-----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, IfwlqaVgPfsM0MHr0DNeMFjWYB20CM2E8o7G9tw2dp4b6xlRo/XITns8dq+4Q1+M XKh7xUHwvma7T4MJch7Mcw== 0001193125-05-238964.txt : 20051208 0001193125-05-238964.hdr.sgml : 20051208 20051208124747 ACCESSION NUMBER: 0001193125-05-238964 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051208 DATE AS OF CHANGE: 20051208 EFFECTIVENESS DATE: 20051208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNAMERICA INCOME FUNDS CENTRAL INDEX KEY: 0000795307 IRS NUMBER: 000000000 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: 051251518 BUSINESS ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA 5 CITY: JERSEY CITY STATE: NJ ZIP: 07311 BUSINESS PHONE: 800-858-8850 MAIL ADDRESS: STREET 1: HARBORSIDE FINANCIAL CENTER STREET 2: 3200 PLAZA 5 CITY: JERSEY CITY STATE: NJ ZIP: 07311 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) Vincent M. Marra Senior Vice President & Chief Operating Officer 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) 324-6464 Date of fiscal year end: March 31 Date of reporting period: September 30, 2005 Item 1. Reports to Stockholders SunAmerica Income Funds, Semiannual Report at September 30, 2005. [GRAPHIC] SunAmerica Income Funds 2005 SEMIANNUAL REPORT [LOGO] AIG Sun America Mutual Funds September 30, 2005 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 SHAREHOLDER LETTER................................ 2 EXPENSE EXAMPLE................................... 3 STATEMENT OF ASSETS AND LIABILITIES............... 5 STATEMENT OF OPERATIONS........................... 7 STATEMENT OF CHANGES IN NET ASSETS................ 9 FINANCIAL HIGHLIGHTS.............................. 12 PORTFOLIO OF INVESTMENTS.......................... 19 NOTES TO FINANCIAL STATEMENTS..................... 64 APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS........................................ 82 TRUSTEE AND OFFICER INFORMATION................... 86
Shareholder Letter Dear Shareholder: We are pleased to present this semiannual update for the SunAmerica Income Funds for the period ended September 30, 2005. The six-month period began hopefully--amid favorable inflation data and a rally in 10-year Treasuries as there was speculation that the Federal Reserve would finish its tightening cycle earlier than expected. The period concluded with great uncertainty over the direction of the fixed income markets. The impact of Hurricanes Katrina and Rita, rising energy prices, and continued Federal tightening have fostered the crosscurrents of higher inflation and slower economic growth. The Federal Reserve has raised the Federal Funds rate (its overnight lending rate) 11 times since it began its tightening policy in June 2004, ending September at 3.75%. The effect of this tightening has been to flatten the yield curve. The compression of yields between two- and ten-year Treasuries, which had been 2.50% in early 2004, narrowed to as low as 0.11% in September. Despite the fact that most major bond indices delivered negative returns during the last three months of the period; six-month returns for major indices were positive. The Lehman Aggregate Bond Index returned 2.31%; the Lehman Government Bond Index rose 2.39%, and the Lehman Municipal Bond Index returned 2.80% The high yield market continued its run of solid performance, with the CSFB High Yield Index delivering a 2.82% return for the period. The high-yield market had been improving nicely until Delta Airlines and Northwest Airlines both filed for bankruptcy in mid-September. From that point on, the risks of higher energy prices began to weigh on the markets, particularly the airlines, automotive and packaging sectors. Despite this challenging backdrop, the SunAmerica Income Funds' portfolio managers were able to add value for our investors. Five of the six SunAmerica Income Funds were in the top quartile of their respective Lipper peer group for the six-month period. Of particular note are the SunAmerica High Yield Bond Fund and the SunAmerica Strategic Bond Fund, both of which were in the top 10% of their Lipper peer groups during the period. We continue to recommend investors to construct a diversified portfolio with an asset allocation appropriate to their individual circumstances and risk profile. We urge you to sit down with your financial advisor to review your portfolio. We thank you for including AIG SunAmerica Mutual Funds in your investment plan. We value your ongoing confidence in us and look forward to serving your investment needs in the future. Sincerely, The SunAmerica Income Funds Investment Professionals AIG SunAmerica Asset Management Corp. AIG Global Investment Corp. ------------------------------------- - Michael Cheah Rich Mercante Hutch Bryan Andrew Doulos Greg Braun Geoffrey Cornell Brian Wiese
2 SunAmerica Income Funds EXPENSE EXAMPLE -- September 30, 2005 -- (unaudited) Disclosure of Portfolio Expenses in Shareholder Reports As a shareholder of a Fund in the SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1) transaction costs, including sales charges on purchase payments, contingent deferred sales charges and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at April 1, 2005 and held until September 30, 2005. Actual Expenses The "Actual" section of the table provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the column under the heading entitled "Expenses Paid During the Six Months Ended September 30, 2005" to estimate the expenses you paid on your account during this period. For shareholder accounts in classes other than Class I and Class Z the "Expenses Paid During the Six Months Ended September 30, 2005" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended September 30, 2005" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Funds' prospectus and/or the retirement plan document for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2005" column would have been higher and the "Ending Account Value" column would have been lower. Hypothetical Example for Comparison Purposes The "Hypothetical" section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. For shareholder accounts in classes other than Class I and Class Z the "Expenses Paid During the Six Months Ended September 30, 2005" column does not include small account fees that may be charged if your account balance is below $500 ($250 for retirement plan accounts). In addition, the "Expenses Paid During the Six Months Ended September 30, 2005" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Fund's prospectus and/or the retirement plan document for full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2005" column would have been higher and the "Ending Account Value" column would have been lower. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, including sales charges on purchase payments, contingent deferred sales charges, small account fees and administrative fees, if applicable to your account. Please refer to your Prospectus and/or qualified retirement plan document for more information. Therefore, the "Hypothetical" example is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs and other fees were included, your costs would have been higher. 3 SunAmerica Income Funds EXPENSE EXAMPLE -- September 30, 2005 -- (unaudited) (continued)
Actual Hypothetical ------------------------------------------ ------------------------------------------ Ending Account Ending Account Value Using Value Using Expenses Paid a Hypothetical Expenses Paid Beginning Actual During the Beginning 5% Assumed During the Account Value Return at Period Ended Account Value Return at Period Ended at April 1, September 30, September 30, at April 1, September 30, September 30, 2005 2005 2005* 2005 2005 2005* ------------- -------------- ------------- ------------- -------------- ------------- Core Bond Fund Class A #.................... $1,000.00 $1,023.86 $ 5.58 $1,000.00 $1,019.55 $ 5.57 Class B #.................... $1,000.00 $1,020.55 $ 8.86 $1,000.00 $1,016.29 $ 8.85 Class C #.................... $1,000.00 $1,020.55 $ 8.86 $1,000.00 $1,016.29 $ 8.85 Class I #.................... $1,000.00 $1,023.36 $ 5.07 $1,000.00 $1,020.05 $ 5.06 Class Z #.................... $1,000.00 $1,026.78 $ 2.69 $1,000.00 $1,022.41 $ 2.69 U.S. Government Securities Fund Class A #.................... $1,000.00 $1,020.73 $ 5.02 $1,000.00 $1,020.10 $ 5.01 Class B #.................... $1,000.00 $1,018.52 $ 8.30 $1,000.00 $1,016.85 $ 8.29 Class C #.................... $1,000.00 $1,017.43 $ 8.29 $1,000.00 $1,016.85 $ 8.29 GNMA Fund Class A #.................... $1,000.00 $1,017.85 $ 5.01 $1,000.00 $1,020.10 $ 5.01 Class B #.................... $1,000.00 $1,014.54 $ 8.28 $1,000.00 $1,016.85 $ 8.29 Class C #.................... $1,000.00 $1,014.54 $ 8.28 $1,000.00 $1,016.85 $ 8.29 Strategic Bond Fund Class A #.................... $1,000.00 $1,043.49 $ 6.92 $1,000.00 $1,018.30 $ 6.83 Class B #.................... $1,000.00 $1,042.95 $10.40 $1,000.00 $1,014.89 $10.25 Class C #.................... $1,000.00 $1,039.93 $10.38 $1,000.00 $1,014.89 $10.25 High Yield Bond Fund Class A #.................... $1,000.00 $1,069.13 $ 7.05 $1,000.00 $1,018.25 $ 6.88 Class B #.................... $1,000.00 $1,065.59 $10.41 $1,000.00 $1,014.99 $10.15 Class C #.................... $1,000.00 $1,065.44 $10.41 $1,000.00 $1,014.99 $10.15 Class Z #.................... $1,000.00 $1,072.09 $ 4.10 $1,000.00 $1,021.11 $ 4.00 Tax Exempt Insured Fund Class A...................... $1,000.00 $1,022.30 $ 6.64 $1,000.00 $1,018.50 $ 6.63 Class B...................... $1,000.00 $1,018.21 $ 9.92 $1,000.00 $1,015.24 $ 9.90 Class C #.................... $1,000.00 $1,019.04 $ 9.87 $1,000.00 $1,015.29 $ 9.85
Expense Ratio as of September 30, 2005* ------------- Core Bond Fund Class A #.................... 1.10% Class B #.................... 1.75% Class C #.................... 1.75% Class I #.................... 1.00% Class Z #.................... 0.53% U.S. Government Securities Fund Class A #.................... 0.99% Class B #.................... 1.64% Class C #.................... 1.64% GNMA Fund Class A #.................... 0.99% Class B #.................... 1.64% Class C #.................... 1.64% Strategic Bond Fund Class A #.................... 1.35% Class B #.................... 2.03% Class C #.................... 2.03% High Yield Bond Fund Class A #.................... 1.36% Class B #.................... 2.01% Class C #.................... 2.01% Class Z #.................... 0.79% Tax Exempt Insured Fund Class A...................... 1.31% Class B...................... 1.96% Class C #.................... 1.95%
- -------- * Expenses are equal to the Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by 183 days divided by 365 days. These ratios do not reflect transaction costs, including sales charges on purchase payments, contingent deferred sales charges, small account fees and administrative fees, if applicable to your account. Please refer to your Prospectus and/or qualified retirement plan document for more information. # During the stated period, the investment adviser either waived a portion of or all fees and assumed a portion of or all expenses for the Funds. As a result, if these fees and expenses had not been waived, the "Actual/Hypothetical Ending Account Value" would have been lower and the "Actual/Hypothetical Expenses Paid During the six months ended September 30, 2005" and the "Expenses Ratios" would have been higher. 4 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005 -- (unaudited)
U.S. Government Strategic Core Bond Securities GNMA Bond Fund Fund Fund Fund ------------ --------------- ------------ ------------ ASSETS: Long-term Investment securities, at value* (unaffiliated). $188,731,208 $206,871,087 $457,303,591 $192,410,501 Long-term Investment securities, at value* (affiliated)... 135,000 -- -- 145,800 Short term investment securities, at value*............... -- -- 69,987,672 2,093,000 Repurchase agreements (cost equals market)................ 7,408,000 -- 100,604,000 5,544,000 ------------ ------------ ------------ ------------ Total investments....................................... 196,274,208 206,871,087 627,895,263 200,193,301 ------------ ------------ ------------ ------------ Cash...................................................... -- 3,537 543 3,042,868 Foreign cash*............................................. -- -- -- 1,157,335 Deposit with broker for securities sold short............. -- -- -- Receivable for: Shares of beneficial interest sold...................... 84,564 15,004 183,728 2,763,841 Dividends and interest.................................. 1,875,583 1,344,814 1,852,692 2,669,216 Investments sold........................................ 4,416,766 -- -- 1,574,725 Prepaid expenses and other assets......................... 2,061 2,193 5,108 1,080 Due from investment adviser for expense reimbursements/fee waivers.................................................. 20,011 64,065 43,810 -- Unrealized appreciation on forward currency contracts..... -- -- -- 242,831 ------------ ------------ ------------ ------------ Total assets.............................................. 202,673,193 208,300,700 629,981,144 211,645,197 ------------ ------------ ------------ ------------ LIABILITIES: Payable for: Shares of beneficial interest redeemed.................. 29,719 345,181 562,781 263,983 Investments purchased................................... 6,307,656 -- 152,448,889 3,536,279 Investment advisory and management fees................. 96,946 108,830 180,819 106,493 Distribution and service maintenance fees............... 57,327 77,111 215,363 113,750 Trustees' fees and expenses............................. 29,597 101,911 50,032 23,836 Other accrued expenses.................................. 219,485 203,639 289,214 121,432 Line of credit.......................................... -- 2,544,274 -- -- Dividends payable......................................... 11,919 104,492 165,867 299,275 Due to custodian.......................................... 504,442 -- -- -- Unrealized depreciation on forward currency contracts..... -- -- -- 164,485 ------------ ------------ ------------ ------------ Total liabilities......................................... 7,257,091 3,485,438 153,912,965 4,629,533 ------------ ------------ ------------ ------------ Net assets................................................ $195,416,102 $204,815,262 $476,068,179 $207,015,664 ============ ============ ============ ============ NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value............ $ 192,301 $ 218,025 $ 424,194 $ 582,579 Paid-in capital........................................... 197,104,514 215,338,367 476,477,226 231,497,928 ------------ ------------ ------------ ------------ 197,296,815 215,556,392 476,901,420 232,080,507 Accumulated undistributed net investment income (loss).... 71,622 (401,453) (1,164,409) 380,444 Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions............................ (1,136,976) (8,416,370) 3,916,606 (30,243,169) Unrealized appreciation (depreciation) on investments..... (815,359) (1,923,307) (3,585,438) 4,744,239 Unrealized appreciation (depreciation) on foreign exchange transactions............................................. -- -- -- 53,643 ------------ ------------ ------------ ------------ Net assets............................................. $195,416,102 $204,815,262 $476,068,179 $207,015,664 ============ ============ ============ ============ *Cost Long-term investment securities (unaffiliated).......... $189,551,299 $208,794,394 $460,889,029 $187,683,059 ============ ============ ============ ============ Long-term investment securities (affiliated)............ $ 130,268 $ -- $ -- $ 129,003 ============ ============ ============ ============ Short-term investment securities........................ $ -- $ -- $ 69,987,672 $ 2,093,000 ============ ============ ============ ============ Foreign Cash............................................ $ -- $ -- $ -- $ 1,174,952 ============ ============ ============ ============
High Yield Tax Exempt Bond Insured Fund Fund ------------- ----------- ASSETS: Long-term Investment securities, at value* (unaffiliated). $ 268,822,114 $64,879,687 Long-term Investment securities, at value* (affiliated)... 864,000 -- Short term investment securities, at value*............... -- 6,153,836 Repurchase agreements (cost equals market)................ -- -- ------------- ----------- Total investments....................................... 269,686,114 71,033,523 ------------- ----------- Cash...................................................... -- 958 Foreign cash*............................................. 142,231 -- Deposit with broker for securities sold short............. 129,710 -- Receivable for: Shares of beneficial interest sold...................... 829,281 5,351 Dividends and interest.................................. 5,292,873 953,715 Investments sold........................................ 24,578,848 3,365,520 Prepaid expenses and other assets......................... 3,365 799 Due from investment adviser for expense reimbursements/fee waivers.................................................. 69,748 1,313 Unrealized appreciation on forward currency contracts..... -- -- ------------- ----------- Total assets.............................................. 300,732,170 75,361,179 ------------- ----------- LIABILITIES: Payable for: Shares of beneficial interest redeemed.................. 7,306,556 21,919 Investments purchased................................... 2,009,495 3,320,610 Investment advisory and management fees................. 195,381 29,877 Distribution and service maintenance fees............... 156,436 28,023 Trustees' fees and expenses............................. 47,010 31,481 Other accrued expenses.................................. 216,551 94,496 Line of credit.......................................... 40,303,004 -- Dividends payable......................................... 560,431 54,876 Due to custodian.......................................... 5,717,449 -- Unrealized depreciation on forward currency contracts..... -- -- ------------- ----------- Total liabilities......................................... 56,512,313 3,581,282 ------------- ----------- Net assets................................................ $ 244,219,857 $71,779,897 ============= =========== NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value............ $ 533,335 $ 55,654 Paid-in capital........................................... 330,868,508 67,496,084 ------------- ----------- 331,401,843 67,551,738 Accumulated undistributed net investment income (loss).... (841,067) (36,286) Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions............................ (101,347,464) 752,519 Unrealized appreciation (depreciation) on investments..... 15,017,906 3,511,926 Unrealized appreciation (depreciation) on foreign exchange transactions............................................. (11,361) -- ------------- ----------- Net assets............................................. $ 244,219,857 $71,779,897 ============= =========== *Cost Long-term investment securities (unaffiliated).......... $ 253,922,062 $61,367,761 ============= =========== Long-term investment securities (affiliated)............ $ 746,146 $ -- ============= =========== Short-term investment securities........................ $ -- $ 6,153,836 ============= =========== Foreign Cash............................................ $ 153,592 $ -- ============= ===========
See Notes to Financial Statements 5 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005 -- (unaudited) (continued)
U.S. Government Strategic High Yield Core Bond Securities GNMA Bond Bond Fund Fund Fund Fund Fund ------------ --------------- ------------ ----------- ------------ Class A (unlimited shares authorized): Net assets................................................... $171,252,162 $170,703,374 $333,940,582 $99,070,730 $116,155,704 Shares of beneficial interest issued and outstanding......... 16,852,801 18,171,427 29,782,137 27,906,664 25,413,395 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 10.16 $ 9.39 $ 11.21 $ 3.55 $ 4.57 Maximum sales charge (4.75% of offering price)............... 0.51 0.47 0.56 0.18 0.23 ------------ ------------ ------------ ----------- ------------ Maximum offering price to public............................. $ 10.67 $ 9.86 $ 11.77 $ 3.73 $ 4.80 ============ ============ ============ =========== ============ Class B (unlimited shares authorized): Net assets................................................... $ 4,911,753 $ 24,832,116 $ 92,269,657 $42,682,200 $ 56,436,241 Shares of beneficial interest issued and outstanding......... 484,578 2,642,284 8,207,116 12,028,991 12,328,559 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 10.14 $ 9.40 $ 11.24 $ 3.55 $ 4.58 ============ ============ ============ =========== ============ Class C (unlimited shares authorized): Net assets................................................... $ 4,091,947 $ 9,279,772 $ 49,857,940 $65,262,734 $ 63,244,159 Shares of beneficial interest issued and outstanding......... 403,132 988,812 4,430,168 18,322,277 13,760,657 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 10.15 $ 9.38 $ 11.25 $ 3.56 $ 4.60 ============ ============ ============ =========== ============ Class I (unlimited shares authorized): Net assets................................................... $ 1,388,269 $ -- $ -- $ -- $ -- Shares of beneficial interest issued and outstanding......... 136,443 -- -- -- $ -- Net asset value, offering and redemption price per share..... $ 10.17 $ -- $ -- $ -- $ -- ============ ============ ============ =========== ============ Class Z (unlimited shares authorized): Net assets................................................... $ 13,771,971 $ -- $ -- $ -- $ 8,383,753 Shares of beneficial interest issued and outstanding......... 1,353,123 -- -- -- 1,830,886 Net asset value, offering and redemption price per share..... $ 10.18 $ -- $ -- $ -- $ 4.58 ============ ============ ============ =========== ============
Tax Exempt Insured Fund ----------- Class A (unlimited shares authorized): Net assets................................................... $58,604,941 Shares of beneficial interest issued and outstanding......... 4,544,409 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 12.90 Maximum sales charge (4.75% of offering price)............... 0.64 ----------- Maximum offering price to public............................. $ 13.54 =========== Class B (unlimited shares authorized): Net assets................................................... $ 7,788,337 Shares of beneficial interest issued and outstanding......... 603,551 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 12.90 =========== Class C (unlimited shares authorized): Net assets................................................... $ 5,386,619 Shares of beneficial interest issued and outstanding......... 417,471 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................ $ 12.90 =========== Class I (unlimited shares authorized): Net assets................................................... $ -- Shares of beneficial interest issued and outstanding......... -- Net asset value, offering and redemption price per share..... $ -- =========== Class Z (unlimited shares authorized): Net assets................................................... $ -- Shares of beneficial interest issued and outstanding......... -- Net asset value, offering and redemption price per share..... $ -- ===========
See Notes to Financial Statements 6 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the six months ended September 30, 2005 -- (unaudited)
Core Bond U.S. Government Fund Securities Fund GNMA Fund ---------- --------------- ---------- INCOME: Dividends* (unaffiliated)....................................................... $ 39,627 $ -- $ -- Interest (unaffiliated)......................................................... 5,068,259 4,646,140 9,542,123 Interest (affiliated)........................................................... 6,875 -- -- ---------- ---------- ---------- Total investment income........................................................ 5,114,761 4,646,140 9,542,123 ---------- ---------- ---------- EXPENSES: Investment advisory and management fees......................................... 591,585 681,355 1,125,992 Distribution and service maintenance fees: Class A........................................................................ 300,516 304,263 593,316 Class B........................................................................ 24,891 131,744 492,702 Class C........................................................................ 21,723 49,373 269,655 Service fees -- Class I......................................................... 1,743 -- -- Transfer agent fees: Class A........................................................................ 188,896 216,429 379,409 Class B........................................................................ 7,161 36,962 124,887 Class C........................................................................ 7,592 13,551 71,115 Class I........................................................................ 1,534 -- -- Class Z........................................................................ -- -- -- Class X........................................................................ -- -- 665 Registration fees: Class A........................................................................ 10,549 13,359 29,125 Class B........................................................................ 4,575 8,235 10,614 Class C........................................................................ 8,235 11,895 9,150 Class I........................................................................ -- -- -- Class Z........................................................................ -- -- -- Custodian fees.................................................................. 16,388 24,264 55,660 Reports to shareholders......................................................... -- 45,707 54,645 Audit and tax fees.............................................................. 14,640 15,043 17,344 Legal fees...................................................................... 1,916 4,489 6,954 Trustees' fees and expenses..................................................... 3,344 6,277 14,330 Interest expense................................................................ -- 1,061 -- Interest expense on securities sold short....................................... -- -- -- Other expenses.................................................................. 5,549 7,551 13,950 ---------- ---------- ---------- Total expenses before fee waivers, expense reimbursements and custody credits.. 1,210,837 1,571,558 3,269,513 Fees waived and expenses reimbursed by investment advisor...................... (136,007) (413,142) (338,789) Custody credits earned on cash balances........................................ (2,663) (7) -- ---------- ---------- ---------- Net expenses................................................................... 1,072,167 1,158,409 2,930,724 ---------- ---------- ---------- Net investment income (loss)...................................................... 4,042,594 3,487,731 6,611,399 ---------- ---------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)............................ 221,810 746,496 2,341,923 Net realized foreign exchange gain (loss) on other assets and liabilities......... -- -- -- ---------- ---------- ---------- Net realized gain (loss) on investments and foreign currencies.................... 221,810 746,496 2,341,923 ---------- ---------- ---------- Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 419,566 177,179 (433,967) Change in unrealized appreciation (depreciation) on investments (affiliated)...... (3,125) -- -- Change in unrealized foreign exchange gain (loss) on other assets and liabilities. -- -- -- Change in unrealized appreciation (depreciation) on securities sold short......... 12,109 -- -- ---------- ---------- ---------- Net unrealized gain (loss) on investments and foreign currencies.................. 428,550 177,179 (433,967) ---------- ---------- ---------- Net realized and unrealized gain (loss) on investments and foreign currencies..... 650,360 923,675 1,907,956 ---------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $4,692,954 $4,411,406 $8,519,355 ========== ========== ========== *Net of foreign withholding taxes on interest and dividends of.................... $ 1,106 $ -- $ -- ========== ========== ==========
