and liabilities............................... -- -- -- -- Net change in unrealized appreciation (depreciation) on securities sold short............................. (70,000) (10,500) -- -- ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations............................................. 36,542,917 (3,325,128) 2,543,102 8,602,613 ------------ ------------ ------------ ------------ Dividends and distributions to shareholders from: Net investment income (Class A)........................ (3,477,768) (4,718,507) (1,009,142) (2,517,853) Net investment income (Class B)........................ (2,729,581) (4,944,952) (187,189) (492,738) Net investment income (Class II)....................... (1,575,184) (1,795,180) (61,991) (136,989) Net investment income (Class I)........................ (1,308) (1,256) -- -- Net investment income (Class Z)........................ (3,178,404) (5,928,841) -- -- Net investment income (Class X)........................ -- -- -- -- Net realized gain on investments (Class A)............. -- -- -- (500,751) Net realized gain on investments (Class B)............. -- -- -- (130,729) Net realized gain on investments (Class II)............ -- -- -- (35,541) Net realized gain on investments (Class I)............. -- -- -- -- Net realized gain on investments (Class Z)............. -- -- -- -- Net realized gain on investments (Class X)............. ------------ ------------ ------------ ------------ Total dividends and distributions to shareholders....... (10,962,245) (17,388,736) (1,258,322) (3,814,601) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 7).................... 42,731,676 24,494,021 (8,032,923) 1,795,166 ------------ ------------ ------------ ------------ Total increase (decrease) in net assets................. 68,312,348 3,780,157 (6,748,143) 6,583,178 NET ASSETS: Beginning of period..................................... 213,383,086 209,602,929 103,838,985 97,255,807 ------------ ------------ ------------ ------------ End of period........................................... $281,695,434 $213,383,086 $ 97,090,842 $103,838,985 ============ ============ ============ ============ Accumulated undistributed net investment income (loss).. $ (151,386) $ (139,760) $ 130,558 $ 74,152 ============ ============ ============ ============
See Notes to Financial Statements 7 SunAmerica Income Funds FINANCIAL HIGHLIGHTS CORE BOND FUND
Net gain Net Asset (loss) on Value, investments Dividends beginning Net (both Total from from net Net Asset of investment realized and investment investment Return of Total Value, end Period Ended period income(1) unrealized) operations income capital Distributions of period - ---------------------------------- --------- ---------- ------------ ---------- ---------- --------- ------------- ---------- Class A - ------- 11/01/97-10/31/98.................. $10.52 $0.68 $ 0.10 $ 0.78 $(0.67) $ -- $(0.67) $10.63 11/01/98-10/31/99.................. 10.63 0.66 (0.77) (0.11) (0.67) -- (0.67) 9.85 11/01/99-10/31/00.................. 9.85 0.62 (0.21) 0.41 (0.60) (0.06) (0.66) 9.60 11/01/00-10/31/01.................. 9.60 0.55 0.65 1.20 (0.51) -- (0.51) 10.29 11/01/01-3/31/02#.................. 10.29 0.20 (0.48) (0.28) (0.19) -- (0.19) 9.82 4/01/02-3/31/03.................... 9.82 0.34 0.58 0.92 (0.42) -- (0.42) 10.32 4/01/03-9/30/03++.................. 10.32 0.10 0.12 0.22 (0.14) -- (0.14) 10.40 Class B - ------- 11/01/97-10/31/98.................. $10.52 $0.61 $ 0.10 $ 0.71 $(0.61) $ -- $(0.61) $10.62 11/01/98-10/31/99.................. 10.62 0.59 (0.75) (0.16) (0.61) -- (0.61) 9.85 11/01/99-10/31/00.................. 9.85 0.58 (0.24) 0.34 (0.55) (0.05) (0.60) 9.59 11/01/00-10/31/01.................. 9.59 0.48 0.64 1.12 (0.45) -- (0.45) 10.26 11/01/01-3/31/02#.................. 10.26 0.17 (0.49) (0.32) (0.16) -- (0.16) 9.78 4/01/02-3/31/03.................... 9.78 0.31 0.55 0.86 (0.36) -- (0.36) 10.28 4/01/03-9/30/03++.................. 10.28 0.08 0.11 0.19 (0.10) -- (0.10) 10.37 Class II* - --------- 11/01/97-10/31/98.................. $10.52 $0.61 $ 0.10 $ 0.71 $(0.61) $ -- $(0.61) $10.62 11/01/98-10/31/99.................. 10.62 0.59 (0.75) (0.16) (0.61) -- (0.61) 9.85 11/01/99-10/31/00.................. 9.85 0.57 (0.23) 0.34 (0.55) (0.05) (0.60) 9.59 11/01/00-10/31/01.................. 9.59 0.48 0.64 1.12 (0.45) -- (0.45) 10.26 11/01/01-3/31/02#.................. 10.26 0.18 (0.49) (0.31) (0.16) -- (0.16) 9.79 4/01/02-3/31/03.................... 9.79 0.31 0.56 0.87 (0.36) -- (0.36) 10.30 4/01/03-9/30/03++.................. 10.30 0.08 0.10 0.18 (0.10) -- (0.10) 10.38 Class I - ------- 7/10/00-10/31/00@.................. $ 9.65 $0.19 $(0.02) $ 0.17 $(0.18) $(0.02) $(0.20) $ 9.62 11/01/00-10/31/01.................. 9.62 0.57 0.65 1.22 (0.52) -- (0.52) 10.32 11/01/01-3/31/02#.................. 10.32 0.21 (0.52) (0.31) (0.19) -- (0.19) 9.82 2/01/02-3/31/03.................... 9.82 0.40 0.55 0.95 (0.44) -- (0.44) 10.33 4/01/03-9/30/03++.................. 10.33 0.11 0.11 0.22 (0.14) -- (0.14) 10.41 Class Z* - -------- 7/10/00-10/31/00@.................. $ 9.64 $0.19 $(0.03) $ 0.16 $(0.18) $(0.02) $(0.20) $ 9.60 11/01/00-10/31/01.................. 9.60 0.59 0.65 1.24 (0.55) -- (0.55) 10.29 11/01/01-3/31/02#.................. 10.29 0.21 (0.47) (0.26) (0.21) -- (0.21) 9.82 4/01/02-3/31/03.................... 9.82 0.47 0.53 1.00 (0.49) -- (0.49) 10.33 4/01/03-9/30/03++.................. 10.33 0.15 0.10 0.25 (0.17) -- (0.17) 10.41
Ratio of Net net Assets, Ratio of investment end of expenses to income to Total period average average Portfolio Period Ended Return(2) (000's) net assets net assets Turnover - ---------------------------------- --------- -------- ----------- ---------- --------- 11/01/97-10/31/98.................. 7.63% $ 6,730 1.25%(4) 6.45%(4) 48% 11/01/98-10/31/99.................. (1.08) 3,507 1.25(4) 4.77(4) 43 11/01/99-10/31/00.................. 4.35 3,858 1.29(4) 6.45(4) 94 11/01/00-10/31/01.................. 12.85 5,901 1.31(4) 5.51(4) 215 11/01/01-3/31/02#.................. (2.77) 5,312 1.33(3)(4) 5.03(3)(4) 94 4/01/02-3/31/03.................... 9.58 21,260 1.33(4) 3.72(4) 179 4/01/03-9/30/03++.................. 2.13 65,179 1.29(3) 2.16(3) 92 11/01/97-10/31/98.................. 6.93% $ 4,845 1.90%(4) 5.81%(4) 48% 11/01/98-10/31/99.................. (1.56) 4,295 1.90(4) 5.71(4) 43 11/01/99-10/31/00.................. 3.70 4,937 1.95(4) 5.95(4) 94 11/01/00-10/31/01.................. 11.93 6,444 1.97(4) 4.88(4) 215 11/01/01-3/31/02#.................. (3.14) 3,220 1.98(3)(4) 4.36(3)(4) 94 4/01/02-3/31/03.................... 8.90 7,198 1.98(4) 3.15(4) 179 4/01/03-9/30/03++.................. 1.89 6,868 1.97(3)(4) 1.57(3)(4) 92 11/01/97-10/31/98.................. 6.93% $ 5,532 1.90%(4) 5.81%(4) 48% 11/01/98-10/31/99.................. (1.56) 4,593 1.90(4) 5.70(4) 43 11/01/99-10/31/00.................. 3.70 2,778 1.95(4) 5.84(4) 94 11/01/00-10/31/01.................. 11.93 4,541 1.97(4) 4.79(4) 215 11/01/01-3/31/02#.................. (3.04) 3,772 1.98(3)(4) 4.39(3)(4) 94 4/01/02-3/31/03.................... 9.00 5,598 1.98(4) 3.13(4) 179 4/01/03-9/30/03++.................. 1.79 5,221 1.97(3)(4) 1.57(3)(4) 92 7/10/00-10/31/00@.................. 1.85% $ 19,971 1.16%(3) 6.18%(3) 94% 11/01/00-10/31/01.................. 13.01 22,782 1.22(4) 5.68(4) 215 11/01/01-3/31/02#.................. (3.01) 21,707 1.23(3)(4) 5.12(3)(4) 94 2/01/02-3/31/03.................... 9.80 20,617 1.24(4) 3.98(4) 179 4/01/03-9/30/03++.................. 2.17 23,541 1.23(3)(4) 2.31(3)(4) 92 7/10/00-10/31/00@.................. 1.81% $317,842 0.95%(3)(4) 6.39%(3)(4) 94% 11/01/00-10/31/01.................. 13.37 323,570 0.97(4) 5.97(4) 215 11/01/01-3/31/02#.................. (2.57) 297,081 0.74(3)(4) 5.62(3)(4) 94 4/01/02-3/31/03.................... 10.38 268,226 0.67 4.56 179 4/01/03-9/30/03++.................. 2.44 243,318 0.70(3) 2.85(3) 92
------------------------------- - -------- * In conjunction with the reorganization, Class C was redesignated as Class II and Class II was redesignated as Class Z. See Note 2 for further discussion. @ Inception date of class. # See Note 2 ++ Unaudited (1) Calculated based upon average shares outstanding. (2) Total return is not annualized and does not reflect sales load. (3) Annualized (4) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
10/31/98 10/31/99 10/31/00 10/31/01 3/31/02(3) 3/31/03 9/30/03(3)++ -------- -------- -------- -------- ---------- ------- ------------ Core Bond Fund Class A............ 0.29% 0.45% 0.49% 0.04% 0.19% 0.11% -- % Core Bond Fund Class B............ 0.30 0.49 0.50 0.03 0.32 0.23 0.24 Core Bond Fund Class II........... 0.30 0.48 0.54 0.04 0.32 0.18 0.13 Core Bond Fund Class I............ -- -- -- 0.03 0.13 0.05 0.15 Core Bond Fund Class Z............ -- -- 0.01(3) 0.03 0.02 -- --
See Notes to Financial Statements 8 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
U.S. GOVERNMENT SECURITIES FUND ------------------------------- Net gain Net Asset (loss) on Net Value, investments Dividends Assets, beginning Net (both Total from from net Net Asset end of of investment realized and investment investment Total Value, end Total period Period Ended period income(1) unrealized) operations income Distributions of period Return(2) (000's) - ----------------- --------- ---------- ------------ ---------- ---------- ------------- ---------- --------- -------- Class A - ------- 3/31/99........... $8.66 $0.49 $(0.07) $0.42 $(0.43) $(0.43) $8.65 4.91% $135,734 3/31/00........... 8.65 0.44 (0.37) 0.07 (0.41) (0.41) 8.31 0.89 150,975 3/31/01........... 8.31 0.45 0.60 1.05 (0.45) (0.45) 8.91 13.06 169,524 3/31/02........... 8.91 0.37(5) (0.08) 0.29 (0.40) (0.40) 8.80 3.25 187,615 3/31/03........... 8.80 0.37 0.86 1.23 (0.40) (0.40) 9.63 14.14 210,848 4/01/03-9/30/03++. 9.63 0.14 (0.05) 0.09 (0.14) (0.14) 9.58 0.97 199,212 Class B - ------- 3/31/99........... $8.66 $0.45 $(0.09) $0.36 $(0.37) $(0.37) $8.65 4.25% $113,521 3/31/00........... 8.65 0.40 (0.38) 0.02 (0.36) (0.36) 8.31 0.23 42,273 3/31/01........... 8.31 0.39 0.61 1.00 (0.40) (0.40) 8.91 12.29 32,085 3/31/02........... 8.91 0.31(5) (0.08) 0.23 (0.34) (0.34) 8.80 2.55 38,878 3/31/03........... 8.80 0.30 0.87 1.17 (0.33) (0.33) 9.64 13.51 62,595 4/01/03-9/30/03++. 9.64 0.11 (0.05) 0.06 (0.11) (0.11) 9.59 0.64 47,276 Class II - -------- 6/01/99-3/31/00@.. $8.49 $0.31 $(0.20) $0.11 $(0.28) $(0.28) $8.32 1.30% $ 907 3/31/01........... 8.32 0.37 0.61 0.98 (0.39) (0.39) 8.91 12.10 3,303 3/31/02........... 8.91 0.29(5) (0.09) 0.20 (0.32) (0.32) 8.79 2.40 12,209 3/31/03........... 8.79 0.30 0.87 1.17 (0.33) (0.33) 9.63 13.52 24,322 4/01/03-9/30/03++. 9.63 0.11 (0.06) 0.05 (0.11) (0.11) 9.57 0.53 19,149
Ratio of net Ratio of investment expenses to income to average average Portfolio Period Ended net assets net assets Turnover - ----------------- ----------- ---------- --------- 3/31/99........... 1.50% 5.72% 291% 3/31/00........... 1.51 5.33 717 3/31/01........... 1.49 5.27 1,561 3/31/02........... 1.42 4.12(5) 570 3/31/03........... 1.12(4) 3.88(4) 614 4/01/03-9/30/03++. 0.99(3)(4) 2.85(3)(4) 137 3/31/99........... 2.15% 5.10% 291% 3/31/00........... 2.18 4.69 717 3/31/01........... 2.17 4.59 1,561 3/31/02........... 2.09(4) 3.42(4)(5) 570 3/31/03........... 1.76(4) 3.20(4) 614 4/01/03-9/30/03++. 1.64(3)(4) 2.22(3)(4) 137 6/01/99-3/31/00@.. 2.20%(3)(4) 4.50%(3)(4) 717% 3/31/01........... 2.20(4) 4.48(4) 1,561 3/31/02........... 2.10(4) 3.33(4)(5) 570 3/31/03........... 1.75(4) 3.18(4) 614 4/01/03-9/30/03++. 1.64(3)(4) 2.21(3)(4) 137
- -------- @ Inception date of class. ++ Unaudited (1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load (3) Annualized (4) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
3/31/00 3/31/01 3/31/02 3/31/03 9/30/03(3)++ ------- ------- ------- ------- ------------ U.S. Government Securities Fund Class A...... -- % -- % -- % 0.21% 0.36% U.S. Government Securities Fund Class B...... -- -- 0.01 0.23 0.38 U.S. Government Securities Fund Class II..... 0.86(3) 1.18 0.16 0.27 0.41
(5)As disclosed in the Notes to the Financial Statements, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount and amortizing premium on debt securities. The per share effect of this change for the year ended March 31, 2002 on investment income and realized and unrealized gains and losses was less than $0.01 per share for all classes of shares. The effect of this change was to decrease the ratio of net investment income to average net assets by 0.11% for all classes of shares. Per share data and ratios for periods prior to March 31, 2002 have not been restated to reflect this change in accounting policy. See Notes to Financial Statements 9 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued) GNMA FUND ---------
Net gain Net Asset (loss) on Value, investments Dividends Distributions beginning Net (both Total from from net from net Net Asset of investment realized and investment investment realized Total Value, end Total Period Ended period income(1) unrealized) operations income gains distributions of period Return(2) - ----------------- --------- ---------- ------------ ---------- ---------- ------------- ------------- ---------- --------- Class A ------- 3/31/99.......... $11.03 $0.57 $ 0.11 $0.68 $(0.53) $(0.50) $(1.03) $10.68 6.21% 3/31/00.......... 10.68 0.53 (0.29) 0.24 (0.50) -- (0.50) 10.42 2.40 3/31/01.......... 10.42 0.61 0.72 1.33 (0.62) (0.01) (0.63) 11.12 13.10 3/31/02.......... 11.12 0.51(6) (0.03) 0.48 (0.51) (0.32) (0.83) 10.77 4.45 3/31/03.......... 10.77 0.37 0.93 1.30 (0.42) (0.11) (0.53) 11.54 12.29 4/01/03-9/30/03++ 11.54 0.09 0.01 0.10 (0.12) -- (0.12) 11.52 0.84 Class B ------- 3/31/99.......... $11.06 $0.50 $ 0.12 $0.62 $(0.46) $(0.50) $(0.96) $10.72 5.63% 3/31/00.......... 10.72 0.46 (0.30) 0.16 (0.44) -- (0.44) 10.44 1.55 3/31/01.......... 10.44 0.53 0.74 1.27 (0.55) (0.01) (0.56) 11.15 12.45 3/31/02.......... 11.15 0.44(6) (0.03) 0.41 (0.44) (0.32) (0.76) 10.80 3.78 3/31/03.......... 10.80 0.30 0.93 1.23 (0.35) (0.11) (0.46) 11.57 11.54 4/01/03-9/30/03++ 11.57 0.06 0.00 0.06 (0.08) -- (0.08) 11.55 0.52 Class II -------- 6/01/99-3/31/00@. $10.52 $0.37 $(0.09) $0.28 $(0.34) $ -- $(0.34) $10.46 2.72% 3/31/01.......... 10.46 0.49 0.77 1.26 (0.55) (0.01) (0.56) 11.16 12.33 3/31/02.......... 11.16 0.44(6) (0.03) 0.41 (0.44) (0.32) (0.76) 10.81 3.78 3/31/03.......... 10.81 0.29 0.94 1.23 (0.35) (0.11) (0.46) 11.58 11.53 4/01/03-9/30/03++ 11.58 0.06 0.00 0.06 (0.08) -- (0.08) 11.56 0.52 Class I ------- 11/16/01-3/31/02@ $11.27 $1.18(6) $(1.15) $0.03 $(0.19) $(0.32) $(0.51) $10.79 0.31% 3/31/03.......... 10.79 0.43 0.86 1.29 (0.43) (0.11) (0.54) 11.54 12.19 4/01/03-9/30/03++ 11.54 0.11 (0.02) 0.09 (0.12) -- (0.12) 11.51 0.81 Class X ------- 3/19/02-3/31/02@. $10.80 $0.02(6) $(0.01) $0.01 $(0.02) $ -- $(0.02) $10.79 0.08% 3/31/03.......... 10.79 0.36 0.95 1.31 (0.44) (0.11) (0.55) 11.55 12.36 4/01/03-9/30/03++ 11.55 0.11 -- 0.11 (0.13) -- (0.13) 11.53 0.97
Ratio of Net net Assets, Ratio of investment end of expenses to income to period average average Portfolio Period Ended (000's) net assets net assets Turnover - ----------------- -------- ----------- ---------- --------- 3/31/99.......... $ 35,809 1.41% 5.19% 456% 3/31/00.......... 44,155 1.37 5.06 910 3/31/01.......... 72,092 0.99(5) 5.78(5) 833 3/31/02.......... 118,440 0.99(4)(5) 4.61(4)(5)(6) 537 3/31/03.......... 255,096 0.99(5) 3.36(5) 421 4/01/03-9/30/03++ 301,816 0.99(3)(5) 1.69(3)(5) 112 3/31/99.......... $ 26,061 2.07% 4.53% 456% 3/31/00.......... 22,376 2.03 4.41 910 3/31/01.......... 38,190 1.64(5) 5.11(5) 833 3/31/02.......... 90,011 1.64(4)(5) 3.96(4)(5)(6) 537 3/31/03.......... 189,323 1.64(5) 2.71(5) 421 4/01/03-9/30/03++ 166,347 1.64(3)(5) 1.08(3)(5) 112 6/01/99-3/31/00@. $ 1,406 2.10%(3)(5) 4.34%(3)(5) 910% 3/31/01.......... 15,851 1.64(5) 4.99(5) 833 3/31/02.......... 36,258 1.64(4)(5) 3.96(4)(5)(6) 537 3/31/03.......... 137,173 1.64(5) 2.59(5) 421 4/01/03-9/30/03++ 118,179 1.64(3)(5) 1.08(3)(5) 112 11/16/01-3/31/02@ $ 51 0.89%(3)(4)(5) 4.81%(3)(4)(5)(6) 537% 3/31/03.......... 41 0.89(5) 3.64(5) 421 4/01/03-9/30/03++ 30 0.88(3)(5) 1.84(3)(5) 112 3/19/02-3/31/02@. $ 106 0.89%(3)(4)(5) 3.84%(3)(4)(5)(6) 537% 3/31/03.......... 4,107 0.78(5) 3.31(5) 421 4/01/03-9/30/03++ 5,834 0.74(3)(5) 1.92(3)(5) 112
- -------- @ Inception date of class. ++ Unaudited (1) Calculated based upon average shares outstanding. (2) Total return is not annualized and does not reflect sales load. (3) Annualized (4) The ratios reflect an expense cap of 0.99%, 1.64% and 1.64% for Class A, Class B and Class II, respectively, which are net of custody credits of 0.01% for Class A, Class B, and Class II or waivers/reimbursements if applicable. Custody credits for Class I and X are less than 0.01%. (5) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
3/31/00 3/31/01 3/31/02 3/31/03 9/30/03(3)++ ------- ------- ------- ------- ------------ GNMA Fund Class A... -- % 0.30% 0.19% 0.13% 0.13% GNMA Fund Class B... -- 0.33 0.19 0.14 0.14 GNMA Fund Class II.. 1.98(3) 0.62 0.21 0.13 0.13 GNMA Fund Class I... -- -- 2.00(3) 24.41 64.29 GNMA Fund Class X... -- -- 56.17(3) 0.37 --
(6) As disclosed in the Notes to the Financial Statements, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount and amortizing premium on debt securities. The per share effect of this change for the year ended March 31, 2002 on investment income and realized and unrealized gains and losses was less than $0.01 per share on all classes of shares. The effect of this change was to decrease the ratio of net investment income to average net assets by 0.03% for all classes of shares. Per share data and ratios for periods prior to March 31, 2002 have not been restated to reflect this change in accounting policy. See Notes to Financial Statements 10 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
STRATEGIC BOND FUND** --------------------- Net gain Net Asset (loss) on Dividends Value, investments Dividends from net Net Asset beginning Net (both Total from from net realized Value, of investment realized and investment investment gain on Return of Total end of Period Ended period+ income(1)+ unrealized)+ operations+ income+ investments+ capital+ Distributions period+ - ----------------- --------- ---------- ------------ ----------- ---------- ------------ --------- ------------- --------- Class A ------- 11/01/97-10/31/98 $3.82 $0.26 $(0.25) $ 0.01 $(0.26) $(0.05) $ -- $(0.31) $3.52 11/01/98-10/31/99 3.52 0.28 (0.20) 0.08 (0.29) (0.02) -- (0.31) 3.29 11/01/99-10/31/00 3.29 0.28 (0.14) 0.14 (0.26) -- (0.04) (0.30) 3.13 11/01/00-10/31/01 3.13 0.28 (0.09) 0.19 (0.28) -- -- (0.28) 3.04 11/01/01-3/31/02# 3.04 0.11(6) (0.03) 0.08 (0.12) -- -- (0.12) 3.00 4/01/02-3/31/03.. 3.00 0.20 0.06 0.26 (0.18) -- -- (0.18) 3.08 4/01/03-9/30/03++ 3.08 0.10 0.23 0.33 (0.11) -- -- (0.11) 3.30 Class B ------- 11/01/97-10/31/98 $3.83 $0.24 $(0.25) $(0.01) $(0.24) $(0.05) $ -- $(0.29) $3.53 11/01/98-10/31/99 3.53 0.26 (0.21) 0.05 (0.26) (0.02) -- (0.28) 3.30 11/01/99-10/31/00 3.30 0.26 (0.14) 0.12 (0.24) -- (0.04) (0.28) 3.14 11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 11/01/01-3/31/02# 3.05 0.10(6) (0.04) 0.06 (0.11) -- -- (0.11) 3.00 4/01/02-3/31/03.. 3.00 0.18 0.06 0.24 (0.16) -- -- (0.16) 3.08 4/01/03-9/30/03++ 3.08 0.09 0.23 0.32 (0.10) -- -- (0.10) 3.30 Class II* --------- 11/01/97-10/31/98 $3.84 $0.24 $(0.25) $(0.01) $(0.24) $(0.06) $ -- $(0.30) $3.53 11/01/98-10/31/99 3.53 0.26 (0.20) 0.06 (0.26) (0.02) -- (0.28) 3.31 11/01/99-10/31/00 3.31 0.26 (0.16) 0.10 (0.24) -- (0.03) (0.27) 3.14 11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 11/01/01-3/31/02# 3.05 0.10(6) (0.03) 0.07 (0.11) -- -- (0.11) 3.01 4/01/02-3/31/03.. 3.01 0.19 0.05 0.24 (0.16) -- -- (0.16) 3.09 4/01/03-9/30/03++ 3.09 0.09 0.23 0.32 (0.10) -- -- (0.10) 3.31 Class I ------- 7/10/00-10/31/00@ $3.21 $0.08 $(0.08) $(0.00) $(0.07) $ -- $(0.01) $(0.08) $3.13 11/01/00-10/31/01 3.13 0.29 (0.09) 0.20 (0.29) -- -- (0.29) 3.04 11/01/01-3/31/02# 3.04 0.11(6) (0.03) 0.08 (0.12) -- -- (0.12) 3.00 4/01/02-3/31/03.. 3.00 0.21 0.06 0.27 (0.19) -- -- (0.19) 3.08 4/01/03-9/30/03++ 3.08 0.11 0.22 0.33 (0.11) -- -- (0.11) 3.30
Ratio of Net Ratio of net Assets, expense investment end of to income to Total period average average Portfolio Period Ended Return(2) (000's) net assets net assets Turnover - ----------------- --------- ------- ---------- ---------- --------- 11/01/97-10/31/98 0.22% $15,296 1.50%(5) 7.02%(5) 162% 11/01/98-10/31/99 2.10 8,997 1.50(5) 8.21(5) 119 11/01/99-10/31/00 4.09 6,439 1.55(5) 8.70(5) 46 11/01/00-10/31/01 6.48 8,478 1.57(5) 9.07(5) 49 11/01/01-3/31/02# 2.46 35,365 1.52(3)(4)(5) 8.09(3)(4)(5)(6) 99 4/01/02-3/31/03.. 9.07(7) 37,136 1.62(8) 6.93(8) 65 4/01/03-9/30/03++ 10.71 38,486 1.77(3)(4)(9) 6.23(4)(9) 37 11/01/97-10/31/98 (0.43)% $29,210 2.15%(5) 6.39%(5) 162% 11/01/98-10/31/99 1.56 21,340 2.15(5) 7.58(5) 119 11/01/99-10/31/00 3.33 15,131 2.20(5) 8.00(5) 46 11/01/00-10/31/01 5.65 9,964 2.21(5) 8.41(5) 49 11/01/01-3/31/02# 2.05 26,892 2.19(3)(4)(5) 7.48(3)(4)(5)(6) 99 4/01/02-3/31/03.. 8.36(7) 27,879 2.28(8) 6.26(8) 65 4/01/03-9/30/03++ 10.35 33,236 2.41(3)(4)(9) 5.59(4)(9) 37 11/01/97-10/31/98 (0.43)% $33,537 2.15%(5) 6.37%(5) 162% 11/01/98-10/31/99 1.56 20,749 2.15(5) 7.57(5) 119 11/01/99-10/31/00 3.32 13,056 2.20(5) 8.04(5) 46 11/01/00-10/31/01 5.65 11,461 2.22(5) 8.41(5) 49 11/01/01-3/31/02# 2.25 14,289 2.22(3)(4)(5) 7.34(3)(4)(5)(6) 99 4/01/02-3/31/03.. 8.47(7) 14,423 2.17(8)(5) 6.37(8)(5) 65 4/01/03-9/30/03++ 10.44 17,343 2.21(3)(4)(5)(9) 5.78(4)(5)(9) 37 7/10/00-10/31/00@ (0.10)% $ 2,636 1.45%(4)(5) 7.87%(4)(5) 46% 11/01/00-10/31/01 6.63 2,811 1.46(5) 9.17(5) 49 11/01/01-3/31/02# 2.59 2,872 1.44(3)(4)(5) 8.13(3)(4)(5)(6) 99 4/01/02-3/31/03.. 9.29(7) 3,145 1.42(8)(5) 7.13(8)(5) 65 4/01/03-9/30/03++ 10.89 3,490 1.43(3)(4)(5)(9) 6.56(4)(5)(9) 37
- -------- * In conjunction with Fund merger, Class C was redesignated as Class II. See Note 2 for further discussion. ** The financial information for the fiscal periods prior to November 16, 2001 reflect the financial information of the North American Strategic Income Fund, which was reorganized in SunAmerica Strategic Bond Fund on that date. + Prior to the fund merger, the North American Strategic Income Fund issued a stock split. The per share information for all periods prior to the stock split have been restated. For amounts reflecting activity subsequent to November 16, 2001, no restatement was necessary. See Note 2 for further discussion. ++ Unaudited @ Inception date of the class. # See Note 2 (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load. (3)The ratios reflect an expense cap of 2.22%, and 1.44% for Class II and Class I, respectively, which is net of custody credits of 0.03% for these classes. Class A and Class B are gross of custody credits of 0.03% for the period ended March 31, 2003. (4) Annualized (5) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
10/31/98 10/31/99 10/31/00 10/31/01 03/31/02(4) 3/31/03 9/30/03(4)++ -------- -------- -------- -------- ----------- ------- ------------ Strategic Bond Fund Class A............. 0.06% 0.17% 0.32% 0.17% 0.01% -- % -- % Strategic Bond Fund Class B............. 0.06 0.17 0.32 0.18 0.01 -- -- Strategic Bond Fund Class II............ 0.06 0.17 0.32 0.17 0.08 0.11 0.20 Strategic Bond Fund Class I............. -- -- 0.26(4) 0.18 0.24 0.48 0.71
(6) As disclosed in the Notes to the Financial Statements, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount and amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002 on net investment income and realized and unrealized gains and losses was less than $0.01 per share for all classes. The effect of this change on the ratio of net investment income to average net asset was less than 0.01% for all classes. Per share data and ratios for the periods prior to March 31, 2002 have not been restated to reflect this change in accounting policy. (7)Total return for each class was increased by less than 0.01% from reimbursements for losses realized on the disposal of investments in violation of investment restrictions (See Note 4). (8)Gross of custody credits of 0.01% (9)The ratio reflects an expense cap of 2.22% for Class II, which is net of custody credits of 0.02%. Class A, Class B and Class I are gross of custody credits of 0.02% for the six months ended September 30, 2003. See Notes to Financial Statements 11 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
HIGH YIELD BOND FUND** ---------------------- Net gain Net Asset (loss) on Net Value, investments Dividends Assets, beginning Net (both Total from from net Net Asset end of Period of investment realized and investment investment Total Value, end Total period Ended period+ income(1)+ unrealized)+ operations+ income+ Distributions of period+ Return(2) (000's) - ----------------- --------- ---------- ------------ ----------- ---------- ------------- ---------- --------- ------- Class A ------- 11/01/98-10/31/99 $5.63 $0.46 $(0.32) $ 0.14 $(0.46) $(0.46) $5.31 2.28% $ 34 11/01/99-10/31/00 5.31 0.50 (0.49) 0.01 (0.50) (0.50) 4.82 0.04 286 11/01/00-10/31/01 4.82 0.44 (0.55) (0.11) (0.46) (0.46) 4.25 (2.23) 722 11/01/01-3/31/02# 4.25 0.18(6) (0.11) 0.07 (0.19) (0.19) 4.13 1.67 59,075 4/01/02-3/31/03.. 4.13 0.37 (0.49) (0.12) (0.35) (0.35) 3.66 (2.45) 66,521 4/01/03-9/30/03++ 3.66 0.17 0.41 0.58 (0.17) (0.17) 4.07 16.17 91,720 Class B ------- 11/01/98-10/31/99 $5.64 $0.42 $(0.32) $ 0.10 $(0.42) $(0.42) $5.32 1.53% $ 652 11/01/99-10/31/00 5.32 0.46 (0.50) (0.04) (0.46) (0.46) 4.82 (0.83) 1,594 11/01/00-10/31/01 4.82 0.41 (0.54) (0.13) (0.43) (0.43) 4.26 (2.84) 2,911 11/01/01-3/31/02# 4.26 0.16(6) (0.11) 0.05 (0.18) (0.18) 4.13 1.23 67,599 4/01/02-3/31/03.. 4.13 0.35 (0.49) (0.14) (0.33) (0.33) 3.66 (3.06) 57,596 4/01/03-9/30/03++ 3.66 0.16 0.42 0.58 (0.16) (0.16) 4.08 16.09 72,274 Class II* --------- 8/21/00-10/31/00@ $5.09 $0.11 $(0.28) $(0.17) $(0.09) $(0.09) $4.83 (3.29)% $ 545 11/01/00-10/31/01 4.83 0.40 (0.52) (0.12) (0.44) (0.44) 4.27 (2.84) 2,274 11/01/01-3/31/02# 4.27 0.17(6) (0.11) 0.06 (0.18) (0.18) 4.15 1.43 20,670 4/01/02-3/31/03.. 4.15 0.34 (0.48) (0.14) (0.33) (0.33) 3.68 (2.97) 27,814 4/01/03-9/30/03++ 3.68 0.15 0.42 0.57 (0.16) (0.16) 4.09 15.73 46,070 Class I ------- 11/01/98-10/31/99 $5.63 $0.47 $(0.32) $ 0.15 $(0.47) $(0.47) $5.31 2.44% $ 14 11/01/99-10/31/00 5.31 0.52 (0.50) 0.02 (0.51) (0.51) 4.82 0.04 14 11/01/00-10/31/01 4.82 0.44 (0.54) (0.10) (0.47) (0.47) 4.25 (2.30) 3,062 11/01/01-3/31/02# 4.25 0.21(6) (0.15) 0.06 (0.19) (0.19) 4.12 1.56 14 4/01/02-3/31/03.. 4.12 0.37 (0.48) (0.11) (0.35) (0.35) 3.66 (2.12) 14 4/01/03-9/30/03++ 3.66 0.34 0.24 0.58 (0.17) (0.17) 4.07 16.21 16 Class Z* -------- 11/01/98-10/31/99 $5.64 $0.49 $(0.32) $ 0.17 $(0.49) $(0.49) $5.32 2.74% $62,506 11/01/99-10/31/00 5.32 0.54 (0.51) 0.03 (0.52) (0.52) 4.83 0.30 62,702 11/01/00-10/31/01 4.83 0.47 (0.57) (0.10) (0.48) (0.48) 4.25 (2.07) 61,451 11/01/01-3/31/02# 4.25 0.19(6) (0.11) 0.08 (0.20) (0.20) 4.13 1.98 62,245 4/01/02-3/31/03.. 4.13 0.39 (0.49) (0.10) (0.37) (0.37) 3.66 (1.84) 61,439 4/01/03-9/30/03++ 3.66 0.18 0.42 0.60 (0.19) (0.19) 4.07 16.53 71,615