See Notes to Financial Statements 7 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the six months ended September 30, 2005 -- (unaudited) (continued)
Strategic High Yield Tax Exempt Bond Fund Bond Fund Insured Fund ---------- ----------- ------------ INCOME: Dividends* (unaffiliated)....................................................... $ 44,172 $ 183,068 $ -- Interest (unaffiliated)......................................................... 5,355,467 14,532,351 1,624,975 Interest (affiliated)........................................................... 7,425 44,000 -- ---------- ----------- ---------- Total investment income........................................................ 5,407,064 14,759,419 1,624,975 ---------- ----------- ---------- EXPENSES: Investment advisory and management fees......................................... 545,986 1,189,285 188,224 Distribution and service maintenance fees: Class A........................................................................ 134,089 273,196 106,602 Class B........................................................................ 201,829 293,897 42,738 Class C........................................................................ 255,038 329,883 29,135 Service fees -- Class I......................................................... -- -- -- Transfer agent fees: Class A........................................................................ 95,228 190,318 87,332 Class B........................................................................ 49,806 69,781 10,134 Class C........................................................................ 61,273 76,909 6,487 Class I........................................................................ -- -- -- Class Z........................................................................ -- -- -- Class X........................................................................ -- -- -- Registration fees: Class A........................................................................ 5,490 12,040 5,490 Class B........................................................................ 9,150 5,789 2,745 Class C........................................................................ 12,810 4,758 10,065 Class I........................................................................ -- -- -- Class Z........................................................................ -- -- -- Custodian fees.................................................................. 88,320 47,535 20,830 Reports to shareholders......................................................... 13,725 25,860 12,316 Audit and tax fees.............................................................. 19,763 22,100 15,912 Legal fees...................................................................... 2,196 2,562 3,651 Trustees' fees and expenses..................................................... 2,404 9,159 1,712 Interest expense................................................................ -- 74,160 -- Interest expense on securities sold short....................................... -- 47,345 -- Other expenses.................................................................. 5,492 8,550 4,861 ---------- ----------- ---------- Total expenses before fee waivers, expense reimbursements and custody credits.. 1,502,599 2,683,127 548,234 Fees waived and expenses reimbursed by investment advisor...................... (707) (201,613) (8,000) Custody credits earned on cash balances........................................ (54,831) (3,761) (371) ---------- ----------- ---------- Net expenses................................................................... 1,447,061 2,477,753 539,863 ---------- ----------- ---------- Net investment income (loss)...................................................... 3,960,003 12,281,666 1,085,112 ---------- ----------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)............................ 1,634,655 7,928,857 445,087 Net realized foreign exchange gain (loss) on other assets and liabilities......... 61,133 -- -- ---------- ----------- ---------- Net realized gain (loss) on investments and foreign currencies.................... 1,695,788 7,928,857 445,087 ---------- ----------- ---------- Change in unrealized appreciation (depreciation) on investments (unaffiliated).... 1,322,870 1,107,694 109,677 Change in unrealized appreciation (depreciation) on investments (affiliated)...... (3,375) (20,000) -- Change in unrealized foreign exchange gain (loss) on other assets and liabilities. 72,588 (11,178) -- Change in unrealized appreciation (depreciation) on securities sold short......... 10,172 (21,438) -- ---------- ----------- ---------- Net unrealized gain (loss) on investments and foreign currencies.................. 1,402,255 1,055,078 109,677 ---------- ----------- ---------- Net realized and unrealized gain (loss) on investments and foreign currencies..... 3,098,043 8,983,935 554,764 ---------- ----------- ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $7,058,046 $21,265,601 $1,639,876 ========== =========== ========== *Net of foreign withholding taxes on interest and dividends of.................... $ 1,770 $ -- $ -- ========== =========== ==========
See Notes to Financial Statements 8 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS
Core Bond Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 4,042,594 $ 8,309,014 Net realized gain (loss) on investments and foreign currencies........................ 221,810 (309,327) Net unrealized appreciation (depreciation) on investments and foreign currencies...... 428,550 (4,282,289) ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 4,692,954 3,717,398 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (3,542,842) (6,506,042) Net investment income (Class B)....................................................... (86,538) (181,405) Net investment income (Class C)....................................................... (75,534) (171,529) Net investment income (Class I)....................................................... (29,464) (90,049) Net investment income (Class Z)....................................................... (347,553) (1,999,235) Net investment income (Class X)....................................................... -- -- Net realized gain on securities (Class A)............................................. -- (1,959,055) Net realized gain on securities (Class B)............................................. -- (60,672) Net realized gain on securities (Class C)............................................. -- (57,101) Net realized gain on securities (Class I)............................................. -- (23,429) Net realized gain on securities (Class Z)............................................. -- (308,101) Net realized gain on securities (Class X)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (4,081,931) (11,356,618) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (9,768,940) (14,834,404) ------------ ------------ Total increase (decrease) in net assets................................................. (9,157,917) (22,473,624) NET ASSETS: Beginning of period..................................................................... 204,574,019 227,047,643 ------------ ------------ End of period+.......................................................................... $195,416,102 $204,574,019 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ 71,622 $ 110,959 ============ ============
U.S. Government Securities Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 3,487,731 $ 7,208,210 Net realized gain (loss) on investments and foreign currencies........................ 746,496 498,065 Net unrealized appreciation (depreciation) on investments and foreign currencies...... 177,179 (7,299,365) ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 4,411,406 406,919 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (3,201,917) (6,470,275) Net investment income (Class B)....................................................... (399,585) (861,625) Net investment income (Class C)....................................................... (149,844) (338,902) Net investment income (Class I)....................................................... -- -- Net investment income (Class Z)....................................................... -- -- Net investment income (Class X)....................................................... -- -- Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- Net realized gain on securities (Class I)............................................. -- -- Net realized gain on securities (Class Z)............................................. -- -- Net realized gain on securities (Class X)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (3,751,346) (7,670,802) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (7,708,301) (37,234,269) ------------ ------------ Total increase (decrease) in net assets................................................. (7,048,241) (44,498,152) NET ASSETS: Beginning of period..................................................................... 211,863,503 256,361,655 ------------ ------------ End of period+.......................................................................... $204,815,262 $211,863,503 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ (401,453) $ (137,838) ============ ============
See Notes to Financial Statements 9 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 6,611,399 $ 13,358,453 Net realized gain (loss) on investments and foreign currencies........................ 2,341,923 3,461,416 Net unrealized appreciation (depreciation) on investments and foreign currencies...... (433,967) (11,084,127) ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 8,519,355 5,735,742 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (5,690,228) (10,096,979) Net investment income (Class B)....................................................... (1,333,513) (2,758,584) Net investment income (Class C)....................................................... (729,388) (1,598,731) Net investment income (Class I)....................................................... -- -- Net investment income (Class Z)....................................................... -- -- Net investment income (Class X)....................................................... (10,305) (262,529) Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- Net realized gain on securities (Class I)............................................. -- -- Net realized gain on securities (Class Z)............................................. -- -- Net realized gain on securities (Class X)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (7,763,434) (14,716,823) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (21,163,242) (65,557,982) ------------ ------------ Total increase (decrease) in net assets................................................. (20,407,321) (74,539,063) NET ASSETS: Beginning of period..................................................................... 496,475,500 571,014,563 ------------ ------------ End of period+.......................................................................... $476,068,179 $496,475,500 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ (1,164,409) $ (12,374) ============ ============
Strategic Bond Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 3,960,003 $ 6,136,237 Net realized gain (loss) on investments and foreign currencies........................ 1,695,788 5,304,488 Net unrealized appreciation (depreciation) on investments and foreign currencies...... 1,402,255 (2,719,620) ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 7,058,046 8,721,105 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (1,949,455) (3,082,007) Net investment income (Class B)....................................................... (893,478) (2,151,861) Net investment income (Class C)....................................................... (1,124,425) (1,452,318) Net investment income (Class I)....................................................... -- (116,760) Net investment income (Class Z)....................................................... -- -- Net investment income (Class X)....................................................... -- -- Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- Net realized gain on securities (Class I)............................................. -- -- Net realized gain on securities (Class Z)............................................. -- -- Net realized gain on securities (Class X)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (3,967,358) (6,802,946) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) 70,528,864 25,739,107 ------------ ------------ Total increase (decrease) in net assets................................................. 73,619,552 27,657,266 NET ASSETS: Beginning of period..................................................................... 133,396,112 105,738,846 ------------ ------------ End of period+.......................................................................... $207,015,664 $133,396,112 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ 380,444 $ 387,799 ============ ============
See Notes to Financial Statements 10 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
High Yield Bond Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 12,281,666 $ 24,869,216 Net realized gain (loss) on investments and foreign currencies........................ 7,928,857 10,420,354 Net unrealized appreciation (depreciation) on investments and foreign currencies...... 1,055,078 6,067,124 ------------ ------------ Increase (decrease) in net assets resulting from operations............................. 21,265,601 41,356,694 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (5,570,535) (9,494,138) Net investment income (Class B)....................................................... (1,913,809) (4,894,387) Net investment income (Class C)....................................................... (2,145,493) (4,060,550) Net investment income (Class I)....................................................... -- -- Net investment income (Class Z)....................................................... (1,613,202) (6,995,720) Net investment income (Class X)....................................................... -- -- Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- Net realized gain on securities (Class I)............................................. -- -- Net realized gain on securities (Class Z)............................................. -- -- Net realized gain on securities (Class X)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (11,243,039) (25,444,795) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (83,696,237) 3,593,907 ------------ ------------ Total increase (decrease) in net assets................................................. (73,673,675) 19,505,806 NET ASSETS: Beginning of period..................................................................... 317,893,532 298,387,726 ------------ ------------ End of period+.......................................................................... $244,219,857 $317,893,532 ============ ============ +Includes accumulated undistributed net investment income (loss)........................ $ (841,067) $ (1,879,694) ============ ============
Tax Exempt Insured Fund -------------------------- For the six months ended For the year September 30, ended 2005 March 31, (unaudited) 2005 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 1,085,112 $ 2,462,678 Net realized gain (loss) on investments and foreign currencies........................ 445,087 314,275 Net unrealized appreciation (depreciation) on investments and foreign currencies...... 109,677 (1,499,351) ----------- ------------ Increase (decrease) in net assets resulting from operations............................. 1,639,876 1,277,602 ----------- ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (917,129) (2,053,393) Net investment income (Class B)....................................................... (101,097) (297,218) Net investment income (Class C)....................................................... (69,111) (145,957) Net investment income (Class I)....................................................... -- -- Net investment income (Class Z)....................................................... -- -- Net investment income (Class X)....................................................... -- -- Net realized gain on securities (Class A)............................................. -- (842,208) Net realized gain on securities (Class B)............................................. -- (135,607) Net realized gain on securities (Class C)............................................. -- (82,894) Net realized gain on securities (Class I)............................................. -- -- Net realized gain on securities (Class Z)............................................. -- -- Net realized gain on securities (Class X)............................................. -- -- ----------- ------------ Total distributions to shareholders..................................................... (1,087,337) (3,557,277) ----------- ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) (5,505,686) (12,519,717) ----------- ------------ Total increase (decrease) in net assets................................................. (4,953,147) (14,799,392) NET ASSETS: Beginning of period..................................................................... 76,733,044 91,532,436 ----------- ------------ End of period+.......................................................................... $71,779,897 $ 76,733,044 =========== ============ +Includes accumulated undistributed net investment income (loss)........................ $ (36,286) $ (34,061) =========== ============
See Notes to Financial Statements 11 SunAmerica Income Funds FINANCIAL HIGHLIGHTS
CORE BOND FUND -------------- Net gain (loss) on Net investments Dividend Net Net Asset (both Dividends from net Asset Assets Value Net realized Total from from net realized Total Value end of beginning investment and investment investment Return of gain on Distri- end of Total period Period Ended of period income(1) unrealized) operations income capital investments butions period Return(2) (000's ) - ------------------ --------- ---------- ----------- ---------- ---------- --------- ----------- ------- ------ --------- -------- Class A - - 11/01/99-10/31/00 $ 9.85 $0.62 $(0.21) $ 0.41 $(0.60) $(0.06) $ -- $(0.66) $ 960 4.35% $ 3,858 11/01/00-10/31/01 9.60 0.55 0.65 1.20 (0.51) -- -- (0.51) 10.29 12.85 5,901 11/01/01-03/31/02# 10.29 0.20 (0.48) (0.28) (0.19) -- -- (0.19) 9.82 (2.77) 5,312 04/01/02-03/31/03 9.82 0.34 0.58 0.92 (0.42) -- -- (0.42) 10.32 9.58 21,260 04/01/03-03/31/04 10.32 0.24 0.20 0.44 (0.27) -- -- (0.27) 10.49 4.30 140,877 04/01/04-03/31/05 10.49 0.40 (0.20) 0.20 (0.43) -- (0.13) (0.56) 10.13 1.94 167,787 04/01/05-09/30/05+ 10.13 0.21 0.03 0.24 (0.21) -- -- (0.21) 10.16 2.39 171,252 Class B - - 11/01/99-10/31/00 $ 9.85 $0.58 $(0.24) $ 0.34 $(0.55) $(0.05) $ -- $(0.60) $ 9.59 3.70% $ 4,937 11/01/00-10/31/01 9.59 0.48 0.64 1.12 (0.45) -- -- (0.45) 10.26 11.93 6,444 11/01/01-03/31/02# 10.26 0.17 (0.49) (0.32) (0.16) -- -- (0.16) 9.78 (3.14) 3,220 04/01/02-03/31/03 9.78 0.31 0.55 0.86 (0.36) -- -- (0.36) 10.28 8.90 7,198 04/01/03-03/31/04 10.28 0.18 0.19 0.37 (0.19) -- -- (0.19) 10.46 3.68 5,683 04/01/04-03/31/05 10.46 0.33 (0.19) 0.14 (0.36) -- (0.13) (0.49) 10.11 1.37 4,977 04/01/05-09/30/05+ 10.11 0.18 0.03 0.21 (0.18) -- -- (0.18) 10.14 2.06 4,912 Class C* - - 11/01/99-10/31/00 $ 9.85 $0.57 $(0.23) $ 0.34 $(0.55) $(0.05) $ -- $(0.60) $ 9.59 3.70% $ 2,778 11/01/00-10/31/01 9.59 0.48 0.64 1.12 (0.45) -- -- (0.45) 10.26 11.93 4,541 11/01/01-03/31/02# 10.26 0.18 (0.49) (0.31) (0.16) -- -- (0.16) 9.79 (3.04) 3,772 04/01/02-03/31/03 9.79 0.31 0.56 0.87 (0.36) -- -- (0.36) 10.30 9.00 5,598 04/01/03-03/31/04 10.30 0.18 0.19 0.37 (0.19) -- -- (0.19) 10.48 3.88 5,352 04/01/04-03/31/05 10.48 0.33 (0.20) 0.13 (0.36) -- (0.13) (0.49) 10.12 1.27 4,780 04/01/05-09/30/05+ 10.12 0.18 0.03 0.21 (0.18) -- -- (0.18) 10.15 2.05 4,092 Class I - - 07/10/00-10/31/00@ $ 9.85 $0.19 $(0.02) $ 0.17 $(0.18) $(0.02) $ -- $(0.20) $ 9.62 1.85% $ 19,971 11/01/00-10/31/01 9.62 0.57 0.65 1.22 (0.52) -- -- (0.52) 10.32 13.01 22,782 11/01/01-03/31/02# 10.32 0.21 (0.52) (0.31) (0.19) -- -- (0.19) 9.82 (3.01) 21,707 02/01/02-03/31/03 9.82 0.40 0.55 0.95 (0.44) -- -- (0.44) 10.33 9.80 20,617 04/01/03-03/31/04 10.33 0.20 0.24 0.44 (0.27) -- -- (0.27) 10.50 4.35 3,092 04/01/04-03/31/05 10.50 0.42 (0.20) 0.22 (0.44) -- (0.13) (0.57) 10.15 2.14 1,405 04/01/05-09/30/05+ 10.15 0.21 0.03 0.24 (0.22) -- -- (0.22) 10.17 2.34 1,388 Class Z* - - 07/10/00-10/31/00@ $ 9.64 $0.19 $(0.03) $ 0.16 $(0.18) $(0.02) $ -- $(0.20) $ 9.60 1.81% $317,842 11/01/00-10/31/01 9.60 0.59 0.65 1.24 (0.55) -- -- (0.55) 10.29 13.37 323,570 11/01/01-03/31/02# 10.29 0.21 (0.47) (0.26) (0.21) -- -- (0.21) 9.82 (2.57) 297,081 04/01/02-03/31/03 9.82 0.47 0.53 1.00 (0.49) -- -- (0.49) 10.33 10.38 268,226 04/01/03-03/31/04 10.33 0.32 0.18 0.50 (0.33) -- -- (0.33) 10.50 4.92 72,043 04/01/04-03/31/05 10.50 0.50 (0.23) 0.27 (0.49) -- (0.13) (0.62) 10.15 2.62 25,626 04/01/05-09/30/05+ 10.15 0.26 0.01 0.27 (0.24) -- -- (0.24) 10.18 2.68 13,772
Ratio of net Ratio of investment expenses income to to average average Portfolio net assets net assets Turnover - ---------- ---------- --------- 1.29%(4) 6.45%(4) 94% 1.31(4) 5.51(4) 215 1.33(3)(4) 5.03(3)(4) 94 1.33(4) 3.72(4) 179 1.25(4) 2.50(4) 229 1.15(4) 3.91(4) 203 1.10(3)(4) 4.09(3)(4) 103 1.95%(4) 5.95%(4) 94% 1.97(4) 4.88(4) 215 1.98(3)(4) 4.36(3)(4) 94 1.98(4) 3.15(4) 179 1.92(4) 1.75(4) 229 1.81(4) 3.25(4) 203 1.75(3)(4) 3.44(3)(4) 103 1.95%(4) 5.84%(4) 94% 1.97(4) 4.79(4) 215 1.98(3)(4) 4.39(3)(4) 94 1.98(4) 3.13(4) 179 1.93(4) 1.77(4) 229 1.81(4) 3.25(4) 203 1.75(3)(4) 3.43(3)(4) 103 1.16%(3)(4) 6.18%(3)(4) 94% 1.22(4) 5.68(4) 215 1.23(3)(4) 5.12(3)(4) 94 1.24(4) 3.98(4) 179 1.23(4) 2.39(4) 229 1.07(4) 3.98(4) 203 1.00(3)(4) 4.19(3)(4) 103 0.95%(3)(4) 6.39%(3)(4) 94% 0.97(4) 5.97(4) 215 0.74(3)(4) 5.82(3)(4) 94 0.67 4.56 179 0.66(4) 2.97(4) 229 0.61(4) 4.41(4) 203 0.53(3)(4) 4.65(3)(4) 103
- -------- * In conjunction with the reorganization on November 16, 2001, Class C was redesignated as Class II and Class II was redesignated as Class Z. Effective February 23, 2004, Class II was redesignated to Class C. @ Inception date of class. # Effective November 16, 2001, the SunAmerica Core Bond, a newly created portfolio of the SunAmerica Income Funds, acquired all the assets and liabilities of the North American Core Bond Fund. + Unaudited (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)Annualized (4)Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
10/31/00 10/31/01 03/31/02(3) 03/31/03 03/31/04 03/31/05 09/30/05(3)+ -------- -------- ----------- -------- -------- -------- ------------ Core Bond Fund Class A 0.49% 0.04% 0.19% 0.11% 0.10% 0.11% 0.12% Core Bond Fund Class B 0.50 0.03 0.32 0.23 0.15 0.31 0.36 Core Bond Fund Class C 0.54 0.04 0.32 0.18 0.14 0.38 0.62 Core Bond Fund Class I -- 0.03 0.13 0.05 0.05 0.06 0.11 Core Bond Fund Class Z 0.01(3) 0.03 0.02 -- 0.02 0.05 0.11
See Notes to Financial Statements 12 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
U.S. GOVERNMENT SECURITIES FUND ------------------------------- Net gain (loss) on Net investments Net Net Asset (both Dividends Dividend Asset Assets Value Net realized Total from from net from net Total Value end of beginning investment and investment investment realized Distri- end of Total period Period Ended of period income(1) unrealized) operations income gains butions period Return(2) (000's) - ------------------ --------- ---------- ----------- ---------- ---------- -------- ------- ------ --------- -------- Class A - - 03/31/01 $8.31 $0.45 $ 0.60 $ 1.05 $(0.45) $ -- $(0.45) $8.91 13.06% $169,524 03/31/02 8.91 0.37(5) (0.08) 0.29 (0.40) -- (0.40) 8.80 3.25 187,615 03/31/03 8.80 0.37 0.86 1.23 (0.40) -- (0.40) 9.63 14.14 210,848 03/31/04 9.63 0.30 0.01 0.31 (0.30) -- (0.30) 9.64 3.29 204,618 03/31/05 9.64 0.31 (0.26) 0.05 (0.32) -- (0.32) 9.37 0.61 174,905 04/01/05-09/30/05+ 9.37 0.16 0.03 0.19 (0.17) -- (0.17) 9.39 2.07 170,703 Class B - - 03/31/01 $8.31 $0.39 $ 0.61 $ 1.00 $(0.40) $ -- $(0.40) $8.91 12.29% $ 32,085 03/31/02 8.91 0.31(5) (0.08) 0.23 (0.34) -- (0.34) 8.80 2.55 38,878 03/31/03 8.80 0.30 0.87 1.17 (0.33) -- (0.33) 9.64 13.51 62,595 03/31/04 9.64 0.24 0.01 0.25 (0.24) -- (0.24) 9.65 2.62 36.605 03/31/05 9.65 0.25 (0.27) (0.02) (0.26) -- (0.26) 9.37 (0.14) 27,013 04/01/05-09/30/05+ 9.37 0.13 0.04 0.17 (0.14) -- (0.14) 9.40 1.85 24,832 Class C* - - 03/31/01 $8.32 $0.37 $ 0.61 $ 0.98 $(0.39) $ -- $(0.39) $8.91 12.10% $ 3,303 03/31/02 8.91 0.29(5) (0.09) 0.20 (0.32) -- (0.32) 8.79 2.40 12,209 03/31/03 8.79 0.30 0.87 1.17 (0.33) -- (0.33) 9.63 13.52 24,322 03/31/04 9.63 0.24 0.01 0.25 (0.24) -- (0.24) 9.64 2.62 15,139 03/31/05 9.64 0.25 (0.27) (0.02) (0.26) -- (0.26) 9.36 (0.14) 9,945 04/01/05-09/30/05+ 9.36 0.13 0.03 0.16 (0.14) -- (0.14) 9.38 1.74 9,280
Ratio of net Ratio of investment expenses income to to average average Portfolio net assets net assets Turnover - ---------- ---------- --------- 1.49% 5.27% 1,561% 1.42 4.12(5) 570 1.12(3) 3.88(3) 614 0.99(3) 3.14(3) 256 0.99(3) 3.26(3) 246 0.99(3)(4) 3.43(3)(4) 187 2.17% 4.59% 1,561% 2.09(3) 3.42(3)(5) 570 1.76(3) 3.20(3) 614 1.64(3) 2.45(3) 256 1.64(3) 2.61(3) 246 1.64(3)(4) 2.78(3)(4) 187 2.20%(3) 4.48(3)% 1,561% 2.10(3) 3.33(3)(5) 570 1.75(3) 3.18(3) 614 1.64(3) 2.45(3) 256 1.64(3) 2.61(3) 246 1.64(3)(4) 2.78(3)(4) 187
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. + Unaudited (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)Annualized (4)Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
03/31/01 03/31/02 03/31/03 03/31/04 03/31/05 09/30/05(3)+ -------- -------- -------- -------- -------- ------------ U.S. Government Securities Fund Class A -- % -- % 0.21% 0.37% 0.39% 0.37% U.S. Government Securities Fund Class B -- 0.01 0.23 0.37 0.43 0.45 U.S. Government Securities Fund Class C 1.18 0.16 0.27 0.38 0.48 0.62
(5)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 13 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
GNMA FUND --------- Net gain (loss) on Net investments Net Net Asset (both Dividends Dividends Asset Assets Value Net realized Total from from net from net Total Value end of beginning investment and investment investment realized Distri- and of Total period Period Ended of period income(1) unrealized) operations income gains butions period Return(2) (000's) - ------------------ --------- ---------- ----------- ---------- ---------- --------- ------- ------ --------- -------- Class A - - 03/31/01 $10.42 $0.61 $ 0.72 $1.33 $(0.62) $(0.01) $(0.63) $11.12 13.10% $ 72,092 03/31/02 11.12 0.51(6) (0.03) 0.48 (0.51) (0.32) (0.83) 10.77 4.45 118,440 03/31/03 10.77 0.37 0.93 1.30 (0.42) (0.11) (0.53) 11.54 12.29 255,096 03/31/04 11.54 0.28 0.07 0.35 (0.31) (0.20) (0.51) 11.38 3.06 337,467 03/31/05 11.38 0.31 (0.16) 0.15 (0.33) -- (0.33) 11.20 1.41 338,031 04/01/05-09/30/05+ 11.20 0.19 0.01 0.20 (0.19) -- (0.19) 11.21 1.78 333,940 Class B - - 03/31/01 $10.44 $0.53 $ 0.74 $1.27 $(0.55) $(0.01) $(0.56) $11.15 12.45% $ 38,190 03/31/02 11.15 0.44(6) (0.03) 0.41 (0.44) (0.32) (0.76) 10.80 3.78 90,011 03/31/03 10.80 0.30 0.93 1.23 (0.35) (0.11) (0.46) 11.57 11.54 189,323 03/31/04 11.57 0.21 0.06 0.27 (0.23) (0.20) (0.43) 11.41 2.39 136,923 03/31/05 11.41 0.24 (0.16) 0.08 (0.26) -- (0.26) 11.23 0.75 102,497 04/01/05-09/30/05+ 11.23 0.13 0.03 0.16 (0.15) -- (0.15) 11.24 1.45 92,270 Class C* - - 03/31/01 $10.46 $0.49 $ 0.77 $1.26 $(0.55) $(0.01) $(0.56) $11.16 12.33% $ 15,851 03/31/02 11.16 0.44(6) (0.33) 0.41 (0.44) (0.32) (0.76) 10.81 3.78 38,258 03/31/03 10.81 0.29 0.94 1.23 (0.35) (0.11) (0.46) 11.58 11.53 137,173 03/31/04 11.58 0.20 0.07 0.27 (0.23) (0.20) (0.43) 11.42 2.39 88,184 03/31/05 11.42 0.24 (0.16) 0.08 (0.26) -- (0.26) 11.24 0.75 54,936 04/01/05-09/30/05+ 11.24 0.13 0.03 0.16 (0.15) -- (0.15) 11.25 1.45 49,858
Ratio of net Ratio of investment expenses income to to average average Portfolios net assets net assets Turnover - ---------- ---------- ---------- 0.99%(5) 5.78%(5) 833% 0.99(4)(5) 4.61(4)(5)(6) 537 0.99(5) 3.36(5) 421 0.99(5) 2.51(5) 213 0.99(5) 2.73(5) 204 0.99(3)(5) 2.89(3)(5) 72 1.64%(5) 5.11%(5) 833% 1.64(4)(5) 3.96(4)(5)(6) 537 1.64(5) 2.71(5) 421 1.64(5) 1.77(5) 213 1.64(5) 2.10(5) 204 1.64(3)(5) 2.24(3)(5) 72 1.64%(5) 4.99%(5) 833% 1.64(4)(5) 3.96(4)(5)(6) 537 1.64(5) 2.59(5) 421 1.64(5) 1.74(5) 213 1.64(5) 2.11(5) 204 1.64(3)(5) 2.24(3)(5) 72
- -------- * Effective February 23, 2004, Class ll was redesignated to Class C. @ Inception date of class. + Unaudited (1)Calculated based upon average outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)Annualized (4)The ratios reflect an expense cap of 0.99%, 1.64% and 1.64% for Class A, Class B and Class C, respectively, which are net of custody credits of 0.01% for Class A, Class B, and Class C or waivers/reimbursements if applicable. (5)Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
03/31/01 03/31/02 03/31/03 03/31/04 03/31/05 09/30/05(3)+ -------- -------- -------- -------- -------- ------------ GNMA Fund Class A 0.30% 0.19% 0.13% 0.18% 0.17% 0.12% GNMA Fund Class B 0.33 0.19 0.14 0.16 0.18 0.16 GNMA Fund Class C 0.62 0.21 0.13 0.16 0.18 0.18
(6)The Trust adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting discount an 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 to March 31, 2002 have not been restated to reflect this change in accounting policy. See Notes to Financial Statements 14 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
STRATEGIC BOND FUND** --------------------- Net gain (loss) on Net investments Dividends Net Asset (both Dividends from net Asset Value Net realized Total from from net realized Total Value beginning investment and investment investment gain on Return of Distri- end of Total Period Ended of period+ income (1)+ unrealized)+ operations+ income+ investments+ capital+ butions period+ Return(2) - ------------------- ---------- ----------- ------------ ----------- ---------- ------------ --------- ------- ------- --------- Class A - - 11/01/99-10/31/00 $3.29 $0.28 $(0.14) $0.14 $(0.26) $ -- $(0.04) $(0.30) $3.13 4.09% 11/01/00-10/31/01 3.13 0.28 (0.09) 0.19 (0.28) -- -- (0.28) 3.04 6.48 11/01/01-03/31/02 3.04 0.11(6) (0.03) 0.08 (0.12) -- -- (0.12) 3.00 2.48 04/01/02-03/31/03 3.00 0.20 0.06 0.26 (0.18) -- -- (0.18) 3.08 9.07(7) 04/01/03-03/31/04 3.08 0.21 0.33 0.54 (0.21) -- -- (0.21) 3.41 18.04 04/01/04-03/31/05 3.41 0.20 0.11 0.31 (0.23) -- -- (0.23) 3.49 9.36 04/01/05-09/30/05++ 3.49 0.08 0.07 0.15 (0.09) -- -- (0.09) 3.55 4.35 Class B - - 11/01/99-10/31/00 $3.30 $0.26 $(0.14) $0.12 $(0.24) $ -- $(0.04) $(0.28) $3.14 3.33% 11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 5.65 11/01/01-03/31/02 3.05 0.10(6) (0.04) 0.06 (0.11) -- -- (0.11) 3.00 2.05 04/01/02-03/31/03 3.00 0.18 0.06 0.24 (0.16) -- -- (0.16) 3.08 8.36(7) 04/01/03-03/31/04 3.08 0.19 0.33 0.52 (0.19) -- -- (0.19) 3.41 17.29 04/01/04-03/31/05 3.41 0.18 0.10 0.28 (0.21) -- -- (0.21) 3.48 8.35 04/01/05-09/30/05++ 3.48 0.08 0.07 0.15 (0.08) -- -- (0.08) 3.55 4.29 Class C* - - 11/01/99-10/31/00 $3.31 $0.26 $(0.16) $0.10 $(0.24) $ -- $(0.03) $(0.27) $3.14 3.32% 11/01/00-10/31/01 3.14 0.26 (0.09) 0.17 (0.26) -- -- (0.26) 3.05 5.65 11/01/01-03/31/02 3.05 0.10(6) (0.03) 0.07 (0.11) -- -- (0.11) 3.01 2.25 04/01/02-03/31/03 3.01 0.19 0.05 0.24 (0.16) -- -- (0.16) 3.09 8.47(7) 04/01/03-03/31/04 3.09 0.19 0.34 0.53 (0.20) -- -- (0.20) 3.42 17.43 04/01/04-03/31/05 3.42 0.18 0.11 0.29 (0.21) -- -- (0.21) 3.50 8.65 04/01/05-09/30/05++ 3.50 0.07 0.07 0.14 (0.08) -- -- (0.08) 3.56 3.99
Ratio Net of net Assets Ratio of investment end of expense income to period to average average Portfolio (000's) net assets net assets Turnover - ------- ---------- ---------- --------- $ 6,439 1.55%(5) 8.70%(5) 46% 8,478 1.57(5) 9.07(5) 49 35,365 1.52(3)(4)(5) 8.09(3)(4)(5)(6) 99 37,136 1.62(8) 6.93(8) 65 43,840 1.55(5)(9) 6.41(9) 69 59,279 1.40(5)(8) 5.94(5)(8) 188 99,071 1.35(4)(11) 5.08(4)(11) 71 $15,131 2.20%(5) 8.00%(5) 46% 9,964 2.21(5) 8.41(5) 49 26,892 2.19(3)(4)(5) 7.48(3)(4)(5)(6) 99 27,879 2.28(8) 8.26(8) 65 36,110 2.19(5)(9) 5.76(5)(9) 69 37,250 2.05(5)(8) 5.32(5)(8) 188 42,682 2.03(4)(11) 4.40(4)(11) 71 $13,056 2.20%(5) 8.04%(5) 46% 11,461 2.22(5) 8.41(5) 49 14,289 2.22(3)(4)(5) 7.34(3)(4)(5)(6) 99 14,423 2.17(5)(8) 6.37(5)(8) 65 22,064 2.18(5)(9) 5.78(5)(9) 69 36,867 2.05(5)(8) 5.29(5)(8) 188 65,263 2.03(4)(11) 4.41(4)(11) 71
- -------- * In conjunction with the reorganization on November 16, 2001, Class C was redesignated as Class II. Effective February 23, 2004, Class II was redesignated to Class C. ** 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. ++ Unaudited (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)The ratios reflect an expense cap of 2.22%, for Class C, which is net of custody credits of 0.02% for Class C, Class A and Class B are gross of custody credits of 0.03% for the period ended March 31, 2002. (4)Annualized (5)Net of the following expense reimbursements and custody credits, if applicable (based on average net assets):
10/31/00 10/31/01 03/31/02(4) 03/31/03 03/31/04 03/31/05 09/30/05++ -------- -------- ----------- -------- -------- -------- ---------- Strategic Bond Fund Class A 0.32% 0.17% 0.01% -- % 0.02% 0.03% -- % Strategic Bond Fund Class B 0.32 0.18 0.01 -- 0.02 0.02 0.00 Strategic Bond Fund Class C 0.32 0.17 0.08 0.11 0.02 0.03 0.00
(6)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. (8)Net of custody credits of 0.01%. (9)Gross of custody credits of 0.02%. (10)Net of custody credits of 0.02%. (11)Net of custody credits of 0.07%. See Notes to Financial Statements 15 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
HIGH YIELD BOND FUND** ---------------------- Net gain (loss) on Net investments Dividends Net Net Asset (both Dividends from net Asset Assets Value Net realized Total from from net realized Total Value end of beginning investment and investment investment gain an Distri- and of Total period Period Ended of period+ income(1)+ unrealized)+ operations+ income+ investment butions+ period+ Return(2) (000's) - ------------------- ---------- ---------- ------------ ----------- ---------- ---------- -------- ------- --------- -------- CLASS A - - 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 11/01/01-03/31/02 4.25 0.18(6) (0.11) 0.07 (0.19) -- (0.19) 4.13 1.67 59,075 04/01/02-03/31/03 4.13 0.37 (0.49) (0.12) (0.35) -- (0.35) 3.66 (2.45) 66,521 04/01/03-03/31/04 3.66 0.33 0.60 0.93 (0.36) -- (0.36) 4.23 26.05 93,818 04/01/04-03/31/05 4.23 0.33 0.21 0.54 (0.34) -- (0.34) 4.43 13.26 101,661 04/01/05-09/30/05++ 4.43 0.17 0.13 0.30 (0.16) -- (0.16) 4.57 6.91 116,156 CLASS B - - 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 11/01/01-03/31/02 4.26 0.16(6) (0.11) 0.05 (0.18) -- (0.18) 4.13 1.23 67,599 04/01/02-03/31/03 4.13 0.35 (0.49) (0.14) (0.33) -- (0.33) 3.66 (3.06) 57,596 04/01/03-03/31/04 3.66 0.31 0.60 0.91 (0.33) -- (0.33) 4.24 25.55 73,751 04/01/04-03/31/05 4.24 0.31 0.20 0.51 (0.31) -- (0.31) 4.44 12.57 61,961 04/01/05-09/30/05++ 4.44 0.16 0.13 0.29 (0.15) -- (0.15) 4.58 6.56 56,436 CLASS C* - - 08/21/00-10/31/00@ $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 11/01/01-03/31/02 4.27 0.17(6) (0.11) 0.06 (0.18) -- (0.18) 4.15 1.43 20,670 04/01/02-03/31/03 4.15 0.34 (0.48) (0.14) (0.33) -- (0.33) 3.68 (2.97) 27,814 04/01/03-03/31/04 3.68 0.30 0.60 0.90 (0.33) -- (0.33) 4.25 25.14 52,868 04/01/04-03/31/05 4.25 0.30 0.22 0.52 (0.31) -- (0.31) 4.46 12.77 65,385 04/01/05-09/30/05++ 4.46 0.16 0.13 0.29 (0.15) -- (0.15) 4.60 6.54 63,244 CLASS Z* - - 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 11/01/01-03/31/02 4.25 0.19(6) (0.11) 0.08 (0.20) -- (0.20) 4.13 1.98 62,245 04/01/02-03/31/03 4.13 0.39 (0.49) (0.10) (0.37) -- (0.37) 3.66 (1.84) 61,439 04/01/03-03/31/04 3.66 0.36 0.59 0.95 (0.38) -- (0.38) 4.23 26.83 77,951 04/01/04-03/31/05 4.23 0.35 0.23 0.58 (0.37) -- (0.37) 4.44 14.18 88,887 04/01/05-09/30/05++ 4.44 0.26 0.05 0.31 (0.17) -- (0.17) 4.58 7.21 8,384
Ratio of net Ratio of investment expense income to to average average Portfolio net assets net assets Turnover - ---------- ---------- --------- 1.38%(5) 10.13%(5) 57% 1.57(5) 9.73(5) 83 1.48(3)(4) 9.56(3)(4)(6) 61 1.56 10.26 117 1.49 8.15 126 1.38(5) 7.59(5) 85 1.36(4)(5) 7.76(4)(5) 33 2.10%(5) 9.41%(5) 57% 2.21(5) 9.17(5) 83 2.12(3)(4) 8.91(3)(4)(6) 61 2.18 9.63 117 2.14 7.52 126 2.03(5) 7.04(5) 85 2.01(4)(5) 7.18(4)(5) 33 2.07%(4) 9.10%(4) 57% 2.21(5) 9.02(5) 83 2.17(3)(4)(5) 8.86(3)(4)(5)(6) 61 2.15(5) 9.67(5) 117 2.11(5) 7.53(5) 126 2.03(5) 6.97(5) 85 2.01(4)(5) 7.18(4)(5) 33 0.96%(5) 10.41%(5) 57% 1.15(5) 10.45(5) 83 0.93(3)(4)(5) 10.04(3)(4)(5)(6) 61 0.92(5) 10.90(5) 117 0.88(5) 8.80(5) 126 0.81(5) 8.23(5) 85 0.79(4)(5) 8.48(4)(5) 33
- -------- * In conjunction with the reorganization on November 16, 2001, Class C was redesigned as Class II and Class II was redesignated as Class Z. Effective February 23, 2004, Class II was redesignated to Class C. ** 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. (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)Gross of custody credits of 0.01%. (4)Annualized (5)Net of the following expense reimbursement and custody credits, if applicable (based on average net assets):
10/31/00 10/31/01 03/31/02(4) 03/31/03 03/31/04 03/31/05 09/30/05(4)++ -------- -------- ----------- -------- -------- -------- ------------- High Yield Bond Fund Class A 0.43% 0.18% -- % -- % -- % 0.08% 0.13% High Yield Bond Fund Class B 0.42 0.18 -- -- -- 0.07 0.14 High Yield Bond Fund Class C -- 0.18 0.01 0.10 0.01 0.09 0.13 High Yield Bond Fund Class Z 0.60 0.18 0.03 0.03 0.00 0.05 0.10
(6)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 16 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
TAX EXEMPT INSURED FUND ----------------------- Net gain (loss) on Net investments Net Net Asset (both Dividends Distributions Asset Assets Value Net realized Total from from net from net Total Value end of beginning investment and investment investment realized Distri- end of Total period Period Ended of period income(1) unrealized) operations income gains butions period Return(2) (000's) - ------------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- Class A - - 03/31/01 $12.37 $0.56 $ 0.66 $1.22 $(0.57) $ -- $(0.57) $13.02 10.08% $72,394 03/31/02 13.02 0.52(6) (0.30) 0.22 (0.52) -- (0.52) 12.72 1.70 75,071 03/31/03 12.72 0.41 0.73 1.14 (0.43) (0.09) (0.52) 13.34 9.08 78,358 03/31/04 13.34 0.39 0.24 0.63 (0.37) (0.44) (0.81) 13.16 4.86 69,098 03/31/05 13.16 0.41 (0.18) 0.23 (0.41) (0.17) (0.58) 12.81 1.83 62,032 04/01/05-09/30/05+ 12.81 0.20 0.09 0.29 (0.20) -- (0.20) 12.90 2.23 58,605 Class B - - 03/31/01 $12.37 $0.47 $ 0.66 $1.13 $(0.48) $ -- $(0.48) $13.02 9.31% $16,302 03/31/02 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43) 12.72 0.95 18,090 03/31/03 12.72 0.32 0.73 1.05 (0.34) (0.09) (0.43) 13.34 8.30 19,031 03/31/04 13.34 0.30 0.23 0.53 (0.27) (0.44) (0.71) 13.16 4.10 16,632 03/31/05 13.16 0.33 (0.18) 0.15 (0.32) (0.17) (0.49) 12.82 1.21 9,000 04/01/05-09/30/05+ 12.82 0.16 0.07 0.23 (0.15) -- (0.15) 12.90 1.82 7,788 Class C* - - 03/31/01 $12.37 $0.47 $ 0.66 $1.13 $(0.48) $ -- $(0.48) $13.02 9.32% $ 721 03/31/02 13.02 0.41(6) (0.28) 0.13 (0.43) -- (0.43) 12.72 0.99 4,095 03/31/03 12.72 0.31 0.74 1.05 (0.34) (0.09) (0.43) 13.34 8.32 6,451 03/31/04 13.34 0.30 0.24 0.54 (0.28) (0.44) (0.72) 13.16 4.14 5,803 03/31/05 13.16 0.32 (0.18) 0.14 (0.32) (0.17) (0.49) 12.81 1.12 5,701 04/01/05-09/30/05+ 12.81 0.15 0.09 0.24 (0.15) -- (0.15) 12.90 1.90 5,387
Ratio of net Ratio of investment expenses income to to average average Portfolio net assets net assets Turnover - ---------- ---------- --------- 1.26% 4.41% 24% 1.29(3) 3.99(3)(6) 140 1.24 3.12 195 1.26 2.90 131 1.25 3.14 153 1.31(4) 2.99(4) 43 1.97% 3.71% 24% 2.04(3) 3.22(3)(6) 140 1.97 2.39 195 1.96 2.20 131 1.94 2.44 153 1.96(4) 2.35(4) 43 1.95%(5) 3.73%(5) 24% 1.95(3)(5) 3.21(3)(5)(6) 140 1.95(5) 2.40(5) 195 1.95(5) 2.21(5) 131 1.95(5) 2.44(5) 153 1.95(4)(5) 2.35(4)(5) 43
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. + Unaudited. (1)Calculated based upon average shares outstanding. (2)Total return is not annualized and does not reflect sales load, but does include expense reimbursements. (3)The ratios for Class C 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):
03/31/01 03/31/02 03/31/03 03/31/04 03/31/05 09/30/05(4)+ -------- -------- -------- -------- -------- ------------ Tax Exempt Insured Fund Class C 1.59% 0.56% 0.00% 0.12% 0.09% 0.27%
(6)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 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 17 SunAmerica Core Bond Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Federal National Mortgage Association... 23.2% Financial Services...................... 17.4 Federal Home Loan Mortgage Corporation.. 12.3 Banks................................... 5.5 Government Agency....................... 5.2 Utilities............................... 5.1 Repurchase Agreement.................... 3.8 Telecommunications...................... 3.6 Broadcasting & Media.................... 3.2 U.S. Treasury Bonds..................... 2.1 Food, Beverage & Tobacco................ 1.9 Insurance............................... 1.9 U.S. Treasury Notes..................... 1.9 Leisure & Tourism....................... 1.6 Automative.............................. 1.5 Energy Sources.......................... 1.4 Chemicals............................... 1.3 Transportation.......................... 0.9 Medical Products........................ 0.7 Business Services....................... 0.6 Metals & Mining......................... 0.6 Pharmaceuticals......................... 0.6 Retail.................................. 0.6 Forest Products......................... 0.5 Health Services......................... 0.5 Real Estate Companies................... 0.5 Conglomerate............................ 0.5 Communication Equipment................. 0.4 Aerospace & Military Technology......... 0.3 Building Materials...................... 0.3 Computer Software....................... 0.2 Energy Services......................... 0.1 Machinery............................... 0.1 Government National Mortgage Association 0.1 ----- 100.4% =====
Credit Quality+# Government -- Treasury 4.2% Government -- Agency.. 37.1 AAA................... 5.9 AA.................... 2.7 A..................... 12.9 BBB................... 18.0 BB.................... 5.9 B..................... 6.2 CCC................... 2.6 CC.................... 0.1 C..................... 0.1 Not Rated@............ 4.3 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Represents debt issues that either have no rating or, the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 18 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount (Note 2) --------------------------------------------------------------------- ASSET-BACKED SECURITIES -- 7.4% Banks -- 1.1% Banc of America Commercial Mtg., Inc. 2005-3 Commercial Mtg. Certificate AJ 4.77% due 10/01/05(1)(3)..................... $ 500,000 $ 486,189 Banc of America Commercial Mtg., Inc. 2005-5 Commercial Mtg. Certificate AJ 5.33% due 10/10/45(1)........................ 800,000 804,031 Wachovia Bank Commercial Mtg. Trust 2005-WL5A Commercial Mtg. Class B 4.00% due 01/15/18*(1)(4).................... 850,000 849,159 ---------- 2,139,379 ---------- Financial Services -- 6.3% American Express Credit Account Master Trust 2005-7 Asset-Backed Certificate Class B 4.04% due 03/16/15(4)........................ 600,000 599,833 Bear Stearns Asset-Backed Securities 2005-HE3, Class 1A1 3.72% due 03/25/35(4)........................ 156,410 156,432 Bear Stearns Commercial Mtg. Inc. 2005-PWR8 Mtg., Class B 4.82% due 06/11/41(1)........................ 1,000,000 969,579 Bear Stearns Commercial Mtg. Securities, Inc. Commercial Mtg. Certificates, Series 2001-Top4, Class A3 5.61% due 11/15/33(1)........................ 100,000 103,556 Bear Stearns Commercial Mtg. Securities, Inc. Commercial Mtg. Certificates, Series 1999-C1, Class A2 6.02% due 02/14/31(1)........................ 525,000 544,307 Capital One Multi Asset Execution Trust 2003-B2 Note Class B2 3.50% due 02/17/09........................... 120,000 119,312 Chase Funding Mtg. Loan 2003-6 Asset-Backed Certificate Class 1A6 4.59% due 05/25/15........................... 550,000 541,482 Citigroup Mtg. Loan Trust, Inc. 2005-WF2 Mtg., Class AF6B 5.55% due 08/25/35(2)(5)..................... 450,000 450,540 DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1999-CG3, Class A1B 7.34% due 10/10/32(1)........................ 1,000,000 1,086,205 Equity One ABS, Inc. 2004-1 Mtg. Pass-thru Certificate Class AF6 4.21% due 04/25/34........................... 1,100,000 1,061,544 Granite Mtg., PLC Series 1 Note Class Al3 3.82% due 01/20/44(2)(4)..................... 200,000 200,458
Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------------- Financial Services (continued) GS Mtg. Securities Corp. II Series 2005-GG4, Class AJ 4.78% due 07/10/39(1)........................ $ 500,000 $ 487,665 Interstar Millennium Trust Series 2003 5G Mtg. Backed Note Class A2 3.87% due 01/20/36(2)(4)..................... 99,167 99,316 Interstar Millennium Trust Series 2003 Class A2 4.13% due 05/27/35(2)(4)..................... 253,120 253,960 Lehman Brothers Floating Rate Commercial Mtg. Trust 2005 Llf C4 Commercial Mtg. Class A2 3.93% due 07/15/18*(1)(4).................... 250,000 249,675 Lehman Brothers Floating Rate Commercial Mtg. Trust 2005 Llf C4 Mtg. Pass-thru 3.98% due 07/15/18*(1)(4).................... 250,000 249,678 MBNA Corp. 2004-A10, Class A 3.85% due 03/15/12(4)........................ 100,000 100,208 Morgan Stanley Capital I 2005-T19, Class AJ 4.99% due 10/01/05(1)(3)..................... 300,000 296,960 Morgan Stanley Capital I 2005-T19, Class B 5.06% due 10/01/05(1)(3)..................... 100,000 98,743 Morgan Stanley Capital I 2005-T19, Class C 5.16% due 10/01/05(1)(3)..................... 100,000 98,489 Morgan Stanley Capital I 2005-T19, Class D 5.29% due 10/01/05(1)(3)..................... 150,000 148,423 Morgan Stanley Dean Witter Capital I Commercial Mtg. Certificates, Series 2002-Top1, Class A4 6.66% due 02/15/33(1)........................ 1,850,600 1,993,062 Morgan Stanley Dean Witter Capital I Commercial Mtg. Certificates, Series 2000-LIF2, Class A2 7.20% due 10/15/33(1)........................ 2,125,000 2,321,578 ----------- 12,231,005 ----------- Total Asset-Backed Securities (cost $14,581,501)........................... 14,370,384 ----------- BONDS & NOTES -- 37.6% Aerospace & Military Technology -- 0.3% Raytheon Co. Notes 6.75% due 08/15/07........................... 596,000 615,866 ----------- Automotive -- 1.5% Cooper-Standard Automotive, Inc. Sr. Sub. Notes 8.38% due 12/15/14........................... 60,000 50,400 DaimlerChrysler North America Holding Corp. Sr. Notes 4.88% due 06/15/10........................... 200,000 196,004
19 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ BONDS & NOTES (continued) Automotive (continued) Dana Corp. Sr. Notes 5.85% due 01/15/15........................ $ 200,000 $ 156,876 Dominion Resources, Inc. Sr. Notes, Series B 5.95% due 06/15/35........................ 220,000 214,915 Dura Operating Corp. Sr. Notes 8.63% due 04/15/12........................ 137,000 121,930 Ford Motor Co. Bonds 6.38% due 02/01/29........................ 232,000 166,460 Ford Motor Co. Notes 7.45% due 07/16/31........................ 275,000 214,500 Hertz Corp. Sr. Notes 4.70% due 10/02/06........................ 517,000 511,409 Hertz Corp. Notes 6.90% due 08/15/14........................ 358,000 331,582 Hertz Corp. Sr. Notes 7.40% due 03/01/11........................ 722,000 699,638 Hertz Corp. Notes 7.63% due 06/01/12........................ 355,000 340,837 Navistar International Corp. Sr. Notes, Series B 6.25% due 03/01/12........................ 9,000 8,550 ---------- 3,013,101 ---------- Banks -- 3.8% American Express Centurion Bank Notes 3.93% due 11/16/09(4)..................... 337,000 335,195 Bank of America Corp. Sub. Notes 7.80% due 09/15/16........................ 394,000 479,621 BankBoston Capital Trust IV Guaranteed Capital Securities 4.39% due 06/08/28(4)..................... 622,000 602,167 Charter One Bank FSB Sub. Notes 6.38% due 05/15/12........................ 1,024,000 1,110,858 China Development Bank Notes 5.00% due 10/15/15(5)..................... 400,000 395,440 Credit Suisse First Boston New York Sub. Notes 6.50% due 05/01/08*....................... 337,000 351,383 First Maryland Capital II Guaranteed Sub. Capital Income Securities 4.54% due 02/01/27(4)..................... 508,000 496,649 HSBC Bank USA Sub. Notes 5.63% due 08/15/35........................ 220,000 216,699
Principal Value Security Description Amount (Note 2) ----------------------------------------------------------- Banks (continued) Independence Community Bank Corp. Sr. Notes 4.90% due 09/23/10.................. $190,000 $ 188,397 JPMorgan Chase Bank NA Sub. Notes 6.13% due 11/01/08.................. 359,000 373,627 Key Bank USA National Assoc. Sub. Notes 7.00% due 02/01/11.................. 249,000 273,702 PNC Funding Corp. Guaranteed Sr. Notes 5.75% due 08/01/06.................. 565,000 570,502 Popular North America, Inc. Notes 4.25% due 04/01/08.................. 614,000 606,025 Sovereign Bancorp, Inc. Sr. Notes 4.80% due 09/01/10*................. 380,000 377,299 Wachovia Corp. Sub. Debentures 5.50% due 08/01/35.................. 440,000 429,259 Washington Mutual Bank Notes 4.50% due 08/25/08.................. 438,000 435,426 Wells Fargo & Co. Notes 3.97% due 09/15/09(4)............... 205,000 205,308 ---------- 7,447,557 ---------- Broadcasting & Media -- 2.8% Affinity Group, Inc. Sr. Sub. Notes 9.00% due 02/15/12.................. 155,000 155,000 AMFM, Inc. Sr. Notes 8.00% due 11/01/08.................. 494,000 531,923 Charter Communications Holdings, LLC Sr. Notes 11.13% due 01/15/11................. 500,000 385,000 Clear Channel Communications, Inc. Sr. Debentures 6.88% due 06/15/18.................. 420,000 430,569 Cox Communications, Inc. Debentures 7.63% due 06/15/25.................. 232,000 267,241 Cox Communications, Inc. Notes 7.75% due 11/01/10.................. 917,000 1,014,723 Historic TW, Inc. Guaranteed Sr. Notes 6.63% due 05/15/29.................. 470,000 491,624 News America, Inc. Guaranteed Sr. Debentures 7.30% due 04/30/28.................. 220,000 244,226 Nexstar Finance, Inc. Sr. Sub. Notes 7.00% due 01/15/14.................. 360,000 324,000
20 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------- BONDS & NOTES (continued) Broadcasting & Media (continued) Paxson Communications Corp. Guaranteed Sr. Sub. Notes 12.25% due 01/15/09(6).......... $630,000 $ 611,100 Time Warner Entertainment Co. LP Sr. Debentures 8.38% due 03/15/23.............. 499,000 605,281 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes 10.00% due 03/01/11............. 375,000 354,375 ---------- 5,415,062 ---------- Building Materials -- 0.3% American Standard, Inc. Sr. Notes 7.63% due 02/15/10.............. 516,000 566,114 ---------- Business Services -- 0.6% Monitronics International, Inc. Sr. Sub. Notes 11.75% due 09/01/10............. 230,000 232,300 PHH Corp. Notes 6.00% due 03/01/08.............. 562,000 571,643 Seitel, Inc. Sr. Notes 11.75% due 07/15/11............. 250,000 277,500 Service Corp. International Sr. Notes 6.75% due 04/01/16.............. 165,000 165,825 ---------- 1,247,268 ---------- Chemicals -- 1.3% BCI US Finance Corp. Sr. Sec. Notes 9.10% due 07/15/10*(4).......... 475,000 479,750 Cytec Industries, Inc. Notes 5.50% due 10/01/10.............. 185,000 184,204 Cytec Industries, Inc. Notes 6.00% due 10/01/15.............. 555,000 552,945 Dow Chemical Co. Debentures 7.38% due 03/01/23.............. 432,000 513,315 ICI North America Debentures 8.88% due 11/15/06.............. 425,000 443,438 Lubrizol Corp. Sr. Notes 5.88% due 12/01/08.............. 210,000 215,550 Lubrizol Corp. Sr. Debentures 6.50% due 10/01/34.............. 220,000 230,663 ---------- 2,619,865 ---------- Communication Equipment -- 0.4% Motorola, Inc. Debentures 6.50% due 09/01/25.............. 718,000 782,288 ----------