Ratio of net Ratio of investment expense to income to Period average average Portfolio Ended net assets net assets Turnover - ----------------- ---------- ---------- --------- 11/01/98-10/31/99 1.25%(5) 5.69%(5) 72% 11/01/99-10/31/00 1.38(5) 10.13(5) 57 11/01/00-10/31/01 1.57(5) 9.73(5) 83 11/01/01-3/31/02# 1.48(3)(4) 9.56(3)(4)(6) 61 4/01/02-3/31/03.. 1.56 10.26 117 4/01/03-9/30/03++ 1.52(4) 8.80(4) 72 11/01/98-10/31/99 2.00%(5) 7.30%(5) 72% 11/01/99-10/31/00 2.10(5) 9.41(5) 57 11/01/00-10/31/01 2.21(5) 9.17(5) 83 11/01/01-3/31/02# 2.12(3)(4) 8.91(3)(4)(6) 61 4/01/02-3/31/03.. 2.18 9.63 117 4/01/03-9/30/03++ 2.16(4) 8.17(4) 72 8/21/00-10/31/00@ 2.07%(4) 9.10%(4) 57% 11/01/00-10/31/01 2.21(5) 9.02(5) 83 11/01/01-3/31/02# 2.17(3)(4)(5) 8.86(3)(4)(5)(6) 61 4/01/02-3/31/03.. 2.15(5) 9.67(5) 117 4/01/03-9/30/03++ 2.18(4)(5) 8.16(4)(5) 72 11/01/98-10/31/99 1.13%(5) 5.57%(5) 72% 11/01/99-10/31/00 1.22(5) 10.14(5) 57 11/01/00-10/31/01 1.51(5) 9.80(5) 83 11/01/01-3/31/02# 1.49(3)(4)(5) 9.33(3)(4)(5)(6) 61 4/01/02-3/31/03.. 1.45(5) 10.37(5) 117 4/01/03-9/30/03++ 1.45(4)(5) 9.00(4)(5) 72 11/01/98-10/31/99 0.88%(5) 8.84%(5) 72% 11/01/99-10/31/00 0.96(5) 10.41(5) 57 11/01/00-10/31/01 1.15(5) 10.45(5) 83 11/01/01-3/31/02# 0.93(3)(4)(5) 10.04(3)(4)(5)(6) 61 4/01/02-3/31/03.. 0.92(5) 10.90(5) 117 4/01/03-9/30/03++ 0.90(4) 9.44(4) 72
- -------- * In conjunction with fund merger, Class C was redesignated as Class II and Class II was redesignated as Class Z. ** The financial information for the fiscal periods prior to November 16, 2001 reflect the financial information of the North American High Yield Bond Fund, which was reorganized in SunAmerica High Yield Bond Fund on that date. + Prior to the fund merger, the North American High Yield Bond Fund issued a stock split. The per share information for all periods prior to the stock split have been restated. For amounts subsequent to November 16, 2001, no restatement was necessary. See Note 2 for further discussion. ++ Unaudited @ Inception date of class. # See Note 2 (1) Calculated based upon average shares outstanding. (2) Total return is not annualized and does not reflect sales load. (3) Gross of custody credits of 0.01%. (4) Annualized. (5) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
10/31/99 10/31/00 10/31/01 3/31/02(4) 3/31/03 9/30/03(4)++ -------- -------- -------- ---------- ------- ------------ High Yield Bond Fund Class A.... 0.76% 0.43% 0.18% -- % -- % -- % High Yield Bond Fund Class B.... 0.37 0.42 0.18 -- -- -- High Yield Bond Fund Class II... -- -- 0.18 0.01 0.10 0.02 High Yield Bond Fund Class I.... 0.92 0.57 0.18 3.00 84.57 75.78 High Yield Bond Fund Class Z.... 0.47 0.60 0.18 0.03 0.03 --
(6) As disclosed in the Notes to the Financial Statements, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount and amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002 on net investment income and realized and unrealized gains and losses was less than $0.01 per share for all classes. The effect of this change on the ratio of net investment income to average net assets was less than 0.01%. Per share data and ratios for the years prior to March 31, 2002 have not been restated to reflect this change in accounting policy. See Notes to Financial Statements 12 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued) TAX EXEMPT INSURED FUND -----------------------
Net gain Net Asset (loss) on Value, investments Dividends Distributions beginning Net (both Total from from net from net Net Asset of investment realized and investment investment realized Total Value, end Period Ended period income(1) unrealized) operations income gains Distributions of period - ----------------------------- --------- ---------- ------------ ---------- ---------- ------------- ------------- ---------- Class A ------- 3/31/99....................... $13.03 $0.56 $ 0.02 $ 0.58 $(0.54) -- (0.54) $13.07 3/31/00....................... 13.07 0.55 (0.71) (0.16) (0.54) -- (0.54) 12.37 3/31/01....................... 12.37 0.56 0.66 1.22 (0.57) -- (0.57) 13.02 3/31/02....................... 13.02 0.52(6) (0.30) 0.22 (0.52) -- (0.52) 12.72 3/31/03....................... 12.72 0.41 0.73 1.14 (0.43) (0.09) (0.52) 13.34 4/01/03-9/30/03++............. 13.34 0.19 0.16 0.35 (0.18) -- (0.18) 13.51 Class B ------- 3/31/99....................... $13.04 $0.47 $ 0.02 $ 0.49 $(0.46) -- (0.46) $13.07 3/31/00....................... 13.07 0.47 (0.71) (0.24) (0.46) -- (0.46) 12.37 3/31/01....................... 12.37 0.47 0.66 1.13 (0.48) -- (0.48) 13.02 3/31/02....................... 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43) 12.72 3/31/03....................... 12.72 0.32 0.73 1.05 (0.34) (0.09) (0.43) 13.34 4/01/03-9/30/03++............. 13.34 0.14 0.16 0.30 (0.13) -- (0.13) 13.51 Class II -------- 6/01/99-3/31/00@.............. $12.83 $0.37 $(0.47) $(0.10) $(0.36) -- (0.36) $12.37 3/31/01....................... 12.37 0.47 0.66 1.13 (0.48) -- (0.48) 13.02 3/31/02....................... 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43) 12.72 3/31/03....................... 12.72 0.31 0.74 1.05 (0.34) (0.09) (0.43) 13.34 4/01/03-9/30/03++............. 13.34 0.14 0.18 0.32 (0.14) -- (0.14) 13.52
Ratio of Net net Assets, Ratio of investment end of expenses to income to Total period average average Portfolio Period Ended Return(2) (000's) net assets net assets Turnover - ----------------------------- --------- ------- ----------- ---------- --------- 3/31/99....................... 4.55% $80,716 1.24% 4.23% 34% 3/31/00....................... (1.20) 68,650 1.28 4.41 33 3/31/01....................... 10.08 72,394 1.26 4.41 24 3/31/02....................... 1.70 75,071 1.29(3) 3.99(3)(6) 140 3/31/03....................... 9.08 78,358 1.24 3.12 195 4/01/03-9/30/03++............. 2.66 72,736 1.25(4) 2.83(4) 74 3/31/99....................... 3.78% $21,651 1.91% 3.57% 34% 3/31/00....................... (1.83) 16,269 1.92 3.77 33 3/31/01....................... 9.31 16,302 1.97 3.71 24 3/31/02....................... 0.95 18,090 2.04(3) 3.22(3)(6) 140 3/31/03....................... 8.30 19,031 1.97 2.39 195 4/01/03-9/30/03++............. 2.28 18,451 1.98(4) 2.09(4) 74 6/01/99-3/31/00@.............. (0.76)% $ 577 1.95%(4)(5) 3.82%(4)(5) 33% 3/31/01....................... 9.32 721 1.95(5) 3.73(5) 24 3/31/02....................... 0.99 4,095 1.95(3)(5) 3.21(3)(5)(6) 140 3/31/03....................... 8.32 6,451 1.95 2.40 195 4/01/03-9/30/03++............. 2.38 5,904 1.95(4)(5) 2.13(4)(5) 74
- -------- @ Inception date of class. ++ Unaudited (1) Calculated based upon average shares outstanding (2) Total return is not annualized and does not reflect sales load (3) The ratios for Class II reflects an expense cap of 1.95% which is net of custody credits of 0.01%. Ratios for Class A and Class B are gross of custody credits of 0.01% (4) Annualized (5) Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
3/31/00(4) 3/31/01 3/31/02 3/31/03 9/30/03(4)++ ---------- ------- ------- ------- ------------ Tax Exempt Insured Fund Class II........ 5.20% 1.59% 0.56% -- % 0.16%
(6)As disclosed in the Notes to the Financial Statements, the Trust has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount and amortizing premium on debt securities. The effect of this change for the year ended March 31, 2002 on net investment income and net realized and unrealized gains and losses was less than $0.01 per share for all classes. The effect of this change on the ratio of net investment income to average net assets was less than 0.01%. Per share date and ratios for the years prior to March 31, 2002 have not been restated to reflect this change in accounting policy. See Notes to Financial Statements 13 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (in thousands) (Note 3) - ----------------------------------------------------------------------- BONDS & NOTES -- 25.7% Automotive -- 0.7% Ford Motor Co. Bonds 6.63% due 10/01/28..... $ 481 $ 405,444 General Motors Corp. Notes 7.20% due 1/15/11 581 612,221 General Motors Corp. Sr. Debentures 8.38% due 7/15/33............................... 505 528,027 Hertz Corp. Sr. Notes 4.70% due 10/02/06.... 842 845,898 ---------- 2,391,590 ---------- Banks -- 2.7% Bank One Corp. Notes 2.63% due 6/30/08...... 590 571,873 BankAmerica Corp. Sr. Global Notes 3.25% due 8/15/08............................... 416 414,744 BankAmerica Corp. Sub. Notes 7.13% due 3/01/09................................... 806 940,747 Fifth Third Bancorp. Notes 3.38% due 8/15/08 806 810,701 FleetBoston Financial Corp. Sub. Debentures 6.88% due 1/15/28.............. 412 458,134 J.P. Morgan Chase & Co. Notes 5.25% due 5/30/07................................... 842 911,297 Key Bank NA Sr. Notes 4.10% due 6/30/05..... 750 781,207 Midland Bank, PLC Sub. Notes 7.65% due 5/01/25................................... 512 625,039 National City Bank Notes 2.50% due 4/17/06.. 831 836,692 PNC Funding Corp. Guaranteed Sub. Notes 7.50% due 11/01/09.................. 1,010 1,208,897 Wachovia Corp. Sub. Notes 6.15% due 3/15/09. 842 947,338 Zions Bancorporation Sub. Notes 6.00% due 9/15/15................................... 590 632,143 ---------- 9,138,812 ----------
Principal Amount Value Security Description (in thousands) (Note 3) - ---------------------------------------------------------------------- Broadcasting & Media -- 1.6% AOL Time Warner, Inc. Guaranteed Sr. Notes 6.13% due 4/15/06................... $500 $ 542,091 Lenfest Communications, Inc. Sr. Notes 7.63% due 2/15/08................... 831 950,111 Liberty Media Corp. Sr. Notes 3.50% due 9/25/06................................... 842 839,260 Liberty Media Corp. Sr. Debentures 8.25% due 2/01/30............................... 482 558,004 News America, Inc. Guaranteed Sr. Debentures 7.30% due 4/30/28.............. 350 393,907 TCI Communications, Inc. Sr. Debentures 8.75% due 8/01/15.............. 643 831,389 Time Warner Entertainment Co. LP Sr. Debentures 8.38% due 3/15/23.............. 482 595,906 Time Warner, Inc. Guaranteed Sr. Notes 6.88% due 6/15/18................... 256 284,019 Time Warner, Inc. Debentures 9.15% due 2/01/23................................... 286 362,115 ---------- 5,356,802 ---------- Business Services -- 0.2% Waste Management, Inc. Sr. Notes 7.38% due 8/01/10................................... 610 713,068 ---------- Chemicals -- 0.1% ICI North America, Inc. Debentures 8.88% due 11/15/06.............................. 65 75,670 ICI Wilmington, Inc. Guaranteed Notes 7.05% due 9/15/07............................... 322 355,545 ---------- 431,215 ---------- Computer Software -- 0.2% Computer Sciences Corp. Notes 6.75% due 6/15/06................................... 500 558,127 ----------
14 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ---------------------------------------------------------------------- BONDS & NOTES (continued) Energy Sources -- 0.6% Amerada Hess Corp. Notes 5.90% due 8/15/06.. $ 410 $ 441,973 Amerada Hess Corp. Notes 7.13% due 3/15/33.. 505 531,063 Occidental Petroleum Corp. Sr. Notes 6.50% due 4/01/05............................... 825 881,521 Pennzoil Co. Debentures 10.25% due 11/01/05. 205 237,298 ---------- 2,091,855 ---------- Financial Services -- 10.9% Bear Stearns Commercial Mtg. Securities, Inc. Commercial Mtg. Certificates, Series 2001-Top4, Class A3 5.61% due 11/15/33.... 100 108,725 Bear Stearns Commercial Mtg. Securities, Inc. Commercial Mtg. Certificates, Series 1999-C1, Class A2 6.02% due 2/14/31....... 525 584,482 Bear Stearns Commercial Mtg. Securities, Inc. Commercial Mtg. Certificates, Series 2000-Top6, Class A2 6.46% due 10/15/36.... 165 187,454 Bear Stearns Cos., Inc. Sr. Notes 7.63% due 12/07/09.................................. 1,000 1,198,155 Berkshire Hathaway Finance Corp. Sr. Notes 4.63% due 10/15/13*................. 842 837,849 Capital One Bank Notes 4.88% due 5/15/08.... 401 415,366 Chase Commercial Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1999-2, Class A2 7.20% due 01/15/32..................... 2,250 2,627,484 Citigroup, Inc. Bonds 5.88% due 2/22/33..... 586 592,951 Citigroup, Inc. Global Sr. Notes 6.50% due 1/18/11................................... 842 962,125
Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------ Financial Services (continued) Credit Suisse First Boston USA, Inc. Notes 6.13% due 11/15/11.................. $ 831 $ 910,306 CS First Boston Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1999-C1, Class A2 7.29% due 9/15/41...................... 545 635,654 DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1999-CG3, Class A1B 7.34% due 10/10/32.................... 1,000 1,175,428 Duke Capital Corp. Sr. Notes, Series A 6.25% due 7/15/05....................... 410 430,118 Ford Motor Credit Co. Sr. Notes 5.80% due 1/12/09................................... 1,337 1,348,159 Ford Motor Credit Co. Global Notes 7.00% due 10/01/13.............................. 421 423,673 FPL Group Capital, Inc. Notes 3.25% due 4/11/06................................... 821 836,785 GE Capital Commercial Mtg. Corp. Series 2002-1A, Class A3 6.27% due 12/10/35...... 1,500 1,684,837 General Electric Capital Corp. Notes, Series A 3.67% due 12/04/06............... 831 834,336 General Motors Acceptance Corp. Notes 4.50% due 7/15/06............................... 718 733,283 General Motors Acceptance Corp. Notes 7.75% due 1/19/10............................... 831 914,520 Goldman Sachs Group, Inc. Sr. Notes 6.65% due 5/15/09............................... 830 954,907 Honda Auto Receivables Owner Trust Asset Backed Notes, Series 2002-4, Class A4 2.70% due 04/15/08..................... 3,500 3,552,139 Honda Auto Receivables Owner Trust Asset Backed Notes, Series 2003-3, Class A4 2.77% due 11/21/08..................... 1,000 1,012,493
15 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------- BONDS & NOTES (continued) Financial Services (continued) Household Finance Corp. Notes 3.38% due 2/21/06................................... $ 645 $ 662,406 Household Finance Corp. Global Sr. Notes 4.75% due 7/15/13................... 410 403,772 IOS Capital, LLC Sr. Notes 7.25% due 6/30/08 453 439,410 John Deere Capital Corp. Notes 3.90% due 1/15/08................................... 830 853,892 LB - UBS Commercial Mtg. Trust Commercial Mtg. Certificates, Series 2000-C5, Class A2 6.51% due 12/15/26........................ 285 324,015 Lehman Brothers Holdings, Inc. Sr. Notes 8.25% due 6/15/07................... 800 945,991 Merrill Lynch & Co., Inc. Notes, Series B 3.13% due 7/15/08................ 830 821,663 Morgan Stanley Dean Witter & Co. Notes 4.25% due 5/15/10................... 1,010 1,019,656 Morgan Stanley Dean Witter & Co. Bonds 6.75% due 4/15/11................... 500 571,259 Morgan Stanley Dean Witter Capital I Commercial Mtg. Certificates, Series 2002-Top1, Class A4 6.66% due 2/15/33...................... 200 229,888 Morgan Stanley Dean Witter Capital I Commercial Mtg. Certificates, Series 2000-LIF2, Class A2 7.20% due 10/15/33.... 125 146,417 National Rural Utilities Cooperative Finance Corp. Global Notes 5.75% due 8/28/09................................... 799 879,637 NiSource Finance Corp. Guaranteed Sr. Notes 7.63% due 11/15/05.................. 925 1,022,910
Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------ Financial Services (continued) Pemex Project Funding Master Trust Guaranteed Notes 8.63% due 2/01/22.. $ 481 $ 536,315 Phillips 66 Capital II Guaranteed Notes 8.00% due 1/15/37................... 746 859,232 Principal Life Global Funding Secured Notes 5.13% due 6/28/07*.................. 750 805,340 SLM Corp. Notes 5.63% due 8/01/33........... 482 460,509 Sprint Capital Corp. Guaranteed Notes 6.38% due 5/01/09............................... 403 438,132 Sprint Capital Corp. Guaranteed Notes 6.90% due 5/01/19............................... 458 469,552 Textron Financial Corp. Notes, Series E 2.75% due 6/01/06................ 831 831,757 TIAA Global Markets, Inc. Notes 4.13% due 11/15/07*................................. 500 520,706 Unilever Capital Corp. Guaranteed Bonds 5.90% due 11/15/32.................. 482 491,643 Washington Mutual Finance Corp. Sr. Notes 6.25% due 5/15/06................... 800 877,004 ------------ 37,572,335 ------------ Food, Beverage & Tobacco -- 1.1% Anheuser-Busch Cos., Inc. Sr. Debentures 5.95% due 1/15/33.............. 482 506,816 Coca Cola HBC Finance BV Notes 5.50% due 9/17/15*.................................. 421 442,472 Coors Brewing Co. Sr. Notes 6.38% due 5/15/12................................... 421 469,203 Pepsi Bottling Group, Inc. Guaranteed Sr. Notes, Series B 7.00% due 3/01/29......... 963 1,124,139 Tyson Foods, Inc. Sr. Sub. Notes 7.25% due 10/01/06.................................. 1,011 1,126,046 ------------ 3,668,676 ------------
16 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ---------------------------------------------------------------------- BONDS & NOTES (continued) Forest Products -- 0.7% International Paper Co. Notes 7.50% due 5/15/04................................... $ 750 $ 775,605 Packaging Corp. of America Notes 5.75% due 8/01/13*.................................. 674 684,537 Sealed Air Corp. Notes 6.95% due 5/15/09*... 615 687,446 Weyerhaeuser Co. Notes 5.50% due 3/15/05.... 401 421,145 ---------- 2,568,733 ---------- Insurance -- 0.7% Metlife, Inc. Sr. Notes 6.13% due 12/01/11.. 421 460,547 Pacific Life Corp. Sr. Notes 6.60% due 9/15/33*.................................. 1,010 1,073,335 Provident Cos., Inc. Sr. Notes 6.38% due 7/15/05................................... 483 507,150 Western & Southern Financial Group, Inc. Bonds 5.75% due 7/15/33*...... 481 462,173 ---------- 2,503,205 ---------- Leisure & Tourism -- 0.2% Continental Airlines, Inc. Pass-Thru Certificates, Series 1998-1, Class A 6.65% due 9/15/17....................... 61 57,877 Continental Airlines, Inc. Pass-Thru Certificates, Series 1997-4, Class A 6.90% due 1/02/18....................... 84 81,369 Continental Airlines, Inc. Pass-Thru Certificates, Series 1998-3, Class C1 7.08% due 11/01/04..................... 74 71,717 MGM Mirage, Inc. Refunding Series B 6.00% due 10/01/09.............................. 502 504,510
Principal Amount Value Security Description (in thousands) (Note 3) - ----------------------------------------------------------------------- Leisure & Tourism (continued) United Airlines, Inc. Pass-Thru Certificates, Series 2000-2, Class A1 7.03% due 10/01/10(1).................. $ 8 $ 6,448 ---------- 721,921 ---------- Machinery -- 0.2% Textron, Inc. Sr. Notes 4.50% due 8/01/10... 722 735,852 ---------- Medical Products -- 0.3% Johnson & Johnson Debentures 4.95% due 5/15/33................................... 963 892,571 ---------- Metals & Mining -- 0.3% CRH America, Inc. Notes 6.40% due 10/15/33.. 1,010 1,045,757 ---------- Real Estate Companies -- 0.3% EOP Operating LP Sr. Notes 7.00% due 7/15/11 1,050 1,195,769 ---------- Real Estate Investment Trusts -- 0.2% Duke Reality LP Sr. Notes 5.25% due 1/15/10. 830 870,190 ---------- Retail Stores -- 0.4% Safeway, Inc. Sr. Notes 6.15% due 3/01/06... 1,241 1,345,897 ---------- Telecommunications -- 1.0% Citizens Communications Co. Sr. Notes 8.50% due 5/15/06............................... 425 487,712 GTE California, Inc. Debentures 5.50% due 1/15/09................................... 590 643,332 GTE Corp. Debentures 6.94% due 4/15/28...... 842 904,752 Iridium, LLC Guaranteed Sr. Notes, Series C 11.25% due 7/15/05(1)................... 25 1,875 Verizon Maryland, Inc. Bonds 5.13% due 6/15/33................................... 479 424,970
17 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ---------------------------------------------------------------------- BONDS & NOTES (continued) Telecommunications (continued) Verizon New York, Inc. Sr. Debentures, Series B 7.38% due 4/01/32................ $ 412 $ 480,263 Verizon Pennsylvania, Inc. Notes 5.65% due 11/15/11.................................. 421 450,933 ---------- 3,393,837 ---------- Transportation -- 0.5% Burlington Northern Santa Fe Corp. Debentures 8.13% due 4/15/20........ 766 930,624 Norfolk Southern Corp. Sr. Bonds 7.80% due 5/15/27................................... 513 622,339 Southern Railway Co. Equipment Trust Bonds, Series 1988-1 8.75% due 10/15/03... 30 30,076 ---------- 1,583,039 ---------- Utilities -- 2.8% Appalachian Power Co. Sr. Notes, Series E 4.80% due 6/15/05....................... 1,000 1,043,631 Carolina Power & Light Co. 1st Mtg. Bond 6.13% due 9/15/33.................... 505 521,636 Centerpoint Energy, Inc. Sr. Notes 7.25% due 9/01/10*.............................. 465 486,834 Consolidated Edison Co. New York Debentures, Series 2003-C 5.10% due 6/15/33................................... 484 441,963 Consumers Energy Co. 1st Mtg. Bonds, Series E 4.00% due 5/15/10*...................... 416 400,980 Dominion Resources, Inc. Sr. Notes, Series F 5.25% due 8/01/33....................... 758 758,604 Dominion Resources, Inc. Sr. Notes, Series B 7.63% due 7/15/05..... 825 905,497 Duke Energy Corp. 1st Mtg. Notes 4.50% due 4/01/10................................... 315 322,287
Principal Amount Value Security Description (in thousands) (Note 3) - ---------------------------------------------------------------------- Utilities (continued) FirstEnegy Corp. Sr. Notes, Series A 5.50% due 11/15/06.............................. $ 378 $ 392,803 Florida Power Corp. 1st Mtg. Bonds 5.90% due 3/01/33............................... 766 775,794 Georgia Power Co. Sr. Notes, Series G 6.20% due 2/01/06............................... 1,000 1,095,279 Old Dominion Electric Cooperative 1st Mtg. Bonds, Series A 5.68% due 12/01/28........ 289 292,615 Progress Energy, Inc. Sr. Notes 7.75% due 3/01/31................................... 482 552,656 Reliant Energy Resources Corp. Notes, Series B 8.13% due 7/15/05................ 440 471,880 TECO Energy, Inc. Sr. Notes 7.50% due 6/15/10................................... 75 76,031 Westar Energy, Inc. 1st Mtg. Bonds 7.88% due 5/01/07............................... 416 464,360 Xcel Energy, Inc. Sr. Notes 7.00% due 12/01/10.................................. 548 620,072 ---------- 9,622,922 ---------- Total Bonds & Notes (cost $85,751,717)........................ 88,402,173 ---------- FOREIGN BONDS & NOTES -- 4.2% Banks -- 0.3% European Investment Bank Bonds 4.00% due 3/15/05................................... 1,000 1,035,807 ---------- Business Services -- 0.0% SCL Terminal Aereo Santiago SA Sr. Secured Notes 6.95% due 7/01/12*.................. 88 97,836 ---------- Energy Sources -- 0.1% Petro Canada Sr. Bonds 5.35% due 7/15/33.... 479 436,784 ----------
18 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ----------------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Financial Services -- 1.1% Deutsche Telekom International Finance BV Guaranteed Bonds 8.75% due 6/15/30..... $ 693 $ 879,073 Deutsche Telekom International Finance BV Guaranteed Notes 8.25% due 6/15/05..... 842 927,335 Diageo Capital, PLC Global Notes 3.38% due 3/20/08................................... 1,010 1,018,222 Rio Tinto Finance USA, Ltd. Notes 2.63% due 9/30/08................................... 832 805,526 ----------- 3,630,156 ----------- Forest Products -- 0.1% Norske Skogindustrier ASA Notes 7.13% due 10/15/33*................................. 202 201,445 ----------- Government Agency -- 1.1% Quebec Province Canada Notes 5.00% due 7/17/09................................... 1,000 1,070,251 Quebec Province Canada Debentures 7.50% due 7/15/23................................... 963 1,197,790 United Kingdom Notes 2.25% due 7/08/08*..... 749 730,339 United Mexican States Notes 4.63% due 10/08/08.................................. 443 451,860 United Mexican States Notes 8.00% due 9/24/22................................... 412 454,230 ----------- 3,904,470 ----------- Metals & Mining -- 0.6% Noranda, Inc. Notes 6.00% due 10/15/15...... 842 859,346 Noranda, Inc. Debentures 6.88% due 11/15/05. 590 635,590 Noranda, Inc. Debentures 7.00% due 7/15/05.. 444 471,607 ----------- 1,966,543 -----------
Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------- Telecommunications -- 0.8% France Telecom SA Sr. Notes 10.00% due 2/28/31................................... $ 842 $ 1,124,185 Telus Corp. Notes 8.00% due 6/01/11......... 250 291,852 Vodafone Group, PLC Bonds 6.25% due 11/30/32 400 412,699 Vodafone Group, PLC Notes 7.75% due 2/15/10. 800 965,398 ------------ 2,794,134 ------------ Utilities -- 0.1% Great Lakes Power, Inc. Sr. Notes 8.30% due 3/01/05................................... 416 443,618 ------------ Total Foreign Bonds & Notes (cost $14,140,291) 14,510,793 ------------ MUNICIPALS -- 0.9% Municipal Bonds -- 0.9% Illinois State Pension General Obligation, 5.10% due 6/01/33 (cost $3,365,000)......................... 3,365 3,131,738 ------------ U.S. GOVERNMENT OBLIGATIONS -- 18.3% U.S Treasury Bonds -- 5.4% 5.25% due 2/15/29........................... 1,300 1,347,937 5.38% due 2/15/31........................... 992 1,064,540 6.25% due 8/15/23........................... 5,770 6,745,263 6.88% due 8/15/25........................... 932 1,170,825 7.13% due 2/15/23........................... 5,773 7,393,048 9.38% due 2/15/06........................... 624 736,076 ------------ 18,457,689 ------------ U.S. Treasury Notes -- 12.9% 1.50% due 2/28/05........................... 5,931 5,958,336 2.00% due 8/31/05 - 5/15/06................. 1,003 1,011,493 2.38% due 8/15/06........................... 409 414,672 2.63% due 5/15/08........................... 54 53,859 3.00% due 1/31/04 - 2/15/08................. 3,559 3,598,603 3.13% due 9/15/08........................... 421 426,854 3.38% due 4/30/04........................... 2,513 2,547,260 3.50% due 11/15/06.......................... 9,418 9,840,708 3.63% due 5/15/13........................... 52 51,039 3.88% due 2/15/13........................... 262 261,877 4.25% due 8/15/13........................... 1,609 1,649,413 5.75% due 8/15/10........................... 465 532,371