Principal Value Security Description Amount (Note 2) ----------------------------------------------------------- Computer Software -- 0.2% Sungard Data Systems, Inc. Sr. Sub. Notes 10.25% due 08/15/15*............... $230,000 $ 232,875 Unisys Corp. Sr. Notes 8.00% due 10/15/12................. 120,000 117,900 ---------- 350,775 ---------- Computers & Business Equipment -- 0.0% Activant Solutions, Inc. Sr. Notes 9.50% due 04/01/10*(4)............. 80,000 81,600 ---------- Energy Services -- 0.1% Hanover Compressor Co. Guaranteed Sr. Notes 9.00% due 06/01/14................. 250,000 277,812 ---------- Energy Sources -- 1.0% Calpine Corp. Sec. Notes 8.75% due 07/15/13*................ 150,000 106,125 Encore Acquisition Co. Sr. Sub. Notes 6.00% due 07/15/15*................ 117,000 114,075 Encore Acquisition Co. Sr. Sub. Notes 6.25% due 04/15/14................. 68,000 67,660 Enterprise Products Operating LP Sr. Notes 4.95% due 06/01/10................. 420,000 412,788 Enterprise Products Operating LP, Series B Guaranteed Sr. Notes 5.00% due 03/01/15................. 185,000 175,533 Hilcorp Finance Co. Sr. Notes 10.50% due 09/01/10*............... 350,000 385,000 Indiantown Cogeneration LP, Series A-9 9.26% due 12/15/10................. 202,814 220,640 Pennzoil Co. Debentures 10.25% due 11/01/05................ 132,000 132,534 PTT Public Co., Ltd Bonds 5.88% due 08/03/35*................ 261,000 250,566 ---------- 1,864,921 ---------- Financial Services -- 9.0% Associates Corp. of North America Sr. Debentures 6.95% due 11/01/18................. 190,000 221,822 BAE Systems Holdings, Inc. Guaranteed Notes 4.75% due 08/15/10*................ 788,000 778,172 BAE Systems Holdings, Inc. Guaranteed Notes 5.20% due 08/15/15*................ 562,000 554,267
21 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ BONDS & NOTES (continued) Financial Services (continued) BAE Systems Holdings, Inc. Guaranteed Notes 6.40% due 12/15/11*....................... $ 789,000 $ 841,172 Caterpillar Financial Services Corp. Sr. Notes 4.30% due 06/01/10........................ 380,000 374,318 Caterpillar Financial Services Corp. Notes 4.70% due 03/15/12........................ 409,000 406,314 Chukchansi Economic Development Authority Sr. Notes 14.50% due 06/15/09*...................... 500,000 602,500 Consolidated Communications Holdings, Inc. Sr. Notes 9.75% due 04/01/12........................ 253,000 269,445 FBG Finance, Ltd. Notes 5.88% due 06/15/35*....................... 220,000 215,618 Ford Motor Credit Co. Notes 5.70% due 01/15/10........................ 258,000 234,370 Ford Motor Credit Co. Sr. Notes 5.80% due 01/12/09........................ 378,000 352,705 Ford Motor Credit Co. Notes 6.38% due 11/05/08........................ 471,000 452,732 Ford Motor Credit Co. Notes 7.00% due 10/01/13........................ 150,000 139,103 General Electric Capital Corp. Notes 2.80% due 01/15/07........................ 579,000 567,396 General Electric Capital Corp. Notes 5.38% due 03/15/07........................ 562,000 569,122 General Electric Capital Corp. Bonds 6.75% due 03/15/32........................ 657,000 772,782 General Motors Acceptance Corp. Notes 6.07% due 12/01/14(4)..................... 235,000 197,568 General Motors Acceptance Corp. Bonds 8.00% due 11/01/31........................ 1,250,000 1,091,461 HSBC Finance Corp. Global Sr. Notes 4.75% due 07/15/13........................ 789,000 770,089 ING USA Global Funding Trust Notes 4.50% due 10/01/10........................ 380,000 374,826 John Deere Capital Corp. Sr. Notes 4.50% due 08/25/08........................ 940,000 936,335 JPMorgan Chase & Co. Global Sub. Note 5.15% due 10/01/15........................ 456,000 453,192
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------------- Financial Services (continued) Lehman Brothers Holdings, Inc. Notes 6.63% due 01/18/12............................... $380,000 $ 413,370 MBNA Corp. Tranche Sr. 00058 4.63% due 09/15/08............................... 632,000 631,539 Merrill Lynch & Co., Inc. Tranche Trust 00476 4.79% due 08/04/10............................... 304,000 302,950 National Rural Utilites Cooperative Finance Corp. Sec. Collateral Trust Bonds 3.88% due 02/15/08............................... 448,000 440,997 NGC Corp. Capital Trust Guaranteed Sub. Notes, Series B 8.32% due 06/01/27............................... 375,000 336,563 Nisource Finance Corp. Guaranteed Notes 5.45% due 09/15/20............................... 190,000 185,856 PNC Bank, National Assoc. Notes 4.88% due 09/21/17............................... 380,000 368,765 Pricoa Global Funding I Notes 4.63% due 06/25/12*.............................. 190,000 186,285 Principal Life Global Funding Sec. Notes 5.13% due 06/28/07*.............................. 482,000 484,212 PX Escrow Corp. Sr. Sub. Disc. Notes 9.63% due 02/01/06(6)............................ 150,000 146,438 Residential Capital Corp. Notes 6.38% due 06/30/10*.............................. 795,000 805,398 Residential Capital Corp. Notes 6.88% due 06/30/15*.............................. 259,000 271,020 Resona Preferred Global Securities Cayman, Ltd. Bonds 7.19% due 12/29/05*(3)........................... 190,000 196,700 SLM Corp., Series A Tranche Trust 00087 3.81% due 07/27/09(4)............................ 190,000 189,848 Sprint Capital Corp. Guaranteed Sr. Notes 6.88% due 11/15/28............................... 403,000 445,184 Transamerica Finance Corp. Sr. Notes 6.40% due 09/15/08............................... 205,000 214,940 Washington Mutual, Inc. Sr. Notes 5.25% due 09/15/17............................... 190,000 187,187 Xlliac Global Funding Tranche Trust 00024 4.80% due 08/10/10*.............................. 570,000 566,320 ----------- 17,548,881 -----------
22 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------- BONDS & NOTES (continued) Food, Beverage & Tobacco -- 1.8% Alliance One International, Inc. Sr. Sub. Notes 12.75% due 11/15/12*............. $625,000 $ 571,875 American Stores Co. Debentures 8.00% due 06/01/26............... 535,000 496,864 Archer-Daniels-Midland Co. Notes 5.38% due 09/15/35............... 220,000 213,159 Coca-Cola Enterprises, Inc. Debentures 8.50% due 02/01/22............... 480,000 631,904 ConAgra Foods, Inc. Notes 6.00% due 09/15/06............... 338,000 342,236 ConAgra, Inc. Sr. Notes 7.13% due 10/01/26............... 215,000 239,274 Monsanto Co. Sr. Notes 5.50% due 08/15/25............... 941,000 916,571 ---------- 3,411,883 ---------- Forest Products -- 0.4% Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23............... 160,000 157,400 Georgia-Pacific Corp. Sr. Notes 8.00% due 01/15/14............... 175,000 191,625 Packaging Corp. of America Sr. Notes 5.75% due 08/01/13............... 262,000 253,466 Pliant Corp. Sr. Sec. Notes 11.13% due 09/01/09.............. 249,000 214,140 ---------- 816,631 ---------- Health Services -- 0.5% HCA, Inc. Sr. Notes 6.95% due 05/01/12............... 390,000 401,168 Psychiatric Solutions, Inc. Sr. Sub. Notes 7.75% due 07/15/15*.............. 250,000 258,125 Tenet Healthcare Corp. Sr. Notes 6.50% due 06/01/12............... 50,000 46,625 Tenet Healthcare Corp. Notes 7.38% due 02/01/13............... 300,000 284,250 Triad Hospitals, Inc. Sr. Sub. Notes 7.00% due 11/15/13............... 25,000 25,312 ---------- 1,015,480 ---------- Insurance -- 1.7% Allstate Financial Global Funding Notes 5.25% due 02/01/07*.............. 190,000 191,179
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- Insurance (continued) Americo Life, Inc. Notes 7.88% due 05/01/13*.......................... $318,000 $ 330,429 Chubb Corp. Notes 6.00% due 11/15/11........................... 267,000 282,046 ING Security Life Institutional Funding Notes 2.70% due 02/15/07*.......................... 578,000 560,416 Kingsway America Inc. Guaranteed Sr. Notes 7.50% due 02/01/14........................... 319,000 330,308 Liberty Mutual Group Notes 6.50% due 03/15/35*.......................... 220,000 204,034 Metropolitan Life Global Funding I Tranche Trust 00011 4.25% due 07/30/09*.......................... 407,000 400,923 Metropolitan Life Global Funding I Tranche Trust 00019 4.63% due 08/19/10*.......................... 185,000 183,742 MIC Financing Trust I Pass-Thru Certificates 8.38% due 02/01/27*.......................... 176,000 181,935 Ohio Casualty Corp. Notes 7.30% due 06/15/14........................... 521,000 561,546 ---------- 3,226,558 ---------- Leisure & Tourism -- 1.5% American Airlines, Inc. Pass-Thru Certificates, Series 2001-1, Class A2 6.82% due 05/23/11........................... 525,000 481,747 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class A-1 7.20% due 01/02/19+.......................... 152,924 151,975 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class B 7.63% due 01/02/15(7)+....................... 950,432 790,399 Atlas Air, Inc. Pass-Thru Certificates, Series 2000-1 8.71% due 01/02/19+.......................... 137,360 142,271 Circus & Eldorado Silver Legacy Capital Corp. Mtg. Notes 10.13% due 03/01/12.......................... 300,000 313,500 Continental Airlines, Inc. Pass-Thru Certificates, Series 1998-1, Class A 6.65% due 09/15/17........................... 57,487 55,566 Continental Airlines, Inc. Pass-Thru Certificates, Series 1997-4, Class A 6.90% due 01/02/18........................... 80,297 78,481 Delta Airlines, Inc. Notes 8.30% due 12/15/29(7)(8)+.................... 175,000 31,500
23 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ BONDS & NOTES (continued) Leisure & Tourism (continued) Delta Airlines, Inc. Sr. Notes 10.00% due 08/15/08(7)(8)+........... $225,000 $ 40,500 Harrahs Operating Co., Inc. Guaranteed Sr. Notes 5.75% due 10/01/17*.................. 192,000 187,934 MGM Mirage, Inc. Sr. Notes 5.88% due 02/27/14................... 325,000 308,750 Riviera Holdings Corp. Guaranteed Sr. Notes 11.00% due 06/15/10#................. 125,000 135,000 United Airlines, Inc. Pass-Thru Certificates, Series 2000-2, Class A1 7.03% due 10/01/10(7)(8)+............ 7,801 7,637 Worldspan LP Sr. Notes 10.04% due 02/15/11*(4).............. 275,000 242,000 ---------- 2,967,260 ---------- Medical Products -- 0.7% CDRV Investors, Inc. Sr. Notes 9.63% due 01/01/15(6)................ 225,000 128,250 Genetech, Inc. Sr. Notes 5.25% due 07/15/35*.................. 939,000 904,726 MEDIQ/PRN Life Support Services, Inc. Sr. Notes 11.00% due 06/01/08+(5)(11).......... 10,000 0 Universal Hospital Services, Inc. Sr. Notes 10.13% due 11/01/11.................. 390,000 399,750 ---------- 1,432,726 ---------- Metals & Mining -- 0.2% Barrick Gold Finance Co. Guaranteed Notes 5.80% due 11/15/34................... 220,000 216,265 Newmont Mining Corp. Notes 8.63% due 05/15/11................... 190,000 223,486 ---------- 439,751 ---------- Pharmaceuticals -- 0.4% American Home Products Notes 6.95% due 03/15/11................... 320,000 351,515 Merck & Co., Inc. Notes 2.50% due 03/30/07................... 337,000 326,839 ---------- 678,354 ---------- Real Estate Companies -- 0.3% EOP Operating LP Notes 8.38% due 03/15/06................... 583,000 593,100 ----------
Principal Value Security Description Amount (Note 2) ---------------------------------------------------------- Retail -- 0.5% Rent-Way, Inc. Sr. Notes 11.88% due 06/15/10............... $ 415,000 $ 456,500 Wal-Mart Stores, Inc. Notes 5.25% due 09/01/35................ 528,000 510,964 ---------- 967,464 ---------- Telecommunications -- 3.1% Alltel Corp. Notes 4.66% due 05/17/07................ 440,000 439,591 American Cellular Corp., Series B Sr. Notes 10.00% due 08/01/11............... 470,000 512,300 AT&T Wireless Services, Inc. Sr. Notes 7.88% due 03/01/11................ 1,218,000 1,386,689 Corning, Inc. Notes 5.90% due 03/15/14................ 260,000 263,784 Corning, Inc. Notes 6.85% due 03/01/29................ 206,000 207,904 GTE Corp. Debentures 6.94% due 04/15/28................ 220,000 240,494 GTE Northwest, Inc. Debenture Series D 5.55% due 10/15/08................ 190,000 192,825 ICO North America, Inc. Sr. Sec. Notes 7.50% due 08/15/09(5)(11)......... 65,000 69,875 Iridium, LLC Guaranteed Sr. Notes, Series C 11.25% due 07/15/05+(7)(12)....... 25,000 5,313 LCI International, Inc. Sr. Notes 7.25% due 06/15/07................ 905,000 882,375 Qwest Corp. Debentures 7.13% due 11/15/43................ 750,000 634,687 Triton PCS, Inc. Guaranteed Sr. Notes 8.50% due 06/01/13................ 75,000 71,437 Verizon New York, Inc. Debentures, Series A 6.88% due 04/01/12................ 190,000 203,262 Verizon New York, Inc. Sr. Debentures, Series B 7.38% due 04/01/32................ 804,000 884,833 ---------- 5,995,369 ---------- Transportation -- 0.9% Burlington Northern Santa Fe Corp. Debentures 7.29% due 06/01/36................ 232,000 285,502 Burlington Northern Santa Fe Corp. Debentures 8.13% due 04/15/20................ 747,000 947,491
24 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) --------------------------------------------------------- BONDS & NOTES (continued) Transportation (continued) Norfolk Southern Corp. Notes 5.59% due 05/17/25................ $461,000 $ 460,827 ---------- 1,693,820 ---------- Utilities -- 4.3% AES Corp. Sr. Notes 7.75% due 03/01/14................ 550,000 583,000 CenterPoint Energy Resources Corp. Notes 7.75% due 02/15/11................ 370,000 415,564 Consolidated Edison, Inc. Debenture Series 2003A 3.63% due 08/01/08................ 395,000 384,601 Consolidated Natural Gas Co. Sr. Notes 5.38% due 11/01/06................ 400,000 403,046 El Paso Production Holding Co. Guaranteed Sr. Notes 7.75% due 06/01/13................ 890,000 930,050 FirstEnergy Corp., Sr. Notes, Series B 6.45% due 11/15/11................ 215,000 228,925 Florida Power & Light Co. 1st Mtg. Bonds 5.40% due 09/01/35................ 440,000 435,530 Florida Power Corp. 1st Mtg. Bonds 4.50% due 06/01/10................ 200,000 197,151 Georgia Power Co. Sr. Notes, Series G 6.20% due 02/01/06................ 318,000 320,048 Indianapolis Power & Light Co. 1st Mtg. Bonds 6.60% due 01/01/34*............... 228,000 254,225 KeySpan Corp. Sr. Notes 4.90% due 05/16/08................ 955,000 958,977 Mirant Corp. Sr. Notes 7.90% due 07/15/09*+(7)(8)........ 425,000 517,438 Old Dominion Electric Cooperative 1st Mtg. Bonds, Series A 5.68% due 12/01/28................ 289,000 301,008 Pepco Holdings, Inc. Notes 5.50% due 08/15/07................ 385,000 389,821 PSEG Power, LLC Sr. Note 7.75% due 04/15/11................ 380,000 425,488 PSI Energy, Inc. Debentures 7.85% due 10/15/07................ 593,000 627,716 Reliant Energy, Inc. Notes 9.50% due 07/15/13................ 275,000 303,875
Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Utilities (continued) Virginia Electric & Power Co. Notes 4.10% due 12/15/08..................... $ 381,000 $ 373,189 Virginia Electric & Power Co., Series A Sr. Notes, Series A 5.75% due 03/31/06..................... 416,000 418,556 ----------- 8,468,208 ----------- Total Bonds & Notes (cost $74,001,958)..................... 73,537,714 ----------- CONVERTIBLE BONDS -- 0.9% Leisure & Tourism -- 0.1% Six Flags, Inc. 4.50% due 05/15/15..................... 60,000 75,675 ----------- Utilities -- 0.8% Calpine Corp. 4.75% due 11/15/23..................... 2,925,000 1,594,125 ----------- Total Convertible Bonds (cost $2,114,450)...................... 1,669,800 ----------- FOREIGN BONDS & NOTES -- 10.2% Banks -- 0.6% HBOS Treasury Services, PLC Notes 3.50% due 11/30/07*.................... 731,000 714,710 NIB Capital Bank NV Bonds 5.82% due 12/11/13*(3)................. 380,000 392,205 ----------- 1,106,915 ----------- Broadcasting & Media -- 0.4% Grupo Televisa SA Sr. Notes 6.63% due 03/18/25..................... 380,000 381,429 Telenet Group Holding NV Sr. Disc. Notes 11.50% due 06/15/14*(6)................ 575,000 470,063 ----------- 851,492 ----------- Business Services -- 0.0% SCL Terminal Aereo Santiago SA Sr. Sec. Notes 6.95% due 07/01/12*.................... 71,737 74,435 ----------- Conglomerate -- 0.5% Tyco International Group SA Guaranteed Notes 6.38% due 10/15/11..................... 190,000 202,518 Tyco International Group SA Guaranteed Sr. Notes 6.75% due 02/15/11..................... 794,000 857,605 ----------- 1,060,123 ----------- Energy Sources -- 0.4% Gazprom International SA Guaranteed Sr. Notes 7.20% due 02/01/20*.................... 275,000 301,125 Nexen, Inc Notes 5.88% due 03/10/35..................... 242,000 237,209
25 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Energy Sources (continued) Petro-Canada Sr. Notes 5.95% due 05/15/35.............. $ 232,000 $ 232,014 ---------- 770,348 ---------- Financial Services -- 1.7% Aries Vermogensverwaltungs GmbH Bonds 9.60% due 10/25/14.............. 1,000,000 1,319,900 HBOS Capital Funding Guaranteed Notes 6.85% due 03/29/49.............. 550,000 565,840 Nationwide Building Society Sr. Notes 2.63% due 01/30/07*............. 578,000 563,815 Nell F Sarl Sr. Notes 8.38% due 08/15/15*............. 375,000 366,562 UFJ Finance Aruba AEC Guaranteed Notes 6.75% due 07/15/13.............. 380,000 417,261 ---------- 3,233,378 ---------- Food, Beverage & Tobacco -- 0.1% Molson Coors Capital Finance ULC Sr. Notes 4.85% due 09/22/10*............. 190,000 188,510 ---------- Forest Products -- 0.1% Abitibi-Consolidated, Inc. Debentures 8.55% due 08/01/10.............. 175,000 178,063 ---------- Government Agency -- 4.7% Federal Republic of Brazil Notes 8.00% due 01/15/18.............. 550,000 582,450 Federal Republic of Brazil Bonds 10.50% due 07/14/14............. 530,000 641,565 Republic of Argentina Bonds 4.01% due 08/03/12(4)........... 620,000 496,930 Republic of Turkey Notes 9.00% due 06/30/11.............. 480,000 552,600 Republic of Turkey Sr. Bonds 11.88% due 01/15/30............. 1,150,000 1,687,625 Republic of Venezuela Bonds 8.50% due 10/08/14.............. 260,000 288,600 Republic of Venezuela Bonds 9.25% due 09/15/27.............. 1,500,000 1,774,500 Russian Federation Bonds 5.00% due 03/31/07*(6).......... 1,175,000 1,349,587 United Kingdom Notes 2.25% due 07/08/08*............. 749,000 710,766
Principal Value Security Description Amount (Note 2) ---------------------------------------------------------- Government Agency (continued) United Mexican States, Series A Tranche 00017 6.75% due 09/27/34.............. $ 264,000 $ 281,160 United Mexican States, Series A Notes 7.50% due 04/08/33.............. 700,000 812,000 ----------- 9,177,783 ----------- Insurance -- 0.2% Fairfax Financial Holdings, Ltd. Notes 8.25% due 10/01/15.............. 315,000 299,250 ----------- Machinery -- 0.1% Atlas Copco AB Notes 6.50% due 04/01/08*............. 232,000 239,572 ----------- Metals & Mining -- 0.4% Falconbridge, Ltd. Notes 8.38% due 02/15/11.............. 303,000 344,777 Teck Cominco, Ltd. Sr. Notes 6.13% due 10/01/35.............. 430,000 421,670 ----------- 766,447 ----------- Pharmaceuticals -- 0.2% Elan Finance, PLC Sr. Notes 7.75% due 11/15/11*............. 455,000 400,400 ----------- Real Estate Companies -- 0.2% Brascan Corp. Sr. Notes 8.13% due 12/15/08.............. 430,000 471,164 ----------- Retail -- 0.1% Jean Coutu Group, Inc. Sr. Sub. Notes 8.50% due 08/01/14.............. 250,000 248,750 ----------- Telecommunications -- 0.5% Telus Corp. Notes 7.50% due 06/01/07.............. 743,000 775,879 Telus Corp. Notes 8.00% due 06/01/11.............. 161,000 184,191 ----------- 960,070 ----------- Total Foreign Bonds & Notes (cost $19,187,211).............. 20,026,700 ----------- U.S. GOVERNMENT OBLIGATIONS -- 4.0% U.S Treasury Bonds -- 2.1% 5.38% due 02/15/31.............. 1,372,000 1,537,068 6.25% due 08/15/23.............. 1,233,000 1,474,350 6.88% due 08/15/25.............. 134,000 172,745 7.25% due 08/15/22.............. 726,000 948,564 ----------- 4,132,727 -----------
26 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS (continued) U.S. Treasury Notes -- 1.9% 0.88% due 04/15/10 TIPS............. $1,048,486 $ 1,021,701 2.00% due 01/15/14 TIPS............. 776,910 793,085 3.88% due 09/15/10.................. 409,000 403,216 4.25% due 08/15/13.................. 2,000 1,993 4.25% due 08/15/15.................. 572,000 568,425 5.75% due 11/15/05.................. 1,000,000 1,002,617 ----------- 3,791,037 ----------- Total U.S. Government Obligations (cost $7,926,568)................... 7,923,764 ----------- U.S. GOVERNMENT AGENCIES -- 35.8% Federal Home Loan Mortgage Corporation -- 12.3% 3.63% due 02/15/08.................. 1,000,000 983,269 4.45% due 03/06/08.................. 500,000 499,207 4.50% due 11/01/18.................. 2,655,747 2,605,173 4.50% due 02/01/19.................. 1,943,716 1,904,718 5.00% due 10/01/33.................. 55,385 54,334 5.00% due 03/01/34.................. 1,303,628 1,277,757 5.00% due 05/01/34.................. 983,462 963,945 5.00% due 06/01/34.................. 3,206,721 3,143,083 5.50% due 02/01/18.................. 656,304 666,074 5.50% due 10/01/33.................. 1,466,599 1,468,131 5.50% due 01/01/35.................. 2,944,281 2,945,753 6.00% due 11/01/33.................. 1,478,948 1,504,911 6.00% due 07/01/35.................. 1,297,190 1,319,972 6.50% due 08/01/16.................. 12,903 13,323 6.50% due 06/01/32.................. 209,389 215,677 6.50% due 08/01/32.................. 1,447,713 1,490,205 6.50% due 02/01/33.................. 190,521 196,113 6.88% due 09/15/10.................. 925,000 1,021,074 7.00% due 03/01/12.................. 10,393 10,851 7.00% due 11/01/16.................. 64,516 67,372 7.50% due 04/01/31.................. 364,771 386,752 7.50% due 12/01/31.................. 908,824 963,589 8.00% due 10/01/29.................. 16,281 17,372 8.00% due 07/01/30.................. 5,102 5,443 8.00% due 08/01/30.................. 14,649 15,628 8.00% due 10/01/30.................. 25,461 27,161 8.00% due 11/01/30.................. 41,907 44,707 8.00% due 12/01/30.................. 83,736 89,330 8.00% due 01/01/31.................. 84,646 90,300 ----------- 23,991,224 ----------- Federal National Mortgage Association -- 23.2% 1.75% due 06/16/06.................. 1,000,000 982,508 3.88% due 05/15/07.................. 1,000,000 991,972 4.50% due 06/01/18.................. 749,479 735,214 4.50% due 02/01/35.................. 1,447,247 1,381,278 4.68% due 04/01/35(4)............... 3,777,561 3,756,757 5.00% due 06/01/18.................. 1,994,448 1,990,573 5.00% due 09/01/18.................. 637,765 636,526 5.00% due 10/01/18.................. 1,368,819 1,366,159 5.00% due 11/01/18.................. 1,073,989 1,071,902 5.00% due 11/01/33.................. 52,465 51,481 5.00% due 03/01/34.................. 5,999,399 5,881,291 5.50% due 06/01/20.................. 1,087,608 1,103,805 5.50% due 12/01/33.................. 6,512,242 6,515,261 5.50% due 03/01/34.................. 769,491 769,547 5.50% due 07/01/34.................. 2,332,626 2,332,795 5.50% due 09/01/34.................. 891,816 891,880
Principal Amount/ Value Security Description Shares (Note 2) -------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Federal National Mortgage Association (continued) 6.00% due 12/01/16................... $ 850,902 $ 875,424 6.00% due 05/01/17................... 158,156 162,712 6.00% due 12/01/33................... 3,213,363 3,267,593 6.00% due 08/01/34................... 2,495,869 2,538,376 6.00% due 10/01/34................... 2,019,826 2,054,028 6.00% due 06/01/35................... 3,428,361 3,486,429 6.27% due 11/01/07................... 49,693 50,776 6.31% due 02/01/08................... 93,715 95,682 6.34% due 01/01/08................... 17,054 17,473 6.43% due 01/01/08................... 18,036 18,511 6.50% due 03/01/17................... 431,997 446,872 6.50% due 04/01/29................... 65,493 67,624 6.50% due 02/01/32................... 390,013 401,856 6.50% due 07/01/32................... 202,411 208,557 7.00% due 09/01/10................... 2,393 2,501 7.00% due 07/01/11................... 99 104 7.00% due 11/01/11................... 1,475 1,542 7.00% due 05/01/12................... 2,405 2,513 7.00% due 06/01/12................... 4,063 4,246 7.00% due 09/01/12................... 1,756 1,836 7.00% due 10/01/12................... 542 566 7.00% due 07/01/13................... 2,691 2,814 7.00% due 04/01/28................... 11,599 12,160 7.00% due 10/01/28................... 1,002 1,050 7.00% due 09/01/31................... 806,092 843,820 7.05% due 06/01/07................... 4,082 4,142 7.50% due 10/01/10................... 91,468 95,793 7.50% due 11/01/14................... 6,621 6,934 7.50% due 05/01/15................... 4,605 4,870 7.50% due 06/01/15................... 73,096 77,309 7.50% due 07/01/15................... 34,822 36,829 7.50% due 08/01/15................... 12,027 12,720 ----------- 45,262,611 ----------- Government National Mortgage Association -- 0.1% 6.50% due 06/15/29................... 76,977 80,222 7.00% due 12/15/22................... 57,087 60,350 7.00% due 08/15/29................... 59,218 62,310 8.00% due 04/15/30................... 7,323 7,842 ----------- 210,724 ----------- Tennessee Valley Authority -- 0.2% 4.65% due 06/15/35................... 468,000 445,616 ----------- Total U.S. Government Agencies (cost $70,384,050)................... 69,910,175 ----------- COMMON STOCK -- 0.0% Machinery -- 0.0% Manitowoc Co., Inc. (cost $261).......................... 28 1,407 ----------- PREFERRED STOCK -- 0.7% Financial Services -- 0.4% General Electric Capital Corp. 4.50%(9)............................. 34,000 810,900 ----------- Government Agency -- 0.3% Federal Home Loan Mtg. Corp. 5.70%.... 5,721 275,466 Federal National Mtg. Assoc. 7.00%(4). 6,152 339,898 ----------- 615,364 -----------
27 SunAmerica Core Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Amount/ Value Security Description Shares (Note 2) ---------------------------------------------------------------------- PREFERRED STOCK (continued) Machinery -- 0.0% Fairfield Manufacturing Co., Inc. 11.25%+(5)(10)(11)........................... $28 $ 0 ------------ Total Preferred Stock (cost $1,485,568)............................ 1,426,264 ------------ WARRANTS+ -- 0.0% Communication Equipment -- 0.0% Concentric Network Corp. Expires 12/15/07 (strike price $5.43)(5)(11). 5 0 ------------ Telecommunications -- 0.0% KMC Telecom Holdings, Inc. Expires 01/31/08 (strike price $0.01)(5)(11). 50 0 ------------ Total Warrants (cost $0).................................... 0 ------------ Total Long-Term Investment Securities (cost $189,681,567).......................... 188,866,208 ------------
Value Security Description Shares (Note 2) ----------------------------------------------------------------------- REPURCHASE AGREEMENT -- 3.8% Agreement with State Street Bank & Trust., bearing interest at 3.45% dated 09/30/05 to be repurchased 10/03/05 in the amount of $7,410,130 and collateralized by $7,535,000 of Federal Home Loan Bank, bearing interest at 3.63% due 02/15/07 having an approximate value of $7,630,363 (cost $7,408,000)........................... 7,408,000 $ 7,408,000 ------------ TOTAL INVESTMENTS -- (cost $197,089,567)@........................ 100.4% 196,274,208 Liabilities in excess of other assets.......... (0.4) (858,106) --------- ------------ NET ASSETS -- 100.0% $195,416,102 ========= ============