19 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS (continued) U.S. Treasury Notes (continued) 6.00% due 8/15/09........................... $ 4,888 $ 5,647,742 6.88% due 5/15/06........................... 5,943 6,717,444 7.00% due 7/15/06........................... 5,040 5,741,664 ------------ 44,453,335 ------------ Total U.S. Government Obligations (cost $62,941,630) 62,911,024 ------------ U.S. GOVERNMENT AGENCIES -- 51.3% Federal Home Loan Bank -- 2.5% 1.88% due 6/15/06........................... 2,510 2,498,645 2.75% due 3/14/08........................... 2,510 2,485,322 4.50% due 9/16/13........................... 1,060 1,057,624 5.25% due 8/15/06........................... 2,510 2,718,430 ------------ 8,760,021 ------------ Federal Home Loan Mortgage Corporation -- 11.2% 2.00% due 1/21/05........................... 2,549 2,554,735 2.70% due 10/02/06.......................... 2,513 2,529,206 4.50% due October TBA....................... 3,300 3,328,875 5.00% due October TBA....................... 3,271 3,298,970 5.00% due 2/01/18........................... 3,205 3,316,947 5.50% due October TBA....................... 6,010 6,118,128 5.88% due 3/21/11........................... 1,188 1,306,647 6.00% due 2/01/32........................... 2,799 2,892,532 6.00% due October TBA....................... 1,000 1,033,125 6.25% due 7/15/32........................... 2,847 3,184,694 6.50% due 8/01/16........................... 35 37,073 7.00% due 3/01/12 - 11/01/16................ 193 204,520 7.00% due October TBA....................... 1,000 1,054,688 7.50% due 12/01/30.......................... 77 81,987 7.50% due October TBA....................... 5,000 5,343,750 8.00% due 10/01/29 - 1/01/31................ 997 1,073,251 2.38% due 10/02/06.......................... 1,257 1,263,682 ------------ 38,622,810 ------------ Federal National Mortgage Association -- 34.4% 1.75% due 6/16/06........................... 2,513 2,485,870 2.38% due 3/17/06 - 4/13/06................. 5,026 5,039,005 2.50% due 5/12/06........................... 2,513 2,531,795 3.25% due 8/15/08........................... 2,560 2,576,504 4.50% due October TBA....................... 1,000 1,008,125 4.63% due 10/15/13.......................... 1,376 1,390,830 5.00% due October TBA....................... 20,700 21,102,187 5.25% due 8/01/12........................... 2,514 2,630,308 5.50% due October TBA....................... 25,700 26,242,750 6.00% due 12/01/16 - 3/01/33................ 7,176 7,429,449 6.00% due October TBA....................... 15,500 16,032,342 6.18% due 7/01/08........................... 19 20,773 6.27% due 11/01/07.......................... 51 56,869 6.30% due 1/01/08........................... 19 20,698 6.31% due 2/01/08........................... 186 204,118
Principal Amount (in thousands)/ Value Security Description Shares (Note 3) - ------------------------------------------------------------------------- Federal National Mortgage Association (continued) 6.34% due 1/01/08........................... $ 18 $ 19,958 6.43% due 1/01/08........................... 19 20,778 6.50% due 3/01/17 - 7/01/32................. 10,381 10,836,563 6.50% due October TBA....................... 2,500 2,605,470 6.63% due 11/15/30.......................... 2,845 3,333,504 6.98 due 6/01/07............................ 16 17,475 7.00% due 9/01/10 - 9/01/31................. 8,307 8,798,809 7.04% due 3/01/07........................... 19 20,796 7.25% due 1/15/10........................... 2,513 3,020,020 7.50% due 10/01/10 - 10/01/15............... 718 767,758 ------------ 118,212,754 ------------ Government National Mortgage Association -- 1.2% 6.50% due 6/15/29 - 7/15/32................. 3,509 3,686,696 7.00% due 12/15/22 - 8/15/29................ 352 375,730 8.00% due 4/15/30........................... 86 92,867 ------------ 4,155,293 ------------ Federal Farm Credit Bank -- 2.0% 2.50% due 3/15/06........................... 2,557 2,595,820 4.38% due 4/15/05........................... 4,000 4,181,672 ------------ 6,777,492 ------------ Total U.S. Government Agencies (cost $174,184,572)....................... 176,528,370 ------------ COMMON STOCK -- 0.0% Forest Products -- 0.0% SF Holdings Group, Inc.+*................... 7 32 ------------ Health Services -- 0.0% Mediq, Inc. (2)(4).......................... 18 0 ------------ Machinery -- 0.0% Manitowoc Co., Inc.......................... 28 607 ------------ Total Common Stock (cost $8,642)............................. 639 ------------ PREFERRED STOCK -- 0.0% Forest Products -- 0.0% SF Holdings Group, Inc. 13.75%(4)........... 2 1,980 ------------ Machinery -- 0.0% Fairfield Manufacturing Co., 11.25% Inc.(3)(4)................................ 28 280 ------------ Total Preferred Stock (cost $40,824)............................ 2,260 ------------ WARRANTS -- 0.0%+ Communication Equipment -- 0.0% Concentric Network Corp. Expires 12/15/07(2)(4)............................ 5 0 ------------
20 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Warrants/ Principal Amount Value Security Description (in thousands) (Note 3) - ------------------------------------------------------------------------ WARRANTS (continued) Telecommunications -- 0.0% KMC Telecom Holdings, Inc. Expires 1/31/08(2)(4)............................. 50 $ 0 ------------ Total Warrants (cost $0)................................. 0 ------------ Total Investment Securities -- 100.4% (cost $340,432,676)....................... 345,486,997 ------------ SHORT-TERM SECURITIES -- 17.4% Bristol Myers Squibb Co. 1.07% due 10/01/03@....................... $10,000 10,000,000 Dexia Delaware, LLC 1.06% due 10/23/03@....................... 15,000 14,990,283 Eksportfinans AS 1.02% due 10/14/03@....................... 10,000 9,996,317 UBS Finance, Inc. 1.10% due 10/01/03@....................... 15,000 15,000,000 Wal Mart Stores, Inc. 1.04% due 10/02/03@....................... 10,000 9,999,711 ------------ Total Short-term Securities (cost $59,986,311)........................ 59,986,311 ------------ REPURCHASE AGREEMENT -- 8.5% Agreement with State Street Bank & Trust Co., bearing interest at 1.00%, dated 09/30/03 to be repurchased 10/01/03 in the amount of $29,232,812 and collateralized by $29,395,000 of Federal Home Loan Banks Notes, bearing interest at 3.63% due 09/30/04 having an approximate value of $30,113,825@ (cost $29,232,000).............................. 29,232 29,232,000 ------------
Value Security Description (Note 3) - ------------------------------------------------------------------ TOTAL INVESTMENTS -- (cost $429,650,987#)...................... 126.3% $434,705,308 Liabilities in excess of other assets........ (26.3) (90,578,269) ------ ------------ NET ASSETS -- 100.00% $344,127,039 ====== ============
- -------- * Security 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 aggregate value is $7,431,321 representing 2.2% of net assets. + Non-income producing security # See Note 6 TBA --Securities purchased on a forward commitments basis with an appropriate principal amount and no definitive maturity date. The actual principal and maturity date will be determined upon settlement date. (1) Bond in default (2) Fair valued security (3) PIK ("Payment-in-kind") payment made with additional securities in lieu of cash. (4) Illiquid security @ The security or a portion thereof represents collateral for TBA See Notes to Financial Statements 21 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS -- 30.5% U.S Treasury Bonds -- 7.4% 5.38% due 2/15/31........................... $18,250 $ 19,584,531 ------------ U.S. Treasury Notes -- 23.1% 4.25% due 8/15/13........................... 60,000 61,507,020 ------------ Total U.S. Government Obligations (cost $80,473,783)........................ 81,091,551 ------------ U.S. GOVERNMENT AGENCIES -- 65.0% Federal Farm Credit Bank -- 10.4% 2.50% due 3/15/06........................... 5,000 5,075,910 3.13% due 10/01/03.......................... 500 500,000 3.88% due 12/15/04@......................... 20,000 20,601,580 5.64% due 4/04/11........................... 500 552,301 6.00% due 3/07/11........................... 200 225,733 6.30% due 12/03/13.......................... 500 578,712 ------------ 27,534,236 ------------ Federal Home Loan Mortgage Corporation -- 2.4% 6.00% due 11/01/13 - 10/01/16............... 2,545 2,653,664 6.50% due 9/01/16........................... 810 852,602 7.00% due 11/01/31.......................... 795 839,243 7.50% due 6/01/25........................... 114 122,691 8.00% due 6/01/08........................... 37 39,305 8.25% due 7/01/06........................... 18 18,703 8.50% due 5/01/08........................... 18 18,891 9.50% due 4/01/20........................... 292 326,481 10.00% due 8/01/21.......................... 1,368 1,526,790 ------------ 6,398,370 ------------ Federal National Mortgage Association -- 1.7% 6.53% due 5/25/30........................... 2,750 3,048,711 7.50% due 7/01/26........................... 361 387,010 8.00% due 12/01/22 - 1/01/23................ 608 662,782 8.75% due 10/01/03(1)....................... 300 329,344 11.00% due 2/01/15.......................... 20 43 11.50% due 9/01/19.......................... 37 41,925 ------------ 4,469,815 ------------ Government National Mortgage Association -- 44.3% 4.50% due October TBA....................... 20,000 20,300,000 5.00% due October TBA....................... 41,000 41,076,875 4.50% due 9/15/18 - 9/15/33................. 23,102 22,386,727 5.00% due 4/15/18 - 9/15/33................. 17,707 18,052,678 6.00% due 3/15/29 - 12/15/31................ 1,618 1,683,712 6.50% due 2/15/29 - 6/15/32................. 8,303 8,723,843 7.00% due 7/15/23 - 11/20/30................ 1,942 2,071,615 7.50% due 4/15/17 - 10/15/23................ 2,578 2,778,457 7.75% due 4/15/04........................... 1 1,358 8.00% due 11/15/06 - 2/15/08................ 7 7,699 9.00% due 12/15/16.......................... 144 158,235 11.00% due 8/20/15 - 9/20/15................ 2 2,141 11.50% due 3/15/13 - 5/20/15................ 131 149,722
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------------------- Government National Mortgage Association (continued) 12.50% due 9/15/14.......................... $ 9 $ 10,857 13.00% due 1/15/11 - 6/15/15................ 51 59,820 13.50% due 2/15/13.......................... 14 16,843 15.00% due 11/15/11 - 9/15/12............... 22 26,331 15.50% due 8/15/11 - 9/15/11................ 81 96,280 16.00% due 11/15/11......................... 8 9,398 ------------ 117,612,591 ------------ Small Business Administration -- 1.6% 6.30% due 6/01/18........................... 4,001 4,366,008 ------------ International Bank For Reconstruction & Development -- 0.2% 5.00% due 3/28/06........................... 350 376,497 Student Loan Marketing Association -- 0.2% 5.25% due 3/15/06........................... 500 540,442 Private Export Funding Corp. -- 4.2% 5.87% due 7/31/08........................... 10,000 11,250,640 ------------ Total U.S. Government Agencies (cost $167,520,464)....................... 172,548,599 ------------ Total Investment Securities -- 95.5% (cost $247,994,247)....................... 253,640,150 ------------ SHORT-TERM SECURITIES -- 5.7% United States Treasury Bills 1.00% due 1/29/04 (cost $14,950,000)................ 15,000 14,950,000 ------------ REPURCHASE AGREEMENTS -- 17.8% State Street Bank & Trust Co. Joint Repurchase Agreement Account@ (Note 3).... 352 352,000 UBS Warburg, LLC Joint Repurchase Agreement Account@ (Note 3)......................... 47,000 47,000,000 ------------ Total Repurchase Agreements (cost $47,352,000)........................ 47,352,000 ------------ TOTAL INVESTMENTS -- (cost $310,296,247#)...................... 119.0% 315,942,150 Liabilities in excess of other assets........ (19.0) (50,305,216) ------- ------------ NET ASSETS -- 100.00% $265,636,934 ======= ============
- -------- # See Note 6 TBA --Securities purchased on a forward commitment basis with an appropriate principal amount and no definitive maturity date. The actual principal and maturity date will be determined upon settlement date. @ The security or a portion thereof represents collateral for TBA. (1) Variable rate security--the rate reflected is as of September 30, 2003; maturity date reflects next reset date. See Notes to Financial Statements 22 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (in thousands) (Note 3) ---------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS -- 2.8% U.S. Treasury Notes -- 2.8% 4.25% due 8/15/13................. $ 16,000 $ 16,401,872 (cost $16,266,180) ------------ U.S. GOVERNMENT AGENCIES -- 91.2% Federal Farm Credit Bank -- 2.6% 2.50% due 3/15/06................. 15,000 15,227,730 ------------ Federal Home Loan Mortgage Corporation -- 0.1% 7.50% due 5/01/24 - 6/01/25....... 165 177,753 10.00% due 1/01/17................ 383 425,314 ------------ 603,067 ------------ Federal National Mortgage Association -- 0.1% 7.00% due 9/01/10................. 270 287,839 ------------ Government National Mortgage Association -- 88.2% 1.00% due 8/15/33................. 744 746,589 4.50% due 8/15/33 - 9/15/33....... 71,894 69,667,969 4.50% due October TBA............. 20,000 20,300,000 5.00% due 3/15/18 - 9/15/33@...... 112,974 114,187,535 5.00% due October TBA............. 266,000 266,498,750 6.00% due 11/15/23 - 2/15/33...... 28,674 29,841,172 6.50% due 3/15/28 - 6/15/32....... 15,268 16,042,286 7.00% due 3/15/23 - 10/20/30...... 2,231 2,374,019 8.00% due 11/15/26 - 8/15/30...... 1,468 1,591,196 8.50% due 3/15/17 - 9/15/24....... 879 966,329 9.00% due 7/15/16 - 10/15/16...... 259 286,928 ------------ 522,502,773 ------------ Small Business Administration -- 0.2% 6.30% due 6/01/18................. 1,334 1,455,336 ------------ Total U.S. Government Agencies (cost $531,675,917) 540,076,745 ------------ Total Investment Securities -- 94.0% (cost $547,942,097) 556,478,617 ------------
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------------- SHORT-TERM SECURITIES -- 22.8% United States Treasury Bills 0.77% due 10/09/03................. $ 15,000 $ 14,997,433 0.86% due 10/09/03................. 15,000 14,997,150 0.87% due 10/02/03................. 15,000 14,999,637 0.87% due 10/16/03................. 15,000 14,994,594 0.89% due 10/23/03................. 15,000 14,991,842 0.92% due 11/06/03................. 15,000 14,986,275 0.92% due 11/13/03................. 15,000 14,983,517 0.94% due 11/15/04................. 15,000 14,958,704 1.00% due 1/29/04.................. 15,000 14,950,000 ------------- Total Short-term Securities (cost $134,859,152) 134,859,152 ------------- REPURCHASE AGREEMENTS -- 29.4% State Street Bank & Trust Co. Joint Repurchase Agreement Account@ (Note 3)................. 53,392 53,392,000 UBS Warburg, LLC Joint Repurchase Agreement@ (Note 3).......................... 121,000 121,000,000 ------------- Total Repurchase Agreements (cost $174,392,000) 174,392,000 ------------- TOTAL INVESTMENTS -- (cost $857,193,249#) 146.2% 865,729,769 Liabilities in excess of other assets (46.2) (273,523,694) -------- ------------- NET ASSETS -- 100.00% $ 592,206,075 ======== =============
- -------- # See Note 6 TBA -- Securities purchased on a forward commitment basis with an appropriate principal amount and no definitive maturity date. The actual principal and maturity date will be determined upon settlement date. @ The security or a portion thereof represents collateral for TBA. See Notes to Financial Statements 23 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- BONDS & NOTES -- 44.6% Aerospace & Military Technology -- 0.0% Condor Systems, Inc. Guaranteed Sr. Sub. Notes, Series B 11.88% due 5/01/09(1)..... $ 25 $ 6,750 -------- Apparel & Textiles -- 0.1% Warnaco, Inc. Sr. Notes 8.88% due 6/15/13*.. 50 53,625 -------- Automotive -- 0.6% BREED Technologies, Inc. Guaranteed Sr. Sub. Notes 9.25% due 4/15/08(1)(2)(8)..... 500 0 Dana Corp. Notes 9.00% due 8/15/11.......... 180 197,100 Diamond Triumph Auto Glass, Inc. Guaranteed Sr. Sub. Notes 9.25% due 4/01/08.......... 100 89,000 Eagle-Picher, Inc. Sr. Notes 9.75% due 9/01/13*.................................. 125 131,250 Pep Boys Manny Moe & Jack Notes 6.92% due 7/07/06................................... 125 126,875 -------- 544,225 -------- Banks -- 0.3% J.P. Morgan Chase & Co. Notes 5.35% due 3/01/07................................... 250 270,722 -------- Broadcasting & Media -- 3.6% Adelphia Communications Corp. Sr. Notes, Series B 9.50% due 2/15/04(1)............. 47 32,429 American Lawyer Media, Inc. Sr. Sub. Notes Series B 9.75% due 12/15/07............... 75 70,125 Charter Communications Holdings, LLC Sr. Sub. Notes 9.63% due 11/15/09............. 925 714,562 Charter Communications Holdings, LLC Sr. Sub. Disc. Notes 9.92% due 4/01/11(3)..... 125 88,438 Charter Communications Holdings, LLC Sr. Notes 10.00% due 5/15/11.................. 75 57,188
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- Broadcasting & Media (continued) Charter Communications Holdings, LLC Sr. Sub. Notes 10.25% due 1/15/10............. $ 25 $ 19,500 Charter Communications Holdings, LLC Sr. Sub. Notes 10.75% due 10/01/09............ 450 367,875 Charter Communications Holdings, LLC Sr. Sub. Notes 11.13% due 1/15/11............. 425 347,437 Charter Communications Holdings, LLC Sr. Sub. Disc. Notes 11.75% due 1/15/10(3).... 225 158,625 CSC Holdings, Inc. Sr. Debentures 7.63% due 7/15/18................................... 275 264,000 CSC Holdings, Inc. Sr. Debentures 7.88% due 2/15/18................................... 50 48,750 CSC Holdings, Inc. Guaranteed Sr. Sub. Debentures 10.50% due 5/15/16............. 50 55,000 Emmis Communications Corp. Sr. Disc. Notes 12.50% due 3/15/11(3)............... 175 155,750 Granite Broadcasting Corp. Sr. Sub. Notes 8.88% due 5/15/08................... 150 144,187 Granite Broadcasting Corp. Sr. Sub. Notes 10.38% due 5/15/05.................. 100 98,500 Haights Cross Operating Co. Sr. Notes 11.75% due 8/15/11*................. 50 51,250 Paxson Communications Corp. Guaranteed Sr. Sub. Disc. Notes 12.25% due 1/15/09(3).... 25 19,813 Pegasus Satellite Communications, Inc. Sr. Sub. Disc. Notes 13.50% due 3/01/07(3).... 175 112,000 Rogers Cable, Inc. Bonds 8.75% due 5/01/32.. 50 55,000 Rogers Cablesystems, Ltd. Guaranteed Sr. Sub. Notes 11.00% due 12/01/15............ 200 226,500
24 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) -------------------------------------------- BONDS & NOTES (continued) Broadcasting & Media (continued) Salem Communications Holding Corp. Guaranteed Sr. Sub. Notes, Series B 9.00% due 7/01/11....................... $ 50 $ 53,812 Susquehanna Media Co. Sr. Sub. Notes 7.38% due 4/15/13............................... 75 77,625 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes, Series B 9.00% due 1/15/06.... 150 150,750 ---------- 3,369,116 ---------- Business Services -- 0.9% Allied Waste North America, Inc. Sr. Notes 7.88% due 4/15/13................... 275 288,062 Allied Waste North America, Inc. Guaranteed Sr. Notes 9.25% due 9/01/12............... 100 110,500 Mobile Mini, Inc. Sr. Notes 9.50% due 7/01/13*.................................. 100 107,000 Monitronics International, Inc. Sr. Sub. Notes 11.75% due 9/01/10*................. 175 175,438 National Equipment Services, Inc. Guaranteed Sr. Sub. Notes, Series D 10.00% due 11/30/04(1)........... 290 116,000 ---------- 797,000 ---------- Chemicals -- 1.2% Equistar Chemicals, LP Sr. Notes 10.63% due 5/01/11*.................................. 175 173,250 Freeport McMoRan Resources Sr. Notes 7.00% due 2/15/08............................... 125 86,250 Huntsman International, LLC Guaranteed Sr. Notes 9.88% due 3/01/09................... 225 236,250 Huntsman, LLC Sr. Secured Notes 11.63% due 10/15/10*................................. 100 97,500 IMC Global, Inc. Guaranteed Sr. Notes, Series B 11.25% due 6/01/11............... 125 130,000
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ Chemicals (continued) Methanex Corp. Sr. Notes 8.75% due 8/15/12.. $150 $ 161,250 Rockwood Specialties Group, Inc. Sr. Sub. Notes 10.63% due 5/15/11*................. 125 133,125 Westlake Chemical Corp. Sr. Notes 8.75% due 7/15/11*.................................. 125 129,687 ---------- 1,147,312 ---------- Communication Equipment -- 0.6% American Tower Escrow Corp. Disc. Notes Zero Coupon due 8/01/08(4).......... 300 199,500 Nortel Networks, Ltd. Sr. Notes 6.13% due 2/15/06................................... 175 175,875 Rural Cellular Corp. Sr. Sub. Notes 9.63% due 5/15/08............................... 150 136,500 Rural Cellular Corp. Sr. Sub. Notes 9.75% due 1/15/10............................... 100 91,000 ---------- 602,875 ---------- Computer Software -- 0.1% Pioneer-Standard Electronics, Inc. Sr. Notes 9.50% due 8/01/06................... 75 77,813 ---------- Computers & Business Equipment -- 0.4% Seagate Technology HDD Holdings Guaranteed Sr. Notes 8.00% due 5/15/09............... 75 82,688 Xerox Capital Trust I 8.00% due 2/01/27..... 75 63,375 Xerox Corp. Sr. Notes 7.13% due 6/15/10..... 50 49,625 Xerox Corp. Notes 7.20% due 4/01/16......... 100 93,500 Xerox Corp. Sr. Notes 7.63% due 6/15/13..... 125 123,281 ---------- 412,469 ----------
25 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- BONDS & NOTES (continued) Conglomerate -- 0.7% Jacuzzi Brands, Inc. Sr. Secured Notes 9.63% due 7/01/10*.................. $ 75 $ 77,812 Park-Ohio Industries, Inc. Sr. Sub. Notes 9.25% due 12/01/07.................. 75 70,875 Prestolite Electric, Inc. Guaranteed Sr. Notes 9.63% due 2/01/08................... 125 122,500 Tyco International Group SA Guaranteed Sr. Notes 6.75% due 2/15/11 250 263,750 Tyco International Group SA Guaranteed Notes 6.88% due 1/15/29................... 125 123,750 -------- 658,687 -------- Education -- 0.1% KinderCare Learning Centers, Inc. Sr. Sub. Notes, Series B 9.50% due 2/15/09......... 75 75,375 -------- Electronics -- 0.3% Amkor Technology, Inc. Sr. Notes 7.75% due 5/15/13*.................................. 150 150,750 ON Semiconductor Corp. Guaranteed Sr. Secured Notes 12.00% due 3/15/10.......... 75 87,938 -------- 238,688 -------- Energy Services -- 0.5% Grant Prideco, Inc. Sr. Notes 9.00% due 12/15/09.................................. 50 53,875 Hanover Equipment Trust Sr. Sec. Notes 8.50% due 9/01/08................... 125 128,750 Oslo Seismic Services, Inc. 1st Mtg. Notes 8.28% due 6/01/11................... 189 165,031 Universal Compression, Inc. Sr. Notes 7.25% due 5/15/10............................... 100 103,000 -------- 450,656 -------- Energy Sources -- 2.6% Chesapeake Energy Corp. Sr. Notes 7.50% due 9/15/13*.................................. 50 52,500
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- Energy Sources (continued) Chesapeake Energy Corp. Guaranteed Sr. Notes 7.75% due 1/15/15................... $ 25 $ 26,375 Chesapeake Energy Corp. Guaranteed Sr. Notes 9.00% due 8/15/12................... 25 28,125 CITGO Petroleum Corp. Sr. Notes 11.38% due 2/01/11*.................................. 250 282,500 Colorado Interstate Gas Co. Sr. Debentures 6.85% due 6/15/37.............. 150 149,250 Costilla Energy, Inc. Sr. Notes 10.25% due 10/01/06(2)(8)............................ 500 0 El Paso Production Holding Co. Sr. Notes 7.75% due 6/01/13*.................. 250 237,500 Encore Acquisition Co. Guaranteed Sr. Notes 8.38% due 6/15/12................... 100 105,000 Frontier Oil Corp. Sr. Notes 9.13% due 2/15/06................................... 50 51,500 Frontier Oil Corp. Sr. Sub. Notes 11.75% due 11/15/09.............................. 155 175,150 KCS Energy, Inc. Guaranteed Sr. Sub. Notes 8.88% due 1/15/06................... 150 147,750 Leviathan Gas Pipeline Partner LP/Leviathan Finance Corp. Guaranteed Sr. Sub. Notes, Series B 10.38% due 6/01/09........ 100 113,500 Mission Energy Holding Co. Sr. Sec. Notes 13.50% due 7/15/08.................. 100 66,000 Roseton Danskammer Pass-Thru Certificates, Series A 7.27% due 11/08/10. 450 420,750 Roseton Danskammer 2001 Series B Pass-Thru Certificates 7.67% due 11/08/16........... 150 127,500 Southern Natural Gas Co. Sr. Notes 8.88% due 3/15/10............................... 125 133,750
26 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ BONDS & NOTES (continued) Energy Sources (continued) Tesoro Petroleum Corp. Sr. Secured Notes 8.00% due 4/15/08................... $ 75 $ 76,875 Westport Resources Corp. Guaranteed Sr. Sub. Notes 8.25% due 11/01/11*............ 200 218,500 ---------- 2,412,525 ---------- Entertainment Products -- 0.2% Steinway Musical Instruments, Inc. Guaranteed Sr. Notes 8.75% due 4/15/11.... 175 179,375 ---------- Financial Services -- 12.6% AmeriCredit Corp. Guaranteed Sr. Notes 9.88% due 4/15/06................... 50 49,500 Athena Neurosciences Finance, LLC Guaranteed Sr. Notes 7.25% due 2/21/08.... 550 445,500 Bear Island Paper Co., LLC Sr. Secured Notes, Series B 10.00% due 12/01/07....... 245 203,350 Bluewater Finance, Ltd. Guaranteed Sr. Notes 10.25% due 2/15/12.................. 175 177,625 Boeing Capital Corp. Sr. Notes 5.75% due 2/15/07................................... 250 270,626 ChipPac International Co., Ltd. Guaranteed Sr. Sub. Notes, Series B 12.75% due 8/01/09................................... 25 27,875 Chukchansi Economic Development Authority Sr. Notes 14.50% due 6/15/09*... 300 368,250 Commercial Mtg. Asset Trust Commercial Mtg. Certificates, Series 1999-C1, Class C 7.35% due 1/17/32....................... 1,200 1,430,237 Credit Suisse First Boston USA, Inc. Global Sr. Notes 4.63% due 1/15/08............... 250 263,393 DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1998-CG1 IO, Class S 0.67% due 6/10/31(5).................... 8,450 237,980
Principal Amount Value Security Description (in thousands)** (Note 3) ----------------------------------------------------------------------- Financial Services (continued) DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1998-CF2 IO, Class S 1.04% due 11/12/31(5)................... $7,040 $259,423 Eircom Funding Sr. Sub. Notes 8.25% due 8/15/13*.................................. 150 161,250 ESI Tractebel Acquisition Corp. Guaranteed Secured Bonds, Series B 7.99% due 12/30/11 243 241,481 First Union Residential Securitization Trans, Inc. Mtg. Certificates, Series 1998-A, Class B2 7.00% due 8/25/28........ 183 185,090 Ford Motor Credit Co. Notes 6.50% due 1/25/07................................... 250 264,202 General Electric Capital Corp. Notes 5.00% due 6/15/07............................... 250 268,806 General Motors Acceptance Corp. Notes 6.85% due 6/17/04............................... 250 258,396 Hilcorp Energy I LP/Hilcorp Finance Co. Sr. Notes 10.50% due 9/01/10*................. 125 132,813 Household Finance Corp. Notes 5.75% due 1/30/07................................... 250 272,910 Huntsman Advanced Materials, LLC Sr. Secured Notes 11.00% due 7/15/10*......... 75 78,000 IOS Capital, LLC Sr. Notes 7.25% due 6/30/08 100 97,000 Jet Equipment Trust Sr. Notes, Series 1995, Class A 8.24% due 11/01/12*............... 136 59,304 LaBranche & Co., Inc. Sr. Sub. Notes 12.00% due 3/02/07............................... 75 84,750 Madison River Capital, LLC/ Madison River Finance Corp. Sr. Notes, Series B 13.25% due 3/01/10............................... 425 446,250
27 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- BONDS & NOTES (continued) Financial Services (continued) Mid-State Trust Asset Backed Notes, Series 6, Class A1 7.34% due 7/01/35............. $964 $1,044,331 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 11.38% due 4/01/13(3)..... 250 175,000 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 16.00% due 5/15/09(3)..... 123 110,854 PCA, LLC Guaranteed Sr. Notes 11.88% due 8/01/09................................... 125 136,250 PDVSA Finance, Ltd. Bonds 6.80% due 11/15/08 275 246,125 PDVSA Finance, Ltd. Notes 8.50% due 11/16/12 100 88,500 PNC Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1998-5, Class CB3 6.74% due 7/25/28(5).................. 359 366,517 PNC Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1998-4, Class 3B3 6.75% due 5/25/28..................... 285 291,179 PNC Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1999-1, Class CB2 6.77% due 3/25/29(5).................. 470 493,697 PNC Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1998-4, Class CB3 6.85% due 5/25/28(5).................. 393 410,126 PNC Mtg. Securities Corp. Commercial Mtg. Certificates, Series 1992-2, Class DB3 6.91% due 4/25/29(5).................. 414 418,668 Px Escrow Corp. Sr. Sub. Disc. Notes 9.63% due 2/01/06(3)............................ 125 92,656 Qwest Capital Funding, Inc. Guaranteed Notes 7.00% due 8/03/09................... 50 44,625 Qwest Capital Funding, Inc. Guaranteed Notes 7.25% due 2/15/11................... 175 155,750
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- Financial Services (continued) Qwest Capital Funding, Inc. Guaranteed Notes 7.63% due 8/03/21................... $475 $ 408,500 Qwest Capital Funding, Inc. Notes 7.75% due 2/15/31................................... 50 42,500 Qwest Capital Funding, Inc. Guaranteed Notes 7.90% due 8/15/10................... 350 318,500 Terra Capital, Inc. Guaranteed Sr. Secured Notes 11.50% due 6/01/10.................. 200 184,000 Terra Capital, Inc. Guaranteed Sr. Secured Notes 12.88% due 10/15/08................. 150 165,750 US West Capital Funding, Inc. Guaranteed Notes 6.88% due 7/15/28................... 75 59,250 Worldspan LP/ WS Financing Corp. Sr. Notes 9.63% due 6/15/11*.................. 100 104,750 ----------- 11,641,539 ----------- Food, Beverage & Tobacco -- 0.5% Cott Beverages, Inc. Guaranteed Sr. Sub. Notes 8.00% due 12/15/11.................. 75 80,719 Del Monte Corp. Sr. Sub. Notes 8.63% due 12/15/12*................................. 75 81,937 Doane Pet Care Co. Sr. Sub. Notes 9.75% due 5/15/07................................... 75 71,250 Doane Pet Care Co. Guaranteed Sr. Notes 10.75% due 3/01/10.................. 50 55,000 Fleming Cos., Inc. Guaranteed Sr. Sub. Notes, Series D 10.63% due 7/31/07(1)..... 150 15 Seminis, Inc. Sr. Sub. Notes 10.25% due 10/01/13* 25 26,688 Smithfield Foods, Inc. Sr. Notes 7.75% due 5/15/13*.................................. 125 134,062 Smithfield Foods, Inc. Sr. Notes, Series B 8.00% due 10/15/09...................... 50 54,500 ----------- 504,171 -----------
28 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- BONDS & NOTES (continued) Forest Products -- 1.6% Constar International, Inc. Sr. Sub. Notes 11.00% due 12/01/12................. $ 50 $ 42,000 Crown Cork & Seal Co., Inc. Notes 8.00% due 4/15/23................................... 80 65,200 Crown Cork & Seal Co., Inc. Notes 8.38% due 1/15/05................................... 575 586,500 Fibermark, Inc. Sr. Notes 9.38% due 10/15/06 100 67,000 Georgia Pacific Corp. Sr. Notes 7.38% due 7/15/08*.................................. 340 350,625 Georgia Pacific Corp. Debenture 7.75% due 11/15/29.................................. 250 226,562 Georgia Pacific Corp. 9.13% due 7/01/22..... 125 123,750 ---------- 1,461,637 ---------- Health Services -- 1.4% HCA, Inc. Sr. Notes 6.95% due 5/01/12....... 225 238,691 HEALTHSOUTH Corp. Notes 7.63% due 6/01/12(1) 125 107,500 HEALTHSOUTH Corp. Sr. Notes 8.38% due 10/01/11(1)............................... 275 236,500 HEALTHSOUTH Corp. Sr. Sub. Notes 10.75% due 10/01/08(1)............................... 100 87,500 IASIS Healthcare Corp. Guaranteed Sr. Sub. Notes 13.00% due 10/15/09................. 150 168,375 Psychiatric Solutions, Inc. Sr. Sub. Notes 10.63% due 6/15/13*................. 125 136,562 Tenet Healthcare Corp. Sr. Notes 6.50% due 6/01/12................................... 75 71,625 Tenet Healthcare Corp. Notes 7.38% due 2/01/13................................... 50 50,375 Universal Hospital Services, Inc. Sr. Notes 10.25% due 3/01/08.................. 200 208,000 ---------- 1,305,128 ----------
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- Insurance -- 0.4% Crum & Forster Holdings Corp. Sr. Notes 10.38% due 6/15/13*............. $250 $271,875 LNR Property Corp. Sr. Sub. Notes 7.63% due 7/15/13*.................................. 75 77,250 -------- 349,125 -------- Internet Content -- 0.1% Globix Corp. Guaranteed Sr. Sec. Notes 11.00% due 5/01/08(6)............... 87 66,490 -------- Leisure & Tourism -- 3.0% American Airlines, Inc. Pass-Thru Certificates, Series 2001-2, Class C 7.80% due 10/01/06................ 100 73,700 Atlas Air, Inc. Pass-Thru Series 1999-1 Class A-2 6.88% due 1/02/11............... 125 115,701 Atlas Air, Inc. Pass-Thru Certificates Series 1999-1 Class A-1 7.20% due 1/02/19. 133 124,569 Atlas Air, Inc. Pass-Thru Certificates, Series 1998, Class C 8.01% due 1/02/10(2)............................ 159 25,238 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class C 8.77% due 1/02/11(2).............. 12 1,955 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-1, Class C 6.95% due 8/02/09................. 170 130,407 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-2, Class C1 7.73% due 3/15/11...................... 47 33,042 Courtyard by Marriott II Sr. Secured Notes, Series B 10.75% due 2/01/08............... 150 149,062 Delta Air Lines, Inc. Pass-Thru Certificates, Series 2002-1, Class C 7.78% due 1/02/12................. 184 151,466 Hard Rock Hotel, Inc. Notes 8.88% due 6/01/13*.................................. 100 105,375
29 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ BONDS & NOTES (continued) Leisure & Tourism (continued) Hollywood Casino Shreveport/ Shreveport Capital Corp. 1st Mtg. Notes 13.00% due 8/01/06(1)................................ $400 $ 292,500 John Q Hammons Hotels LP 1st Sr. Mtg. Notes, Series B 8.88% due 5/15/12......... 75 81,188 Mandalay Resort Group Sr. Sub. Notes, Series B 10.25% due 8/01/07............... 170 195,500 MGM Mirage, Inc. Guaranteed Sr. Notes 8.50% due 9/15/10............................... 225 253,125 Northwest Airlines, Inc. Guaranteed Sr. Notes 7.63% due 3/15/05............... 110 96,525 Park Place Entertainment Corp. Sr. Sub. Notes 9.38% due 2/15/07................... 100 110,500 Prime Hospitality Corp. Sr. Sub. Notes, Series B 8.38% due 5/01/12................ 50 49,250 Riviera Holdings Corp. Guaranteed Sr. Notes 11.00% due 6/15/10.............. 185 183,381 United AirLines, Inc. 2000-1 Pass-Thru Certificates Class A-2 7.73% due 7/01/10(1)................................ 75 58,541 United AirLines, Inc. Series 2000-1 Pass-Thru Certificates Class A-1 7.78% due 1/01/14(1)............................ 63 49,210 Vail Resorts, Inc. Guaranteed Sr. Sub. Notes 8.75% due 5/15/09.............. 100 105,125 Waterford Gaming, LLC Sr. Notes 8.63% due 9/15/12*.................................. 198 206,910 Wynn Las Vegas, LLC 2nd Mtg. Notes 12.00% due 11/01/10.............................. 200 228,000 ---------- 2,820,270 ---------- Machinery -- 0.3% Briggs & Stratton Corp. Guaranteed Sr. Notes 8.88% due 3/15/11................... 75 84,000 Dresser, Inc. Guaranteed Sr. Sub. Notes 9.38% due 4/15/11................... 75 78,750
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- Machinery (continued) Terex Corp. Guaranteed Sr. Sub. Notes 9.25% due 7/15/11............................... $ 25 $ 27,375 Terex Corp. Guaranteed Sr. Sub. Notes, Series B 10.38% due 4/01/11........ 50 56,000 Venture Holdings Co., LLC Guaranteed Sr. Sub. Notes 11.00% due 6/01/07(1).......... 100 19,000 -------- 265,125 -------- Metals & Mining -- 0.4% CSN Islands VII Corp. Guaranteed Notes 10.75% due 9/12/08*................. 75 75,750 MMI Products, Inc. Sr. Sub. Notes, Series B 11.25% due 4/15/07...................... 100 58,000 Owens Brockway Glass Container Guaranteed Sr. Secured Notes 7.75% due 5/15/11....... 150 155,250 Owens Brockway Glass Container Sr. Secured Notes 8.75% due 11/15/12.................. 25 26,813 Renco Metals, Inc. Guaranteed Sr. Notes 11.50% due 7/01/49(1)(2)............ 500 0 Ryerson Tull, Inc. Notes 9.13% due 7/15/06.. 75 73,875 WCI Steel, Inc. Sr. Secured Notes, Series B 10.00% due 12/01/04(1).................. 100 30,000 -------- 419,688 -------- Real Estate Investment Trusts -- 0.5% National Health Investors, Inc. Notes 7.30% due 7/16/07............................... 200 198,000 RFS Partnership LP Guaranteed Sr. Notes 9.75% due 3/01/12................... 50 52,000 Senior Housing Properties Trust Sr. Notes 7.88% due 4/15/15................... 25 26,250 Senior Housing Properties Trust Sr. Notes 8.63% due 1/15/12................... 202 219,170 -------- 495,420 --------
30 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- BONDS & NOTES (continued) Restaurants -- 0.2% Tricon Global Restaurants, Inc. Sr. Notes 8.88% due 4/15/11................... $125 $145,625 -------- Retail Stores -- 1.6% Armstrong World Industries, Inc. Sr. Notes 6.35% due 8/15/49(1)................ 25 12,500 Armstrong World Industries, Inc. Sr. Notes 6.50% due 8/15/05(1)................ 150 78,750 Armstrong World Industries, Inc. Debentures 9.75% due 4/15/08(1)...... 75 39,375 Big 5 Corp. Sr. Notes, Series B 10.88% due 11/15/07.................................. 76 79,895 Collins & Aikman Floor Cover Guaranteed Sr. Sub. Notes 9.75% due 2/15/10.............. 75 79,125 J.C. Penney Co., Inc. Notes 6.88% due 10/15/15 250 246,250 Oakwood Homes Corp. Sr. Notes 8.13% due 3/01/09(1)................................ 175 62,125 Rent-A-Center, Inc. Guaranteed Sr. Sub. Notes, Series B 7.50% due 5/01/10......... 140 147,175 Rent-Way, Inc. Sr. Sec. Notes 11.88% due 6/15/10*.................................. 150 156,375 Rite Aid Corp. Sr. Debentures 7.70% due 2/15/27................................... 175 151,375 Rite Aid Corp. Guaranteed Sr. Notes 8.13% due 5/01/10*.............................. 50 53,250 Rite Aid Corp. Sr. 2nd Notes 9.50% due 2/15/11................................... 25 28,250 Saks, Inc. Guaranteed Notes 9.88% due 10/01/11.................................. 100 118,000 Salton, Inc. Sr. Sub. Notes 10.75% due 12/15/05.................................. 35 34,388
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ Retail Stores (continued) Salton, Inc. Sr. Sub. Notes 12.25% due 4/15/08................................... $ 65 $ 63,537 Service Corp. International Notes 7.70% due 4/15/09................................... 150 153,375 ---------- 1,503,745 ---------- Telecommunications -- 5.3% AirGate PCS, Inc. Sr. Sub. Disc. Notes 13.50% due 10/01/09(3).............. 650 497,250 Alamosa PCS Holdings, Inc. Guaranteed Sr. Disc. Notes 12.88% due 2/15/10(3)......... 800 632,000 Alaska Communications Holdings, Inc. Guaranteed Sr. Sub. Notes 9.38% due 5/15/09................... 250 235,000 FairPoint Communications Inc. Sr. Sub. Notes 12.50% due 5/01/10.................. 250 266,250 GCI, Inc. Sr. Notes 9.75% due 8/01/07....... 50 50,625 Horizon PCS, Inc. Guaranteed Sr. Notes 13.75% due 6/15/11(1)............... 425 106,250 iPCS, Inc. Sr. Disc. Notes 14.00% due 7/15/10(1)................................ 550 60,500 LCI International, Inc. Sr. Notes 7.25% due 6/15/07................................... 325 260,000 MJD Communications, Inc. Sr. Sub. Notes, Series B 9.50% due 5/01/08................ 300 291,000 Nextel Communications, Inc. Sr. Notes 7.38% due 8/01/15............................... 300 303,000 Nextel Communications, Inc. Sr. Notes 9.38% due 11/15/09.............................. 50 54,250 Nextel Communications, Inc. Sr. Notes 9.95% due 2/15/08............................... 400 420,500 PanAmSat Corp. Notes 6.38% due 1/15/08...... 125 129,062
31 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ BONDS & NOTES (continued) Telecommunications (continued) PanAmSat Corp. Guaranteed Sr. Notes 8.50% due 2/01/12............................... $ 50 $ 52,375 Pegasus Satellite Communications, Inc. Sr. Notes 11.25% due 1/15/10*................. 280 221,200 Qwest Corp. Notes 8.88% due 3/15/12*........ 375 416,250 Rogers Wireless Communications, Inc. Sr. Secured Notes 9.63% due 5/01/11........... 50 57,500 US Unwired, Inc. Guaranteed Sr. Sub. Disc. Notes, Series B 13.38% due 11/01/09(3)............................... 550 401,500 US West Communications, Inc. Debentures 6.88% due 9/15/33.............. 200 176,000 US West Communications, Inc. Secured Debentures 7.50% due 6/15/23.............. 25 23,375 Western Wireless Corp. Sr. Notes 9.25% due 7/15/13*.................................. 200 204,000 ---------- 4,857,887 ---------- Transportation -- 0.1% Petroleum Helicopters, Inc. Guaranteed Sr. Notes, Series B 9.38% due 5/01/09......... 50 54,500 ---------- Utilities -- 4.4% AES Corp. Sr. Secured Notes 8.75% due 5/15/13*.................................. 405 425,250 AES Drax Energy, Ltd. Guaranteed Sr. Sub. Secured Notes, Series B 11.50% due 8/30/10(1)................................ 725 5,438 Cincinnati Bell Telephone Company Medium Term Notes 7.18% due 12/15/23............. 50 45,625 Dynegy Holdings, Inc. Sr. Notes 8.75% due 2/15/12................................... 100 91,500
Principal Amount Value Security Description (in thousands)** (Note 3) ---------------------------------------------------------------------- Utilities (continued) Edison Mission Energy Sr. Notes 7.73% due 6/15/09................................... $100 $ 81,500 Edison Mission Energy Sr. Notes 9.88% due 4/15/11................................... 250 213,750 Edison Mission Energy Sr. Notes 10.00% due 8/15/08................................... 350 308,000 Mirant Americas Generation, LLC Sr. Notes 7.20% due 10/01/08(1)............... 225 178,312 Mirant Americas Generation, LLC Sr. Notes 7.63% due 5/01/06(1)................ 75 59,438 Mirant Americas Generation, LLC Sr. Notes 8.30% due 5/01/11(1)................ 400 316,000 Mirant Americas Generation, LLC Sr. Notes 8.50% due 10/01/21(1)............... 300 237,000 Mirant Mid Atlantic, LLC Pass-Thru Certificates, Series A 8.63% due 6/30/12(7)................................ 67 66,500 Mirant Mid Atlantic, LLC Secured Pass-Thru Certificates 9.13% due 6/30/17(7)......... 67 65,748 Pacific Gas & Electric Co. Sr. Notes 10.00% due 11/01/05*............................. 125 128,125 PG& E Corp. Sr. Secured Notes 6.88% due 7/15/08*.................................. 100 105,000 Reliant Resources, Inc. Sr. Secured Notes 9.25% due 7/15/10*.................. 200 181,000 Reliant Resources, Inc. Sr. Secured Notes 9.50% due 7/15/13*.................. 300 270,000 Tiverton/Rumford Power Assoc., Ltd. Guaranteed Notes 9.00% due 7/15/18*.................................. 125 105,000 Transcontinental Gas Pipe Line Corp. Sr. Notes 8.88% due 7/15/12................... 350 395,938 Williams Cos., Inc. Notes 7.13% due 9/01/11. 500 493,750
32 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- BONDS & NOTES (continued) Utilities (continued) Williams Cos., Inc. Sr. Notes 8.63% due 6/01/10.................................... $275 $ 292,187 ----------- 4,065,061 ----------- Total Bonds & Notes (cost $40,506,593)......................... 41,252,624 ----------- CONVERTIBLE BONDS -- 0.1% Utilities -- 0.1% Calpine Corp 4.00% due 12/26/06 (cost $42,553)............................. 50 45,813 ----------- FOREIGN BONDS & NOTES -- 30.0% Broadcasting & Media -- 0.5% CF Cable TV, Inc. Guaranteed Secured Sr. Notes 9.13% due 7/15/07.................... 50 52,250 Shaw Communications, Inc. Sr. Notes 7.25% due 4/06/11................................ 125 132,813 Shaw Communications, Inc. Sr. Notes 8.25% due 4/11/10................................ 225 248,062 ----------- 433,125 ----------- Forest Products -- 0.1% Kappa Beheer BV Guaranteed Sr. Sub. Notes 10.63% due 7/15/09................... 75 80,625 ----------- Government Agency -- 27.8% Australia Commonwealth Bonds 7.50% due 7/15/05.................................... AUD 620 439,737 Canadian Government Bonds 5.75% due 6/01/29.. CAD 420 336,809 Canadian Government Bonds 5.75% due 9/01/06.. CAD 615 486,763 Colombia Government International Bond Bonds 11.75% due 2/25/20.............. 300 351,750 Deutsche Bundesrepublik Bonds 4.00% due 7/04/09.................................... EUR 110 132,282 Deutsche Bundesrepublik Bonds 5.63% due 1/04/28.................................... EUR 120 156,000
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- Government Agency (continued) Federal Republic of Brazil Bonds 2.19% due 10/15/03.................................. $1,000 $ 803,000 Federal Republic of Brazil Bonds 8.00% due 4/15/14................................... 1,371 1,251,321 Federal Republic of Brazil Global Notes 10.25% due 6/17/13.................. 850 830,875 Federal Republic of Brazil Bonds 11.00% due 8/17/40................................... 1,190 1,124,550 Federal Republic of Brazil Notes 14.50% due 10/15/09.................................. 250 300,250 Federal Republic of Brazil Notes 11.00% due 1/11/12................................... 600 615,000 Federal Republic Of Germany Bonds 4.50% due 8/18/06................................... EUR 415 509,173 Kingdom of Sweden Bonds 5.00% due 1/28/09... SEK 3,000 406,740 Republic of Bulgaria Bonds, Series A 2.69% due 7/28/12............................... 343 331,714 Republic of Bulgaria Bonds 8.25% due 1/15/15 100 114,000 Republic of Chile Notes 6.88% due 4/28/09... 200 230,000 Republic of Colombia Notes 10.75% due 1/15/13................................... 400 448,000 Republic of Ecuador Bonds 7.00% due 8/15/04. 725 453,125 Republic of Greece Sr. Notes 4.65% due 4/19/07................................... EUR 300 370,583 Republic of Italy Bonds 5.25% due 12/15/05 - 11/01/29................... EUR 235 288,735 Republic of Panama Bonds 9.63% due 2/08/11.. $ 400 $ 457,000
33 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ----------------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Government Agency (continued) Republic of Peru Bonds 4.50% due 3/07/04.... 100 87,750 Republic of Peru Bonds 4.00% due 3/07/17(3). 188 173,195 Republic of Peru Guaranteed Global Bonds 9.13% due 2/21/12................... 305 339,312 Republic of Philippines Bonds 9.00% due 2/15/13................................... 700 752,500 Republic of Philippines Bonds 9.88% due 1/15/19................................... 250 271,562 Republic of South Africa Notes 7.38% due 4/25/12................................... 275 312,125 Republic of Turkey Notes 9.50% due 1/15/14.. 243 247,253 Republic of Turkey Notes 10.50% due 1/13/08. 67 73,868 Republic of Turkey Notes 11.00% due 1/14/13. 250 275,625 Republic of Turkey Bonds 11.75% due 6/15/10. 625 714,062 Republic of Venezuela Debentures 1.88% due 12/18/03.................................. 750 686,250 Republic of Venezuela Bonds 9.25% due 9/15/27................................... 150 115,950 Russian Federation Bonds 5.00% due 3/31/07.. 3,650 3,450,500 Russian Federation Bonds 8.25% due 3/31/10.. 1,250 1,412,500 Russian Government Debentures 3.00% due 5/14/08................................... 250 222,500 Spanish Government Bonds 5.15% due 7/30/09.. EUR 468 594,608
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------- Government Agency (continued) Spanish Government Bonds 6.15% due 1/31/13.. EUR 293 $ 399,064 United Kingdom Bonds 6.25% due 11/25/10..... GBP 70 129,200 United Mexican States Notes 6.63% due 3/03/15................................... $1,250 1,313,125 United Mexican States Notes 7.50% due 1/14/12................................... 1,700 1,922,700 United Mexican States Bonds 8.13% due 12/30/19.................................. 1,570 1,774,100 ----------- 25,705,156 ----------- Insurance -- 0.1% Fairfax Financial Holdings, Ltd. Notes 8.25% due 10/01/15............. 125 117,500 ----------- Metals & Mining -- 0.2% Crown European Holdings SA Sr. Secured Notes 10.88% due 3/01/13*................. 140 154,350 Russel Metals, Inc. Sr. Notes 10.00% due 6/01/09................................... 25 26,625 ----------- 180,975 ----------- Telecommunications -- 0.3% Telus Corp. Notes 8.00% due 6/01/11......... 250 291,852 ----------- Utilities -- 1.0% Calpine Canada Energy Finance, ULC Guaranteed Sr. Notes 8.50% due 5/01/08............................... 1,175 846,000 Companhia De Saneamento Basico do Estado de Sao Paulo Notes 12.00% due 6/20/08*....... 75 75,750 ----------- 921,750 ----------- Total Foreign Bonds & Notes (cost $24,196,156)........................ 27,730,983 -----------
34 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands)** (Note 3) ------------------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS -- 14.3% U.S. Treasury Bonds -- 4.8% 5.38% due 2/15/31........................... 3,000 3,219,375 6.13% due 11/15/27.......................... 500 579,121 6.25% due 5/15/30........................... 500 593,301 ---------- 4,391,797 ---------- U.S. Treasury Notes -- 9.5% 3.00% due 1/31/04........................... 100 100,656 3.50% due 11/15/06.......................... 1,000 1,044,883 4.75% due 2/15/04........................... 1,000 1,013,789 5.00% due 2/15/11 - 8/15/11................. 2,585 2,833,013 5.88% due 11/15/04.......................... 3,000 3,158,790 6.88% due 5/15/06........................... 557 629,584 ---------- 8,780,715 ---------- Total U.S. Government Obligations (cost $12,539,612)........................ 13,172,512 ---------- U.S. GOVERNMENT AGENCIES -- 4.1% Federal Home Loan Mortgage Corporation -- 0.3% 6.50% due 5/01/29........................... 38 39,432 7.00% due 6/01/29........................... 51 54,216 8.50% due 5/01/08........................... 78 83,333 10.00% due 5/15/20.......................... 65 64,717 11.57% due 6/15/21.......................... 41 1,188 ---------- 242,886 ---------- Federal National Mortgage Association -- 3.0% 0.50% due 10/17/36(5)....................... 4,508 72,988 0.50% due 3/17/20(5)........................ 2,468 30,977 0.90% due 6/25/38(5)........................ 5,040 216,018 1.58% due 2/25/35(5)........................ 3,121 126,052 5.50% due 1/01/29 - 6/01/29................. 360 368,721 6.00% due 2/01/32........................... 404 416,476 6.63% due 9/15/09........................... 1,000 1,164,647 7.50% due 1/01/30 - 9/01/30................. 101 107,551 8.00% due 11/01/28.......................... 100 108,644 8.80% due 1/25/19........................... 112 123,816 10.40% due 4/25/19.......................... 20 21,830 13.00% due 11/15/15......................... 18 20,925 ---------- 2,778,645 ---------- Government National Mortgage Association -- 0.2% 7.50% due 7/15/27 - 10/15/27................ 187 201,270 ----------
Principal Amount (in thousands)**/ Value Security Description Shares (Note 3) ------------------------------------------------------------------------- Federal Farm Credit Bank -- 0.6% 5.45% due 12/11/13.......................... $ 500 $ 544,098 ---------- Total U.S. Government Agencies (cost $3,739,892)......................... 3,766,899 ---------- COMMON STOCK -- 0.0% Financial Services -- 0.0% Ono Finance, PLC............................ 100 1 ---------- Internet Content -- 0.0% Globix Corp.+............................... 9,174 22,935 ---------- Telecommunications -- 0.0% Dobson Communications Corp.+................ 270 2,192 IMPSAT Fiber Networks, Inc.+................ 17,360 128,464 ---------- 130,656 ---------- Total Common Stock (cost $1,002,511)......................... 153,592 ---------- PREFERRED STOCK -- 1.2% Broadcasting & Media -- 0.6% CSC Holdings, Inc. 11.13%................... 4,750 498,157 Granite Broadcasting Corp. 12.75%........... 50 35,500 Paxson Communications Corp. 14.25%(6)....... 5 44,250 ---------- 577,907 ---------- Communication Equipment -- 0.4% Rural Cellular Corp. 11.38%(6).............. 325 264,875 Rural Cellular Corp. 12.25%(6).............. 198 126,720 ---------- 391,595 ---------- Financial Services -- 0.0% TCR Holdings, Class B(2)(6)(8).............. 570 6 TCR Holdings, Class C(2)(6)(8).............. 314 3 TCR Holdings, Class D(2)(6)(8).............. 827 8 TCR Holdings, Class E(2)(6)(8).............. 1,711 17 ---------- 34 ---------- Retail Stores -- 0.1% Rent-Way, Inc.(2)(9)........................ 3 25,000 ---------- Telecommunications -- 0.1% Dobson Communications Corp.*(2) 6.00%....... 450 90,731 ---------- Total Preferred Stock (cost $786,232)........................... 1,085,267 ----------
35 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Rights/ Warrants/ Principal Amount Value Security Description (in thousands) (Note 3) ----------------------------------------------------------------------- RIGHTS -- 0.0% Government Agency -- 0.0% United Mexican States, A(2)................. 1,400,000 $ 700 United Mexican States, C(2)................. 1,400,000 3,500 United Mexican States, D(2)................. 1,400,000 1,400 ----------- 5,600 ----------- Total Rights (cost $0)................................. 5,600 ----------- WARRANTS -- 0.0%+ Broadcasting & Media -- 0.0% Knology Holdings, Inc. Expires 10/22/07(2).. 1,500 375 UIH Australia Pacific, Inc.* Expires 5/15/06(2)........................ 1,000 0 ----------- 375 ----------- Forest Products -- 0.0% Berry Plastics Corp. Expires 4/15/04(2)(8).. 500 0 ----------- Telecommunications -- 0.0% GT Group Telecom, Inc.* Expires 2/1/10(2)... 150 2 Leap Wireless International, Inc. Expires 4/15/10................................... 500 5 Leap Wireless International, Inc. Expires 4/15/10................................... 350 350 Occidente Y Caribe Expires 3/15/04(2)....... 7,250 0 ----------- 357 ----------- Total Warrants (cost $10,030)............................ 732 ----------- Total Investment Securities -- 94.2% (cost $82,823,579)........................ 87,214,022 ----------- SHORT-TERM SECURITIES -- 1.7% Time Deposits -- 1.0% Euro Time Deposit with State Street Bank & Trust Co. 0.50% due 10/01/03 (cost $872,000)........................... 872 872,000 ----------- Registered Investment Companies --0.7% State Street Navigator Securities Lending Prime Portfolio........................... 625 625,000 ----------- Total Short-Term Investments (cost $1,497,000)......................... 1,497,000 ----------- REPURCHASE AGREEMENT -- 1.8% State Street Repurchase Agreement (Note 3) (cost $1,665,000)................ 1,665 1,665,000 -----------
Value Security Description (Note 3) --------------------------------------------------------------- TOTAL INVESTMENTS (cost $85,985,579#)....................... 97.7% 90,376,022 Other assets less liabilities................ 2.3 2,179,259 ----- ----------- NET ASSETS -- 100.0% $92,555,281 ===== ===========