- -------- + Non-income producing security # Security represents an investment in an affiliated company; see Note 7. * Securities exempt from registration under Rule 144A of the Securities Act of 1933. The Fund has no rights to demand registration of these securities. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, the aggregate value of these securities was $19,989,579 representing 10.2% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. @ See Note 5 for cost of investments on a tax basis. TIPS --Treasury Inflation Protected Security (1) Commercial mortgaged backed security. (2) Collateralized mortgage obligation. (3) Variable rate security -- the rate reflected is as of September 30, 2005; maturity date reflects next reset date. (4) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of September 30, 2005. (5) Fair valued security; See Note 2. (6) Security is a "step-up" bond where the coupon rate increases or steps up at a predetermined rate. Rate shown reflects the increased rate. (7) Bond in default. (8) Company has filed for Chapter 11 bankruptcy protection. (9) Security is a "step-up" preferred stock where the dividend rate increases or steps up at a predetermined rate. Rate reflected is as of September 30, 2005 (10) PIK ("Payment-in-Kind") payment made with additional securities in lieu of cash. (11) Illiquid security. (12) Bond in default of interest and principal See Notes to Financial Statements 28 SunAmerica U.S. Government Securities Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Government National Mortgage Association.................... 46.6% U.S. Treasury Notes......................................... 26.6 U.S. Treasury Bonds......................................... 17.2 Private Export Funding...................................... 5.1 Federal Farm Credit Bank.................................... 3.1 Small Business Administration............................... 1.4 Federal National Mortgage Association....................... 0.9 International Bank for Reconstruction and Development....... 0.1 ----- 101.0% =====
Credit Quality+# Government -- Treasury............................ 43.5% Government -- Agency.............................. 55.7 Not Rated@........................................ 0.8 ----- 100.0% =====
- -------- * Calculated as a percentage on net assets. @ Represents debt issues that either have no rating or the rating is unavailable from the data source. + Sources Standard & Poors. # Calculated as a percentage of total debt issues, excluding short-term securities. 29 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ U.S. GOVERNMENT OBLIGATIONS -- 43.8% U.S Treasury Bonds -- 17.2% 3.38% due 04/15/32 TIPS......... $16,505,100 $21,821,541 5.38% due 02/15/31.............. 12,000,000 13,443,744 ----------- 35,265,285 ----------- U.S. Treasury Notes -- 26.6% 3.88% due 09/15/10.............. 12,000,000 11,830,308 4.13% due 05/15/15.............. 12,000,000 11,793,276 4.25% due 08/15/15.............. 31,000,000 30,806,250 ----------- 54,429,834 ----------- Total U.S. Government Obligations (cost $91,597,003).............. 89,695,119 ----------- U.S. GOVERNMENT AGENCIES -- 57.2% Federal Farm Credit Bank -- 3.1% 2.50% due 03/15/06.............. 5,000,000 4,964,505 5.64% due 04/04/11.............. 500,000 527,009 6.00% due 03/07/11.............. 200,000 213,716 6.30% due 12/03/13.............. 500,000 556,208 ----------- 6,261,438 ----------- Federal Home Loan Mortgage Corporation -- 0.0% 8.00% due 06/01/08.............. 12,560 12,723 8.25% due 07/01/06.............. 582 584 8.50% due 05/01/08.............. 1,151 1,175 100.00% due 10/01/05(1)......... 77 77 ----------- 14,559 ----------- Federal National Mortgage Association -- 0.9% 8.00% due 01/01/23.............. 22,406 24,017 6.53% due 05/25/30.............. 1,705,985 1,771,557 8.00% due 01/01/23.............. 13,570 14,555 11.00% due 02/01/15............. 35 39 11.50% due 09/01/19............. 19,133 21,039 ----------- 1,831,207 ----------- Government National Mortgage Association -- 46.6% 4.50% due 05/15/18............... 1,378,169 1,361,025 4.50% due 08/15/18............... 2,139,792 2,113,175 4.50% due 09/15/18............... 5,831,650 5,759,109 4.50% due 10/15/18............... 5,638,052 5,567,919 4.50% due 09/15/33............... 5,857,197 5,640,130 5.00% due 04/15/18............... 6,123,877 6,158,068 5.00% due 08/15/33............... 2,626,836 2,603,573 5.00% due 09/15/33............... 1,173,960 1,163,564 5.00% due 10/15/33............... 809,288 802,121 5.00% due 11/15/34............... 268,375 265,748 5.50% due 11/15/32............... 20,331 20,543 5.50% due 03/15/33............... 706,159 713,318 5.50% due 04/15/33............... 839,721 848,234 5.50% due 05/15/33............... 1,877,882 1,896,920 5.50% due 06/15/33............... 8,654,650 8,742,393 5.50% due 07/15/33............... 2,456,352 2,481,255 5.50% due 10/15/33............... 2,438,008 2,462,725 5.50% due 12/15/33............... 488,992 493,949 5.50% due 01/15/34............... 4,452,763 4,496,306 5.50% due 02/15/34............... 2,916,257 2,944,774 6.00% due 01/15/28............... 5,163 5,296 6.00% due 04/15/28............... 1,853,116 1,901,933
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- Government National Mortgage Association (continued) 6.00% due 05/15/28............ $ 4,046 $ 4,150 6.00% due 10/15/28............ 20,472 20,999 6.00% due 01/15/29............ 1,797 1,843 6.00% due 03/15/29............ 105,706 108,394 6.00% due 04/15/29............ 61,496 63,060 6.00% due 05/15/29............ 115,330 118,263 6.00% due 06/15/29............ 38,255 39,228 6.00% due 04/15/31............ 45,288 46,402 6.00% due 05/15/31............ 78,431 80,359 6.00% due 11/15/31............ 355,934 364,685 6.00% due 12/15/31............ 798,820 818,458 6.00% due 01/15/32............ 288,981 296,060 6.00% due 02/15/32............ 59,064 60,511 6.00% due 03/15/32............ 13,108 13,429 6.00% due 08/15/32............ 397,471 407,207 6.00% due 11/15/32............ 71,976 73,739 6.00% due 12/15/32............ 11,911 12,203 6.00% due 01/15/33............ 27,129 27,793 6.00% due 02/15/33............ 171,452 175,650 6.00% due 03/15/33............ 159,164 163,060 6.00% due 04/15/33............ 524,080 536,909 6.00% due 07/15/33............ 391,409 400,991 6.00% due 08/15/33............ 3,806,081 3,899,423 6.00% due 09/15/33............ 528,165 541,094 6.00% due 10/15/33............ 2,366,869 2,424,810 6.00% due 11/15/33............ 241,081 246,982 6.00% due 12/15/33............ 1,311,520 1,343,626 6.00% due 02/15/34............ 490,421 502,445 6.00% due 05/15/34............ 80,505 82,478 6.00% due 06/15/34............ 59,419 60,876 6.00% due 07/15/34............ 3,917,869 4,013,930 6.00% due 08/15/34............ 265,555 272,066 6.00% due 09/15/34............ 1,659,695 1,700,388 6.00% due 12/15/34............ 634,890 650,456 6.00% due 09/15/34............ 665,393 681,707 6.00% due 10/15/34............ 7,309,652 7,488,875 6.00% due 11/15/34............ 802,863 822,548 6.00% due 01/15/35............ 1,665,762 1,706,490 6.00% due 06/15/35............ 437,550 448,248 6.00% due 08/15/35............ 1,672,869 1,713,771 6.50% due 02/15/29............ 25,572 26,650 6.50% due 05/15/31............ 48,571 50,551 6.50% due 06/15/31............ 78,211 81,400 6.50% due 07/15/31............ 111,742 116,299 6.50% due 08/15/31............ 107,601 111,989 6.50% due 09/15/31............ 226,832 236,081 6.50% due 10/15/31............ 542,972 565,112 6.50% due 11/15/31............ 20,151 20,972 6.50% due 12/15/31............ 38,351 39,915 6.50% due 01/15/32............ 48,383 50,341 6.50% due 02/15/32............ 935,433 973,293 6.50% due 06/15/32............ 157,348 163,716 7.00% due 07/15/23............ 50,722 53,602 7.00% due 10/15/23............ 156,889 165,797 7.00% due 09/15/25............ 359,494 379,541 7.00% due 03/20/29............ 28,871 30,234 7.00% due 06/20/29............ 4,651 4,871 7.00% due 11/20/30............ 123,172 128,944
30 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ U.S. GOVERNMENT AGENCIES (continued) Government National Mortgage Association (continued) 7.50% due 04/15/17............. $ 17,009 $ 18,105 7.50% due 08/15/23............. 270,200 288,761 7.50% due 09/15/23............. 805,947 861,312 7.50% due 10/15/23............. 26,206 28,006 8.00% due 11/15/06............. 741 753 8.00% due 02/15/08............. 1,199 1,238 9.00% due 12/15/16............. 107,792 117,156 11.00% due 08/20/15............ 304 332 11.00% due 09/20/15............ 730 800 11.50% due 03/15/13............ 24,422 27,052 11.50% due 06/15/13............ 10,297 11,369 11.50% due 05/20/15............ 4,073 4,502 12.50% due 09/15/14............ 7,780 8,706 13.00% due 01/15/11............ 3,352 3,745 13.00% due 02/15/11............ 5,003 5,588 13.00% due 03/15/11............ 275 307 13.00% due 04/15/11............ 592 661 13.00% due 09/15/13............ 5,432 6,097 13.00% due 10/20/14............ 4,199 4,689 13.00% due 11/15/14............ 848 954 13.00% due 02/20/15............ 1,380 1,538 13.50% due 02/15/13............ 12,350 13,968 15.00% due 01/15/12............ 510 587 15.00% due 02/15/12............ 1,209 1,390 15.00% due 06/15/12............ 13,008 14,953 15.00% due 09/15/12............ 712 818 15.50% due 09/15/11............ 39,147 44,979 ----------- 95,543,358 -----------
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- International Bank for Reconstruction and Development -- 0.1% 5.00% due 03/28/06.................... $ 350,000 $ 351,435 ------------ Private Export Funding -- 5.1% 5.87% due 07/31/08.................... 10,000,000 10,373,240 ------------ Small Business Administration -- 1.4% 6.30% due 06/01/18.................... 2,690,730 2,800,731 ------------ Total U.S. Government Agencies (cost $117,197,391)................... 117,175,968 ------------ TOTAL INVESTMENTS -- (cost $208,794,394)@.................. 101.0% 206,871,087 Liabilities in excess of other assets.... (1.0) (2,055,825) ----------- ------------ NET ASSETS -- 100.0% $204,815,262 =========== ============
- -------- @ See Notes 5 for cost of investment on a tax basis. TIPS --Treasury Inflation Protected Security (1) Variable rate security--the rate reflected is as of September 30, 2005; maturity date reflects the next reset date. See Notes to Financial Statements 31 SunAmerica GNMA Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Government National Mortgage Association 83.4% Repurchase Agreements................... 21.1 Federal Home Loan Bank.................. 14.7 United States Treasury Notes............ 5.6 Federal Farm Credit Bank................ 3.1 Federal National Mortgage Association... 2.1 United States Treasury Bonds............ 1.7 Small Business Administration........... 0.2 ----- 131.9% =====
Credit Quality+# Government -- Treasury 7.6% Government -- Agency.. 92.4 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 32 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- U.S. GOVERNMENT OBLIGATIONS -- 7.3% U.S Treasury Bonds -- 1.7% 5.38% due 02/15/31.............. $ 7,000,000 $ 7,842,184 ------------ U.S. Treasury Notes -- 5.6% 3.88% due 09/15/10.............. 3,000,000 2,957,577 4.13% due 05/15/15.............. 3,000,000 2,948,319 4.25% due 08/15/15.............. 21,000,000 20,868,750 ------------ 26,774,646 ------------ Total U.S. Government Obligations (cost $35,118,886).............. 34,616,830 ------------ U.S. GOVERNMENT AGENCIES -- 88.8% Federal National Mortgage Association -- 2.1% 5.00% due 01/25/18(1)........... 10,000,000 10,035,888 ------------ Government National Mortgage Association -- 83.4% 4.50% due 05/15/18............... 2,756,337 2,722,051 4.50% due 08/15/18............... 1,433,170 1,415,343 4.50% due 09/15/18............... 4,523,357 4,467,090 4.50% due 10/15/18............... 6,445,771 6,365,591 4.50% due 08/15/33............... 3,810,715 3,669,491 4.50% due 09/15/33............... 4,398,008 4,235,018 5.00% due 04/15/34............... 84,898 84,067 5.00% due 05/15/34............... 204,636 202,633 5.00% due 11/15/34............... 918,230 909,242 5.00% due 12/15/34............... 906,503 897,630 5.00% TBA due Oct................ 20,000,000 19,787,500 5.00% due 03/15/18............... 878,059 882,961 5.00% due 04/15/18............... 9,976,964 10,032,667 5.00% due 05/15/18............... 14,196,083 14,275,343 5.00% due 01/15/33............... 18,997 18,829 5.00% due 05/15/33............... 17,134 16,982 5.00% due 08/15/33............... 3,830,264 3,796,344 5.00% due 09/15/33............... 3,381,454 3,351,508 5.00% due 10/15/33............... 8,175,580 8,103,178 5.50% due 06/15/29............... 8,338 8,439 5.50% due 08/15/33............... 3,751,743 3,789,779 5.50% due 09/15/33............... 562,696 568,401 5.50% due 10/15/33............... 9,498,551 9,594,850 5.50% due 12/15/33............... 10,294,029 10,398,392 5.50% due 01/15/34............... 15,096,744 15,244,373 5.50% due 02/15/34............... 1,915,099 1,933,826 5.50% TBA due Oct................ 130,000,000 131,178,060 5.50% due 12/15/32............... 1,093,149 1,104,543 5.50% due 01/15/33............... 659,948 666,638 5.50% due 02/15/33............... 2,881,890 2,911,107 5.50% due 03/15/33............... 1,651,385 1,668,127 5.50% due 04/15/33............... 8,688,053 8,776,134 5.50% due 05/15/33............... 10,103,082 10,205,509 5.50% due 06/15/33............... 11,168,171 11,281,664 5.50% due 07/15/33............... 571,324 577,116 6.00% due 11/15/23............... 7,133 7,329 6.00% due 01/15/24............... 9,186 9,434 6.00% due 07/15/28............... 6,403 6,568 6.00% due 11/15/28............... 474,250 486,462 6.00% due 12/15/28............... 459,272 471,097 6.00% due 01/15/29............... 1,057,279 1,084,167 6.00% due 02/15/29............... 1,084,583 1,112,166 6.00% due 03/15/29............... 750,402 769,487
Principal Value Security Description Amount (Note 2) --------------------------------------------------------------- Government National Mortgage Association (continued) 6.00% due 04/15/29........... $ 1,703,758 $ 1,747,088 6.00% due 04/15/29........... 323,612 331,927 6.00% due 05/15/29........... 228,532 234,344 6.00% due 06/15/29........... 706,572 724,583 6.00% due 07/15/29........... 346,869 355,690 6.00% due 08/15/29........... 31,960 32,773 6.00% due 10/15/29........... 173,657 178,074 6.00% due 04/15/31........... 24,703 25,310 6.00% due 07/15/31........... 42,771 43,823 6.00% due 10/15/31........... 133,999 137,293 6.00% due 11/15/31........... 2,106,038 2,157,813 6.00% due 12/15/31........... 974,952 998,921 6.00% due 01/15/32........... 928,061 950,795 6.00% due 02/15/32........... 89,631 91,827 6.00% due 03/15/32........... 620,464 635,663 6.00% due 07/15/32........... 161,664 165,625 6.00% due 08/15/32........... 2,457,958 2,518,328 6.00% due 09/15/32........... 1,814,297 1,858,740 6.00% due 10/15/32........... 275,243 281,985 6.00% due 11/15/32........... 10,901 11,168 6.00% due 12/15/32........... 223,705 229,185 6.00% due 01/15/33........... 2,183,383 2,236,832 6.00% due 02/15/33........... 3,701,220 3,791,824 6.00% due 03/15/33........... 1,894,922 1,941,309 6.00% due 04/15/33........... 2,286,913 2,342,895 6.00% due 05/15/33........... 2,415,055 2,474,174 6.00% due 06/15/33........... 1,661,264 1,701,932 6.00% due 08/15/33........... 2,722,512 2,789,179 6.00% due 10/15/33........... 794,193 813,635 6.00% due 11/15/33........... 3,047,028 3,121,619 6.00% due 12/15/33........... 4,837,407 4,955,825 6.00% due 01/15/34........... 2,862,385 2,932,567 6.00% due 02/15/34........... 16,988,450 17,404,984 6.00% due 03/15/34........... 665,680 682,002 6.00% due 04/15/34........... 6,578,272 6,739,562 6.00% due 05/15/34........... 435,636 446,317 6.00% due 06/15/34........... 942,563 965,673 6.00% due 07/15/34........... 5,728,573 5,869,030 6.00% due 08/15/34........... 8,333,728 8,538,267 6.00% due 09/15/34........... 431,181 441,762 6.00% due 10/15/34........... 1,364,560 1,398,018 6.00% due 11/15/34........... 2,553,783 2,616,398 6.00% due 12/15/34........... 127,866 131,001 6.00% due 01/15/35........... 103,983 106,526 6.00% due 02/15/35........... 1,770,020 1,813,298 6.00% due 04/15/35........... 91,432 93,667 6.00% due 05/15/35........... 154,045 157,811 6.00% due 06/15/35........... 607,130 621,975 6.50% due 03/15/28........... 37,650 39,268 6.50% due 08/15/28........... 77,944 81,281 6.50% due 12/15/28........... 1,757 1,832 6.50% due 01/15/29........... 7,265 7,572 6.50% due 02/15/29........... 2,561 2,669 6.50% due 03/15/29........... 167,519 174,581 6.50% due 04/15/29........... 2,618 2,729 6.50% due 05/15/29........... 19,806 20,650 6.50% due 06/15/29........... 59,141 61,634 6.50% due 07/15/29........... 7,772 8,100
33 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Government National Mortgage Association (continued) 6.50% due 10/15/29.................. $ 10,143 $ 10,571 6.50% due 08/15/31.................. 454,269 472,792 6.50% due 09/15/31.................. 34,243 35,639 6.50% due 10/15/31.................. 492,341 512,416 6.50% due 11/15/31.................. 316,956 329,880 6.50% due 12/15/31.................. 382,558 398,156 6.50% due 02/15/32.................. 317,241 330,080 6.50% due 05/15/32.................. 2,336,329 2,430,885 6.50% due 06/15/32.................. 174,126 181,174 7.00% due 03/15/23.................. 141,687 149,732 7.00% due 01/20/24.................. 1,087 1,143 7.00% due 03/20/24.................. 1,075 1,130 7.00% due 07/20/25.................. 6,511 6,841 7.00% due 09/15/25.................. 156,121 164,827 7.00% due 01/20/29.................. 65,724 68,826 7.00% due 02/20/29.................. 12,837 13,443 7.00% due 06/20/29.................. 23,063 24,152 7.00% due 07/20/29.................. 87,693 91,833 7.00% due 09/20/29.................. 8,544 8,947 7.00% due 10/20/29.................. 16,508 17,287 7.00% due 11/20/29.................. 6,174 6,465 7.00% due 03/20/30.................. 8,257 8,644 7.00% due 06/20/30.................. 15,743 16,481 7.00% due 08/20/30.................. 46,212 48,377 7.00% due 09/20/30.................. 39,788 41,653 7.00% due 10/20/30.................. 54,895 57,468 8.00% due 11/15/26.................. 281,337 301,632 8.00% due 12/15/29.................. 33,356 35,732 8.00% due 01/15/30.................. 983 1,052 8.00% due 04/15/30.................. 50,668 54,261 8.00% due 05/15/30.................. 8,335 8,927 8.00% due 08/15/30.................. 55,164 59,076 8.50% due 03/15/17.................. 34,115 37,108 8.50% due 05/15/21.................. 87,786 96,194 8.50% due 12/15/22.................. 147,182 161,455 8.50% due 01/15/23.................. 123,995 136,185 8.50% due 09/15/24.................. 53,244 58,527 9.00% due 07/15/16.................. 89,111 96,851 9.00% due 10/15/16.................. 19,735 21,449 ------------ 396,823,780 ------------
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ Small Business Administration -- 0.2% 6.30% due 06/01/18.................. $ 896,910 $ 933,577 ------------- Federal Farm Credit Bank -- 3.1% 2.50% due 03/15/06(2)............... 15,000,000 14,893,515 ------------- Total U.S. Government Agencies (cost $425,770,143)................. 422,686,760 ------------- Total Long-Term Investment Securities -- 96.1% (cost $460,889,029)................. 457,303,590 ------------- SHORT-TERM INVESTMENT SECURITIES -- 14.7% Federal Home Loan Bank 3.17% due 10/03/05(2) (cost $69,987,672).................. 70,000,000 69,987,672 ------------- REPURCHASE AGREEMENTS -- 21.1% State Street Bank & Trust Co. Joint Repurchase Agreement(2)(3).......... 10,604,000 10,604,000 UBS Securities, LLC Joint Repurchase Agreement(2)(3)..................... 90,000,000 90,000,000 ------------- Total Repurchase Agreements (cost $100,604,000)................. 100,604,000 ------------- TOTAL INVESTMENTS -- (cost $631,480,701)@................ 131.9% 627,895,262 Liabilities in excess of other assets.. (31.9) (151,827,083) ----------- ------------- NET ASSETS -- 100.0% $ 476,068,179 =========== =============
- -------- TBA --Securities purchased on a forward commitment basis with an approximate principal amount and no definitive maturity date. The actual principal and maturity date will be determined upon settlement date: @ See Note 5 for cost of investments on a tax basis. (1) Collateralized mortgage obligation. (2) The security or a portion thereof represents collateral for TBA securities. (3) See Note 2 for details of Joint Repurchase Agreement. See Notes to Financial Statements 34 SunAmerica Strategic Bond Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Foreign Government Agencies......... 31.0% Financial Services.................. 8.8 Federal National Mtg. Association... 6.6 Federal Home Loan Mtg. Corp......... 6.5 Telecommunications.................. 4.8 Broadcasting & Media................ 3.9 U.S.Treasury Notes.................. 3.9 Utilities........................... 3.7 Leisure & Tourism................... 3.1 Repurchase Agreements............... 2.7 U.S Treasury Bonds.................. 2.4 Energy Sources...................... 2.1 Financial Services.................. 1.7 Food, Beverage & Tobacco............ 1.2 Forest Products..................... 1.1 Chemicals........................... 1.0 Health Services..................... 1.0 Time Deposit........................ 1.0 Automotive.......................... 0.9 Business Services................... 0.8 Energy Services..................... 0.8 Banks............................... 0.7 Medical Products.................... 0.7 Pharmaceuticals..................... 0.7 Insurance........................... 0.6 Metals & Mining..................... 0.6 Retail Stores....................... 0.6 Real Estate Investment Trusts....... 0.5 Household & Personal Products....... 0.4 Computer Software................... 0.3 Conglomerate........................ 0.3 Electronics......................... 0.3 Machinery........................... 0.3 Restaurants......................... 0.3 Retail.............................. 0.3 Transportation...................... 0.3 Building Materials.................. 0.2 Communication Equipment............. 0.2 Aerospace & Military Technology..... 0.1 Computers & Business Equipment...... 0.1 Government National Mtg. Association 0.1 Internet Content.................... 0.1 ---- 96.7% ====
Credit Quality+# Government -- Treasury 7.1% Government -- Agency.. 14.2 AAA................... 10.6 AA.................... 4.0 A..................... 6.0 BBB................... 12.2 BB.................... 17.5 B..................... 14.9 CCC................... 8.1 CC.................... 0.1 C..................... 0.2 Below C............... 0.1 Not Rated@............ 5.0 ----- 100.0% =====
Country Allocation* United States. 60.5% Brazil........ 6.1 Russia........ 4.1 Mexico........ 3.3 Canada........ 3.0 Sweden........ 2.3 Argentina..... 2.2 Turkey........ 2.0 Spain......... 1.7 Venezuela..... 1.6 Germany....... 1.4 Australia..... 0.9 Italy......... 0.8 South Africa.. 0.8 United Kingdom 0.7 Japan......... 0.6 Belgium....... 0.5 Czech Republic 0.5 Luxembourg.... 0.5 Greece........ 0.4 Ireland....... 0.4 Poland........ 0.4 Ukraine....... 0.4 France........ 0.3 Netherlands... 0.3 Uruguay....... 0.3 Cayman Island. 0.2 Finland....... 0.2 Peru.......... 0.2 Mexico........ 0.1 ---- 96.7% ====
- -------- * Calculated as a percentage of net assets. @ Represents debt issues that either have no rating or the rating is unavailable from the data source. + Source: Standard and Poors. # Calculated as a percentage of total debt issues, excluding short-term securities. 35 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- ASSET-BACKED SECURITIES -- 3.3% Asset-Backed Securities -- 3.3% Banc of America Commercial Mtg., Inc. 2005 5 Commercial Mtg. Certificate A J 5.33% due 09/10/15(1)......................... $ 400,000 $ 402,015 Commercial Mtg. Asset Trust Commercial Mtg. Certificates, Series 1999-C1, Class C 7.35% due 10/11/05(1)......................... 1,200,000 1,375,378 DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1998-CG1, Class S 0.83% due 10/01/05(1)(2)(4)................... 7,426,651 139,307 DLJ Commercial Mtg. Corp. Commercial Mtg. Certificates, Series 1998-CF2, Class S 0.98% due 10/01/05(1)(2)(4)................... 6,412,767 150,945 Lehman Brothers Floating Rate Commercial Mtg. Trust 2005, Class A2 3.93% due 07/15/18*(1)(3)..................... 1,000,000 998,700 Lehman Brothers Floating Rate Commercial Mtg. Trust 2005 Pass-thru 3.98% due 07/15/18*(1)(3)..................... 1,000,000 998,710 Mid-State Trust Asset Backed Notes, Series 6, Class A1 7.34% due 07/01/35(1)......................... 730,531 769,492 Morgan Stanley Capital I, Class B 2005-T19 Class B 5.06% due 10/01/05(1)(2)...................... 300,000 296,228 Morgan Stanley Capital I, Class C 2005-T19 Class C 5.16% due 10/01/05(1)(2)...................... 200,000 196,977 PNC Mtg. Securities Corp. Certificates, Series 1992-2, Class DB3 6.91% due 10/01/05(1)(2)(5)................... 295,086 294,281 Wachovia Bank Commercial Mtg. Trust 2005 Commercial Mtg. Class B 4.00% due 01/15/18*(1)(3)..................... 1,200,000 1,198,812 ---------- Total Asset-Backed Securities (cost $6,867,958)............................. 6,820,845 ---------- BONDS & NOTES -- 29.1% Aerospace & Military Technology -- 0.1% DeCrane Aircraft Holdings Guaranteed Sr. Sub. Notes, Series B 12.00% due 09/30/08........................... 175,000 105,000 Raytheon Co. Notes 6.75% due 08/15/07............................ 113,000 116,766 ---------- 221,766 ---------- Apparel & Textiles -- 0.0% Warnaco, Inc. Sr. Notes 8.88% due 06/15/13............................ 50,000 54,000 ----------
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ Automotive -- 0.9% BREED Technologies, Inc. Guaranteed Sr. Sub. Notes 9.25% due 04/15/08(6)(7)+.................. $500,000 $ 0 Cooper-Standard Automotive, Inc. Sr. Sub. Notes 8.38% due 12/15/14......................... 155,000 130,200 DaimlerChrysler North America Holding Corp. Sr. Notes 4.88% due 06/15/10......................... 38,000 37,240 Dana Corp. Sr. Notes 5.85% due 01/15/15......................... 450,000 352,972 Diamond Triumph Auto Glass, Inc. Guaranteed Sr. Sub. Notes 9.25% due 04/01/08(7)(12).................. 100,000 70,000 Dominion Resources, Inc. Sr. Notes, Series B 5.95% due 06/15/35......................... 55,000 53,729 Dura Operating Corp. Sr. Notes 8.63% due 04/15/12......................... 179,000 159,310 Exide Corp. Term Loan 10.00% due 03/15/25(7)(12)................. 225,000 0 Ford Motor Co. Bonds 6.38% due 02/01/29......................... 44,000 31,570 Ford Motor Co. Notes 7.45% due 07/16/31......................... 850,000 663,000 Hertz Corp. Notes 6.90% due 08/15/14......................... 44,000 40,753 Hertz Corp. Sr. Notes 7.40% due 03/01/11......................... 226,000 219,000 Hertz Corp. Notes 7.63% due 06/01/12......................... 82,000 78,729 Navistar International Corp. Sr. Notes, Series B 6.25% due 03/01/12......................... 29,000 27,550 Stanadyne Corp. Sr. Sub. Notes 10.00% due 08/15/14........................ 50,000 49,500 ---------- 1,913,553 ---------- Banks -- 0.6% American Express Centurion Bank Notes 3.93% due 11/16/09(3)...................... 40,000 39,786 Bank of America Corp. Sub. Notes 7.80% due 09/15/16......................... 123,000 149,729