- -------- * 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 aggregate value is $7,029,371 which represents 7.60% of net assets. ** In United States dollars unless otherwise indicated AUD -- Australian Dollar CAD -- Canadian Dollar EUR -- Euro GBP -- United Kingdom Pound SEK -- Swedish Krona IO Interest only securities + Non-income producing security # See Note 6 (1) Bond in default. (2) Fair valued security; see Note 3. (3) Security is a "step-up" bond where the coupon rate increases or steps up at a predetermined rate. Rate shown reflects the increased rate. (4) Represents a zero coupon bond which will convert to an interest-bearing security at a later date (5) Variable rate security -- the rate reflected is as of September 30, 2003; maturity date reflects next reset date. (6) PIK ("Payment-in-Kind") payment made with additional securities in lieu of cash. (7) Company has filed Ch. 11 Bankruptcy, but is continuing to make interest payments. (8) Illiquid security (9) To the extent permitted by the Statement of Additional Information, the Strategic Bond Fund may invest in restricted securities. This restricted security is valued pursuant to Note 3. Restricted securities held by a Fund may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933. The risk of investing in such securities is generally greater than the risk of investing in the securities of widely held, publicly traded companies. 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, these securities may exhibit greater price volatility than securities for which secondary markets exist. As of September 30, 2003, the Strategic Bond Fund held the following restricted securities:
Value as a % of Acquisition Acquisition Market Net Name Date Share/Par Cost Value Assets ---- ----------- --------- ----------- ------ ------ Rent-Way, Inc., Preferred Stock 05/29/2003 3 25,000 25,000 0.02%
36 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued) Allocation of investment by country as a percentage of net assets as of September 30, 2003 United States 69.2% Brazil....... 5.4 Russia....... 5.3 Mexico....... 3.5 Canada....... 3.0 Mexico....... 1.9 Spain........ 1.1 Colombia..... 0.9 Germany...... 0.9 Turkey....... 0.9 Venezuela.... 0.9 Peru......... 0.7 Australia.... 0.5 Panama....... 0.5 Ecuador...... 0.5 Greece....... 0.4 Sweden....... 0.4 Bulgaria..... 0.4 Italy........ 0.3 Philippines.. 0.3 ---- 97.0% ====
Open Forward Foreign Currency Contracts
Gross Contract In Delivery Unrealized to Deliver Exchange For Date Appreciation -------------------------------- *** USD 426,984 AUD 670,000 11/07/2003 $26,971 ------- Net Unrealized Appreciation........ $26,971 =======
Gross Contract In Delivery Unrealized to Deliver Exchange For Date Depreciation -------------------------------------- *** AUD 670,000 USD 429,604 11/07/2003 $(24,352) CAD 1,100,000 USD 778,128 11/07/2003 (34,957) SEK 3,210,000 USD 387,368 11/07/2003 (26,154) -------- Net Unrealized Depreciation............... $(85,463) ======== Net Unrealized Appreciation (Depreciation) $(58,492) ========
- -------- *** Represents open forward foreign currency contracts and offsetting or partially offsetting open forward foreign currency contracts that do not have additional market risk but have continued counterparty settlement risk. AUD -- Australian Dollar CAD -- Canadian Dollar SEK -- Swedish Krona USD -- United States Dollar See Notes to Financial Statements 37 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------ BONDS & NOTES -- 82.4% Aerospace & Military Technology -- 0.1% Condor Systems, Inc. Guaranteed Sr. Sub. Notes, Series B 11.88% due 5/01/09(1)........... $ 500 $ 135,000 DeCrane Aircraft Holdings Guaranteed Sr. Sub. Notes, Series B 12.00% due 9/30/08.............. 500 235,000 ---------- 370,000 ---------- Apparel & Textiles -- 0.1% Warnaco, Inc. Sr. Notes 8.88% due 6/15/13*.............. 350 375,375 ---------- Automotive -- 1.5% Dana Corp. Notes 9.00% due 8/15/11............... 1,200 1,314,000 Diamond Triumph Auto Glass, Inc. Guaranteed Sr. Sub. Notes 9.25% due 4/01/08............... 695 618,550 Eagle-Picher, Inc. Sr. Notes 9.75% due 9/01/13*.............. 850 892,500 Goodyear Tire & Rubber Co. Notes 7.86% due 8/15/11............... 775 651,000 Pep Boys Manny Moe & Jack Notes 6.92% due 7/07/06............... 850 862,750 ---------- 4,338,800 ---------- Broadcasting & Media -- 8.3% AMC Entertainment, Inc. Sr. Sub. Notes 9.88% due 2/01/12............... 1,025 1,117,250 American Lawyer Media, Inc. Sr. Sub. Notes Series B 9.75% due 12/15/07.............. 525 490,875 Charter Communications Holdings, LLC Sr. Sub. Notes 9.63% due 11/15/09.............. 4,850 3,746,625 Charter Communications Holdings, LLC Sr. Sub. Disc. Notes 9.92% due 4/01/11(2)............ 2,550 1,804,125
Principal Amount Value Security Description (in thousands) (Note 3) ----------------------------------------------------------- Broadcasting & Media (continued) Charter Communications Holdings, LLC Sr. Notes 10.00% due 5/15/11............. $ 450 $ 343,125 Charter Communications Holdings, LLC Sr. Sub. Notes 10.25% due 1/15/10............. 375 292,500 Charter Communications Holdings, LLC Sr. Sub. Notes 10.75% due 10/01/09............ 2,075 1,696,313 Charter Communications Holdings, LLC Sr. Sub. Notes 11.13% due 1/15/11............. 2,775 2,268,562 Charter Communications Holdings, LLC Sr. Sub. Disc. Notes 11.75% due 1/15/10(2).......... 300 211,500 Charter Communications Holdings, LLC Sr. Sub. Disc. Notes 12.13% due 1/15/12(2).......... 50 25,750 CSC Holdings, Inc. Sr. Debentures 7.63% due 7/15/18.............. 150 144,000 CSC Holdings, Inc. Sr. Debentures 7.88% due 2/15/18.............. 1,650 1,608,750 CSC Holdings, Inc. Guaranteed Sr. Sub. Debentures 10.50% due 5/15/16............. 2,250 2,475,000 Emmis Communications Corp. Sr. Disc. Notes 12.50% due 3/15/11(2).......... 1,050 934,500 Granite Broadcasting Corp. Sr. Sub. Notes 8.88% due 5/15/08.............. 865 831,481 Granite Broadcasting Corp. Sr. Sub. Notes 9.38% due 12/01/05............. 20 19,425 Granite Broadcasting Corp. Sr. Sub. Notes 10.38% due 5/15/05............. 750 738,750 Haights Cross Operating Co. Sr. Notes 11.75% due 8/15/11*............ 400 410,000
38 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued) - --------------------------------------- -----------------------------------------
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------- BONDS & NOTES (continued) Broadcasting & Media (continued) Paxson Communications Corp. Guaranteed Sr. Sub. Disc. Notes 12.25% due 1/15/09(2)............ $ 100 $ 79,250 Rogers Cable, Inc. Bonds 8.75% due 5/01/32................ 450 495,000 Rogers Cablesystems, Ltd. Guaranteed Sr. Sub. Notes 11.00% due 12/01/15.............. 1,250 1,415,625 Salem Communications Holding Corp. Guaranteed Sr. Sub. Notes, Series B 9.00% due 7/01/11................ 375 403,594 Susquehanna Media Co. Sr. Sub. Notes 7.38% due 4/15/13................ 525 543,375 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes, Series B 9.00% due 1/15/06................ 1,200 1,206,000 ----------- 23,301,375 ----------- Business Services -- 1.9% Allied Waste North America, Inc. Sr. Notes 7.88% due 4/15/13................ 2,625 2,749,688 Mobile Mini, Inc. Sr. Notes 9.50% due 7/01/13*............... 575 615,250 Monitronics International, Inc. Sr. Sub. Notes 11.75% due 9/01/10*.............. 1,200 1,203,000 National Equipment Services, Inc. Guaranteed Sr. Sub. Notes, Series D 10.00% due 11/30/04(1)........... 2,240 896,000 ----------- 5,463,938 ----------- Chemicals -- 2.3% Equistar Chemicals, LP Sr. Notes 10.63% due 5/01/11*.............. 1,225 1,212,750 Freeport McMoRan Resources Sr. Notes 7.00% due 2/15/08................ 725 500,250 Huntsman International, LLC Guaranteed Sr. Notes 9.88% due 3/01/09................ 1,405 1,475,250
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------- Chemicals (continued) Huntsman, LLC Sr. Secured Notes 11.63% due 10/15/10*.............. $ 725 $ 706,875 IMC Global, Inc. Guaranteed Sr. Notes, Series B 11.25% due 6/01/11(6)............. 450 468,000 Methanex Corp. Sr. Notes 8.75% due 8/15/12................. 450 483,750 Rockwood Specialties Group, Inc. Sr. Sub. Notes 10.63% due 5/15/11*............... 725 772,125 Royster Clark, Inc. 1st Mtg. Notes 10.25% due 4/01/09................ 300 239,250 Westlake Chemical Corp. Sr. Notes 8.75% due 7/15/11*................ 725 752,187 ---------- 6,610,437 ---------- Communication Equipment -- 1.4% American Tower Escrow Corp. Disc. Notes zero coupon due 8/01/08(3)........ 2,175 1,446,375 Nortel Networks, Ltd. Sr. Notes 6.13% due 2/15/06................. 1,000 1,005,000 Rural Cellular Corp. Sr. Sub. Notes 9.63% due 5/15/08................. 925 841,750 Rural Cellular Corp. Sr. Sub. Notes 9.75% due 1/15/10................. 700 637,000 ---------- 3,930,125 ---------- Computer Software -- 0.2% DigitalNet, Inc. Sr. Notes 9.00% due 7/15/10*................ 75 79,500 Pioneer-Standard Electronics, Inc. Sr. Notes 9.50% due 8/01/06................. 425 440,938 ---------- 520,438 ---------- Computers & Business Equipment -- 0.9% Seagate Technology HDD Holdings Guaranteed Sr. Notes 8.00% due 5/15/09................. 300 330,750
39 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued) - --------------------------------------- -----------------------------------------
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------- BONDS & NOTES (continued) Computers & Business Equipment (continued) Xerox Capital Trust I Guaranteed Capital 8.00% due 2/01/27................ $ 550 $ 464,750 Xerox Corp. Sr. Notes 7.13% due 6/15/10................ 375 372,188 Xerox Corp. Notes 7.20% due 4/01/16................ 375 350,625 Xerox Corp. Sr. Notes 7.63% due 6/15/13................ 925 912,281 ---------- 2,430,594 ---------- Conglomerate -- 1.6% Jacuzzi Brands, Inc. Sr. Secured Notes 9.63% due 7/01/10*............... 500 518,750 Park-Ohio Industries, Inc. Sr. Sub. Notes 9.25% due 12/01/07............... 585 552,825 Prestolite Electric, Inc. Guaranteed Sr. Notes 9.63% due 2/01/08................ 825 808,500 Tyco International Group SA Guaranteed Sr. Notes 6.75% due 2/15/11(6)............. 1,675 1,767,125 Tyco International Group SA Guaranteed Notes 6.88% due 1/15/29................ 800 792,000 ---------- 4,439,200 ---------- Education -- 0.2% KinderCare Learning Centers, Inc. Sr. Sub. Notes, Series B 9.50% due 2/15/09................ 475 477,375 ---------- Electronics -- 0.6% Amkor Technology, Inc. Sr. Notes 7.75% due 5/15/13*............... 125 125,625 Amkor Technology, Inc. Sr. Sub. Notes 9.25% due 2/15/08................ 800 864,000 ON Semiconductor Corp. Guaranteed Sr. Secured Notes 12.00% due 3/15/10............... 650 762,125 ---------- 1,751,750 ----------
Principal Amount Value Security Description (in thousands) (Note 3) ---------------------------------------------------------- Energy Services -- 1.0% Hanover Equipment Trust Sr. Sec. Notes 8.50% due 9/01/08............. $1,000 $1,030,000 Oslo Seismic Services, Inc. 1st Mtg. Notes 8.28% due 6/01/11............. 1,135 990,187 Universal Compression, Inc. Sr. Notes 7.25% due 5/15/10............. 700 721,000 ---------- 2,741,187 ---------- Energy Sources -- 5.9% Chesapeake Energy Corp. Sr. Notes 7.50% due 9/15/13*............ 325 341,250 Chesapeake Energy Corp. Guaranteed Sr. Notes 7.75% due 1/15/15............. 350 369,250 Chesapeake Energy Corp. Guaranteed Sr. Notes 9.00% due 8/15/12............. 175 196,875 CITGO Petroleum Corp. Sr. Notes 11.38% due 2/01/11*........... 1,475 1,666,750 Colorado Interstate Gas Co. Sr. Debentures 6.85% due 6/15/37............. 1,000 995,000 El Paso Production Holding Co. Sr. Notes 7.75% due 6/01/13*............ 1,675 1,591,250 Encore Acquisition Co. Guaranteed Sr. Notes 8.38% due 6/15/12............. 1,050 1,102,500 Forest Oil Corp. Guaranteed Sr. Notes 7.75% due 5/01/14............. 775 806,000 Frontier Escrow Corp. Sr. Notes 8.00% due 4/15/13*............ 725 735,875 Frontier Oil Corp. Sr. Notes 9.13% due 2/15/06............. 60 61,800 Frontier Oil Corp. Sr. Sub. Notes 11.75% due 11/15/09........... 545 615,850 KCS Energy, Inc. Guaranteed Sr. Sub. Notes 8.88% due 1/15/06............. 1,200 1,182,000
40 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) --------------------------------------------------------------- BONDS & NOTES (continued) Energy Sources (continued) Leviathan Gas Pipeline Partner LP/ Leviathan Finance Corp. Guaranteed Sr. Sub. Notes, Series B 10.38% due 6/01/09................ $ 660 $ 749,100 Mission Energy Holding Co. Sr. Secured Notes 13.50% due 7/15/08................ 1,000 660,000 Roseton Danskammer Pass-Thru Certificates, Series A 7.27% due 11/08/10................ 2,700 2,524,500 Roseton Danskammer 2001 Series B Pass-Thru Certificates 7.67% due 11/08/16................ 1,125 956,250 Southern Natural Gas Co. Sr. Notes 8.88% due 3/15/10................. 725 775,750 Tesoro Petroleum Corp. Sr. Secured Notes 8.00% due 4/15/08................. 275 281,875 Westport Resources Corp. Guaranteed Sr. Sub. Notes 8.25% due 11/01/11*............... 1,050 1,147,125 ----------- 16,759,000 ----------- Entertainment Products -- 0.4% Steinway Musical Instruments, Inc. Guaranteed Sr. Notes 8.75% due 4/15/11................. 1,150 1,178,750 ----------- Financial Services -- 14.7% AmeriCredit Corp. Guaranteed Sr. Notes 9.88% due 4/15/06................. 275 272,250 Athena Neurosciences Finance, LLC Guaranteed Sr. Notes 7.25% due 2/21/08................. 3,550 2,875,500 Bear Island Paper Co., LLC Sr. Secured Notes, Series B 10.00% due 12/01/07............... 1,600 1,328,000 Bluewater Finance, Ltd. Guaranteed Sr. Notes 10.25% due 2/15/12................ 1,075 1,091,125 ChipPac International Co., Ltd. Guaranteed Sr. Sub. Notes, Series B 12.75% due 8/01/09................ 200 223,000
Principal Amount Value Security Description (in thousands) (Note 3) --------------------------------------------------------------- Financial Services (continued) Chukchansi Economic Development Authority Sr. Notes 14.50% due 6/15/09*................ $2,200 $2,700,500 Eircom Funding Sr. Sub. Notes 8.25% due 8/15/13*................. 1,025 1,101,875 ESI Tractebel Acquisition Corp. Guaranteed Secured Bonds, Series B 7.99% due 12/30/11................. 835 829,781 Hilcorp Energy I LP/Hilcorp Finance Co. Sr. Notes 10.50% due 9/01/10*................ 825 876,562 Huntsman Advanced Materials, LLC Sr. Secured Notes 11.00% due 7/15/10*................ 600 624,000 IOS Capital, LLC Sr. Notes 7.25% due 6/30/08.................. 675 654,750 Jet Equipment Trust Sr. Notes, Series 1995, Class A 8.24% due 11/01/12*................ 1,344 584,566 JP Morgan High Yield Debt Index 100 Notes 8.00% due 6/20/08*................. 9,826 9,973,136 LaBranche & Co., Inc. Sr. Sub. Notes 12.00% due 3/02/07................. 425 480,250 Madison River Capital, LLC/ Madison River Finance Corp. Sr. Notes, Series B 13.25% due 3/01/10................. 2,375 2,493,750 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 11.38% due 4/01/13(2).............. 1,725 1,207,500 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 16.00% due 5/15/09(2).............. 775 698,469 Nexstar Finance, LLC Guaranteed Sr. Sub. Notes 12.00% due 4/01/08................. 100 112,000 PCA, LLC Guaranteed Sr. Notes 11.88% due 8/01/09................. 800 872,000 PDVSA Finance, Ltd. Bonds 6.80% due 11/15/08................. 1,425 1,275,375
41 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------- BONDS & NOTES (continued) Financial Services (continued) PDVSA Finance, Ltd. Notes 8.50% due 11/16/12.............. $ 825 $ 730,125 PX Escrow Corp. Sr. Sub. Disc. Notes 9.63% due 2/01/06(2)............ 725 537,406 Qwest Capital Funding, Inc. Guaranteed Notes 7.00% due 8/03/09............... 400 357,000 Qwest Capital Funding, Inc. Guaranteed Notes 7.25% due 2/15/11............... 1,700 1,513,000 Qwest Capital Funding, Inc. Guaranteed Notes 7.63% due 8/03/21............... 1,450 1,247,000 Qwest Capital Funding, Inc. Notes 7.75% due 2/15/31............... 625 531,250 Qwest Capital Funding, Inc. Guaranteed Notes 7.90% due 8/15/10............... 2,800 2,548,000 Terra Capital, Inc. Guaranteed Sr. Secured Notes 11.50% due 6/01/10.............. 1,050 966,000 Terra Capital, Inc. Guaranteed Sr. Secured Notes 12.88% due 10/15/08............. 1,125 1,243,125 US West Capital Funding, Inc. Guaranteed Notes 6.88% due 7/15/28............... 900 711,000 Worldspan LP/ WS Financing Corp. Sr. Notes 9.63% due 6/15/11*.............. 625 654,688 ----------- 41,312,983 ----------- Food, Beverage & Tobacco -- 1.0% Del Monte Corp. Sr. Sub. Notes 8.63% due 12/15/12*............. 450 491,625 Doane Pet Care Co. Sr. Sub. Notes 9.75% due 5/15/07............... 525 498,750 Doane Pet Care Co. Guaranteed Sr. Notes 10.75% due 3/01/10.............. 500 550,000 Fleming Cos., Inc. Guaranteed Sr. Sub. Notes, Series D 10.63% due 7/31/07(1)........... 1,050 105
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------- Food, Beverage & Tobacco (continued) Seminis, Inc. Sr. Sub. Notes 10.25% due 10/01/13*............. $ 225 $ 240,188 Smithfield Foods, Inc. Sr. Notes 7.75% due 5/15/13*............... 725 777,562 Smithfield Foods, Inc. Sr. Notes, Series B 8.00% due 10/15/09............... 275 299,750 ---------- 2,857,980 ---------- Forest Products -- 3.4% Constar International, Inc. Sr. Sub. Notes 11.00% due 12/01/12.............. 475 399,000 Crown Cork & Seal Co., Inc. Notes 8.00% due 4/15/23................ 650 529,750 Crown Cork & Seal Co., Inc. Notes 8.38% due 1/15/05................ 3,375 3,442,500 Georgia Pacific Corp. Sr. Notes 7.38% due 7/15/08*............... 2,175 2,242,969 Georgia Pacific Corp. Debenture 7.75% due 11/15/29............... 1,800 1,631,250 Georgia Pacific Corp. 9.13% due 7/01/22................ 825 816,750 Speciality Paperboard, Inc. Sr. Notes 9.38% due 10/15/06............... 775 519,250 ---------- 9,581,469 ---------- Health Services -- 3.0% HCA, Inc. Sr. Notes 6.95% due 5/01/12................ 1,250 1,326,060 HEALTHSOUTH Corp. Notes 7.63% due 6/01/12................ 925 795,500 HEALTHSOUTH Corp. Sr. Notes 8.38% due 10/01/11............... 1,625 1,397,500 HEALTHSOUTH Corp. Sr. Sub. Notes 10.75% due 10/01/08.............. 650 568,750
42 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------- BONDS & NOTES (continued) Health Services (continued) IASIS Healthcare Corp. Guaranteed Sr. Sub. Notes 13.00% due 10/15/09............... $1,070 $1,201,075 Psychiatric Solutions, Inc. Sr. Sub. Notes 10.63% due 6/15/13*............... 875 955,937 Tenet Healthcare Corp. Sr. Notes 6.50% due 6/01/12................. 300 286,500 Tenet Healthcare Corp. Notes 7.38% due 2/01/13................. 575 579,313 Universal Hospital Services, Inc. Sr. Notes 10.25% due 3/01/08................ 1,250 1,300,000 ---------- 8,410,635 ---------- Insurance -- 0.8% Crum & Forster Holdings Corp. Sr. Notes 10.38% due 6/15/13*............... 1,525 1,658,438 LNR Property Corp. Sr. Sub. Notes 7.63% due 7/15/13*................ 500 515,000 ---------- 2,173,438 ---------- Leisure & Tourism -- 6.1% American Airlines, Inc. Pass-Thru Certificates, Series 2001-2, Class C 7.80% due 10/01/06................ 950 700,146 Atlas Air, Inc. Pass-Thru Series 1999 1 Class A 2 6.88% due 1/02/11................. 800 740,487 Atlas Air, Inc. Pass-Thru Certificates Series 1999 Class A 1 7.20% due 1/02/19................. 887 830,462 Atlas Air, Inc. Pass-Thru Certificates, Series 1998, Class C 8.01% due 1/02/10(4).............. 796 126,189 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class C 8.77% due 1/02/11(4).............. 462 72,335
Principal Amount Value Security Description (in thousands) (Note 3) ---------------------------------------------------------- Leisure & Tourism (continued) Atlas Air, Inc. Pass-Thru Certificates, Series 2000-1, Class C 9.70% due 1/02/08(4).......... $ 101 $ 16,297 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-1, Class C 6.95% due 8/02/09............. 886 675,606 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-2, Class C1 7.73% due 3/15/11............. 351 247,813 Courtyard by Marriott II Sr. Secured Notes, Series B 10.75% due 2/01/08............ 1,000 993,750 Delta Air Lines, Inc. Pass-Thru Certificates, Series 2002-1, Class C 7.78% due 1/02/12............. 1,083 889,861 Hard Rock Hotel, Inc. Notes 8.88% due 6/01/13*............ 575 605,906 Hollywood Casino Shreveport/ Shreveport Capital Corp. 1st Mtg. Notes 13.00% due 8/01/06(1)......... 2,311 1,689,919 John Q Hammons Hotels LP 1st Sr. Mtg. Notes, Series B 8.88% due 5/15/12............. 500 541,250 Mandalay Resort Group Sr. Sub. Notes, Series B 10.25% due 8/01/07............ 1,125 1,293,750 MGM Mirage, Inc. Guaranteed Sr. Notes 8.50% due 9/15/10............. 1,525 1,715,625 Northwest Airlines, Inc. Guaranteed Sr. Notes 7.63% due 3/15/05............. 630 552,825 Park Place Entertainment Corp. Sr. Sub. Notes 9.38% due 2/15/07............. 700 773,500 Prime Hospitality Corp. Sr. Sub. Notes, Series B 8.38% due 5/01/12............. 350 344,750 Riviera Holdings Corp. Guaranteed Sr. Notes 11.00% due 6/15/10............ 1,000 991,250
43 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) ----------------------------------------------------------- BONDS & NOTES (continued) Leisure & Tourism (continued) Six Flags, Inc. Sr. Notes 8.88% due 2/01/10............. $ 200 $ 183,500 United AirLines, Inc. 2000 1 Pass-Thru Certificates Class A 2 7.73% due 7/01/10(1).......... 500 390,275 United AirLines, Inc. Series 2000 1 Certificates Class A 1 7.78% due 1/01/14(1).......... 465 360,869 Vail Resorts, Inc. Guaranteed Sr. Sub. Notes 8.75% due 5/15/09............. 450 473,062 Waterford Gaming, LLC Sr. Notes 8.63% due 9/15/12*............ 1,160 1,212,200 Wynn Las Vegas, LLC 2nd Mtg. Notes 12.00% due 11/01/10........... 750 855,000 ----------- 17,276,627 ----------- Machinery -- 0.6% Anthony Crane Rental LP Guaranteed Sr. Secured Notes 9.38% due 2/01/08(4)(5)....... 1,187 28,185 Briggs & Stratton Corp. Guaranteed Sr. Notes 8.88% due 3/15/11............. 550 616,000 Dresser, Inc. Guaranteed Sr. Sub. Notes 9.38% due 4/15/11............. 500 525,000 Terex Corp. Guaranteed Sr. Sub. Notes 9.25% due 7/15/11............. 100 109,500 Terex Corp. Guaranteed Sr. Sub. Notes, Series B 10.38% due 4/01/11............ 180 201,600 Venture Holdings Co., LLC Guaranteed Sr. Sub. Notes 11.00% due 6/01/07(1)......... 550 104,500 ----------- 1,584,785 ----------- Metals & Mining -- 1.0% CSN Islands VII Corp. Guaranteed Notes 10.75% due 9/12/08*........... 475 479,750 MMI Products, Inc. Sr. Sub. Notes, Series B 11.25% due 4/15/07............ 775 449,500
Principal Amount Value Security Description (in thousands) (Note 3) --------------------------------------------------------------- Metals & Mining (continued) National Steel Corp. 1st Mtg., Series D 9.88% due 3/01/09(1).............. $ 46 $ 3,214 Owens Brockway Glass Container Guaranteed Sr. Secured Notes 7.75% due 5/15/11................. 1,025 1,060,875 Owens Brockway Glass Container Sr. Secured Notes 8.75% due 11/15/12................ 225 241,313 Renco Metals, Inc. Guaranteed Sr. Notes 11.50% due 7/01/49(1)(4).......... 2,150 0 Ryerson Tull, Inc. Notes 9.13% due 7/15/06................. 525 517,125 WCI Steel, Inc. Sr. Secured Notes, Series B 10.00% due 12/01/04(1)............ 330 99,000 ---------- 2,850,777 ---------- Real Estate Investment Trusts -- 1.1% National Health Investors, Inc. Notes 7.30% due 7/16/07................. 1,120 1,108,800 RFS Partnership LP Guaranteed Sr. Notes 9.75% due 3/01/12................. 350 364,000 Senior Housing Properties Trust Sr. Notes 7.88% due 4/15/15................. 225 236,250 Senior Housing Properties Trust Sr. Notes 8.63% due 1/15/12................. 1,300 1,410,500 ---------- 3,119,550 ---------- Restaurants -- 0.3% Tricon Global Restaurants, Inc. Sr. Notes 8.88% due 4/15/11(6).............. 800 932,000 ---------- Retail Stores -- 3.5% Armstrong World Industries, Inc. Sr. Notes 6.35% due 8/15/49(1).............. 200 100,000 Armstrong World Industries, Inc. Sr. Notes 6.50% due 8/15/05(1).............. 825 433,125 Armstrong World Industries, Inc. Debentures 9.75% due 4/15/08(1).............. 670 351,750
44 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) ---------------------------------------------------------------- BONDS & NOTES (continued) Retail Stores (continued) Big 5 Corp. Sr. Notes, Series B 10.88% due 11/15/07................. $ 490 $ 515,113 Collins & Aikman Floor Cover Guaranteed Sr. Sub. Notes 9.75% due 2/15/10................... 450 474,750 J.C. Penney Co., Inc. Notes 6.88% due 10/15/15.................. 1,800 1,773,000 Oakwood Homes Corp. Sr. Notes 7.88% due 3/01/04(1)................ 925 333,000 Rent-A-Center, Inc. Guaranteed Sr. Sub. Notes, Series B 7.50% due 5/01/10................... 975 1,024,969 Rent-Way, Inc. Sr. Sec. Notes 11.88% due 6/15/10*................. 875 912,187 Rite Aid Corp. Sr. Debentures 7.70% due 2/15/27................... 1,125 973,125 Rite Aid Corp. Guaranteed Sr. Notes 8.13% due 5/01/10*.................. 450 479,250 Rite Aid Corp. Sr. 2nd Notes 9.50% due 2/15/11................... 100 113,000 Saks, Inc. Guaranteed Notes 9.88% due 10/01/11.................. 725 855,500 Salton, Inc. Sr. Sub. Notes 10.75% due 12/15/05................. 185 181,763 Salton, Inc. Sr. Sub. Notes 12.25% due 4/15/08.................. 280 273,700 Service Corp. International Notes 7.70% due 4/15/09................... 975 996,937 ---------- 9,791,169 ---------- Telecommunications -- 10.8% AirGate PCS, Inc. Sr. Sub. Disc. Notes 13.50% due 10/01/09(2).............. 4,550 3,480,750 Alamosa PCS Holdings, Inc. Guaranteed Sr. Disc. Notes 12.88% due 2/15/10(2)............... 4,800 3,792,000
Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------- Telecommunications (continued) Alaska Communications Holdings, Inc. Guaranteed Sr. Sub. Notes 9.38% due 5/15/09................ $ 975 $ 916,500 Centennial Cellular Operating Co. Sr. Sub. Notes 10.75% due 12/15/08.............. 175 173,688 Centennial Communications Cellular Operating Co. Sr. Notes 10.13% due 6/15/13*.............. 250 257,500 FairPoint Communications Inc. Sr. Sub. Notes 12.50% due 5/01/10............... 175 186,375 GCI, Inc. Sr. Notes 9.75% due 8/01/07................ 450 455,625 Horizon PCS, Inc. Guaranteed Sr. Notes 13.75% due 6/15/11(1)............ 2,775 693,750 iPCS, Inc. Sr. Disc. Notes 14.00% due 7/15/10(1)............ 1,400 154,000 LCI International, Inc. Sr. Notes 7.25% due 6/15/07................ 2,300 1,840,000 MJD Communications, Inc. Sr. Sub. Notes, Series B 9.50% due 5/01/08................ 3,025 2,934,250 Nextel Communications, Inc. Sr. Notes 7.38% due 8/01/15................ 2,300 2,323,000 Nextel Communications, Inc. Sr. Notes 9.38% due 11/15/09............... 600 651,000 Nextel Communications, Inc. Sr. Notes 9.95% due 8/15/08................ 1,450 1,524,312 PanAmSat Corp. Notes 6.38% due 1/15/08................ 575 593,687 PanAmSat Corp. Guaranteed Sr. Notes 8.50% due 2/01/12................ 450 471,375 Pegasus Satellite Communications, Inc. Sr. Notes 11.25% due 1/15/10*.............. 2,750 2,172,500
45 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------- BONDS & NOTES (continued) Telecommunications (continued) Qwest Corp. Notes 8.88% due 3/15/12*............... $ 175 $ 194,250 Rogers Wireless Communications, Inc. Sr. Secured Notes 9.63% due 5/01/11................ 400 460,000 US Unwired, Inc. Guaranteed Sr. Sub. Disc. Notes, Series B zero coupon due 11/01/09(2)...... 3,475 2,536,750 US West Communications, Inc. Debentures 6.88% due 9/15/33................ 3,575 3,146,000 US West Communications, Inc. Secured Debentures 7.50% due 6/15/23................ 100 93,500 Western Wireless Corp. Sr. Notes 9.25% due 7/15/13*............... 1,300 1,326,000 ----------- 30,376,812 ----------- Transportation -- 0.1% Petroleum Helicopters, Inc. Guaranteed Sr. Notes, Series B 9.38% due 5/01/09................ 275 299,750 ----------- Utilities -- 9.6% AES Corp. Sr. Secured Notes 8.75% due 5/15/13*............... 2,395 2,514,750 AES Drax Energy, Ltd. Guaranteed Sr. Sub. Secured Notes, Series B 11.50% due 8/30/10(1)............ 4,460 33,450 Calpine Corp. Sr. Notes 7.75% due 4/15/09................ 200 138,000 Calpine Corp. Sr. Notes 8.75% due 7/15/07................ 700 521,500 Cincinnati Bell Telephone Company Medium Term Notes 7.18% due 12/15/23............... 375 342,188 Dynegy Holdings, Inc. Sr. Notes 8.75% due 2/15/12................ 775 709,125 Edison Mission Energy Sr. Notes 7.73% due 6/15/09................ 275 224,125
Principal Amount Value Security Description (in thousands) (Note 3) --------------------------------------------------------------- Utilities (continued) Edison Mission Energy Sr. Notes 9.88% due 4/15/11.................. $1,225 $1,047,375 Edison Mission Energy Sr. Notes 10.00% due 8/15/08................. 2,750 2,420,000 Mirant Americas Generation, LLC Sr. Notes 7.20% due 10/01/08(1).............. 1,525 1,208,562 Mirant Americas Generation, LLC Sr. Notes 7.63% due 5/01/06(1)............... 525 416,063 Mirant Americas Generation, LLC Sr. Notes 8.30% due 5/01/11(1)............... 2,525 1,994,750 Mirant Americas Generation, LLC Sr. Notes 8.50% due 10/01/21(1).............. 1,975 1,560,250 Mirant Mid Atlantic, LLC Pass-Thru Certificates, Series A 8.63% due 6/30/12(1)............... 819 814,632 Mirant Mid Atlantic, LLC Secured Pass-Thru Certificates 9.13% due 6/30/17(1)............... 693 679,394 Pacific Gas & Electric Co. Sr. Notes 10.00% due 11/01/05*............... 500 512,500 PG& E Corp. Sr. Secured Notes 6.88% due 7/15/08*................. 725 761,250 Reliant Resources, Inc. Sr. Secured Notes 9.25% due 7/15/10*................. 800 724,000 Reliant Resources, Inc. Sr. Secured Notes 9.50% due 7/15/13*................. 2,175 1,957,500 Tiverton/Rumford Power Assoc., Ltd. Guaranteed Notes 9.00% due 7/15/18*................. 1,100 924,000 Transcontinental Gas Pipe Line Corp. Sr. Notes 8.88% due 7/15/12.................. 2,225 2,517,031 Williams Cos., Inc. Notes 7.13% due 9/01/11.................. 2,925 2,888,437
46 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (in thousands) (Note 3) -------------------------------------------------------------------- BONDS & NOTES (continued) Utilities (continued) Williams Cos., Inc. Sr. Notes 8.63% due 6/01/10..................... $1,900 $ 2,018,750 ------------ 26,927,632 ------------ Total Bonds & Notes (cost $225,903,610)..................... 232,183,951 ------------ CONVERTIBLE BONDS -- 0.1% Utilities -- 0.1% Calpine Corp 4.00% due 12/26/06 (cost $255,309)....................... 300 274,875 ------------ FOREIGN BONDS & NOTES -- 4.4% Broadcasting & Media -- 0.7% CF Cable TV, Inc. Guaranteed Secured Sr. Notes 9.13% due 7/15/07..................... 400 418,000 Shaw Communications, Inc. Sr. Notes 7.25% due 4/06/11..................... 475 504,688 Shaw Communications, Inc. Sr. Notes 8.25% due 4/11/10..................... 1,050 1,157,625 ------------ 2,080,313 ------------ Forest Products -- 0.2% Kappa Beheer BV Guaranteed Sr. Sub. Notes 10.63% due 7/15/09.................... 400 430,000 ------------ Insurance -- 0.3% Fairfax Financial Holdings, Ltd. Notes 8.25% due 10/01/15.................... 900 846,000 ------------ Metals & Mining -- 0.5% Crown European Holdings SA Sr. Secured Notes 10.88% due 3/01/13*................... 800 882,000 International Utility Structures, Inc. Sr. Sub. Notes 10.75% due 2/01/08(1)................. 2,150 473,000 Russel Metals, Inc. Sr. Notes 10.00% due 6/01/09.................... 100 106,500 ------------ 1,461,500 ------------ Telecommunications -- 0.7% Telus Corp. Notes 8.00% due 6/01/11............... 1,625 1,897,036 ------------
Principal Amount (in thousands)/ Value Security Description Shares (Note 3) ------------------------------------------------------------ Utilities -- 2.0% Calpine Canada Energy Finance, ULC Guaranteed Sr. Notes 8.50% due 5/01/08............. $ 7,225 $ 5,202,000 Companhia De Saneamento Basico do Estado de Sao Paulo Notes 12.00% due 6/20/08*........... 550 555,500 ----------- 5,757,500 ----------- Total Foreign Bonds & Notes (cost $13,884,349).............. 12,472,349 ----------- COMMON STOCK -- 0.5% Energy Sources -- 0.0% Tri-Union Development Corp.(4)(8)................... 1,061 10 Tribo Petroleum Corp.(4)(8).... 1,800 18 ----------- 28 ----------- Financial Services -- 0.0% Ono Finance, PLC(8)............ 500 5 ----------- Leisure & Tourism -- 0.0% Capital Gaming International, Inc.+(4)(8)................... 77 0 ----------- Telecommunications -- 0.5% Dobson Communications Corp.+... 156,082 1,267,386 ----------- Total Common Stock (cost $1,307,267)............... 1,267,419 ----------- PREFERRED STOCK -- 1.6% Broadcasting & Media -- 0.7% CSC Holdings, Inc. 11.13%........................ 13,925 1,460,384 Granite Broadcasting Corp. 12.75%........................ 375 266,250 Paxson Communications Corp. 14.25%(5)..................... 30 265,500 ----------- 1,992,134 ----------- Communication Equipment -- 0.7% Rural Cellular Corp., Series B 11.38%(5)..................... 1,600 1,304,000 Rural Cellular Corp. 12.25%(5)..................... 772 494,080 ----------- 1,798,080 ----------- Retail Stores -- 0.0% Rent-Way, Inc.(4)(8)(9)........ 10 100,000 -----------
47 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Shares/Warrants/ Principal Amount Value Security Description (in thousands) (Note 3) ------------------------------------------------------------------ PREFERRED STOCK (continued) Telecommunications -- 0.2% Dobson Communications Corp. 6.00%*(4)(8)..................... 2,425 $ 488,941 ------------ Total Preferred Stock (cost $3,358,921).................. 4,379,155 ------------ WARRANTS -- 0.0%+ Broadcasting & Media -- 0.0% Knology Holdings, Inc. Expires 10/22/07(4).............. 4,500 1,125 UIH Australia Pacific, Inc. Expires 5/15/06*(4)(8)........... 1,000 0 XM Satellite Radio, Inc. Expires 3/15/10*(8).............. 1,000 12,500 ------------ 13,625 ------------ Telecommunications -- 0.0% GT Group Telecom, Inc. Expires 2/1/10*(4)............... 2,650 27 KMC Telecom Holdings, Inc. Expires 1/31/08(4)(8)............ 3,650 0 Leap Wireless International, Inc. Expires 4/15/10(8)............... 2,250 21 Leap Wireless International, Inc. Expires 4/15/10(8)............... 1,950 1,950 Occidente Y Caribe Expires 3/15/04(4)(8)............ 7,750 0 ------------ 1,998 ------------ Total Warrants (cost $321,861).................... 15,623 ------------ Total Investment Securities -- 89.0% (cost $245,031,317)................ 250,593,372 ------------ REPURCHASE AGREEMENTS -- 6.9% State Street Bank & Trust Co. Joint Repurchase Agreement Account (see Note 3)............. 505 505,000 UBS Warburg, LLC Joint Repurchase Agreement Account (see Note 3)..................... 19,000 19,000,000 ------------ Total Repurchase Agreement (cost $19,505,000)................ 19,505,000 ------------
Principal Amount Value Security Description (in thousands) (Note 3) ----------------------------------------------------------- TOTAL INVESTMENTS -- (cost $264,536,317#)......... 95.9% 270,098,372 ------------ BOND-SHORT POSITION -- (0.7)% Automotive -- (0.2)% Goodyear Tire & Rubber Co. 8.50% 3/15/07.............. (700) $ (658,000) Broadcasting & Media -- (0.5)% Regal Cinemas Corporation 9.38% 2/01/12.............. (1,000) (1,221,000) ------------ (Proceeds $1,798,500)....... (1,879,000) ------------ Other assets less liabilities. 4.8% 13,476,062 ------ ------------ NET ASSETS -- 100.0% $281,695,434 ====== ============
- -------- * 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 aggregate value is $52,944,154 which represents 18.79% of net assets. + Non-income producing security # See Note 6 (1)Bond in default. (2)Security is a "step-up" bond where the coupon rate increases or steps up at a predetermined rate. Rate shown reflects the increased rate. (3)Represents a zero coupon bond which will convert to an interest-bearing security at a later date (4)Fair valued security; see Note 3. (5)PIK ("Payment-in-Kind") payment made with additional securities in lieu of cash. (6)The security or a portion thereof represents collateral for securities short sale. (7)Company has filed Ch. 11 bankruptcy, but is continuing to make interest payments. (8)Illiquid security 48 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued) (9)To the extent permitted by the Statement of Additional Information, the High Yield Bond Fund may invest in restricted securities. This restricted security is valued pursuant to Note 3. Restricted securities held by a Fund may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933. The risk of investing in such securities is generally greater than the risk of investing in the securities of widely held, publicly traded companies. 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, these securities may exhibit greater price volatility than securities for which secondary markets exist. As of September 30, 2003, the High Yield Bond Fund held the following restricted securities:
Value as a % of Acquisition Acquisition Market Net Name Date Share/Par Cost Value Assets ---- ----------- --------- ----------- ------- ------ Rent-Way, Inc., Preferred Stock......... 05/29/2003 10 100,000 100,000 0.04%
Allocation of investment by country as a percentage of net assets as of September 30, 2003. United States 90.4% Canada....... 4.4 Brazil....... 0.2 Netherlands.. 0.2 ---- 95.2% ====
See Notes to Financial Statements 49 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited)
Principal Amount Value Security Description (In thousands) (Note 3) ------------------------------------------------------------------ MUNICIPAL BONDS -- 90.9% Alabama -- 5.3% Jefferson County, Alabama Sewer Revenue, Capital Improvement, Series D 5.25% due 2/01/26+.................... $4,500 $5,174,505 ---------- California -- 7.4% California State Department Water Resources, Central Valley Project Revenue, Series X, 5.13% due 12/01/22+................... 3,000 3,130,980 San Ramon Valley, California Unified School District, General Obligation, 5.00% due 8/01/23+.................... 4,000 4,097,840 ---------- 7,228,820 ---------- Colorado -- 3.7% El Paso County, Colorado, Single Family Mortgage Revenue, zero coupon due 9/01/15(1)............ 2,000 1,229,040 Highlands Ranch Metropolitan District No. 2, General Obligation, 6.50% due 6/15/09+.................... 1,960 2,359,997 ---------- 3,589,037 ---------- Connecticut -- 4.9% Connecticut State, General Obligation, Refunding, Series C, 5.25% due 12/15/09+................... 4,100 4,730,908 ---------- Florida -- 7.8% Lee County, Florida, Airport Revenue, Series A, 5.75% due 10/01/22+................... 5,000 5,474,350 Orange County, Florida Sales Tax Revenue, Refunding, Series A, 5.13% due 1/01/23+.................... 2,000 2,083,360 ---------- 7,557,710 ---------- Georgia -- 3.3% Georgia Municipal Electric Authority, Power Revenue, Prerefunded, Series Y, 6.40% due 1/01/09+.................... 60 71,660 Georgia Municipal Electric Authority, Power Revenue, Prerefunded, Series Y 6.40% due 1/01/13+.................... 85 103,756 Metropolitan Atlanta Rapid Transit Authority Refunding Second Indenture Series A 5.00% due 7/01/09+.................... 2,650 2,991,479 ---------- 3,166,895 ----------
Principal Amount Value Security Description (In thousands) (Note 3) ------------------------------------------------------------------ Illinois -- 4.0% Illinois Health Facilities Authority Revenue, Lutheran General Health Systems, Series C, 7.00% due 4/01/08+................... $3,400 $ 3,886,302 ----------- Massachusetts -- 0.9% Massachusetts State Housing Finance Agency, Insured Rental, Series A, 6.60% due 7/01/14+................... 875 905,747 ----------- Missouri -- 6.1% Sikeston, Missouri, Electric Revenue, Refunding, 6.20% due 6/01/10+................... 5,000 5,969,700 ----------- New Jersey -- 13.1% Garden State Preservation Trust, New Jersey, Series A, 5.25% due 11/01/19+.................. 3,400 3,721,640 New Jersey Economic Development Authority, School Facilities Construction, Series C, 5.00% due 6/15/12+................... 4,000 4,463,720 Passaic Valley, New Jersey Sewer Systems, Series F, 5.00% due 12/01/09+.................. 2,000 2,273,960 Passaic Valley, New Jersey Sewer Systems, Series F, 5.00% due 12/01/12+.................. 2,000 2,242,480 ----------- 12,701,800 ----------- New Mexico -- 0.0% New Mexico Mtg. Finance Authority, Single Family Mtg., Series C, 8.63% due 7/01/17+................... 20 20,146 ----------- New York -- 11.4% New York State Authority, Highway & Bridge Trust Fund, Series B, 5.00% due 4/01/12+................... 5,000 5,564,050 Niagara Falls, New York, Public Improvement, General Obligation, 7.50% due 3/01/13.................... 450 582,341 Niagara Falls, New York, Public Improvement, General Obligation, 7.50% due 3/01/14+................... 550 735,136 Triborough Bridge And Tunnel Authority New York Sub. Series A 5.25% due 11/15/30+.................. 4,000 4,163,760 ----------- 11,045,287 -----------
50 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount Value Security Description (In thousands) (Note 3) ------------------------------------------------------------------ MUNICIPAL BONDS (continued) Ohio -- 3.5% Cuyahoga County, Ohio Revenue, Cleveland Clinic Health Systems, Series A, 5.75% due 1/01/24.................... $2,000 $ 2,101,520 Woodridge, Ohio Local School District, General Obligation, 6.80% due 12/01/14+.................. 1,000 1,275,810 ----------- 3,377,330 ----------- Oklahoma -- 0.3% Oklahoma Development Finance Authority, Public Service of Oklahoma Project, Refunding, 4.88% due 6/01/04.................... 250 252,905 ----------- Pennsylvania -- 10.3% Exeter Township, Pennsylvania School District, General Obligation, 5.00% due 5/15/22+................... 4,555 4,728,773 Pennsylvania State Turnpike Commission, Oil Franchise Tax Revenue, Series A 5.25% due 12/01/23+.................. 5,000 5,288,200 ----------- 10,016,973 ----------- South Dakota -- 2.6% South Dakota State Health & Educational Facilities Authority Revenue, McKennan Hospital, 6.25% due 7/01/10+................... 2,120 2,509,508 ----------- Texas -- 6.3% Harris County, Texas Hospital District, Mtg. Revenue, 7.40% due 2/15/10+................... 1,450 1,696,195 Houston, Texas Water And Sewer Systems Revenue, Refunding Junior Lien Series A 6.20% due 12/01/25+.................. 2,635 2,921,161 San Antonio, Texas, Hotel Occupancy Revenue, Henry B. Gonzalez Project, zero coupon due 8/15/17+(1).......... 2,700 1,431,756 Texas State Veterans Housing Assistance, General Obligation, 6.80% due 12/01/23................... 65 66,645 ----------- 6,115,757 ----------- Total Investment Securities -- 90.9% (cost $82,825,509)................... 88,249,330 -----------
Principal Amount Value Security Description (In thousands) (Note 3) ------------------------------------------------------------------ SHORT-TERM INVESTMENTS -- 6.7% Arizona -- 1.3% Maricopa County, Arizona Industrial Development Authority Revenue, JIA Corp. Project, 1.25% due 10/01/2003(2)............... $ 300 $ 300,000 Tempe, Arizona Industrial Development Authority Revenue, Centers For Habilitation, 1.25% due 10/01/2003(2)............... 945 945,032 ---------- 1,245,032 ---------- Colorado -- 0.4% Colorado Springs, Colorado Revenue, National Strength & Condition, 1.25% due 10/01/2003(2)............... 400 400,000 ---------- Iowa -- 1.6% Iowa Finance Authority Children's Care Facilities Revenue, Childserve Project, Series B, 1.25% due 10/01/2003(2)............... 450 450,000 Linn County, Iowa Revenue, Goodwill Industries, Southwest Project, 1.25% due 10/01/2003(2)............... 1,115 1,115,000 ---------- 1,565,000 ---------- Missouri -- 0.2% St. Louis, Missouri Planned Industrial Expansion Authority, Industrial Development Revenue, Chemical Building Project, 1.20% due 10/01/2003(2)............... 100 100,000 Wright City, Missouri Industrial Revenue, Watlow Process Systems, Inc., 1.20% due 10/01/2003(2)......... 100 100,000 ---------- 200,000 ---------- New York -- 3.0% New York City, New York, General Obligation, Series B, 1.15% due 10/01/2003(2)............... 1,200 1,200,000 New York, New York Municipal Water Finance Authority, Water & Sewer Systems Revenue, Series C, 1.15% due 10/01/2003(2)............... 1,700 1,700,000 ---------- 2,900,000 ----------
51 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2003 -- (unaudited) (continued)
Principal Amount (In thousands)/ Value Security Description Shares (Note 3) ----------------------------------------------------------------- SHORT-TERM INVESTMENTS (continued) North Carolina -- 0.2% Mecklenburg County, North Carolina, Certificates Participation 1.15% due 10/02/2003(2)............ $ 200 $ 200,000 ----------- Registered Investment Companies -- 0.0% SSgA Tax Free Money Market Fund........................ 33,619 33,619 Total Short-Term Investments (cost $6,543,651).................. 6,543,651 ----------- TOTAL INVESTMENTS -- (cost $89,369,160#)................ 97.6% 94,792,981 Other assets less liabilities......... 2.4 2,297,861 ------- ----------- NET ASSETS -- 100.0% $97,090,842 ======= ===========
- -------- # See Note 6 + All or part of this security is insured by the Financial Security Assurance ("FSA"), Financial Guaranteed Insurance Corp. ("FGIC"), Municipal Bond Insurance Association ("MBIA"), or American Municipal Bond Assurance Corp. ("AMBAC") ($84,599,220 or 87.1% of Net Assets). (1)Represents a zero coupon bond which will convert to an interest-bearing security at a later date. (2)Variable rate security -- the rate reflected as of September 30, 2003; maturity date reflects next reset date. See Notes to Financial Statements 52 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) Note 1. Organization SunAmerica Income Funds is an open-end diversified management investment company organized as a Massachusetts business trust (the "Trust"). It currently consists of six different investment 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 AIG SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). An investor may invest in one or more of the following Funds: SunAmerica Core Bond Fund, SunAmerica U.S. Government Securities Fund, SunAmerica GNMA Fund, SunAmerica Strategic Bond Fund (formerly, Diversified Income Fund), SunAmerica High Yield Bond Fund (formerly, High Income Fund) and SunAmerica Tax Exempt Insured Fund. The Funds are considered to be separate entities for financial and tax reporting purposes. The investment objectives for each of the Funds are as follows: Core Bond Fund seeks a high level of current income consistent with relative safety of capital by the active trading of investment-grade fixed-income securities, or in securities issued or guaranteed by the U.S. Government and mortgage-backed or asset-backed securities without regard to the maturities of such securities. Under normal market conditions, at least 80% of the Fund's assets plus borrowing for investment purposes will be invested in bonds. U.S. Government Securities Fund seeks high current income consistent with relative safety of capital by the active trading of securities of high credit quality, issued or guaranteed by the U.S. government, or any agency or instrumentality thereof without regard to the maturities of such securities. Under normal market conditions, at least 80% of the Fund's assets plus borrowing for investment purposes will be invested in such securities. GNMA Fund seeks current income, with capital appreciation as a secondary objective by the active trading of mortgage-backed securities of high credit quality issued or guaranteed by the Government National Mortgage Association (GNMA) without regard to the maturities of such securities. Under normal market conditions, at least 80% of the Fund's assets plus 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 bonds (which may include "junk bonds"), U.S. 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 assets plus borrowing for investment purposes will be invested in bonds. High Yield Bond Fund seeks a high level of total return by the active trading of below-investment grade U.S. and foreign junk bonds (rated below Baa by Moody's and below BBB by S&P) without regard to the maturities of such securities and bank debt. For purposes of this policy, bonds include fixed-income securities other than short-term commercial paper and preferred stock. Under normal market conditions, at least 80% of the Funds assets plus borrowing for investment purposes will be invested in such securities. 53 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) Tax Exempt Insured Fund seeks as high a level of current income exempt from federal income taxes as is consistent with preservation of capital by investing, under normal market conditions, at least 80% of its assets in municipal bonds, the income of which is exempt from federal income taxes, and that are insured as to the scheduled payment of principal and interest for as long as such bonds are held by the Fund, without regard to the maturities of such securities. Each Fund offers multiple classes of shares. The classes within each Fund are presented in the Statement 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, any purchases of Class A shares in excess of $1,000,000 will be purchased at net asset value but will be subject to a contingent deferred sales charge on redemptions made within two years of purchase. Class B shares are offered without an initial sales charge, although a declining contingent deferred sales charge may be imposed on redemptions made within six years of purchase. Class B shares of each Fund convert automatically to Class A shares on the first business day of the month following the eighth anniversary of the issuance of such Class B shares and at such time will be subject to the lower distribution fee applicable to Class A shares. Class II shares are offered at net asset value per share plus an initial sales charge and may be subject to a contingent deferred sales charge on redemptions made within 18 months of purchase. Class I, Class Z, and Class X are offered at net asset value per share. These classes are offered exclusively to participants in certain employee retirement plans and other programs. Each class of shares bears the same voting, dividend, liquidation and other rights and conditions and each (other than Class I, Class X and Class Z) makes distribution and account maintenance and service fee payments under a distribution plan pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "1940 Act") except that Class B and Class II shares are subject to higher distribution fee rates. Indemnifications: Under the Funds' organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Funds. In addition, in the normal course of business the Funds enter into contracts that contain a variety of representations and warranties which provide general indemnifications. The Funds' maximum exposure under these arrangements are unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote. Note 2. Fund Mergers Pursuant to a plan of reorganization approved by shareholders of the North American Funds ("NA Funds") on November 7, 2001, all the assets and liabilities of the determined NA Funds were transferred in a tax-free exchange 54 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) to a determined SunAmerica Mutual Fund ("SA Funds"). The details of the reorganization transactions, which were consummated on November 16, 2001, are set forth below. The SunAmerica Core Bond Fund, a newly created portfolio of the SunAmerica Income Funds, acquired all of the assets and liabilities of the North American Core Bond Fund. In conjunction with this reorganization, Class C was redesignated as Class II and Class II was redesignated as Class Z. The SunAmerica U.S. Government Securities Fund ("U.S. Government Securities Fund") and the SunAmerica Tax Exempt Insured Fund ("Tax Exempt Insured Fund"), respectively, acquired all of the assets and liabilities of the North American U.S. Government Securities Fund ("NA U.S. Government Securities Fund") and the North American Municipal Bond Fund ("NA Municipal Bond Fund"), respectively. In conjunction with the reorganizations, the SA Funds are the surviving entities. All shares of the NA U.S. Government Securities Fund and the NA Municipal Bond Fund Class A, Class B, and Class C were exchanged, tax free, for U.S. Government Securities Fund and Tax Exempt Insured Fund Class A, Class B, and Class II shares, respectively. The North American Strategic Income Fund ("NA Strategic Income Fund") was reorganized into the SunAmerica Diversified Income Fund ("SA Diversified Income Fund") and renamed the SunAmerica Strategic Bond Fund ("Strategic Bond Fund"). The North American High Yield Bond Fund ("NA High Yield Bond Fund") was reorganized into the SunAmerica High Income Fund ("SA High Income Fund") and was renamed the SunAmerica High Yield Bond Fund ("High Yield Bond Fund"). However, based on accounting principles generally accepted in the United States of America, from a financial reporting standpoint, the NA Strategic Income Fund and the NA High Yield Bond Fund are the surviving entities in this reorganization. Not withstanding this financial accounting treatment, the SA Diversified Income Fund and the SA High Income Fund are the surviving entities for legal and tax reporting purposes. On November 16th, prior to the reorganization, the NA Strategic Income Fund and the NA High Yield Bond Fund declared a stock split and issued the following additional shares of stock for each share of stock owned:
Class A Class B Class C* Class I Class II@ ------- ------- -------- ------- --------- NA Strategic Income Fund...... 1.5526 1.5465 1.5436 1.5579 1.5482 NA High Yield Bond Fund....... 0.7750 0.7735 0.7689 0.7749 0.7720