36 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------- BONDS & NOTES (continued) Banks (continued) Charter One Bank FSB Sub. Notes 6.38% due 05/15/12.................. $318,000 $ 344,973 Credit Suisse First Boston New York Sub. Notes 6.50% due 05/01/08*................. 40,000 41,707 HSBC Bank USA Sub. Notes 5.63% due 08/15/35.................. 65,000 64,025 Independence Community Bank Corp. Sr. Notes 4.90% due 09/23/10.................. 60,000 59,494 JPMorgan Chase Bank NA Sub. Notes 6.13% due 11/01/08.................. 63,000 65,567 PNC Funding Corp. Guaranteed Sr. Notes 5.75% due 08/01/06.................. 85,000 85,828 Popular North America, Inc. Notes 4.25% due 04/01/08.................. 108,000 106,597 Sovereign Bancorp, Inc. Sr. Notes 4.80% due 09/01/10*................. 110,000 109,218 US Bank NA Notes 3.90% due 08/15/08.................. 85,000 83,418 Wachovia Corp. Sub. Debentures 5.50% due 08/01/35.................. 140,000 136,582 Wells Fargo & Co. Notes 3.97% due 09/15/09(3)............... 36,000 36,054 ---------- 1,322,978 ---------- Broadcasting & Media -- 3.0% Adelphia Communications Corp. Sr. Notes 10.25% due 06/15/11(6)+............. 50,000 38,000 Affinity Group, Inc. Sr. Sub. Notes 9.00% due 02/15/12.................. 364,000 364,000 AMFM, Inc. Sr. Notes 8.00% due 11/01/08.................. 148,000 159,362 CCO Holdings, LLC Sr. Notes 8.75% due 11/15/13.................. 175,000 172,813 Charter Communications Holdings, LLC Sr. Notes 9.63% due 11/15/09.................. 925,000 786,250 Charter Communications Holdings, LLC Sr. Notes 9.92% due 04/01/11(8)............... 200,000 144,500 Charter Communications Holdings, LLC Sr. Notes 10.25% due 01/15/10................. 25,000 20,750
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ Broadcasting & Media (continued) Charter Communications Holdings, LLC Sr. Notes 10.75% due 10/01/09................. $ 450,000 $ 396,000 Charter Communications Holdings, LLC Sr. Notes 11.13% due 01/15/11................. 1,500,000 1,155,000 Clear Channel Communications, Inc. Sr. Debentures 6.88% due 06/15/18.................. 130,000 133,271 COX Communications, Inc. Debentures 7.63% due 06/15/25.................. 163,000 187,760 COX Communications, Inc. Notes 7.75% due 11/01/10.................. 110,000 121,723 Fisher Communications, Inc. Sr. Notes 8.63% due 09/15/14.................. 300,000 320,250 Haights Cross Operating Co. Guaranteed Sr. Notes 11.75% due 08/15/11................. 150,000 164,250 Historic TW, Inc. Guaranteed Sr. Notes 6.63% due 05/15/29.................. 144,000 150,625 Insight Communications Co., Inc. Sr. Sub. Notes 12.25% due 02/15/11(8).............. 100,000 102,000 News America, Inc. Guaranteed Sr. Debentures 7.30% due 04/30/28.................. 65,000 72,158 Paxson Communications Corp. Guaranteed Sr. Sub. Notes 12.25% due 01/15/09(8).............. 700,000 679,000 Telex Communications, Inc. Sr. Sec. Notes 11.50% due 10/15/08................. 50,000 53,375 Time Warner Entertainment Co. LP Sr. Debentures 8.38% due 03/15/23.................. 198,000 240,171 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes 8.75% due 01/15/14.................. 125,000 110,937 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes 10.00% due 03/01/11................. 675,000 637,875 ---------- 6,210,070 ---------- Building Materials -- 0.2% American Standard, Inc. Sr. Notes 7.63% due 02/15/10.................. 163,000 178,831 Dayton Superior Corp. Sr. Sec. Notes 10.75% due 09/15/08................. 175,000 176,750 ---------- 355,581 ----------
37 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------ BONDS & NOTES (continued) Business Services -- 0.8% Alderwoods Group, Inc. Sr. Notes 7.75% due 09/15/12............. $ 50,000 $ 52,500 Associated Materials, Inc. Sr. Sub. Notes 9.75% due 04/15/12............. 175,000 169,312 Di Finance Subordinated, LLC Division Capital Corp. Sr. Sub. Notes 9.50% due 02/15/13*............ 225,000 235,125 FTI Consulting, Inc. Sr. Notes 7.63% due 06/15/13*............ 75,000 76,500 Mobile Mini, Inc. Sr. Notes 9.50% due 07/01/13............. 100,000 110,500 Monitronics International, Inc. Sr. Sub. Notes 11.75% due 09/01/10............ 275,000 277,750 PHH Corp. Notes 6.00% due 03/01/08............. 67,000 68,150 Seitel, Inc. Sr. Notes 11.75% due 07/15/11............ 375,000 416,250 Service Corp. International Sr. Notes 6.75% due 04/01/16............. 75,000 75,375 Service Corp. International Sr. Notes 7.00% due 06/15/17*............ 200,000 202,000 ---------- 1,683,462 ---------- Chemicals -- 0.6% BCI US Finance Corp. Sr. Sec. Notes 9.10% due 07/15/10*(3)......... 100,000 101,000 Cytec Industries, Inc. Notes 5.50% due 10/01/10............. 60,000 59,742 Cytec Industries, Inc. Notes 6.00% due 10/01/15............. 180,000 179,333 Dow Chemical Co. Debentures 7.38% due 03/01/23............. 97,000 115,258 Equistar Chemicals LP Notes 8.75% due 02/15/09............. 75,000 78,000 Equistar Chemicals LP Sr. Notes 10.63% due 05/01/11............ 175,000 190,750 ICI North America Debentures 8.88% due 11/15/06............. 111,000 115,816 Lubrizol Corp. Sr. Notes 5.88% due 12/01/08............. 55,000 56,454
Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------- Chemicals (continued) Lubrizol Corp. Sr. Debentures 6.50% due 10/01/34................. $ 65,000 $ 68,150 Lyondell Chemical Co. Guaranteed Sr. Sec. Notes 9.50% due 12/15/08................. 50,000 52,375 Phosphate Resource Partners LP Sr. Notes 7.00% due 02/15/08................. 125,000 127,813 Rockwood Specialties Group Sr. Sub. Notes 7.50% due 11/15/14*................ 75,000 72,750 Rockwood Specialties, Inc. Sr. Sub. Notes 10.63% due 05/15/11................ 55,000 59,950 ---------- 1,277,391 ---------- Communication Equipment -- 0.2% Motorola, Inc. Debentures 6.50% due 09/01/25................. 222,000 241,877 Rural Cellular Corp. Sr. Sub. Notes 9.75% due 01/15/10................. 250,000 252,500 ---------- 494,377 ---------- Computer Software -- 0.3% Solar Capital Corp. Sr. Notes 9.13% due 08/15/13*................ 175,000 181,344 Sungard Data Systems, Inc. Sr. Sub. Notes 10.25% due 08/15/15*............... 150,000 151,875 Unisys Corp. Sr. Notes 8.00% due 10/15/12................. 225,000 221,062 ---------- 554,281 ---------- Computers & Business Equipment -- 0.1% Activant Solutions, Inc. Sr. Notes 9.50% due 04/01/10*(3)............. 100,000 102,000 ---------- Conglomerate -- 0.2% Carriage Services, Inc. Sr. Notes 7.88% due 01/15/15................. 287,000 297,045 Park-Ohio Industries, Inc. Sr. Sub. Notes 8.38% due 11/15/14................. 75,000 65,062 ---------- 362,107 ---------- Electronics -- 0.2% Advanced Micro Devices, Inc. Sr. Notes 7.75% due 11/01/12................. 225,000 230,625 Sanmina-Sci Corp. Sr. Sub. Notes 6.75% due 03/01/13................. 75,000 71,250 ---------- 301,875 ----------
38 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------ BONDS & NOTES (continued) Energy Services -- 0.1% Hanover Compressor Co. Sub. Notes 11.00% due 03/31/07.............. $ 25,000 $ 22,500 Oslo Seismic Services, Inc. 1st Mtg. Notes 8.28% due 06/01/11............... 197,728 206,514 Pride International, Inc. Sr. Notes 7.38% due 07/15/14............... 50,000 54,312 -------- 283,326 -------- Energy Sources -- 1.9% Belden & Blake Corp. Sec. Notes 8.75% due 07/15/12............... 75,000 78,375 Calpine Corp. Sec. Notes 8.75% due 07/15/13*.............. 680,000 481,100 Chesapeake Energy Corp. Sr. Notes 6.25% due 01/15/18............... 350,000 343,000 Chesapeake Energy Corp. Sr. Notes 6.63% due 01/15/16............... 25,000 25,312 Citgo Petroleum Corp. Sr. Notes 6.00% due 10/15/11............... 75,000 75,000 Colorado Interstate Gas Co. Debentures 6.85% due 06/15/37............... 150,000 151,557 ConocoPhillips Sr. Notes 7.00% due 03/30/29............... 125,000 150,494 Costilla Energy, Inc. Sr. Notes 10.25% due 10/01/49(6)(7)+....... 500,000 0 Encore Acquisition Co. Sr. Sub. Notes 6.00% due 07/15/15*.............. 75,000 73,125 Encore Acquisition Co. Sr. Sub. Notes 6.25% due 04/15/14............... 50,000 49,750 Enterprise Products Operating LP Sr. Notes 4.95% due 06/01/10............... 130,000 127,768 Enterprise Products Operating LP, Series B Guaranteed Sr. Notes 5.00% due 03/01/15............... 60,000 56,930 EXCO Resources, Inc. Guaranteed Notes 7.25% due 01/15/11............... 125,000 129,375 FPL Group Capital, Inc. Notes 4.09% due 02/16/07............... 120,000 119,211 Grant Prideco, Inc. Sr. Notes 6.13% due 08/15/15*.............. 50,000 50,500
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- Energy Sources (continued) Hilcorp Finance Co. Sr. Notes 10.50% due 09/01/10*........................ $ 350,000 $ 385,000 Mission Energy Holding Co. Sr. Sec. Notes 13.50% due 07/15/08......................... 1,075,000 1,265,812 Newfield Exploration Co. Sr. Sub. Notes 6.63% due 09/01/14.......................... 150,000 156,000 Roseton Danskammer Guaranteed Pass-Thru Certificates, Series B 7.67% due 11/08/16.......................... 150,000 149,250 Whiting Petroleum Corp. Sr. Sub. Notes 7.00% due 02/01/14*......................... 100,000 101,375 ---------- 3,968,934 ---------- Financial Services -- 5.5% AAC Group Holding Corp. Sr. Notes 10.25% due 10/01/12*(8)..................... 125,000 90,000 Affinity Group, Inc. Sr. Sub. Notes 10.00% due 02/15/15*........................ 125,000 135,000 Associates Corp. of North America Sr. Debentures 6.95% due 11/01/18.......................... 60,000 70,049 BAE Systems Holdings, Inc. Guaranteed Notes 4.75% due 08/15/10*......................... 245,000 241,944 BAE Systems Holdings, Inc. Guaranteed Notes 5.20% due 08/15/15*......................... 67,000 66,078 BAE Systems Holdings, Inc. Guaranteed Notes 6.40% due 12/15/11*......................... 237,000 252,672 Borden United States Finance Corp. Sr. Sec. Notes 9.00% due 07/15/14*......................... 75,000 76,125 Caterpillar Financial Services Corp. Sr. Notes 4.30% due 06/01/10.......................... 100,000 98,505 Caterpillar Financial Services Corp. Notes 4.70% due 03/15/12.......................... 72,000 71,527 Chukchansi Economic Development Authority Sr. Notes 14.50% due 06/15/09*........................ 500,000 602,500 Citigroup Global Markets Holdings, Inc. Sr. Notes 5.88% due 03/15/06.......................... 85,000 85,604 Consolidated Communications Holdings, Inc. Sr. Notes 9.75% due 04/01/12.......................... 135,000 143,775 Countrywide Home Loans, Inc. Tranche Trust 00255 5.50% due 08/01/06.......................... 101,000 101,815
39 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------- BONDS & NOTES (continued) Financial Services (continued) ESI Tractebel Acquisition Corp. Guaranteed Bonds 7.99% due 12/30/11............. $ 223,000 $ 233,883 FBG Finance, Ltd. Notes 5.88% due 06/15/35*............ 60,000 58,805 Ford Motor Credit Co. Notes 5.70% due 01/15/10............. 58,000 52,688 Ford Motor Credit Co. Sr. Notes 5.80% due 01/12/09............. 117,000 109,171 Ford Motor Credit Co. Notes 6.38% due 11/05/08............. 123,000 118,229 Ford Motor Credit Co. Notes 7.00% due 10/01/13............. 250,000 231,839 General Electric Capital Corp. Notes 5.38% due 03/15/07............. 67,000 67,849 General Electric Capital Corp. Bonds 6.75% due 03/15/32............. 201,000 236,422 General Motors Acceptance Corp. Notes 6.07% due 12/01/14(3).......... 625,000 525,447 General Motors Acceptance Corp. Notes 6.75% due 12/01/14............. 225,000 195,715 General Motors Acceptance Corp. Sr. Notes 7.00% due 02/01/12............. 145,000 130,946 General Motors Acceptance Corp. Bonds 8.00% due 11/01/31............. 3,050,000 2,663,166 H & E Equipment Services, LLC Guaranteed Sr. Sec. Notes 11.13% due 06/15/12............ 125,000 140,000 HSBC Finance Corp. Global Sr. Notes 4.75% due 07/15/13............. 237,000 231,320 ING USA Global Funding Trust Tranche Trust 00001 4.50% due 10/01/10............. 120,000 118,366 John Deere Capital Corp. Tranche Trust 00332 4.50% due 08/25/08............. 166,000 165,353 JPMorgan Chase & Co. Global Sub. Notes 5.15% due 10/01/15............. 144,000 143,113 Lehman Brothers Holdings, Inc. Notes 6.63% due 01/18/12............. 120,000 130,538 MBNA Corp. Tranche Sr. 00058 4.63% due 09/15/08............. 190,000 189,862 MedCath Holdings Corp. Sr. Notes 9.88% due 07/15/12............. 175,000 190,750 Merrill Lynch & Co., Inc. Tranche Trust 00476 4.79% due 08/04/10............. 96,000 95,668
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------------- Financial Services (continued) Muzak, LLC/ Muzak Finance Corp. Guaranteed Sr. Sub. Notes 9.88% due 03/15/09............................... $ 75,000 $ 37,594 National Rural Utilites Cooperative Finance Corp. Sec. Collateral Trust Bonds 3.88% due 02/15/08............................... 85,000 83,671 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 11.38% due 04/01/13(8)........................... 575,000 425,500 NGC Corp. Capital Trust, Series B Guaranteed Sub. Notes 8.32% due 06/01/27............................... 1,225,000 1,099,438 Nisource Finance Corp. Guaranteed Notes 5.45% due 09/15/20............................... 60,000 58,691 PCA, LLC Sr. Notes 11.88% due 08/01/09.............................. 325,000 85,313 PNC Bank, National Assoc. Notes 4.88% due 09/21/17............................... 130,000 126,156 Pricoa Global Funding I Notes 4.63% due 06/25/12*.............................. 50,000 49,022 Principal Life Global Funding Sec. Notes 5.13% due 06/28/07*.............................. 85,000 85,390 PX Escrow Corp. Sr. Sub. Notes 9.63% due 02/01/06(8)............................ 125,000 122,031 Residential Capital Corp. Notes 6.38% due 06/30/10*.............................. 234,000 237,060 Residential Capital Corp. Notes 6.88% due 06/30/15*.............................. 84,000 87,899 Resona Preferred Global Securities Cayman, Ltd. Bonds 7.19% due 07/30/15*(2)........................... 60,000 62,116 SLM Corp., Series A Tranche Trust 00087 3.81% due 07/27/09(3)............................ 60,000 59,952 Sprint Capital Corp. Guaranteed Sr. Notes 6.88% due 11/15/28............................... 48,000 53,024 Terra Capital, Inc. Guaranteed Sr. Sec. Notes 11.50% due 06/01/10.............................. 162,000 185,490 Terra Capital, Inc. Guaranteed Sr. Sec. Notes 12.88% due 10/15/08.............................. 75,000 88,500 Transamerica Finance Corp. Sr. Notes 6.40% due 09/15/08............................... 36,000 37,745 Washington Mutual, Inc. Sr. Notes 5.25% due 09/15/17............................... 60,000 59,112 Xlliac Global Funding Tranche Trust 00024 4.80% due 08/10/10*.............................. 180,000 178,838 ----------- 11,287,266 -----------
40 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------- BONDS & NOTES (continued) Food, Beverage & Tobacco -- 1.1% Alliance One International, Inc. Sr. Sub. Notes 12.75% due 11/15/12*............ $200,000 $ 183,000 American Stores Co. Debentures 8.00% due 06/01/26.............. 164,000 152,310 Archer-Daniels-Midland Co. Debentures 5.38% due 09/15/35.............. 70,000 67,823 Coca-Cola Enterprises, Inc. Debentures 8.50% due 02/01/22.............. 78,000 102,684 ConAgra Foods, Inc. Notes 6.00% due 09/15/06.............. 107,000 108,341 ConAgra, Inc. Sr. Notes 7.13% due 10/01/26.............. 70,000 77,903 Le Natures, Inc. Sr. Sub. Notes 10.00% due 06/15/13*............ 75,000 81,000 Monsanto Co. Sr. Notes 5.50% due 08/15/25.............. 285,000 277,601 North Atlantic Holding Co., Inc. Sr. Notes 12.25% due 03/01/14(8).......... 250,000 50,000 North Atlantic Trading Co., Inc. Sr. Notes 9.25% due 03/01/12.............. 150,000 112,500 Stater Brothers Holdings, Inc. Sr. Notes 8.13% due 06/15/12.............. 450,000 444,375 Wornick Co. Sr. Sec. Notes 10.88% due 07/15/11............. 525,000 539,438 ---------- 2,196,975 ---------- Forest Products -- 0.7% Boise Cascade, LLC Sr. Notes 6.47% due 10/17/12(3)........... 125,000 124,687 Caraustar Industries, Inc. Notes 7.38% due 06/01/09.............. 25,000 24,250 Caraustar Industries, Inc. Guaranteed Sr. Sub. Notes 9.88% due 04/01/11.............. 50,000 49,500 Constar International, Inc. Sr. Notes 7.17% due 11/15/05*............. 75,000 69,563 Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23.............. 400,000 393,500 FiberMark, Inc. Sr. Notes 9.38% due 10/15/06(6)+.......... 550,000 391,875 FiberMark, Inc. Sr. Notes 10.75% due 04/15/11(6)+......... 125,000 95,312
Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Forest Products (continued) Georgia-Pacific Corp. Sr. Notes 8.00% due 01/15/14................. $ 125,000 $ 136,875 Packaging Corp. of America Sr. Notes 5.75% due 08/01/13................. 16,000 15,479 Pliant Corp. Sr. Sec. Notes 11.13% due 09/01/09................ 120,000 103,200 Pliant Corp. Sr. Sub. Notes 13.00% due 06/01/10(16)............ 250,000 118,750 ---------- 1,522,991 ---------- Health Services -- 1.0% Concentra Operating Corp. Sr. Sub. Notes 9.13% due 06/01/12................. 180,000 187,200 Concentra Operating Corp. Sr. Sub. Notes 9.50% due 08/15/10................. 30,000 31,425 Genesis Healthcare Corp. Sr. Sub. Notes 8.00% due 10/15/13................. 75,000 80,812 HCA, Inc. Notes 6.38% due 01/15/15................. 450,000 445,208 HCA, Inc. Notes 6.75% due 07/15/13................. 600,000 610,502 Pediatric Services Of America, Inc. Guaranteed Sr. Sub. Notes 10.00% due 04/15/08(7)............. 25,000 25,250 Psychiatric Solutions, Inc. Sr. Sub. Notes 7.75% due 07/15/15*................ 67,000 69,178 Team Health, Inc. Sr. Sub. Notes 9.00% due 04/01/12................. 225,000 238,500 Tenet Healthcare Corp. Notes 7.38% due 02/01/13................. 125,000 118,437 Tenet Healthcare Corp. Sr. Notes 9.25% due 02/01/15*................ 100,000 101,000 Triad Hospitals, Inc. Sr. Sub. Notes 7.00% due 11/15/13................. 75,000 75,938 US Oncology, Inc. Sr. Sub. Notes 10.75% due 08/15/14................ 125,000 140,000 ---------- 2,123,450 ---------- Household & Personal Products -- 0.2% Procter & Gamble Co. Bonds 2.00% due 06/21/10................. JPY 39,000,000 361,386 ----------
41 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------- BONDS & NOTES (continued) Insurance -- 0.4% Allstate Financial Global Funding Notes 5.25% due 02/01/07*............... $ 60,000 $ 60,372 Americo Life, Inc. Notes 7.88% due 05/01/13*............... 38,000 39,485 Chubb Corp. Notes 6.00% due 11/15/11................ 84,000 88,734 Crum & Forster Holdings Corp. Sr. Notes 10.38% due 06/15/13............... 125,000 136,563 Liberty Mutual Group Notes 6.50% due 03/15/35*............... 75,000 69,557 Metropolitan Life Global Funding I Tranche Trust 00011 4.25% due 07/30/09*............... 132,000 130,029 Metropolitan Life Global Funding I Tranche Trust 00019 4.63% due 08/19/10*............... 60,000 59,592 MIC Financing Trust I Pass-Thru Certificates 8.38% due 02/01/27*............... 123,000 127,148 Ohio Casualty Corp. Notes 7.30% due 06/15/14................ 100,000 107,782 -------- 819,262 -------- Internet Content -- 0.1% Spheris, Inc. Sr. Sub. Notes 11.00% due 12/15/12*.............. 150,000 144,750 -------- Leisure & Tourism -- 2.7% American Airlines, Inc. Pass-Thru Certificates, Series 2001-1, Class A2 6.82% due 05/23/11................ 500,000 458,806 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class A-2 6.88% due 07/02/09................ 264,176 254,081 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class A-1 7.20% due 01/02/19................ 78,422 77,936 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class B 7.63% due 01/02/15(6)+............ 751,504 624,967 Atlas Air, Inc. Pass-Thru Certificates, Series 2000-1 8.71% due 01/02/19................ 313,966 325,190 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class C 8.77% due 01/02/11(6)+............ 62,428 34,067
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- Leisure & Tourism (continued) Atlas Air, Inc. Pass-Thru Certificates Series 2000-1, Class B 9.06% due 07/02/17........................... $552,091 $ 509,768 Circus & Eldorado Silver Legacy Capital Corp. Mtg. Notes 10.13% due 03/01/12.......................... 575,000 600,875 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999 1, Class A 6.55% due 02/02/19........................... 411,530 403,513 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-1, Class C 6.95% due 08/02/09........................... 127,510 111,735 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-2, Class C1 7.73% due 03/15/11........................... 45,376 37,639 Continental Airlines, Inc. Sec. Pass-Thru Certificates, Series 2000-2, Class B 8.31% due 10/02/19........................... 68,966 60,907 Delta Airlines, Inc. Notes 8.30% due 12/15/29(6)(9)+.................... 500,000 90,000 Delta Airlines, Inc. Sr. Notes 9.50% due 11/18/08*(6)(9)+................... 175,000 131,250 Delta Airlines, Inc. Sr. Notes 10.00% due 08/15/08(6)(9)+................... 525,000 94,500 Eldorado Casino Shreveport Joint 1st Mtg. Notes 10.00% due 08/01/12.......................... 303,051 287,520 Eldorado Resorts, LLC Sr. Notes 9.00% due 04/15/14(7)........................ 425,000 425,000 Harrahs Operating Co., Inc. Guaranteed Sr. Notes 5.75% due 10/01/17*.......................... 60,000 58,729 Riviera Holdings Corp. Guaranteed Sr. Notes 11.00% due 06/15/10#......................... 135,000 145,800 True Temper Sports, Inc. Guaranteed Sr. Sub. Notes 8.38% due 09/15/11........................... 300,000 279,000 Turning Stone Casino Resort Sr. Notes 9.13% due 12/15/10*.......................... 75,000 78,000 Waterford Gaming, LLC Sr. Notes 8.63% due 09/15/12*.......................... 191,000 203,415 Worldspan LP Sr. 2nd Lien Sec. Notes 10.04% due 02/15/11*......................... 450,000 396,000 ---------- 5,688,698 ----------
42 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- BONDS & NOTES (continued) Machinery -- 0.2% Dresser Rand Group, Inc. Sr. Sub. Notes 7.38% due 11/01/14*................ $188,000 $ 195,050 Huntsman Advanced Materials, LLC Sr. Sec. Notes 11.00% due 07/15/10................ 175,000 196,000 Venture Holdings Co., LLC Guaranteed Sr. Sub. Notes 11.00% due 06/01/07(6)(9)+......... 100,000 250 ---------- 391,300 ---------- Medical Products -- 0.7% AmerisourceBergen Corp. Sr. Notes 5.88% due 09/15/15*................ 275,000 271,563 CDRV Investors, Inc. Sr. Notes 9.63% due 01/01/15(8).............. 325,000 185,250 Encore Med IHC, Inc. Sr. Sub. Notes 9.75% due 10/01/12................. 75,000 74,625 Genetech, Inc. Sr. Notes 5.25% due 07/15/35*................ 287,000 276,524 Inverness Medical Innovations, Inc. Sr. Sub. Notes 8.75% due 02/15/12................. 425,000 431,375 Mylan Labs, Inc. Sr. Notes 5.75% due 08/15/10*................ 25,000 25,031 Mylan Labs, Inc. Sr. Notes 6.38% due 08/15/15*................ 75,000 75,094 Universal Hospital Services, Inc. Sr. Notes 10.13% due 11/01/11................ 175,000 179,375 ---------- 1,518,837 ---------- Metals & Mining -- 0.5% AK Steel Corp. Guaranteed Notes 7.88% due 02/15/09................. 50,000 48,500 Allegheny Technologies, Inc. Notes 8.38% due 12/15/11................. 75,000 80,625 Associated Materials, Inc. Sr. Notes 11.25% due 03/01/14(8)............. 275,000 137,500 Barrick Gold Finance Co. Guaranteed Notes 5.80% due 11/15/34................. 70,000 68,812 Chaparrel Steel Co. Sr. Notes 10.00% due 07/15/13*............... 75,000 79,125 CSN Islands IX Corp. Guaranteed Notes 10.00% due 01/15/15*............... 175,000 194,687
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------- Metals & Mining (continued) CSN Islands VIII Corp. Guaranteed Sr. Notes 9.75% due 12/16/13*................ $175,000 $194,250 Newmont Mining Corp. Notes 8.63% due 05/15/11................. 60,000 70,575 Renco Metals, Inc. Guaranteed Sr. Notes 11.50% due 07/01/49(6)(7)(12)(15)+. 500,000 0 Ryerson Tull, Inc. Sr. Notes 8.25% due 12/15/11................. 100,000 97,250 -------- 971,324 -------- Pharmaceuticals -- 0.1% American Home Products Notes 6.95% due 03/15/11................. 58,000 63,712 Curative Health Services, Inc. Sr. Notes 10.75% due 05/01/11................ 150,000 96,000 Merck & Co., Inc. Notes 2.50% due 03/30/07................. 40,000 38,794 -------- 198,506 -------- Real Estate Companies -- 0.0% EOP Operating LP Notes 8.38% due 03/15/06................. 70,000 71,213 -------- Real Estate Investment Trusts -- 0.4% National Health Investors, Inc. Notes 7.30% due 07/16/07................. 100,000 102,528 Omega Healthcare Investors, Inc. Sr. Notes 7.00% due 04/01/14................. 25,000 25,250 Senior Housing Properties Trust Sr. Notes 8.63% due 01/15/12................. 352,000 391,600 Trustreet Properties, Inc. Sr. Notes 7.50% due 04/01/15................. 225,000 230,062 -------- 749,440 -------- Restaurants -- 0.3% Denny's Holdings, Inc. Sr. Notes 10.00% due 10/01/12................ 200,000 200,000 Restaurant Co. Sr. Notes 10.00% due 10/01/13*............... 50,000 48,000 Sbarro, Inc. Sr. Notes 11.00% due 09/15/09................ 394,000 392,030 -------- 640,030 --------
43 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------ BONDS & NOTES (continued) Retail Stores -- 0.7% Acco Brands Corp. Sr. Sub. Notes 7.63% due 08/15/15*............ $ 75,000 $ 74,250 Collins & Aikman Floor Cover Guaranteed Sr. Notes 9.75% due 02/15/10............. 148,000 142,820 General Nutrition Centers, Inc. Sr. Sub. Notes 8.50% due 12/01/10............. 50,000 42,625 Jostens Holding Corp. Sr. Notes 10.25% due 12/01/13(8)......... 255,000 183,600 Neiman Marcus Group, Inc. Sr. Sub. Notes 10.38% due 10/15/15*........... 100,000 99,500 Prestige Brands, Inc. Sr. Sub. Notes, Series B 9.25% due 04/15/12............. 50,000 51,250 Rent-Way, Inc. Sr. Notes 11.88% due 06/15/10(7)......... 283,000 311,300 Saks, Inc. Guaranteed Notes 9.88% due 10/01/11............. 375,000 414,375 Wal-Mart Stores, Inc. Notes 5.25% due 09/01/35............. 156,000 150,967 ---------- 1,470,687 ---------- Telecommunications -- 2.2% Alltel Corp. Notes 4.66% due 05/17/07............. 53,000 52,951 American Cellular Corp., Series B Sr. Notes 10.00% due 08/01/11............ 450,000 490,500 AT&T Wireless Services, Inc. Sr. Notes 7.88% due 03/01/11............. 371,000 422,382 Cincinnati Bell, Inc. Notes 7.25% due 06/15/23............. 25,000 23,375 Cincinnati Bell, Inc. Sr. Sub. Notes 8.38% due 01/15/14............. 25,000 24,625 Corning, Inc. Notes 5.90% due 03/15/14............. 71,000 72,034 Corning, Inc. Notes 6.85% due 03/01/29............. 63,000 63,582 GTE Corp. Debentures 6.94% due 04/15/28............. 70,000 76,521