----- * Class C was redesignated Class II @ Class II was redesignated Class Z The financial highlights included in these financial statements have been adjusted to reflect the stock split as if it had taken place as of the commencement of operations. 55 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) Net assets and unrealized appreciation (depreciation) as of the merger date were as follows: Net assets of U.S. Government Securities Fund prior to merger.................... $208,965,218 Net assets of NA U.S. Government Securities Fund prior to merger................. 48,781,692 ------------ Aggregate net assets of U.S. Government Securities Fund following the acquisition $257,746,910 ------------ Unrealized depreciation in NA U.S. Government Securities Fund.................... $ (250,422) Net assets of Tax Exempt Insured Fund prior to merger............................ $ 88,549,335 Net assets of NA Municipal Bond Fund prior to merger............................. 16,028,648 ------------ Aggregate net assets of Tax Exempt Insured Fund following the acquisition........ $104,577,983 ------------ Unrealized appreciation in NA Municipal Bond Fund................................ $ 617,075 Net assets of NA Strategic Income Fund prior to merger........................... $ 31,973,607 Net assets of SA Diversified Income Fund prior to merger......................... 50,355,280 ------------ Aggregate net assets of Strategic Bond Fund following the acquisition............ $ 82,328,887 ------------ Unrealized depreciation in SA Diversified Income Fund............................ $ (8,463,371) Net assets of NA High Yield Bond Fund prior to merger............................ $ 70,292,776 Net assets of SA High Income Fund prior to merger................................ 142,643,362 ------------ Aggregate net assets of High Yield Bond Fund following the acquisition........... $212,936,138 ------------ Unrealized depreciation in SA High Income Fund................................... $(28,926,444)
Note 3. Significant Accounting Policies The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements: Security Valuations: Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by the Adviser to be over-the-counter, are valued at the quoted bid price provided by principal market makers. Securities listed on the New York Stock Exchange ("NYSE") or other national securities exchanges, are valued on the basis of the last sale price on the exchange on which they are primarily traded. If there is no sale on that day, then securities are valued at the closing bid price on the NYSE or other primary exchange for that day. However, if the last sale price on the NYSE is different than the last sale price on any other exchange, the NYSE price is used. Securities listed on the NASDAQ exchange are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP is the last sale price unless the reported 56 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) trade for the security is outside the range of the bid/ask price. In such cases, the NOCP is normalized to the nearer of the bid or ask price. Securities that are traded on foreign exchanges are ordinarily valued at the last quoted sales price available before the time when the assets are valued. If a securities price is available from more than one foreign exchange, a Fund uses the exchange that is the primary market for the security. Future contracts and options traded on national securities exchanges are valued as of the close of the exchange on which they are traded. The Funds may make use of a pricing service in the determination of their net asset values. The preceding procedures need not be used to determine the value of debt securities owned by a Fund if, in the opinion of the Trustees, some other method would more accurately reflect the fair market value of such debt securities in quantities owned by such Fund. Senior Secured Floating Rate Loans ("Loans") for which an active secondary market exists to a reliable degree, will be valued at the mean of the last available bid and asked prices in the market for such Loans, as provided by a third party pricing service. Securities for which market quotations are not readily available or if a development/event occurs that may significantly impact the value of a security, then these securities may be fair valued as determined pursuant to procedures adopted in good faith by the Trustees. Short-term investments which mature in less than 60 days are valued at amortized cost, if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity, if their original term to maturity exceeded 60 days. Repurchase Agreements: Pursuant to exemptive relief granted by the Securities and Exchange Commission, the Funds are permitted to participate in joint repurchase agreement transactions with other affiliated investment companies. The Funds, along with other affiliated registered investment companies, 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. The Funds' custodian takes possession of the collateral pledged for investments in repurchase agreements. The underlying collateral is valued daily on a mark to market basis to ensure that the value, including accrued interest, is at least equal to the repurchase price. In the event of default of the obligation to repurchase, a Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. As of September 30, 2003, U.S. Government Securities Fund, GNMA Fund, Strategic Bond Fund and High Yield Bond Fund has a 0.3%, 49.3% 1.5% and 0.5% undivided interest, respectively, which represented $352,000, $53,392,000, $1,665,000 and $505,000, respectively, in principal amount in a joint repurchase agreement with State Street Bank & Trust Co. As of such date, the repurchase agreement in the joint account and collateral therefore were as follows: State Street Bank & Trust Co. Repurchase Agreement 0.85% dated 9/30/03, in the principal amount of $108,359,000, repurchase price $108,361,558 due 10/01/03, collateralized by the following:
Type of Collateral Interest Rate Maturity Date Principal Amount Market Value ------------------ ------------- ------------- ---------------- ------------ U.S. Treasury Notes 3.25% 12/31/03 $80,400,000 $81,606,000 U.S. Treasury Notes 7.25% 8/15/04 19,200,000 20,400,000 U.S. Treasury Bonds 8.13% 8/15/19 6,125,000 8,529,063
U.S. Government Securities Fund, GNMA Fund and High Yield Bond Fund has a 15.7%, 40.3% and 6.3% undivided interest, respectively, which represented $47,000,000, $121,000,000, and $19,000,000, respectively, in 57 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) principal amount in a joint repurchase agreement with UBS Warburg, LLC. As of such date, the repurchase agreement in the joint account and collateral therefore were as follows: UBS Warburg, LLC, Repurchase Agreement 0.85% dated 9/30/03, in the principal amount of $300,000,000 repurchase price $300,008,000 due 10/01/03 collateralized by the following:
Type of Collateral Interest Rate Maturity Date Principal Amount Market Value ------------------ ------------- ------------- ---------------- ------------ U.S. Treasury Bonds 3.63% 4/15/28 $ 21,276,000 $ 21,852,633 U.S. Treasury Bonds 3.88% 4/15/29 278,724,000 285,896,000
Securities Transactions, Investment Income, Dividends and Distributions to Shareholders: Securities transactions are recorded on a trade date basis. Senior Secured Floating Rate Loans are recorded on a settlement date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income, including adjustments for amortization of premiums and accretion of discounts, is recorded on the accrual basis; dividend income is recorded on the ex-dividend date. For financial statement purposes, the Funds amortize all premiums and accrete all discounts on fixed income securities. Funds which earn foreign income and capital gains may be subject to foreign withholding taxes at various rates. Common expenses incurred by the Trust are allocated among the Funds based on relative net assets or other appropriate methods. In all other respects, expenses are charged to each Fund as incurred on a specific identification basis. Interest earned on cash balances held at the custodian are shown as custody credits on the Statement of Operations. Net investment income, 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 (or the value of dividend-eligible shares, as appropriate) of each class of shares at the beginning of the day (after adjusting for the current capital share activity of the respective class). Dividends from net investment income are accrued daily and paid monthly. Capital gain distributions, if any, are paid 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 accounting principles generally accepted in the United States of America. 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 investment income/loss, net realized gain/loss and net assets are not affected. Each Fund intends to comply with the requirements of the Internal Revenue Code, as amended, applicable to regulated investment companies and to distribute all of their net income (taxable and tax exempt) to their shareholders. Therefore, no federal tax provision is required. Each Fund is considered a separate entity for tax purposes. Investment Securities Loaned: During the six months ended September 30, 2003, U.S. Government Securities Fund participated in securities lending with qualified brokers. In lending portfolio securities to brokers the Funds receive cash as collateral against the loaned securities, which must be maintained at not less than 102% of the market value of the loaned securities during the period of the loan. The Funds may use the cash collateral received to invest in short-term investments which earn interest income or to cover bank overdrafts. Any interest earned from the investment of the collateral is recorded by the Funds net of the portion of interest that is rebated to the borrowing broker. If the amounts are used to cover bank overdrafts, the broker rebates incurred are reflected as 58 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) interest expense on the Statement of Operations. As with other extensions of credit, should the borrower of the securities fail financially, the Funds may bear the risk of delay in recovery or may be subject to replacing the loaned securities by purchasing them with the cash collateral held, which may be less than 100% of the market value of such securities at the time of replacement. At September 30, 2003 there were no loaned securities outstanding in the U.S. Government Securities Fund. For the six months ended September 30, 2003, U.S. Government Securities Fund paid fees of $74,442, net of rebates, relating to Security lending transactions. Forward Foreign Currency Contracts: Certain Portfolios may enter into forward foreign currency contracts ("forward contracts") to attempt to protect securities and related receivables and payables against changes in future foreign exchange rates or to enhance return. 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 change in market value is recorded by the Portfolio as unrealized gain or loss. On the settlement date, the Portfolio records either realized gains or losses when the contract is closed 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 may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. Forward contracts involve elements of risk in excess of the amount reflected in the Statement of Assets and Liabilities. The Trust bears the risk of an unfavorable change in the foreign exchange rate underlying the forward contract. 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 Fund does 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 fiscal year-end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the changes in the market prices of portfolio securities sold during the year. Realized foreign exchange gains and losses on other assets and liabilities and change in unrealized foreign exchange gains and losses on other assets and liabilities include foreign exchange gains and losses from currency gains or losses realized between the trade and settlement dates of securities transactions, the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid and changes in the unrealized foreign exchange gains and losses relating to other assets and liabilities arising as a result of changes in the exchange rate. Short Sales: The High Yield Bond Fund ("Fund") may sell a security it does not own in anticipation of a decline in the market value of that security (short sales). To complete such a transaction, the Fund must borrow the security to make delivery to the buyer. The Fund then is obligated to replace the security borrowed by purchasing 59 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) it at market price at the time of replacement. The price at such time may be more or less than the price at which the security was sold by the Fund. Until the security is replaced, the Fund is required to pay to the lender any dividends or interest that accrue during the period of the loan. To borrow the security, the Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet margin requirements, until the short position is closed out. Until the Fund replaces a borrowed security, the Fund will maintain daily a segregated account, containing cash or liquid securities, at such a level that (i) the amount deposited in the account plus the amount deposited with the broker as collateral will equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short. Liabilities for securities sold short are reported at market value in the financial statements. Such liabilities are subject to off balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. The Fund bears the risk of potential inability of the broker to meet their obligation to perform. Mortgage-Backed Dollar Rolls: During the six months ended September 30, 2003, the U.S. Government Securities Fund and the GNMA Fund entered into dollar rolls using "to be announced" ("TBA") mortgage-backed securities ("TBA Rolls"). The Funds' policy is to record the components of TBA Rolls as purchase/sale transactions. Any difference between the purchase and sale price is recorded as a realized gain or loss on the date the transaction is entered into. The U.S. Government Securities Fund and the GNMA Fund had TBA Rolls outstanding at period-end, which are included in receivable for investments sold and payable for investments purchased in the Statement of Assets and Liabilities. Dollar roll transactions involve the risk that the market value of the securities held by the Fund may decline below the price of the securities that the Fund has sold but is obligated to repurchase under the agreement. In the event that the buyer of securities in a dollar roll transaction files bankruptcy or becomes insolvent, the Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund's obligation to repurchase the securities. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed transaction costs. Note 4. Investment Advisory and Management Agreement, Distribution Agreement and Service Agreement The Trust, on behalf of each Fund, has an Investment Advisory and Management Agreement (the "Agreement") with SAAMCo. Under the Agreement, SAAMCo provides continuous supervision of a Fund's portfolio and administers its corporate affairs, subject to general review by the Trustees. In connection therewith, SAAMCo 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 SAAMCo and its affiliates. 60 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) The Funds pay SAAMCo a monthly investment advisory and management fee calculated daily at the following annual percentages of each Fund's average daily net assets:
Management Assets Fees --------------------------- ---------- Core Bond Fund.......................... $0 - $200 million 0.600% (greater than) $200 million 0.525 (greater than) $500 million 0.475 U.S. Government Securities Fund......... $0 - $200 million 0.650 (greater than) $200 million 0.620 (greater than) $400 million 0.550 GNMA Fund............................... $0 - $25 million 0.550 (greater than) $25 million 0.500 (greater than) $50 million 0.450 Strategic Bond Fund..................... $0 - $350 million 0.650 (greater than) $350 million 0.600 High Yield Bond Fund.................... $0 - $200 million 0.750 (greater than) $200 million 0.720 (greater than) $400 million 0.550 Tax Exempt Insured Fund................. $0 - $350 million 0.500 (greater than) $350 million 0.450
The Core Bond Fund, Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Insured Fund are subadvised by AIG Global Investment Corp. ("AIGGIC") pursuant to a subadvisory agreement with SAAMCo. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of SAAMCo. AIGGIC receives the following fees from SAAMCo., based upon each Fund's average daily net assets:
Sub-advisory Fees - ----------------------------------------------- Core Bond Strategic Bond High Yield Tax Exempt Assets Fund Fund Bond Fund Insured Fund - ------ --------- -------------- ---------- ------------ $0 - $200 million............ 0.25% 0.35% 0.45% 0.25% (greater than) $200 million 0.20 0.25 0.35 0.22 (greater than) $500 million 0.15 0.20 0.30 0.15
For the six months ended September 30, 2003, expenses were reimbursed to the Funds as follows:
SAAMCO -------- Core Bond Class A............................ $ 139 Core Bond Class B............................ 9,020 Core Bond Class II........................... 3,590 Core Bond Class I............................ 16,229 Core Bond Class Z............................ -- U.S. Government Securities Fund Class A...... 372,133 U.S. Government Securities Fund Class B...... 106,537 U.S. Government Securities Fund Class II..... 47,127
61 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
SAAMCO -------- GNMA Fund Class A............................ $193,080 GNMA Fund Class B............................ 131,581 GNMA Fund Class II........................... 89,198 GNMA Fund Class I............................ 10,168 GNMA Fund Class X............................ -- Strategic Bond Class A....................... -- Strategic Bond Class B....................... -- Strategic Bond Class II...................... 16,244 Strategic Bond Class I....................... 11,892 High Yield Bond Class A...................... -- High Yield Bond Class B...................... -- High Yield Bond Class II..................... 2,979 High Yield Bond Class I...................... 11,149 High Yield Bond Class Z...................... 135 Tax Exempt Insured Fund Class A.............. -- Tax Exempt Insured Fund Class B.............. -- Tax Exempt Insured Fund Class II............. 4,997
The Trust, on behalf of each Fund, has a Distribution Agreement with AIG SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an affiliate of the Adviser. Each Fund, has adopted a Distribution Plan (the "Plan") in accordance with the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 under the 1940 Act permits an investment company directly or indirectly to pay expenses associated with the distribution of its shares ("distribution expenses") in accordance with a plan adopted by the investment company's board of trustees and approved by its shareholders. Pursuant to such rule, the Trustees and the shareholders of each class of shares of each Fund have adopted Distribution Plans, hereinafter referred to as the "Class A Plan," the "Class B Plan" and the "Class II Plan." In adopting the Class A Plan, the Class B Plan and the Class II Plan, the Trustees determined that there was a reasonable likelihood that each 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. Under the Class A Plan, Class B Plan and Class II Plan, the Distributor receives payments from the Funds at an annual rate of up to 0.10%, 0.75% and 0.75%, respectively, of average daily net assets of such Fund's Class A, Class B and Class II shares to compensate the Distributor and certain securities firms for providing sales and promotional activities for distributing that class of shares. The distribution costs for which the Distributor may be compensated for, include fees paid to broker-dealers that have sold Fund shares, commissions, and other expenses such as those incurred for sales literature, prospectus printing and distribution and compensation to wholesalers. It is possible that in any given year the amount paid to the Distributor under the Class A Plan, Class B Plan or Class II Plan may exceed the Distributor's distribution costs as described above. The Distribution Plans provide that each class of shares of each Fund may also pay the Distributor an account maintenance and service fee at the 62 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) annual rate of up to 0.25% of the aggregate average daily net assets of such class of shares for payments to broker-dealers for providing continuing account maintenance. Accordingly, for the six months ended September 30, 2003, SACS received fees (see the Statement of Operations) based upon the aforementioned rates. In addition, AIG SunAmerica Capital Services, Inc. is paid a fee of 0.25% of average daily net assets of Class I shares in compensation for providing additional shareholder services to Class I shareholders. SACS receives sales charges on each Fund's Class A and Class II shares, portions of which are reallowed to affiliated broker-dealers and non-affiliated broker-dealers. SACS also receives the proceeds of contingent deferred sales charges paid by investors in connection with certain redemptions of Class A, Class B and Class II shares. SACS has advised the Funds that for the six months ended September 30, 2003, the proceeds received from Class A and Class II sales (and paid out to affiliated and non-affiliated broker-dealers) and Class A, Class B and Class II redemptions were as follows:
Class A Class B ------------------------------------- -------------- Contingent Sales Affiliated Non-affiliated Deferred Sales Charges Broker-dealers Broker-dealers Charges ------- -------------- -------------- -------------- U.S. Government Securities Fund 127,089 55,745 49,819 151,610 GNMA Fund...................... 649,307 266,318 267,136 479,382 Strategic Bond Fund............ 53,321 27,000 16,824 53,576 High Yield Bond Fund........... 247,940 34,112 171,465 120,527 Core Bond Fund................. 14,308 5,523 6,386 10,718 Tax Exempt Insured Fund........ 27,304 13,740 8,541 20,802
Class II Class II ------------------------------------- -------------- Contingent Sales Affiliated Non-affiliated Deferred Sales Charges Broker-dealers Broker-dealers Charges ------- -------------- -------------- -------------- U.S. Government Securities Fund 25,345 5,102 20,243 13,979 GNMA Fund...................... 177,203 64,783 112,420 119,283 Strategic Bond Fund............ 20,502 6,075 14,427 4,573 High Yield Bond Fund........... 104,040 12,405 91,635 6,743 Core Bond Fund................. 4,210 658 3,552 231 Tax Exempt Insured Fund........ 4,550 1,543 3,007 5,564
63 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) The Trust has entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service Agreement, SAFS performs certain shareholder account functions by assisting the Funds' transfer agent in connection with the services that it offers to the shareholders of the Funds. The Service Agreement permits the Funds to compensate SAFS for services rendered, based upon an annual rate of 0.22% of average daily net assets, which is approved annually by the Trustees. For the six months ended September 30, 2003 the Funds incurred the following expenses which are included in transfer agent fees and expenses in the Statement of Operations to compensate SAFS pursuant to the terms of the Service Agreement:
Payable at Expenses September 30, 2003 -------- ------------------ Core Bond Fund Class A.................. $ 44,664 $10,702 Core Bond Fund Class B.................. 8,129 1,252 Core Bond Fund Class II................. 5,931 919 Core Bond Fund Class I.................. 24,466 4,118 Core Bond Fund Class Z.................. -- -- U.S. Government Securities Fund Class A. 226,896 35,274 U.S. Government Securities Fund Class B. 62,060 8,588 U.S. Government Securities Fund Class II 24,929 3,512 GNMA Fund Class A....................... 324,317 53,419 GNMA Fund Class B....................... 201,368 29,777 GNMA Fund Class II...................... 147,379 21,418 GNMA Fund Class I....................... 35 5 GNMA Fund Class X....................... 5,500 1,007 Strategic Bond Class A.................. 42,605 6,839 Strategic Bond Class B.................. 34,322 5,881 Strategic Bond Class II................. 17,663 2,998 Strategic Bond Class I.................. 3,673 617 High Yield Bond Class A................. 86,673 15,674 High Yield Bond Class B................. 73,263 12,656 High Yield Bond Class II................ 42,411 7,906 High Yield Bond Class I................. 32 3 High Yield Bond Class Z................. -- -- Tax Exempt Insured Fund Class A......... 81,634 12,893 Tax Exempt Insured Fund Class B......... 20,754 3,277 Tax Exempt Insured Fund Class II........ 6,706 1,057
At September 30, 2003, AIGGIC, an indirect wholly owned subsidiary of AIG, owned 100% of the outstanding Class Z shares of Core Bond Fund and High Yield Bond Fund. The Variable Annuity Life Insurance Company ("VALIC"), an indirect wholly owned subsidiary of AIG, owned 90%, 100%, 99% and 15% of the outstanding shares of Core Bond Fund Class I, Strategic Bond Fund Class I, High Yield Bond Fund Class I and Tax Exempt Insured Class B, respectively. SAAMCo owned 14% and 94% of the outstanding shares of GNMA Fund Class A and Class I and 86% and 9% of the outstanding shares of Core Bond Class A and Class II Fund, respectively. On April 18, 2002, AIGGIC, the subadviser for the Strategic Bond Fund, reimbursed the Fund for $12,000 due to a violation of the investment restrictions prohibiting the Fund from investing in short sales. The $12,000 reimbursement increased the total return of each class of shares by less than 0.01%. 64 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) Note 5. Purchases and Sales of Investment Securities The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the period ended September 30, 2003 were as follows:
U.S. Government High Tax Exempt Core Bond Securities GNMA Strategic Yield Bond Insured Fund Fund Fund Bond Fund Fund Fund ------------ --------------- ------------ ----------- ------------ ----------- Purchases (excluding U.S. government securities)........................... $149,647,397 $ -- $ -- $39,590,297 $213,384,243 $65,037,628 Sales (excluding U.S. government securities)........................... 139,102,150 -- -- 29,932,662 169,920,964 65,718,691 Purchases of U.S. government securities 148,501,645 396,318,055 761,648,036 166,066 -- -- Sales of U.S. government securities.... 174,088,884 427,613,278 715,983,543 1,089,422 -- --
Note 6. Federal Income Taxes The following details the tax basis of distributions as well as the components of distributable earnings. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences primarily arising from wash sales, post October losses, Fund mergers, treatment of defaulted securities and derivative transactions.
Tax Distributions Distributable Earnings For the year ended For the year ended March 31, 2003 March 31, 2003 ----------------------------------------- ------------------------------- Long- Long-term Unrealized term Ordinary Gains/ Capital Appreciation Ordinary Capital Tax Income Loss Carryover (Depreciation) Income Gains Exempt ---------- -------------- -------------- ----------- -------- ---------- Core Bond Fund...................... $ 39,061 $ (4,465,152) $ 5,617,957 $15,186,265 $ -- $ -- U.S. Government Securities Fund..... 177,782 (11,121,143) 7,000,963 11,170,917 -- -- GNMA Fund........................... 8,240,779 2,290,943 8,112,844 18,685,979 -- -- Strategic Bond Fund................. 394,308 (49,916,576) 526,235 4,507,318 -- -- High Yield Bond Fund................ 924,201 (133,258,897) (15,849,224) 17,388,736 -- -- Tax Exempt Insured Fund............. 1,859,407 406,154 5,083,843 125,409 667,022 3,022,170
The amounts of aggregate unrealized gain (loss) and the cost of investment securities for federal tax purposes, including short-term securities and repurchase agreements, were as follows:
U.S. Core Government Tax Exempt Bond Securities GNMA Strategic High Yield Insured Fund Fund Fund Bond Fund Bond Fund Fund ------------ ------------ ------------ ----------- ------------ ----------- Cost......................................... $429,796,313 $311,292,646 $857,825,749 $86,316,824 $263,501,814 $89,369,160 ============ ============ ============ =========== ============ =========== Appreciation................................. $ 6,697,999 $ 6,832,895 $ 9,898,834 $ 8,780,465 $ 20,896,849 $ 5,451,047 Depreciation................................. (1,789,004) (2,183,391) (1,994,814) (4,721,267) (16,179,292) (27,226) ------------ ------------ ------------ ----------- ------------ ----------- Unrealized appreciation (depreciation) -- net $ 4,908,995 $ 4,649,504 $ 7,904,020 $ 4,059,198 $ 4,717,558 $ 5,423,821 ============ ============ ============ =========== ============ ===========
65 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) At March 31, 2003, Core Bond Fund, U.S. Government Securities Fund, Strategic Bond Fund and High Yield Bond Fund had capital loss carry forwards of $4,465,152, $11,121,143, $49,916,576, and $133,258,897 respectively, which were available to the extent provided in regulations and which will expire between 2004-2011. To the extent that these carryover losses are used to offset future capital gains, it is probable that the gains so offset will not be distributed. Included in the capital loss carryover amounts at March 31, 2003 are the amounts of losses acquired from the following acquired Funds as a result of the reorganizations as discussed in Note 2: North American U.S. Government Securities Fund $ 997,836 North American Strategic Income Fund.......... 9,372,684 North American High Yield Bond Fund........... 13,911,085 North American Municipal Bond Fund............ --
As of March 31, 2003, Strategic Bond Fund and High Yield Bond Fund had post October 31, 2002 capital loss deferrals of $4,851,088 and $1,614,991, respectively. Core Bond Fund, U.S. Government Securities Fund and Tax Exempt Insured Fund utilized capital loss carry forwards of $4,502,088, $11,503,796 and $331,315, respectively, to offset the Fund's net taxable gains realized and recognized in the year ended March 31, 2003. As of March 31, 2003, Strategic Bond Fund and High Yield Bond Fund had $6,509,969 and $7,442,050 of capital loss carry forwards that expired. As a result of reorganizations into some of these portfolios during the period ended March 31, 2002, as discussed in Note 2, certain capital loss carryforwards may be subject to limitations on use pursuant to applicable U.S. Federal Income Tax Law. Therefore, it is possible not all of these capital losses will be available for use. 66 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) Note 7. Capital Share Transactions Transactions in capital shares of each class of each series were as follows:
Core Bond Fund ---------------------------------------------------------------------------------------------------------- Class A Class B ---------------------------------------------------- ---------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------- ------------------------ ----------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Shares sold......... 4,502,928** $ 46,610,712** 1,911,203* $ 19,558,165* 163,820 $ 1,703,281 529,865 $ 5,366,262 Reinvested shares... 48,883 505,486 28,114 286,234 5,506 56,984 14,634 147,929 Shares redeemed..... (342,789) (3,523,342) (420,056) (4,235,193) (206,813)** (2,134,641)** (173,661)* (1,758,943)* ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Net increase (decrease)......... 4,209,022 $ 43,592,856 1,519,261 $ 15,609,206 (37,487) $ (374,376) 370,838 $ 3,755,248 ========== ============ ========== ============ ======== =========== ========== ============ Core Bond Fund ---------------------------------------------------------------------------------------------------------- Class II Class I ---------------------------------------------------- ---------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------- ------------------------ ----------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Shares sold......... 215,508 $ 2,240,129 561,314 $ 5,690,211 494,805 $ 5,145,116 1,738,602 $ 17,572,086 Reinvested shares... 4,409 45,678 12,948 131,275 29,374 304,886 94,315 954,643 Shares redeemed..... (260,745) (2,707,807) (415,830) (4,169,367) (258,293) (2,691,380) (2,046,585) (20,720,266) ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Net increase (decrease)......... (40,828) $ (422,000) 158,432 $ 1,652,119 265,886 $ 2,758,622 (213,668) $ (2,193,537) ========== ============ ========== ============ ======== =========== ========== ============ Core Bond Fund ---------------------------------------------------- Class Z ---------------------------------------------------- For the six months ended For the year ended September 30, 2003 March 31, 2003 ------------------------- ------------------------ Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold......... -- $ -- -- $ -- Reinvested shares... 409,133 4,246,486 1,430,838 14,476,065 Shares redeemed..... (2,990,679) (31,000,000) (5,717,731) (57,739,162) ---------- ------------ ---------- ------------ Net increase (decrease)......... (2,581,546) $(26,753,514) (4,286,893) $(43,263,097) ========== ============ ========== ============
* Includes automatic conversion of 22,026 shares of Class B shares in the amount of $222,847 to 21,961 shares of Class A shares in the amount of $222,847. ** Includes automatic conversion of 11,496 shares of Class B shares in the amount of $119,123 to 11,463 shares of Class A shares in the amount of $119,123. 67 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
U.S. Government Securities Fund --------------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ ------------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------- -------------------------- -------------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Shares sold.... 5,209,431** $ 50,191,175** 16,172,319* $ 152,218,301* 419,690 $ 4,044,775 4,495,676 $ 42,228,815 Reinvested shares........ 229,981 2,201,060 667,786 6,191,337 52,629 505,186 157,230 1,481,363 Shares redeemed (6,536,183) (62,547,303) (16,276,413) (152,748,051) (2,036,420)** (19,366,468)** (2,574,910)* (24,236,111)* ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease).... (1,096,771) $(10,155,068) 563,692 $ 5,661,587 (1,564,101) $(14,816,507) 2,077,996 $ 19,474,067 ========== ============ =========== ============= ========== ============ ========== ============ U.S. Government Securities Fund ------------------------------------------------------ Class II ------------------------------------------------------ For the six months ended For the year ended September 30, 2003 March 31, 2003 ------------------------- -------------------------- Shares Amount Shares Amount ---------- ------------ ----------- ------------- Shares sold.... 524,400 $ 5,082,144 2,365,163 $ 22,258,658 Reinvested shares........ 22,717 217,665 61,152 576,229 Shares redeemed (1,073,330) (10,262,522) (1,288,558) (12,154,479) ---------- ------------ ----------- ------------- Net increase (decrease).... (526,213) $ (4,962,713) 1,137,757 $ 10,680,408 ========== ============ =========== =============
* Includes automatic conversion of 534,577 shares of Class B shares in the amount of $4,991,021 to 534,765 shares of Class A shares in the amount of $4,991,021. ** Includes automatic conversion of 148,024 shares of Class B shares in the amount of $1,417,018 to 148,044 shares of Class A shares in the amount of $1,417,018. 68 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
GNMA Fund ------------------------------------------------------------------------------------------------------------ Class A Class B ----------------------------------------------------- ----------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------ -------------------------- ------------------------ ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Shares sold.... 12,345,572 $142,206,539** 20,986,110* $ 237,799,506* 2,361,177 $ 27,356,772 12,763,664 $145,111,925 Reinvested shares........ 211,144 2,366,396 667,003 7,573,715 79,067 911,261 385,948 4,393,569 Shares redeemed (8,456,933) (96,376,115) (10,535,852) (119,630,103) (4,400,872) (50,346,221)** (5,116,327)* (58,203,016)* ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease).... 4,099,783 $ 48,196,820 11,117,261 $ 125,743,118 (1,960,628) $(22,078,188) 8,033,285 $ 91,302,478 ========== ============ =========== ============= ========== ============ ========== ============ GNMA Fund ------------------------------------------------------------------------------------------------------------ Class II Class I ----------------------------------------------------- ----------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------ -------------------------- ------------------------ ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Shares sold.... 2,754,048 $ 31,971,441 11,565,832 $ 131,890,842 -- $ -- -- $ -- Reinvested shares........ 58,564 675,475 245,826 2,806,505 28 317 170 1,919 Shares redeemed (4,434,582) (50,774,871) (3,318,648) (37,928,650) (953) (11,026) (1,350) (14,552) ---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease).... (1,621,970) $(18,127,955) 8,493,010 $ 96,768,697 (925) $ (10,709) (1,180) $ (12,633) ========== ============ =========== ============= ========== ============ ========== ============ GNMA Fund ----------------------------------------------------- Class X ----------------------------------------------------- For the six months ended For the year ended September 30, 2003 March 31, 2003 ------------------------ -------------------------- Shares Amount Shares Amount ---------- ------------ ----------- ------------- Shares sold.... 163,371 $ 1,876,204 374,832 $ 4,250,363 Reinvested shares........ 4,905 56,272 8,750 100,073 Shares redeemed (17,830) (202,754) (37,889) (437,031) ---------- ------------ ----------- ------------- Net increase (decrease).... 150,446 $ 1,729,722 345,693 3,913,405 ========== ============ =========== =============
* Includes automatic conversion of 195,681 shares of Class B shares in the amount of $2,233,137 to 196,215 shares of Class A shares in the amount of $2,233,137. ** Includes automatic conversion of 79,751 shares of Class B in the amount of $916,264 to 79,960 shares of Class A shares in the amount of $916,264. 69 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
Strategic Bond Fund ----------------------------------------------------------------------------------------------------------- Class A Class B --------------------------------------------------- ------------------------------------------------------ For the For the six months ended For the year ended six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------ ------------------------ ------------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Shares sold.... 2,140,694** $ 6,870,145** 5,749,864* $ 17,063,277* 2,766,795 $ 8,899,725 3,650,173 $ 10,909,683 Reinvested shares........ 236,075 761,862 442,757 1,316,774 160,383 517,342 261,564 777,454 Shares redeemed (2,745,084) (8,787,356) (5,933,899) (17,581,335) (1,887,178)** (6,095,336)** (3,827,323)* (11,336,035)* ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Net increase (decrease).... (368,315) $(1,155,349) 258,722 $ 798,716 1,040,000 $ 3,321,731 84,414 $ 351,102 ========== =========== ========== ============ ========== =========== ========== ============ Strategic Bond Fund ----------------------------------------------------------------------------------------------------------- Class II Class I --------------------------------------------------- ------------------------------------------------------ For the For the six months ended For the year ended six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------ ------------------------ ------------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Shares sold.... 1,812,919 $ 5,879,817 2,361,199 $ 7,058,032 -- -- -- $ -- Reinvested shares........ 93,302 302,344 162,201 483,955 35,770 115,506 65,251 194,149 Shares redeemed (1,327,287) (4,295,817) (2,604,349) (7,748,759) -- -- -- -- ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Net increase (decrease).... 578,934 $ 1,886,344 (80,949) $ (206,772) 35,770 $ 115,506 65,251 $ 194,149 ========== =========== ========== ============ ========== =========== ========== ============
* Includes automatic conversion of 860,996 shares of Class B shares in the amount of $2,545,720 to 860,854 shares of Class A shares in the amount of $2,545,720. ** Includes automatic conversion of 295,692 shares of Class B shares in the amount of $956,263 to 295,692 shares of Class A shares in the amount of $956,263. 70 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
High Yield Bond Fund --------------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ ------------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 -------------------------- ------------------------- -------------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ Shares sold.... 17,422,857** $ 68,481,288** 15,410,944* $ 54,586,537* 5,544,482 $ 21,826,623 5,717,346 $ 20,569,651 Reinvested shares........ 529,372 2,101,609 783,484 2,876,224 322,113 1,274,632 600,801 2,209,929 Shares redeemed (13,592,525) (53,644,677) (12,321,331) (45,700,839) (3,851,401)** (15,092,178)** (6,957,270)* (25,671,684)* ----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease).... 4,359,704 $ 16,938,220 3,873,097 $ 11,761,922 2,015,194 $ 8,009,077 (639,123) $ (2,892,104) =========== ============ =========== ============ ========== ============ ========== ============ High Yield Bond Fund --------------------------------------------------------------------------------------------------------------- Class II Class I ------------------------------------------------------ ------------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 -------------------------- ------------------------- -------------------------- ------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ Shares sold.... 6,639,292 $ 26,151,398 5,002,813 $ 18,337,823 50,125 $ 200,000 -- $ -- Reinvested shares........ 207,238 824,009 263,054 965,355 169 666 361 1,319 Shares redeemed (3,145,416) (12,367,532) (2,686,939) (9,901,331) (50,125) (202,584) -- -- ----------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease).... 3,701,114 $ 14,607,875 2,578,928 $ 9,401,847 169 $ (1,918) 361 $ 1,319 =========== ============ =========== ============ ========== ============ ========== ============ High Yield Bond Fund ------------------------------------------------------ Class Z ------------------------------------------------------ For the six months ended For the year ended September 30, 2003 March 31, 2003 -------------------------- ------------------------- Shares Amount Shares Amount ----------- ------------ ----------- ------------ Shares sold.... -- $ -- 8 $ 30 Reinvested shares........ 804,454 3,178,422 1,700,227 6,221,007 Shares redeemed -- -- -- -- ----------- ------------ ----------- ------------ Net increase (decrease).... 804,454 $ 3,178,422 1,700,235 $ 6,221,037 =========== ============ =========== ============
* Includes automatic conversion of 483,813 shares of Class B shares in the amount of $1,813,086 to 484,737 of shares of Class A shares in the amount of $1,813,086. ** Includes automatic conversion of 206,730 shares of Class B shares in the amount of $810,317 to 207,151 shares of Class A shares in the amount of $810,317. 71 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued)
Tax Exempt Insured Fund ------------------------------------------------------------------------------------------------------- Class A Class B ---------------------------------------------------- ------------------------------------------------- For the six months ended For the year ended For the six months ended For the year ended September 30, 2003 March 31, 2003 September 30, 2003 March 31, 2003 ------------------------- ------------------------ ----------------------- ---------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Shares sold......... 465,786** $ 6,234,348** 1,796,170* $ 23,825,662* 86,651 $ 1,169,332 453,361 $ 6,022,337 Reinvested shares... 45,314 607,040 145,158 1,916,793 7,487 100,292 27,036 357,478 Shares redeemed..... (1,004,220) (13,435,018) (1,969,797) (26,214,114) (155,757)** (2,075,005)** (475,903)* (6,259,772)* ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Net increase (decrease)......... (493,120) $ (6,593,630) (28,469) $ (471,659) (61,617) $ (805,381) 4,494 $ 120,043 ========== ============ ========== ============ ======== =========== ======== =========== Tax Exempt Insured Fund ---------------------------------------------------- Class II ---------------------------------------------------- For the six months ended For the year ended September 30, 2003 March 31, 2003 ------------------------- ------------------------ Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold......... 43,710 $ 579,473 345,981 $ 4,588,301 Reinvested shares... 2,837 38,020 9,084 120,117 Shares redeemed..... (93,334) (1,251,405) (193,507) (2,561,636) ---------- ------------ ---------- ------------ Net increase (decrease)......... (46,787) $ (633,912) 161,558 $ 2,146,782 ========== ============ ========== ============
* Includes automatic conversion of 97,811 shares of Class B shares in the amount of $1,288,353 to 97,827 shares of Class A shares in the amount of $1,288,353. ** Includes automatic conversion of 24,722 shares of Class B shares in the amount of $332,892 to 24,722 shares of Class A shares in the amount of $332,892. Note 8. Commitments and Contingencies The SunAmerica Family of Mutual Funds has established $75 million committed and $50 million uncommitted lines of credit with State Street Bank and Trust Company, the Funds' custodian. Interest is currently payable at the Federal Funds rate plus 50 basis points on the committed line and State Street's discretionary bid rate on the uncommitted line of credit. There is also a commitment fee of 10 basis points per annum on the daily unused portion of the $75 million committed line of credit, which is included in interest expense of the Statement of Operations. Borrowings under the line of credit will commence when the Fund's cash shortfall exceeds $100,000. During the six months ended September 30, 2003, the High Yield Bond Fund had borrowings outstanding for 25 days under the line of credit and incurred $6,051 in interest charges related to these borrowings. The High Yield Bond Fund's average amount of debt under the line of credit for the days utilized was $5,583,384 at a weighted average interest of 1.58%. The Funds, pursuant to exemptive relief granted by the Securities and Exchange Commission are permitted to participate in an interfund lending program among investment companies advised by SAAMCo or an affiliate. The interfund lending program allows the participating Funds to borrow money from and loan 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 September 30, 2003 none of the Funds participated in this program. 72 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2003 -- (unaudited) (continued) Note 9. Trustees Retirement Plan The Trustees (and Directors) of the SunAmerica Income Funds have adopted the SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective January 1, 1993 for the unaffiliated Trustees. The Retirement Plan provides generally that if an unaffiliated Trustee who has at least 10 years of consecutive service as a Disinterested Trustee of any of the SunAmerica mutual funds (an "Eligible Trustee") retires after reaching age 60 but before age 70 or dies while a Trustee, such person will be eligible to receive a retirement or death benefit from each SunAmerica mutual fund with respect to which he or she is an Eligible Trustee. As of each birthday, prior to the 70th birthday, but in no event for a period greater than 10 years, each Eligible Trustee will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Trustee of each SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.5% of any amounts credited under the preceding clause during prior years is added to each Eligible Trustee's Account until such Eligible Trustee reaches his or her 70th birthday. An Eligible Trustee may receive any benefits payable under the Retirement Plan, at his or her election, either in one lump sum or in up to fifteen annual installments. Any undistributed amounts shall continue to accrue interest at 8.5%. As of September 30, 2003, Core Bond Fund, U.S. Government Securities Fund, GNMA Fund, Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Insured Fund had accrued $14,873, $109,961, $32,122, $25,711, $43,231 and $32,698, respectively, for the Retirement Plan, which is included in accrued expenses on the Statement of Assets and Liabilities and for the period ended September 30, 2003 expensed $7,268, $6,784, $12,272, $1,768, $4,289 and $2,352, respectively, for the Retirement Plan, which is included in Trustees' fees and expenses on the Statement of Operations. 73 SunAmerica Income Funds TRUSTEE INFORMATION -- September 30, 2003 -- (unaudited) The following table contains basic information regarding the Trustees that oversee operations of the Funds and other investment companies within the Fund complex.
Number of Term of Funds in Position Office and Fund Other Name, Held With Length of Complex Directorships Address and SunAmerica Time Principal Occupations Overseen by Held by Date of Birth* Complex Served(4) During Past 5 Years Trustee(1) Trustee(2) - -------------- ---------- ---------- ------------------------------- ----------- --------------------- S. James Coppersmith Trustee 1987 - Retired. 45 Director of BJ's DOB: February 21, 1933 present Wholesale Club, Inc.; Director, Boston Stock Exchange. Dr. Judith L. Craven Trustee 2001 - Retired. 75 Director, A.G. Belo DOB: October 6, 1945 present Corporation (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present). William F. Devin Trustee 2001 - Retired. 75 Member of the DOB: December 30, 1938 present Board of Governors, Boston Stock Exchange (1985- Present); Samuel M. Eisenstat Chairman 1986 - Attorney, solo practitioner. 46 Director, North DOB: March 7, 1940 of the present European Oil Board Royalty Trust. Stephen J. Gutman Trustee 1986 - Partner and Managing 46 None DOB: May 10, 1943 present Member of B.B. Associates LLC (menswear specialty retailing and other activities) (June 1988 to present).
74 SunAmerica Income Funds TRUSTEE INFORMATION -- September 30, 2003 -- (unaudited) (continued)
Number of Term of Funds in Position Office and Fund Other Name, Held With Length of Complex Directorships Address and SunAmerica Time Principal Occupations Overseen by Held by Date of Birth* Complex Served(4) During Past 5 Years Trustee(1) Trustee(2) - -------------- ---------- ---------- ---------------------------- ----------- --------------------- Peter A. Harbeck(3) Trustee 1995 - President, CEO and Director, 83 None DOB: January 23, 1954 present AIG SunAmerica Asset Management Corp. ("SAAMCo") (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc ("SACS") (August 1993 to present) Sebastiano Sterpa Trustee 1993 - Founder and Chairman of the 37 Director, Real Estate DOB: July 18, 1929 present Board of the Sterpa Group Business Service (real estate investment and and Countrywide management) (1962 to Financial. present)
- -------- * The business address for each Trustee is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311. (1) The "Fund Complex" consists of all registered investment company portfolios for which SAAMCo serves as investment adviser or business manager. The "Fund Complex" includes the SunAmerica Money Market Funds (2 funds), SunAmerica Equity Funds (7 funds), SunAmerica Income Funds (6 funds), SunAmerica Style Select Series, Inc. (15 portfolios), SunAmerica Strategic Investment Series, Inc. (7 funds), Anchor Series Trust (8 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (33 portfolios), VALIC Company I (22 portfolios), VALIC Company II (15 funds), Anchor Pathway Funds (7 Series) and Seasons Series Trust (19 portfolios). (2) Directorships of companies required to report to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies registered under the Investment Company Act of 1940. (3) Interested trustee, as defined within the Investment Company Act of 1940. (4) Trustees serve until their successors are duly elected and qualified, subject to the Trustee's retirement plan discussed in Note 9 of the financial statements. Additional information concerning the Directors is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 75 If you would like additional information: [_] Call FastFacts--Call our 24 hour automated account and fund information hotline at 800-654-4760. [_] Visit SunAmerica on the World Wide Web. Visit our site at www.sunamericafunds.com for more up-to-date information. AIG SunAmerica Mutual Funds thanks you for your continued support. 76 [LOGO] AIG Sun America Mutual Funds AIG SunAmerica Asset Management Corp. Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Trustees Investment Adviser This report is submitted S. James Coppersmith AIG SunAmerica solely for the general Dr. Judith L. Craven Asset Management Corp. information of William F. Devin Harborside Financial shareholders of the Fund. Peter A. Harbeck Center Distribution of this Samuel M. Eisenstat 3200 Plaza 5 report to persons other Stephen J. Gutman Jersey City, NJ 07311 than shareholders of the Sebastiano Sterpa Fund is authorized only Distributor in connection with a Officers AIG SunAmerica Capital currently effective Robert M. Zakem, Services, Inc. prospectus, setting forth President and Secretary Harborside Financial details of the Fund, Donna M. Handel, Center which must precede or Treasurer 3200 Plaza 5 accompany this report. J. Steven Neamtz, Vice Jersey City, NJ 07311 President The accompanying report Michael Cheah, Vice Shareholder Servicing has not been examined by President Agent independent accountants Abbe P. Stein, Vice AIG SunAmerica Fund and accordingly no President and Services, Inc. opinion has been Assistant Secretary Harborside Financial expressed thereon. Joseph P. Kelly, Center Assistant Secretary 3200 Plaza 5 Thomas Lynch, Assistant Jersey City, NJ 07311 Secretary Stacey V. Morrison, Custodian and Transfer Assistant Secretary Agent Gregory R. Kingston, State Street Bank and Vice President and Trust Company Assistant Treasurer P.O. Box 419572 Robert A. Chopyak, Kansas City, MO Assistant Treasurer 64141-6572 Laura E. Filippone, Assistant Treasurer
Distributed by: AIG SunAmerica Capital Services, Inc. INSAN-9/03 Item 2. Code of Ethics. Not applicable. Item 3. Audit Committee Financial Expert. Not applicable. Item 4. Principal Accountant Fees and Services. Not applicable. Item 5. Audit Committee of Listed Registrants. Not applicable. Item 6. Reserved. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Reserved. Item 9. 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. 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) that occurred during the Registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. However, a situation was discovered at the registrant's transfer agent which circumvented internal controls related to abandoned property procedures. The registrant has worked with the transfer agent to develop actions to enhance the internal controls. Item 10. Exhibits. (a) Not applicable. (b) (1) Certification pursuant to Rule 30a-2 under the Investment Company Act of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT. (2) Certification pursuant to 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/ Robert M. Zakem Robert M. Zakem President Date: December 8, 2003 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/ Robert M. Zakem Robert M. Zakem President Date: December 8, 2003 By: /s/ Donna M. Handel Donna M. Handel Treasurer Date: December 8, 2003 EX-99.CERT 3 dex99cert.txt CERTIFICATION PURSUANT TO SECTION 302 Exhibit Ex-99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Robert M. Zakem, certify that 1. I have reviewed this report on Form N-CSR of SunAmerica Income Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 17, 2003 /s/ Robert M. Zakem Robert M. Zakem President CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Donna M. Handel, certify that 1. I have reviewed this report on Form N-CSR of SunAmerica Income Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 17, 2003 /s/ Donna M. Handel Donna M. Handel Treasurer EX-99.906CERT 4 dex99906cert.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit Ex-99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Robert M. Zakem, President, and Donna M. Handel, Treasurer of SunAmerica Income Funds (the "Registrant"), each certify to the best of his or her knowledge that: 1. The attached Form N-CSR report of the Registrant fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such N-CSR report fairly represents, in all material respects, the financial conditions and results of operations of the Registrant as of, and for, the periods presented in the report. Dated: November 17, 2003 /s/ Robert M. Zakem Robert M. Zakem President /s/ Donna M. Handel Donna M. Handel Treasurer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----