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ Telecommunications (continued) GTE Northwest, Inc. Debentures Series D 5.55% due 10/15/08.................. $ 55,000 $ 55,818 ICO North America, Inc. Notes 7.50% due 08/15/09(7)............... 200,000 215,000 Intelsat, Ltd Sr. Notes 9.25% due 02/01/15*(8).............. 125,000 82,500 LCI International, Inc. Sr. Notes 7.25% due 06/15/07.................. 2,000,000 1,950,000 Qwest Corp. Debentures 7.13% due 11/15/43.................. 125,000 105,781 Qwest Corp. Debentures 7.25% due 10/15/35.................. 100,000 88,750 Triton PCS, Inc. Guaranteed Sr. Notes 8.50% due 06/01/13.................. 400,000 381,000 US West Communications, Inc. Debentures 7.50% due 06/15/23.................. 25,000 22,812 Valor Telecommunications Enterprises Sr. Notes 7.75% due 02/15/15.................. 100,000 97,000 Verizon New York, Inc., Debentures, Series A 6.88% due 04/01/12.................. 60,000 64,188 Verizon New York, Inc., Sr. Debentures, Series B 7.38% due 04/01/32.................. 202,000 222,309 ---------- 4,511,128 ---------- Transportation -- 0.3% Burlington Northern Santa Fe Corp. Debentures 7.29% due 06/01/36.................. 44,000 54,147 Burlington Northern Santa Fe Corp. Debentures 8.13% due 04/15/20.................. 102,000 129,376 Norfolk Southern Corp. Notes 5.59% due 05/17/25.................. 168,000 167,937 Petroleum Helicopters, Inc. Guaranteed Sr. Notes, Series B 9.38% due 05/01/09.................. 50,000 53,125 Progress Rail Services Corp. Sr. Notes 7.75% due 04/01/12*................. 100,000 101,750 Ultrapetrol Bahamas, Ltd. 1st Mtg. Notes 9.00% due 11/24/14.................. 200,000 184,250 ---------- 690,585 ----------
44 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- BONDS & NOTES (continued) Utilities -- 2.8% AES Corp. Sr. Sub. Debentures 8.88% due 11/01/27................ $ 300,000 $ 327,000 CenterPoint Energy Resources Corp. Notes 7.75% due 02/15/11................ 120,000 134,778 Cincinnati Bell Telephone Co. Guaranteed Notes 7.18% due 12/15/23................ 50,000 50,125 Cincinnati Bell Telephone Co. Guaranteed Notes 7.20% due 11/29/23................ 225,000 220,781 Consolidated Edison, Inc. Debenture Series 2003A 3.63% due 08/01/08................ 120,000 116,841 Consolidated Natural Gas Co. Sr. Notes 5.38% due 11/01/06................ 105,000 105,800 El Paso Natural Gas Co. Sr. Notes 7.63% due 08/01/10................ 250,000 259,943 El Paso Natural Gas Co. Debentures 8.63% due 01/15/22................ 325,000 371,675 El Paso Production Holding Co. Guaranteed Sr. Notes 7.75% due 06/01/13................ 975,000 1,018,875 Ferrellgas L. P. Sr. Notes 6.75% due 05/01/14................ 225,000 214,875 FirstEnergy Corp., Series B Sr. Notes, Series B 6.45% due 11/15/11................ 48,000 51,109 Florida Power & Light Co. 1st Mtg. Bonds 5.40% due 09/01/35................ 140,000 138,578 Florida Power Corp. 1st Mtg. Bonds 4.50% due 06/01/10................ 38,000 37,459 KeySpan Corp. Sr. Notes 4.90% due 05/16/08................ 239,000 239,995 Mirant Corp. Sr. Notes 7.90% due 07/15/09*+(6)(9)........ 1,125,000 1,369,687 Pacific Energy Partners LP Sr. Notes 6.25% due 09/15/15*............... 75,000 75,188 Pacific Energy Partners LP Sr. Notes 7.13% due 06/15/14................ 155,000 160,812 Pepco Holdings, Inc. Notes 5.50% due 08/15/07................ 111,000 112,390 PSEG Power, LLC Sr. Notes 7.75% due 04/15/11................ 120,000 134,364 PSI Energy, Inc. Debentures 7.85% due 10/15/07................ 179,000 189,479
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Utilities (continued) Reliant Energy, Inc. Sr. Sec. Notes 6.75% due 12/15/14.................. $ 50,000 $ 49,125 Reliant Energy, Inc. Notes 9.50% due 07/15/13.................. 50,000 55,250 Sempra Energy Sr. Notes 4.62% due 05/17/07.................. 53,000 52,889 Transcontinental Gas Pipe Line Corp. Sr. Notes 8.88% due 07/15/12.................. 25,000 29,156 Williams Cos, Inc. Notes 7.88% due 09/01/21.................. 300,000 330,000 ----------- 5,846,174 ----------- Total Bonds & Notes (cost $60,955,117).................. 60,309,703 ----------- CONVERTIBLE BONDS -- 1.2% Broadcasting & Media -- 0.1% Citadel Broadcasting Corp. Sub. Notes 1.88% due 02/15/11.................. 150,000 116,812 ----------- Energy Services -- 0.0% Unisource Energy Corp. Sr. Notes 4.50% due 03/01/35*................. 25,000 26,188 ----------- Health Services -- 0.0% Genesis Healthcare Corp. Sr. Sub. Debentures 2.50% due 03/15/25*................. 75,000 73,313 ----------- Leisure & Tourism -- 0.2% Six Flags, Inc. Sr. Notes 4.50% due 05/15/15.................. 310,000 390,987 ----------- Pharmaceuticals -- 0.0% Elan Capital Corp. Bonds 6.50% due 11/10/08.................. 50,000 67,815 ----------- Utilities -- 0.9% Calpine Corp. Sr. Notes 4.75% due 11/15/23.................. 3,025,000 1,648,625 Calpine Corp. Notes 7.75% due 06/01/15.................. 200,000 169,000 ----------- 1,817,625 ----------- Total Convertible Bonds (cost $2,965,562)................... 2,492,740 ----------- FOREIGN BONDS & NOTES -- 36.0% Banks -- 0.1% HBOS Treasury Services, PLC Notes 3.50% due 11/30/07*................. 88,000 86,039 NIB Capital Bank NV Bonds 5.82% due 12/11/13*(2).............. 110,000 113,533 ----------- 199,572 -----------
45 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Broadcasting & Media -- 0.5% Corp. Interamericana De Entretenimiento SA Sr. Notes 8.88% due 06/14/15*....................... $ 100,000 $ 98,250 Grupo Televisa SA Sr. Notes 6.63% due 03/18/25........................ 181,000 181,681 Telenet Group Holding NV Sr. Notes 11.50% due 06/15/14*(8)................... 850,000 694,875 ---------- 974,806 ---------- Chemicals -- 0.4% Nova Chemicals Corp. Sr. Notes 6.50% due 01/15/12........................ 150,000 145,687 Rhodia SA Sr. Sub. Notes 8.88% due 06/01/11........................ 625,000 590,625 ---------- 736,312 ---------- Conglomerate -- 0.1% Tyco International Group SA Guaranteed Notes 6.38% due 10/15/11........................ 60,000 63,953 Tyco International Group SA Guaranteed Sr. Notes 6.75% due 02/15/11........................ 186,000 200,900 ---------- 264,853 ---------- Electronics -- 0.1% Celestica, Inc. Sr. Sub. Notes 7.63% due 07/01/13........................ 50,000 49,875 STATS ChipPAC Ltd. Sr. Notes 6.75% due 11/15/11........................ 75,000 72,750 ---------- 122,625 ---------- Energy Services -- 0.2% ENI Coordination Center Guaranteed Notes 5.25% due 12/27/07........................ GBP 205,000 366,614 ---------- Energy Sources -- 0.2% North America Energy Partners, Inc. Sr. Notes 8.75% due 12/01/11........................ 175,000 166,250 North America Energy Partners, Inc. Sr. Notes 9.00% due 06/01/10........................ 175,000 180,250 Petro-Canada Sr. Notes 5.95% due 05/15/35........................ 44,000 44,003 ---------- 390,503 ---------- Financial Services -- 1.5% Aries Vermogensverwaltungs GmbH Bonds 9.60% due 10/25/14........................ 1,500,000 1,979,850
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Financial Services (continued) Bluewater Finance, Ltd. Guaranteed Sr. Notes 10.25% due 02/15/12.............. $ 175,000 $ 189,875 HBOS Capital Funding Guaranteed Notes 6.85% due 03/29/49............... 175,000 180,040 Nationwide Building Society Sr. Notes 2.63% due 01/30/07*.............. 85,000 82,914 Nell AF SARL Sr. Notes 8.38% due 08/15/15*.............. 600,000 586,500 UFJ Finance Aruba AEC Guaranteed Notes 6.75% due 07/15/13............... 120,000 131,766 ---------- 3,150,945 ---------- Food, Beverage & Tobacco -- 0.1% Diageo Capital, PLC Guaranteed Notes 4.38% due 05/03/10............... 88,000 86,570 Molson Coors Capital Finance, ULC Sr. Notes 4.85% due 09/22/10*.............. 60,000 59,529 ---------- 146,099 ---------- Forest Products -- 0.4% Abitibi-Consolidated, Inc. Debentures 8.55% due 08/01/10............... 375,000 381,563 Stora Enso Oyj Notes 3.88% due 12/15/09............... SEK 3,000,000 395,870 ---------- 777,433 ---------- Government Agencies -- 31.0% Australia Commonwealth Bonds 7.50% due 09/15/09............... AUD 2,360,000 1,937,434 Canadian Government Bonds 5.00% due 06/01/14............... CAD 430,000 399,029 Canadian Government Bonds 4.25% due 09/01/08............... CAD 2,555,000 2,247,829 Canadian Government Bonds 5.75% due 09/01/06............... CAD 1,705,000 1,499,417 Deutsche Bundesrepublik Bonds 5.63% due 01/04/28............... EUR 405,000 640,670 Dutch Government Bonds 5.25% due 07/15/08............... EUR 355,000 458,113 Federal Republic of Brazil Notes 4.31% due 04/12/15(3)............ 1,511,196 1,486,715 Federal Republic of Brazil Notes 11.00% due 01/11/12.............. 240,000 294,120
46 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ FOREIGN BONDS & NOTES (continued) Government Agencies (continued) Federal Republic of Brazil Notes 10.25% due 06/17/13........... $ 580,000 $ 690,200 Federal Republic of Brazil Notes 8.00% due 04/15/14............ 765,230 766,378 Federal Republic of Brazil Bonds 10.50% due 07/14/14........... 1,395,000 1,688,648 Federal Republic of Brazil Notes 7.88% due 03/07/15............ 110,000 114,125 Federal Republic of Brazil Bonds 12.50% due 01/05/16(7)........ BRL 1,074,000 464,235 Federal Republic of Brazil Bonds 8.00% due 01/15/18............ 1,120,000 1,186,080 Federal Republic of Brazil Bonds 8.88% due 10/14/19............ 110,000 119,460 Federal Republic of Brazil Bonds 8.88% due 04/15/24............ 145,000 154,715 Federal Republic of Brazil Bonds 8.75% due 02/04/25............ 880,000 929,720 Federal Republic of Brazil Bonds 8.25% due 01/20/34............ 180,000 180,900 Federal Republic of Brazil Bonds 11.00% due 08/17/40........... 3,665,000 4,493,290 Government of Germany Notes 3.50% due 10/09/09............ EUR 245,000 304,276 Government of Japan Bonds 0.50% due 06/20/06............ JPY 68,000,000 600,989 Kingdom of Spain Bonds 5.35% due 10/31/11............ EUR 1,215,000 1,662,101 Kingdom of Sweden Bonds 4.50% due 08/12/15............ SEK 15,480,000 2,240,105 Kingdom of Sweden Bonds 5.00% due 01/28/09............ SEK 17,800,000 2,475,975 Poland Government Bonds 5.75% due 03/24/10............ PLN 2,650,000 846,838 Republic of Argentina Bonds 4.00% due 08/03/12(3)......... 1,560,000 1,250,340 Republic of Argentina Notes 5.25% due 03/31/09............ 2,739,761 1,082,206 Republic of Argentina Notes 8.28% due 12/31/33............ 2,076,430 2,141,838
Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- Government Agencies (continued) Republic of Colombia Notes 8.25% due 12/22/14.......... $ 200,000 $ 224,100 Republic of Colombia Notes 10.75% due 01/15/13......... 470,000 590,555 Republic of Greece Sr. Notes 4.65% due 04/19/07.......... EUR 300,000 372,919 Republic of Greece Bonds 5.25% due 05/18/12.......... EUR 310,000 422,244 Republic of Italy Bonds 5.25% due 12/15/05.......... EUR 695,000 840,330 Republic of Italy Bonds 5.25% due 11/01/29.......... EUR 538,000 792,141 Republic of Peru Bonds 5.00% due 03/07/07(2)....... 164,000 161,950 Republic of Peru Notes 7.35% due 07/21/25.......... 320,000 339,200 Republic of South Africa Bonds 13.00% due 08/31/10......... ZAR 6,225,000 1,179,282 Republic of South Africa Notes 13.50% due 09/15/15......... ZAR 1,925,000 412,535 Republic of Turkey Notes 8.00% due 02/14/34.......... 255,000 269,025 Republic of Turkey Notes 9.50% due 01/15/14.......... 130,000 157,137 Republic of Turkey Notes 11.00% due 01/14/13......... 280,000 358,050 Republic of Turkey Sr. Bonds 11.88% due 01/15/30......... 2,330,000 3,419,275 Republic of Ukraine Sr. Notes 7.65% due 06/11/13.......... 780,000 858,468 Republic of Uruguay Bonds 7.50% due 03/15/15.......... 225,000 230,625 Republic of Venezuela Bonds 8.50% due 10/08/14.......... 300,000 333,000 Republic of Venezuela Bonds 9.25% due 09/15/27.......... 2,575,000 3,046,225 Republic of Uruguay Bonds 9.25% due 05/17/17.......... 400,000 448,500 Russian Federation Debentures 3.00% due 05/14/11.......... 760,000 676,476
47 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Government Agencies (continued) Russian Federation Bonds 7.50% due 03/31/07*(8)............ $ 4,730,000 $ 5,433,795 Russian Federation Bonds 8.25% due 03/31/10................ 1,885,000 2,041,455 Russian Federation Bonds 12.75% due 06/24/28............... 200,000 376,960 Spanish Government Bonds 6.15% due 01/31/13................ EUR 1,199,000 1,740,106 United Kingdom Notes 5.00% due 03/07/08................ GBP 535,000 961,184 United Mexican States Notes 5.88% due 01/15/14................ 200,000 206,800 United Mexican States Notes 6.38% due 01/16/13................ 185,000 196,840 United Mexican States Notes 7.50% due 01/14/12................ 220,000 246,840 United Mexican States Bonds 8.13% due 12/30/19................ 445,000 539,563 United Mexican States Bonds 8.30% due 08/15/31................ 325,000 406,250 United Mexican States Bonds 9.50% due 12/18/14................ MXN 14,775,000 1,454,150 United Mexican States, Series A Notes 6.63% due 03/03/15................ 2,095,000 2,276,217 United Mexican States, Series A Notes 6.75% due 09/27/34................ 310,000 330,150 United Mexican States, Series A Notes 7.50% due 04/08/33................ 400,000 464,000 ----------- 64,162,093 ----------- Household & Personal Products -- 0.2% Vitro Envases Norteamerica SA Sr. Sec. Notes 10.75% due 07/23/11*.............. 350,000 357,000 ----------- Insurance -- 0.2% Fairfax Financial Holdings, Ltd. Notes 8.25% due 10/01/15................ 400,000 380,000 ----------- Leisure & Tourism -- 0.1% Grupo Posadas SA de CV Sr. Notes 8.75% due 10/04/11*............... 175,000 187,250 -----------
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ Machinery -- 0.0% Magnachip Semiconductor SA 2nd Priority Sr. Sec. Notes 6.88% due 12/15/11.............. $ 50,000 $ 48,000 Magnachip Semiconductor SA Sr. Sub. Notes 8.00% due 12/15/14.............. 50,000 46,000 ---------- 94,000 ---------- Metals & Minerals -- 0.0% Falconbridge, Ltd. Notes 8.38% due 02/15/11.............. 28,000 31,861 ---------- Metals & Mining -- 0.1% Teck Cominco, Ltd. Sr. Notes 6.13% due 10/01/35.............. 140,000 137,288 ---------- Pharmaceuticals -- 0.6% Abbott Japan Co. Ltd. Guaranteed Bonds 1.05% due 11/06/08.............. JPY 76,000,000 677,464 Elan Finance, PLC Sr. Notes 7.75% due 11/15/11*............. 600,000 528,000 Elan Finance, PLC Sr. Notes 7.79% due 11/15/11*(3).......... 150,000 132,375 ---------- 1,337,839 ---------- Real Estate Companies -- 0.0% Brascan Corp. Sr. Notes 8.13% due 12/15/08.............. 76,000 83,275 ---------- Retail -- 0.1% Jean Coutu Group, Inc. Sr. Sub. Notes 8.50% due 08/01/14.............. 250,000 248,750 ---------- Telecommunications -- 0.1% British Telecommunications, PLC Notes 7.88% due 12/15/05.............. 85,000 85,577 Telecom Italia Capital SA Guaranteed Sr. Notes 4.00% due 01/15/10*............. 14,000 13,443 Telecom Italia Capital SA Guaranteed Sr. Notes 6.00% due 09/30/34*............. 111,000 108,774 TELUS Corp. Notes 7.50% due 06/01/07.............. 38,000 39,682 ---------- 247,476 ---------- Transportation -- 0.0% Grupo Transportacion Ferroviaria Mexicana SA De CV Sr. Notes 9.38% due 05/01/12*............. 100,000 108,000 ----------
48 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Utilities -- 0.0% AES Chivor Notes 9.75% due 12/30/14*....................... $ 100,000 $ 112,050 AES Drax Energy, Ltd. Sec. Notes 11.50% due 08/30/10(6)+................... 725,000 725 ----------- 112,775 ----------- Total Foreign Bonds & Notes (cost $71,984,444)........................ 74,617,369 ----------- U.S. GOVERNMENT OBLIGATIONS -- 6.3% U.S Treasury Bonds -- 2.4% 5.38% due 02/15/31........................ 3,560,000 3,988,311 6.25% due 08/15/23........................ 740,000 884,849 ----------- 4,873,160 ----------- U.S. Treasury Notes -- 3.9% 3.63% due 01/15/10........................ 803,000 784,462 3.87% due 05/15/10........................ 175,000 172,464 3.88% due 09/15/10........................ 72,000 70,982 4.00% due 02/15/15........................ 1,501,000 1,461,130 4.25% due 08/15/15........................ 2,162,000 2,148,487 5.75% due 11/15/05........................ 3,525,000 3,534,225 ----------- 8,171,750 ----------- Total U.S. Government Obligations (cost $13,186,021)........................ 13,044,910 ----------- U.S. GOVERNMENT AGENCIES -- 13.2% Federal Home Loan Mortgage Corporation -- 6.5% 3.50% due 05/15/07........................ 600,000 591,549 3.63% due 02/15/07........................ 624,000 617,284 3.88% due 03/03/08........................ 310,000 306,314 3.88% due 12/20/06........................ 600,000 596,433 4.13% due 07/12/10........................ 300,000 295,090 4.35% due 06/02/08........................ 600,000 595,541 4.45% due 03/06/08........................ 600,000 599,048 4.50% due 02/01/20........................ 282,928 277,150 4.50% due 08/01/20........................ 498,021 487,851 5.00% due 02/01/34........................ 550,713 540,263 5.00% due 02/01/35........................ 798,604 782,756 5.00% due 05/01/34........................ 340,314 333,560 5.00% due 07/01/20........................ 966,717 964,498 5.00% due 08/01/35........................ 1,098,593 1,075,453 5.00% due 09/01/18........................ 699,583 698,237 5.50% due 07/01/35........................ 2,976,586 2,978,074 6.00% due 07/01/35........................ 299,352 304,609 6.50% due 05/01/29........................ 12,693 13,094 6.88% due 09/15/10........................ 1,156,000 1,276,067 7.00% due 06/01/29........................ 25,550 26,706 8.50% due 05/01/08........................ 26,750 27,902 10.00% due 05/15/20(5).................... 30,357 30,334 11.57% due 10/01/05(4).................... 16,902 331 ----------- 13,418,144 ----------- Federal National Mortgage Association -- 6.6% 0.45% due 10/01/05(4)(5).................. 3,361,012 40,647 0.57% due 10/01/05(4)(5).................. 935,048 6,299 0.84% due 10/01/05(4)(5).................. 2,804,760 117,560
Principal Amount** Value Security Description /Shares (Note 2) -------------------------------------------------------------------- Federal National Mortgage Association (continued) 1.31% due 10/01/05(4)(5)................... $1,585,391 $ 55,180 3.00% due 03/02/07......................... 600,000 588,513 3.38% due 05/15/07......................... 600,000 590,542 4.25% due 08/15/10......................... 324,000 319,849 4.50% due 02/01/35......................... 339,034 323,269 4.50% due 06/01/19......................... 681,292 667,621 4.68% due 10/01/05......................... 661,073 657,432 5.00% due 03/01/34......................... 421,449 413,152 5.00% due 06/01/19......................... 400,885 399,972 5.00% due 11/01/34......................... 687,242 673,713 5.25% due 08/01/12......................... 576,000 591,746 5.50% due 01/01/29......................... 12,580 12,606 5.50% due 03/01/35......................... 736,405 736,313 5.50% due 06/01/29......................... 197,466 197,736 5.50% due 06/01/34......................... 1,688,079 1,688,201 5.50% due 07/01/19......................... 493,534 500,858 5.50% due 09/01/20......................... 496,703 504,100 6.00% due 02/01/32......................... 170,007 172,953 6.00% due 04/01/35......................... 1,053,904 1,071,750 6.00% due 05/01/34......................... 31,011 31,536 6.00% due 06/01/35......................... 747,555 760,217 6.00% due 10/01/34......................... 878,614 893,492 6.00% due 10/01/34......................... 895,347 910,507 6.50% due 02/01/35......................... 106,555 109,679 6.50% due 04/01/34......................... 478,055 492,074 7.50% due 01/01/30......................... 20,362 21,566 7.50% due 09/01/30......................... 4,208 4,454 8.00% due 11/01/28......................... 38,794 41,567 8.80% due 01/25/19(5)...................... 55,759 59,500 10.40% due 04/25/19(5)..................... 10,511 11,240 13.00% due 11/15/15........................ 11,616 12,937 ----------- 13,678,781 ----------- Government National Mortgage Association -- 0.1% 7.50% due 07/15/27......................... 31,499 33,503 7.50% due 10/15/27......................... 89,501 95,194 7.50% due 10/15/27......................... 9,194 9,779 ----------- 138,476 ----------- Tennessee Valley Authority -- 0.0% 4.65% due 06/15/35......................... 105,000 99,978 ----------- Total U.S. Government Agencies (cost $27,835,834)......................... 27,335,379 ----------- COMMON STOCK -- 3.3% Broadcasting & Media -- 0.1% Charter Communications, Inc................. 150,000 225,000 ----------- Energy Services -- 0.5% Trico Marine Services, Inc.................. 39,200 1,048,600 ----------- Leisure & Tourism -- 0.0% Shreveport Gaming Holdings, Inc.(7)(12)(14). 2,441 56,199 ----------- Machinery -- 0.1% NES Rentals Holding, Inc.+.................. 19,435 213,785 ----------- Real Estate Investment Trusts -- 0.1% Meristar Hospitality Corp.+................. 19,820 180,957 -----------
49 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Amount** Value Security Description /Shares (Note 2) --------------------------------------------------------------------- COMMON STOCK (continued) Telecommunications -- 2.5% Alamosa Holdings, Inc.+.................... $ 24,721 $ 422,976 iPCS, Inc.+................................ 60,413 2,513,181 IWO Holdings, Inc.(7)+..................... 50,781 2,132,802 ------------ 5,068,959 ------------ Total Common Stock (cost $2,839,578)......................... 6,793,500 ------------ PREFERRED STOCK -- 0.5% Broadcasting & Media -- 0.2% Ono Finance, PLC zero coupon+(7)(12)....... 100 0 Paxson Communications Corp. 14.25%(10)..... 70 476,000 ------------ 476,000 ------------ Federal Home Loan Mortgage Corporation -- 0.0% Federal Home Loan Mtg. Corp. 5.70%......... 1,005 48,391 ------------ Federal National Mortgage Association -- 0.0% Federal National Mtg. Assoc. 7.00%(3)...... 1,080 59,670 ------------ Financial Services -- 0.2% General Electric Capital Corp. 4.50%(13)... 16,000 381,600 TCR Holdings, Class B(7)................... 570 6 TCR Holdings, Class C(7)................... 314 3 TCR Holdings, Class D(7)................... 827 8 TCR Holdings, Class E(7)................... 1,711 17 ------------ 381,634 ------------ Retail Stores -- 0.1% GNC Corp. 12.00%(10)....................... 100 74,000 Rent-Way, Inc. 8.00%(7)(12)(14)............ 4 40,883 ------------ 114,883 ------------ Total Preferred Stock (cost $1,167,517)......................... 1,080,578 ------------ RIGHTS -- 0.0% Government Agency -- 0.0% United Mexican States VRR(7)............... 1,400,000 26,600 United Mexican States VRR- A(2)(7)......... 1,400,000 34,300 ------------ 60,900 ------------ Total Rights (cost $0)................................. 60,900 ------------ WARRANTS+ -- 0.0% Broadcasting & Media -- 0.0% Knology Holdings, Inc.(7)*................. 1,500 375 ------------ Telecommunications -- 0.0% GT Group Telecom, Inc.(7)*................. 150 2 Leap Wireless International, Inc.(7)(12)*.. 500 0 Leap Wireless International, Inc.(7)(12)*.. 350 0 ------------ 2 ------------ Total Warrants (cost $10,031)............................ 377 ------------ Total Long-Term Investment Securities -- 93.0% (cost $187,812,062)....................... 192,556,301 ------------ SHORT-TERM INVESTMENT SECURITIES -- 1.0% Time Deposit with State Street Bank & Trust Co. 1.35% due 10/03/05.............. $ 554,000 554,000 Time Deposit with State Street Bank & Trust Co. 1.95% due 10/03/05.............. 1,539,000 1,539,000 ------------ Total Short-Term Investment Securities (cost $2,093,000)......................... 2,093,000 ------------
Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------------ REPURCHASE AGREEMENTS -- 2.7% State Street Bank & Trust Co. Joint Repurchase Agreement(11)................................. 544,000 $ 544,000 UBS Securities LLC Joint Repurchase Agreement(11)................................. 5,000,000 5,000,000 ------------ 5,544,000 ------------ Total Repurchase Agreements (cost $5,544,000)............................. 5,544,000 ------------ TOTAL INVESTMENTS -- (cost $195,449,062)@.......................... 96.7% 200,193,301 Other assets less liabilities.................... 3.3 6,822,363 --------- ------------ NET ASSETS -- 100.0% $207,015,664 ========= ============
- -------- # Security represents an investment in an affiliated company; see Note 7. + Non-income producing security * Securities exempt from registration under Rule 144A of the Securities Act of 1933. The Fund has no rights to demand registration of these securities. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, the aggregate value of these securities was $17,062,841 representing 8.2% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. ** Denominated in United States dollars unless otherwise indicated VRR --Value Recovery Right AUD --Australian Dollar BRL --Brazilian Real CAD --Canadian Dollar EUR --Euro GBP --Pound Sterling JPY --Japanese Yen MXN --Mexican Peso PLN --Polish Zloty SEK --Swedish Krona ZAR --South African Rand @ See Note 5 for cost of investments on a tax basis. (1) Commercial Mortgage-Backed Security (2) Variable rate security -- the rate reflected is as of September 30, 2005; maturity date reflects next reset date. (3) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of September 30, 2005. (4) Interest only (5) Collateralized Mortgage Obligation (6) Bond in default. (7) Fair valued security; see Note 2. (8) Security is a "step-up" bond where the coupon rate increases or steps up at a predetermined rate. Rate shown reflects the increased rate. (9) Company has filed for chapter 11 bankruptcy protection. (10) PIK ("Payment-in-Kind") Security. Payment made with additional securities in lieu of cash. (11) See Note 2 for details of Joint Repurchase Agreement. (12) Illiquid Security (13) Security is a "step-up" preferred stock where the dividend rate increases or steps up at a predetermined rate. The rate reflected is as of September 30, 2005. 50 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued) (14) To the extent permitted by the Statement of Additional Information, the Strategic Bond Fund may invest in restricted securities. The Fund has no right to demand registration of these securities. The securities are valued pursuant to Note 1. 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, 2005, the Strategic Bond Fund held the following restricted securities:
Acquisition Acquisition Market % of Name Date Shares Cost Value Net Assets ---- ----------- ------ ----------- ------- ---------- Rent-Way, Inc. 8.00% Preferred Stock.... 05/29/2003 3 $25,000 $29,202 0.02% Rent-Way, Inc. 8.00% Preferred Stock.... 05/19/2003 1 10,000 11,681 0.01 Shreveport Gaming Holdings, Inc...... 07/29/2005 2,047 47,128 47,128 0.02 Shreveport Gaming Holdings, Inc...... 07/21/2005 394 9,073 9,071 0.00 ------- ---- $97,082 0.05% ======= ====
(15) Security is subject to litigation, the outcome of which is still to be determined. (16) Subsequent to 09/30/05 bond in default. Open Forward Foreign Currency Contracts
Gross Contract In Delivery Unrealized to Deliver Exchange For Date Appreciation ------------------ *AUD 3,500,000 USD 2,664,630 11/04/2005 $ 19,730 *USD 2,664,630 AUD 3,500,000 11/04/2005 25,840 *EUR 7,700,000 USD 9,269,956 11/04/2005 197,261 -------- $242,831 --------
Gross Contract In Delivery Unrealized to Deliver Exchange For Date Depreciation ---------------------- *USD 5,658,285 EUR 4,700,000 11/04/2005 $(164,485) --------- Net Unrealized Appreciation (Depreciation) $ 78,346 =========
- -------- * Represents open forward 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 EUR --Euro USD --United States Dollar See Notes to Financial Statements 51 SunAmerica High Yield Bond Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Telecommunications............. 18.3% Financial Services............. 12.5 Broadcasting & Media........... 11.2 Utilities...................... 11.2 Leisure & Tourism.............. 10.1 Energy Sources................. 6.6 Forest Products................ 4.0 Automative..................... 3.7 Chemicals...................... 3.3 Energy Services................ 3.2 Business Services.............. 2.7 Food, Beverage & Tobacco....... 2.4 Health Services................ 2.4 Medical Products............... 2.4 Real Estate Investment Trusts.. 2.1 Pharmaceuticals................ 1.6 Machinery...................... 1.4 Retail......................... 1.4 Metals & Mining................ 1.2 Retail Stores.................. 1.2 Transportation................. 1.2 Computer Software.............. 1.1 Electronics.................... 1.0 Communication Equipment........ 0.8 Insurance...................... 0.7 Restaurants.................... 0.6 Household & Personal Products.. 0.5 Aerospace & Military Technology 0.4 Internet Content............... 0.4 Building Materials............. 0.3 Conglomerate................... 0.3 Computers & Business Equipment. 0.2 ----- 110.4% =====
Credit Quality+# BB........ 19.7% B......... 38.5 CCC....... 25.4 CC........ 0.9 C......... 1.0 Below C... 0.4 Not Rated@ 14.1 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Represents debt issues that either have no rating or, the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 52 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- BONDS & NOTES -- 81.3% Aerospace & Military Technology -- 0.4% DeCrane Aircraft Holdings Guaranteed Sr. Sub. Notes, Series B 12.00% due 09/30/08................. $1,700,000 $1,020,000 ---------- Automotive -- 3.0% Cooper-Standard Automotive, Inc. Sr. Sub. Notes 8.38% due 12/15/14.................. 830,000 697,200 Dana Corp. Sr. Notes 5.85% due 01/15/15.................. 1,825,000 1,431,497 Diamond Triumph Auto Glass, Inc. Guaranteed Sr. Sub. Notes 9.25% due 04/01/08(1)(7)............ 820,000 574,000 Dura Operating Corp. Sr. Notes 8.63% due 04/15/12.................. 961,000 855,290 Exide Corp. Term Loan 10.00% due 03/15/25+(1)(7).......... 1,650,000 0 Ford Motor Co. Notes 7.45% due 07/16/31.................. 2,725,000 2,125,500 Nationsrent, Inc. Sr. Unsec. Notes 9.50% due 05/01/15.................. 900,000 936,000 Navistar International Corp. Sr. Notes, Series B 6.25% due 03/01/12.................. 145,000 137,750 Stanadyne Corp. Sr. Sub. Notes 10.00% due 08/15/14................. 475,000 470,250 ---------- 7,227,487 ---------- Broadcasting & Media -- 8.9% Adelphia Communications Corp. Sr. Notes 10.25% due 06/15/11+(2)(3).......... 825,000 627,000 Affinity Group, Inc. Sr. Sub. Notes 9.00% due 02/15/12.................. 1,400,000 1,400,000 CCO Holdings, LLC Sr. Notes 8.75% due 11/15/13.................. 675,000 666,563 Charter Communications Holdings, LLC Sr. Notes 9.63% due 11/15/09.................. 2,525,000 2,146,250 Charter Communications Holdings, LLC Sr. Disc. Notes 9.92% due 04/01/11(4)............... 3,825,000 2,763,562 Charter Communications Holdings, LLC Sr. Notes 10.25% due 01/15/10................. 375,000 311,250 Charter Communications Holdings, LLC Sr. Notes 10.75% due 10/01/09................. 2,075,000 1,826,000 Charter Communications Holdings, LLC Sr. Notes 11.13% due 01/15/11................. 2,375,000 1,828,750
Principal Value Security Description Amount (Note 2) --------------------------------------------------------- Broadcasting & Media (continued) Fisher Communications, Inc. Sr. Notes 8.63% due 09/15/14.............. $1,550,000 $ 1,654,625 Haights Cross Operating Co. Guaranteed Sr. Notes 11.75% due 08/15/11............. 1,075,000 1,177,125 Insight Communications Co., Inc. Sr. Sub. Disc. Notes 12.25% due 02/15/11(4).......... 1,300,000 1,326,000 Paxson Communications Corp. Guaranteed Sr. Sub. Notes 12.25% due 01/15/09(4).......... 2,650,000 2,570,500 Telex Communications, Inc. Sr. Sec. Notes 11.50% due 10/15/08............. 300,000 320,250 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes 8.75% due 01/15/14.............. 1,050,000 931,875 Young Broadcasting, Inc. Guaranteed Sr. Sub. Notes 10.00% due 03/01/11............. 2,300,000 2,173,500 ----------- 21,723,250 ----------- Building Materials -- 0.3% Dayton Superior Corp. Sr. Sec. Notes 10.75% due 09/15/08............. 800,000 808,000 ----------- Business Services -- 2.7% Alderwoods Group, Inc. Sr. Notes 7.75% due 09/15/12.............. 425,000 446,250 Associated Materials, Inc. Sr. Sub. Notes 9.75% due 04/15/12.............. 575,000 556,312 Di Finance Subordinated, LLC Sr. Sub. Notes 9.50% due 02/15/13*............. 675,000 705,375 FTI Consulting, Inc. Sr. Notes 7.63% due 06/15/13*............. 425,000 433,500 Mobile Mini, Inc. Sr. Notes 9.50% due 07/01/13.............. 575,000 635,375 Monitronics International, Inc. Sr. Sub. Notes 11.75% due 09/01/10............. 950,000 959,500 Seitel, Inc. Sr. Notes 11.75% due 07/15/11............. 1,450,000 1,609,500 Service Corp. International Sr. Notes 6.75% due 04/01/16.............. 400,000 402,000 Service Corp. International Sr. Notes 7.00% due 06/15/17*............. 850,000 858,500 ----------- 6,606,312 -----------
53 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ BONDS & NOTES (continued) Chemicals -- 2.0% BCI US Finance Corp. Sr. Sec. Notes 9.10% due 07/15/10*(5)............. $ 700,000 $ 707,000 Equistar Chemicals LP Notes 8.75% due 02/15/09................. 375,000 390,000 Equistar Chemicals LP Sr. Notes 10.63% due 05/01/11................ 1,225,000 1,335,250 Phosphate Resource Partners LP Sr. Notes 7.00% due 20/15/08................. 725,000 741,312 Rockwood Specialties Group Sr. Sub. Notes 7.50% due 11/15/14*................ 925,000 897,250 Rockwood Specialties, Inc. Sr. Sub. Notes 10.63% due 05/15/11................ 292,000 318,280 Westlake Chemical Corp. Sr. Notes 8.75% due 07/15/11................. 471,000 507,503 ---------- 4,896,595 ---------- Communication Equipment -- 0.8% Rural Cellular Corp. Sr. Sub. Notes 9.75% due 01/15/10................. 1,875,000 1,893,750 ---------- Computer Software -- 1.1% Solar Capital Corp. Sr. Notes 9.13% due 08/15/13*................ 825,000 854,906 Sungard Data Systems, Inc. Sr. Sub. Notes 10.25% due 08/15/15*............... 925,000 936,563 Unisys Corp. Sr. Notes 8.00% due 10/15/12................. 1,000,000 982,500 ---------- 2,773,969 ---------- Computers & Business Equipment -- 0.2% Activant Solutions, Inc. Sr. Notes 9.50% due 04/01/10*(5)............. 550,000 561,000 ---------- Conglomerate -- 0.3% Carriage Services, Inc. Sr. Notes 7.88% due 01/15/15................. 684,000 707,940 ---------- Electronics -- 0.7% Advanced Micro Devices, Inc. Sr. Notes 7.75% due 11/01/12................. 975,000 999,375 Sanmina-Sci Corp. Sr. Sub. Notes 6.75% due 03/01/13................. 625,000 593,750 ---------- 1,593,125 ----------
Principal Value Security Description Amount (Note 2) --------------------------------------------------------------------- Energy Services -- 1.0% Hanover Compressor Co. Sub. Notes zero coupon due 03/31/07.................... $ 125,000 $ 112,500 Oslo Seismic Services, Inc. 1st Mtg. Notes 8.28% due 06/01/11.......................... 1,807,797 1,888,127 Pride International, Inc. Sr. Notes 7.38% due 07/15/14.......................... 350,000 380,187 ----------- 2,380,814 ----------- Energy Sources -- 5.8% Belden & Blake Corp. Sec. Notes 8.75% due 07/15/12.......................... 450,000 470,250 Calpine Corp. Sec. Notes 8.75% due 07/15/13*......................... 2,910,000 2,058,825 Chesapeake Energy Corp. Sr. Notes 6.25% due 01/15/18.......................... 1,150,000 1,127,000 Chesapeake Energy Corp. Sr. Notes 6.63% due 01/15/16.......................... 175,000 177,188 Citgo Petroleum Corp. Sr. Notes 6.00% due 10/15/11.......................... 550,000 550,000 Colorado Interstate Gas Co. Debentures 6.85% due 06/15/37.......................... 1,000,000 1,010,380 Encore Acquisition Co. Sr. Sub. Notes 6.00% due 07/15/15*......................... 550,000 536,250 Encore Acquisition Co. Sr. Sub. Notes 6.25% due 04/15/14.......................... 300,000 298,500 EXCO Resources, Inc. Guaranteed Notes 7.25% due 01/15/11.......................... 650,000 672,750 Grant Prideco, Inc. Sr. Notes 6.13% due 08/15/15*......................... 275,000 277,750 Hilcorp Finance Co. Sr. Notes 10.50% due 09/01/10*........................ 1,625,000 1,787,500 Mission Energy Holding Co. Sr. Sec. Notes 13.50% due 07/15/08......................... 2,925,000 3,444,187 Newfield Exploration Co. Sr. Sub. Notes 6.63% due 09/01/14.......................... 675,000 702,000 Roseton Danskammer Guaranteed Pass-Thru Certificates, Series B 7.67% due 11/08/16.......................... 1,075,000 1,069,625 ----------- 14,182,205 -----------
54 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- BONDS & NOTES (continued) Financial Services -- 12.5% AAC Group Holding Corp. Sr. Notes 10.25% due 10/01/12*...................... $ 1,025,000 $ 738,000 Affinity Group, Inc. Sr. Sub. Notes 10.00% due 02/15/15*...................... 950,000 1,026,000 Borden U.S. Finance Corp. Sr. Sec. Notes 9.00% due 07/15/14*....................... 800,000 812,000 Chukchansi Economic Development Authority Sr. Notes 14.50% due 06/15/09*...................... 3,225,000 3,886,125 Consolidated Communications Holdings, Inc. Sr. Notes 9.75% due 04/01/12........................ 945,000 1,006,425 ESI Tractebel Acquisition Corp. Guaranteed Bonds 7.99% due 12/30/11........................ 763,000 800,238 General Motors Acceptance Corp. Notes 6.07% due 12/01/14(5)..................... 2,475,000 2,080,769 General Motors Acceptance Corp. Notes 6.75% due 12/01/14........................ 295,000 256,604 General Motors Acceptance Corp. Bonds 8.00% due 11/01/31........................ 10,430,000 9,107,153 MedCath Holdings Corp. Sr. Notes 9.88% due 07/15/12........................ 875,000 953,750 Muzak, LLC/Muzak Finance Corp. Guaranteed Sr. Sub. Notes 9.88% due 03/15/09........................ 525,000 263,156 Nexstar Finance Holdings, LLC Guaranteed Sr. Disc. Notes 11.38% due 04/01/13(4).................... 1,925,000 1,424,500 NGC Corp. Capital Trust, Series B Guaranteed Sub. Notes, Series B 8.32% due 06/01/27........................ 5,400,000 4,846,500 PCA, LLC Sr. Notes 11.88% due 08/01/09....................... 2,000,000 525,000 PX Escrow Corp. Sr. Disc. Notes 9.63% due 02/01/06(4)..................... 2,175,000 2,123,344 Terra Capital, Inc. Guaranteed Sr. Sec. Notes 11.50% due 06/01/10....................... 671,000 768,295 ----------- 30,617,859 ----------- Food, Beverage & Tobacco -- 2.4% Alliance One International, Inc. Sr. Sub. Notes 12.75% due 11/15/12*...................... 1,100,000 1,006,500 Le Natures, Inc. Sr. Sub. Notes 10.00% due 06/15/13*...................... 475,000 513,000
Principal Value Security Description Amount (Note 2) ----------------------------------------------------------- Food, Beverage & Tobacco (continued) North Atlantic Holding Co., Inc. Sr. Disc. Notes 12.25% due 03/01/14(4)............. $2,050,000 $ 410,000 North Atlantic Trading Co., Inc. Sr. Notes 9.25% due 03/01/12................. 650,000 487,500 Stater Brothers Holdings, Inc. Sr. Notes 8.13% due 06/15/12................. 1,075,000 1,061,563 Wornick Co. Sr. Sec. Notes 10.88% due 07/15/11................ 2,325,000 2,388,937 ---------- 5,867,500 ---------- Forest Products -- 3.4% Boise Cascade, LLC Sr. Notes 6.47% due 10/15/12(5).............. 1,225,000 1,221,937 Caraustar Industries, Inc. Guaranteed Sr. Sub. Notes 9.88% due 04/01/11................. 300,000 297,000 Constar International, Inc. Sr. Notes 7.17% due 11/15/05*................ 625,000 579,688 Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23................. 1,900,000 1,869,125 FiberMark, Inc. Sr. Notes 9.38% due 10/15/06+(2)............. 3,275,000 2,333,437 FiberMark, Inc. Sr. Notes 10.75% due 04/15/11+(2)............ 750,000 571,875 Pliant Corp. Sr. Sec. Notes 11.13% due 09/01/09................ 590,000 507,400 Pliant Corp. Sr. Sub. Notes 13.00% due 06/01/10(10)............ 1,725,000 819,375 ---------- 8,199,837 ---------- Health Services -- 2.4% Concentra Operating Corp. Sr. Sub. Notes 9.13% due 06/01/12................. 675,000 702,000 Concentra Operating Corp. Sr. Sub. Notes 9.50% due 08/15/10................. 250,000 261,875 Genesis Healthcare Corp. Sr. Sub. Notes 8.00% due 10/15/13................. 475,000 511,813 Pediatric Services Of America, Inc. Guaranteed Sr. Sub. Notes 10.00% due 04/15/08(1)............. 200,000 202,000 Psychiatric Solutions, Inc. Sr. Sub. Notes 7.75% due 07/15/15*................ 433,000 447,073
55 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------- BONDS & NOTES (continued) Health Services (continued) Team Health, Inc. Sr. Sub. Notes 9.00% due 04/01/12............. $1,300,000 $1,378,000 Tenet Healthcare Corp. Sr. Notes 6.50% due 06/01/12............. 25,000 23,312 Tenet Healthcare Corp. Notes 7.38% due 02/01/13............. 500,000 473,750 Tenet Healthcare Corp. Sr. Notes 9.25% due 02/01/15*............ 750,000 757,500 Triad Hospitals, Inc. Sr. Sub. Notes 7.00% due 11/15/13............. 575,000 582,187 US Oncology, Inc. Sr. Sub. Notes 10.75% due 08/15/14............ 475,000 532,000 ---------- 5,871,510 ---------- Insurance -- 0.3% Crum & Forster Holdings Corp. Sr. Notes 10.38% due 06/15/13............ 775,000 846,688 ---------- Internet Content -- 0.4% Spheris, Inc. Sr. Sub. Notes 11.00% due 12/15/12*........... 975,000 940,875 ---------- Leisure & Tourism -- 8.4% American Airlines, Inc. Pass-Thru Certificates, Series 2001-1, Class A2 6.82% due 05/23/11............. 2,350,000 2,156,390 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class B 7.63% due 01/02/15+(2)......... 5,437,354 4,521,819 Atlas Air, Inc. Pass-Thru Certificates, Series 2000-1 8.71% due 01/02/19............. 1,079,258 1,117,841 Atlas Air, Inc. Pass-Thru Certificates, Series 1999-1, Class C 8.77% due 01/02/11+(2)......... 574,341 313,412 Atlas Air, Inc. Pass-Thru Certificates Series 2000-1, Class B 9.06% due 07/02/17............. 1,301,358 1,201,596 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-1, Class C 6.95% due 08/02/09............. 660,591 578,868 Continental Airlines, Inc. Pass-Thru Certificates, Series 1999-2, Class C1 7.73% due 03/15/11............. 340,319 282,293
Principal Value Security Description Amount (Note 2) --------------------------------------------------------- Leisure & Tourism (continued) Delta Airlines, Inc. Notes 8.30% due 12/15/29(2)(3)+....... $2,450,000 $ 441,000 Delta Airlines, Inc. Sr. Notes 9.50% due 11/18/08*(2)(3)+...... 500,000 375,000 Delta Airlines, Inc. Sr. Notes 10.00% due 08/15/08(2)(3)+...... 3,000,000 540,000 Eldorado Casino Shreveport Joint 1st Mtg. Notes 10.00% due 08/01/12............. 1,750,881 1,661,148 Eldorado Resorts, LLC Sr. Notes 9.00% due 04/15/14(1)........... 2,675,000 2,675,000 Riviera Holdings Corp. Guaranteed Sr. Notes 11.00% due 06/15/10#............ 800,000 864,000 True Temper Sports, Inc. Guaranteed Sr. Sub. Notes 8.38% due 09/15/11.............. 1,000,000 930,000 Turning Stone Casino Resort Sr. Notes 9.13% due 12/15/10*............. 600,000 624,000 Waterford Gaming, LLC Sr. Notes 8.63% due 09/15/12*............. 1,120,000 1,192,800 Worldspan LP Sr. Notes 10.04% due 02/15/11*(5)......... 1,175,000 1,034,000 ----------- 20,509,167 ----------- Machinery -- 0.7% Dresser Rand Group, Inc. Sr. Sub. Notes 7.38% due 11/01/14*............. 683,000 708,613 Huntsman Advanced Materials, LLC Sr. Sec. Notes 11.00% due 07/15/10............. 525,000 588,000 Magnachip Semiconductor SA Sr. Sub. Notes 8.00% due 12/15/14.............. 525,000 483,000 Venture Holdings Co., LLC Guaranteed Sr. Sub. Notes 11.00% due 06/01/07+(2)(3)...... 550,000 1,375 ----------- 1,780,988 ----------- Medical Products -- 2.4% Amerisourcebergen Corp. Sr. Notes 5.88% due 09/15/15*............. 1,375,000 1,357,813 CDRV Investors, Inc. Sr. Notes 9.63% due 01/01/15(4)........... 1,975,000 1,125,750 Encore Med IHC, Inc. Sr. Sub. Notes 9.75% due 10/01/12.............. 625,000 621,875
56 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ BONDS & NOTES (continued) Medical Products (continued) Inverness Medical Innovations, Inc. Sr. Sub. Notes 8.75% due 02/15/12.................. $1,400,000 $1,421,000 Mylan Labs, Inc. Sr. Notes 5.75% due 08/15/10*................. 200,000 200,250 Mylan Labs, Inc. Sr. Notes 6.38% due 08/15/15*................. 500,000 500,625 Universal Hospital Services, Inc. Sr. Notes 10.13% due 11/01/11................. 700,000 717,500 ---------- 5,944,813 ---------- Metals & Mining -- 1.2% AK Steel Corp. Guaranteed Notes 7.88% due 02/15/09.................. 300,000 291,000 Allegheny Technologies, Inc. Notes 8.38% due 12/15/11.................. 600,000 645,000 Chaparrel Steel Co. Sr. Notes 10.00% due 07/15/13*................ 500,000 527,500 CSN Islands IX Corp. Guaranteed Notes 10.00% due 01/15/15*................ 500,000 556,250 CSN Islands VIII Corp. Guaranteed Sr. Notes 9.75% due 12/16/13*................. 675,000 749,250 Renco Metals, Inc. Guaranteed Sr. Notes 11.50% due 07/01/49+(1)(2)(3)(7)(8). 2,150,000 0 Ryerson Tull, Inc. Sr. Notes 8.25% due 12/15/11.................. 275,000 267,438 ---------- 3,036,438 ---------- Pharmaceuticals -- 0.3% Curative Health Services, Inc. Sr. Notes 10.75% due 05/01/11................. 1,125,000 720,000 ---------- Real Estate Investment Trusts -- 1.8% National Health Investors, Inc. Notes 7.30% due 07/16/07.................. 1,120,000 1,148,311 Senior Housing Properties Trust Sr. Notes 8.63% due 01/15/12.................. 1,075,000 1,195,938 Trustreet Properties, Inc. Sr. Notes 7.50% due 04/01/15.................. 1,925,000 1,968,312 ---------- 4,312,561 ---------- Restaurants -- 0.6% Restaurant Co. Sr. Notes 10.00% due 10/01/13*................ 250,000 240,000
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- Restaurants (continued) Sbarro, Inc. Sr. Notes 11.00% due 09/15/09................. $1,225,000 $ 1,218,875 ----------- 1,458,875 ----------- Retail -- 0.7% Rent-Way, Inc. Sr. Notes 11.88% due 06/15/10(7).............. 1,500,000 1,650,000 ----------- Retail Stores -- 0.9% Acco Brands Corp. Sr. Sub. Notes 7.63% due 08/15/15*................. 425,000 420,750 Collins & Aikman Floor Cover Guaranteed Sr. Notes 9.75% due 02/15/10.................. 730,000 704,450 Prestige Brands, Inc. Sr. Sub. Notes, Series B 9.25% due 04/15/12.................. 250,000 256,250 Saks, Inc. Guaranteed Notes 9.88% due 10/01/11.................. 725,000 801,125 ----------- 2,182,575 ----------- Telecommunications -- 6.5% American Cellular Corp., Series B Sr. Notes 10.00% due 08/01/11................. 3,100,000 3,379,000 Cincinnati Bell, Inc. Sr. Notes 7.00% due 02/15/15.................. 275,000 265,375 Cincinnati Bell, Inc. Notes 7.25% due 06/15/23.................. 225,000 210,375 Cincinnati Bell, Inc. Sr. Sub. Notes 8.38% due 01/15/14.................. 375,000 369,375 ICO North America, Inc. Sr. Sec. Notes 7.50% due 08/15/09(1)(7)............ 1,075,000 1,155,625 LCI International, Inc. Sr. Notes 7.25% due 06/15/07.................. 7,725,000 7,531,875 Qwest Corp. Debentures 7.25% due 10/15/35.................. 1,375,000 1,220,312 Triton PCS, Inc. Guaranteed Sr. Notes 8.50% due 06/01/13.................. 650,000 619,125 US West Communications, Inc. Debentures 7.50% due 06/15/23.................. 250,000 228,125 Valor Telecommunications Enterprises Sr. Notes 7.75% due 02/15/15.................. 900,000 873,000 ----------- 15,852,187 -----------
57 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- BONDS & NOTES (continued) Transportation -- 0.9% Petroleum Helicopters, Inc. Guaranteed Sr. Notes, Series B 9.38% due 05/01/09.................. $ 275,000 $ 292,188 Progress Rail Services Corp. Sr. Notes 7.75% due 04/01/12*................. 825,000 839,437 Ultrapetrol Bahamas, Ltd. 1st Preferred Ship Mtg. Notes 9.00% due 11/24/14.................. 1,100,000 1,013,375 ------------ 2,145,000 ------------ Utilities -- 8.3% AES Corp. Sr. Sub. Debentures 8.88% due 11/01/27.................. 1,525,000 1,662,250 Cincinnati Bell Telephone Co. Guaranteed Notes 7.18% due 12/15/23.................. 375,000 375,938 Cincinnati Bell Telephone Co. Guaranteed Notes 7.20% due 11/29/23.................. 1,525,000 1,496,406 El Paso Natural Gas Co. Sr. Notes 7.63% due 08/01/10.................. 725,000 753,836 El Paso Natural Gas Co. Debentures 8.63% due 01/15/22.................. 2,125,000 2,430,180 El Paso Production Holding Co. Guaranteed Sr. Notes 7.75% due 06/01/13.................. 3,325,000 3,474,625 Ferrellgas L. P. Sr. Notes 6.75% due 05/01/14.................. 1,300,000 1,241,500 Mirant Corp. Sr. Notes 7.90% due 07/15/09*+(2)(3).......... 3,525,000 4,291,687 Pacific Energy Partners LP Sr. Notes 6.25% due 09/15/15*................. 350,000 350,875 Pacific Energy Partners LP Sr. Notes 7.13% due 06/15/14.................. 850,000 881,875 Reliant Energy, Inc. Notes 9.50% due 07/15/13.................. 500,000 552,500 Transcontinental Gas Pipe Line Corp. Sr. Notes 8.88% due 07/15/12.................. 725,000 845,531 Williams Cos, Inc. Notes 7.88% due 09/01/21.................. 1,675,000 1,842,500 ------------ 20,199,703 ------------ Total Bonds & Notes (cost $199,116,247)................. 198,511,023 ------------
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- CONVERTIBLE BONDS -- 3.9% Energy Services -- 0.1% Unisource Energy Corp. 4.50% due 03/01/35*....................... $ 200,000 $ 209,500 ---------- Leisure & Tourism -- 1.1% Six Flags, Inc. 4.50% due 05/15/15........................ 2,135,000 2,692,769 ---------- Pharmaceuticals -- 0.2% Elan Capital Corp. 6.50% due 11/10/08(7)..................... 425,000 576,427 ---------- Utilities -- 2.5% Calpine Corp. 4.75% due 11/15/23........................ 10,550,000 5,749,750 Calpine Corp. 7.75% due 06/01/15........................ 400,000 338,000 ---------- 6,087,750 ---------- Total Convertible Bonds (cost $11,088,784)........................ 9,566,446 ---------- FOREIGN BONDS & NOTES -- 8.2% Broadcasting & Media -- 1.7% Corp. Interamericana De Entretenimiento SA Sr. Notes 8.88% due 06/14/15*....................... 825,000 810,563 Telenet Group Holding NV Sr. Disc. Notes 11.50% due 06/15/14*(4)................... 4,225,000 3,453,937 ---------- 4,264,500 ---------- Chemicals -- 1.3% Nova Chemicals Corp. Sr. Notes 6.50% due 01/15/12........................ 850,000 825,562 Rhodia SA Sr. Sub. Notes 8.88% due 06/01/11........................ 2,475,000 2,338,875 ---------- 3,164,437 ---------- Electronics -- 0.3% Celestica, Inc. Sr. Sub. Notes 7.63% due 07/01/13........................ 350,000 349,125 STATS ChipPAC Ltd. Sr. Notes 6.75% due 11/15/11........................ 325,000 315,250 ---------- 664,375 ---------- Energy Sources -- 0.8% North America Energy Partners, Inc. Sr. Notes 8.75% due 12/01/11........................ 525,000 498,750 North America Energy Partners, Inc. Sr. Notes 9.00% due 06/01/10........................ 1,300,000 1,339,000 ---------- 1,837,750 ----------
58 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) --------------------------------------------------------------- FOREIGN BONDS & NOTES (continued) Forest Products -- 0.6% Abitibi-Consolidated, Inc. Debentures 8.55% due 08/01/10.................... $1,475,000 $ 1,500,813 ----------- Household & Personal Products -- 0.1% Vitro Envases Norteamerica SA Sr. Sec. Notes 10.75% due 07/23/11*.................. 225,000 229,500 ----------- Insurance -- 0.4% Fairfax Financial Holdings, Ltd. Notes 8.25% due 10/01/15.................... 950,000 902,500 ----------- Leisure & Tourism -- 0.5% Grupo Posadas SA de CV Sr. Notes 8.75% due 10/04/11*................... 1,075,000 1,150,250 ----------- Metals & Mining -- 0.0% International Utility Structures, Inc. Sr. Sub. Notes 10.75% due 02/01/08+(1)(2)(7)......... 2,150,000 43,000 Vitro SA de CV Notes 11.75% due 11/01/13*.................. 75,000 69,750 ----------- 112,750 ----------- Pharmaceuticals -- 1.1% Elan Finance, PLC Sr. Notes 7.75% due 11/15/11*................... 1,700,000 1,496,000 Elan Finance, PLC Sr. Notes 7.79% due 11/15/11*(5)................ 1,225,000 1,081,062 ----------- 2,577,062 ----------- Retail -- 0.7% Jean Coutu Group, Inc. Sr. Sub. Notes 8.50% due 08/01/14.................... 1,725,000 1,716,375 ----------- Transportation -- 0.3% TFM SA de CV Sr. Notes 9.38% due 05/01/12*................... 775,000 837,000 ----------- Utilities -- 0.4% AES Chivor Notes 9.75% due 12/30/14*................... 875,000 980,438 AES Drax Energy, Ltd. Sec. Notes 11.50% due 08/30/10+(2)............... 4,460,000 4,460 ----------- 984,898 ----------- Total Foreign Bonds & Notes (cost $23,797,921).................... 19,942,210 -----------
Value Security Description Shares (Note 2) --------------------------------------------------------------------- LOAN AGREEMENTS -- 1.1% Automotive -- 0.7% Delphi Corp. 10.70% due 06/14/11.......................... 1,745,625 $ 1,782,583 ----------- Household & Personal Products -- 0.4% Vitro Envases Norteamerica SA 10.08% due 11/24/05(7)....................... 1,000,000 1,007,500 ----------- Total Loan Agreements (cost $2,787,083)............................ 2,790,083 ----------- COMMON STOCK -- 15.6% Broadcasting & Media -- 0.6% Charter Communications, Inc.+................. 1,000,000 1,500,000 ----------- Energy Services -- 2.1% Trico Marine Services, Inc.+.................. 187,500 5,015,625 ----------- Energy Sources -- 0.0% Tri-Union Development Corp.+(1)(7)............ 1,061 11 Tribo Petroleum Corp.+*(1)(7)................. 1,800 18 ----------- 29 ----------- Leisure & Tourism -- 0.1% Capital Gaming International, Inc.+(1)(7)..... 77 0 Shreveport Gaming Holdings, Inc.+(1)(7)(9).... 14,150 325,775 ----------- 325,775 ----------- Machinery -- 0.7% NES Rentals Holding, Inc.+.................... 150,124 1,651,364 ----------- Real Estate Investment Trusts -- 0.3% Meristar Hospitality Corp.+................... 91,550 835,852 ----------- Telecommunications -- 11.8% iPCS, Inc.+................................... 344,285 14,322,256 IWO Holdings, Inc.+(1)........................ 346,094 14,535,948 ----------- 28,858,204 ----------- Total Common Stock (cost $15,685,318)........................... 38,186,849 ----------- PREFERRED STOCK -- 0.3% Broadcasting & Media -- 0.0% Ono Finance, PLC zero coupon+(1)(7)........... 500 0 ----------- Retail Stores -- 0.3% GNC Corp.12.00%(6)............................ 725 536,500 Rent-Way, Inc. 8.00%(1)(7)(9)................. 13 151,851 ----------- 688,351 ----------- Total Preferred Stock (cost $859,350).............................. 688,351 ----------- WARRANTS+ -- 0.0% Broadcasting & Media -- 0.0% Knology Holdings, Inc. Expires 10/15/07 (strike price $0.10)*(1).... 4,500 1,125 ----------- Business Services -- 0.0% Maxim Crane Works Holdings, Inc. Expires 01/20/10 (strike price $30.05)(1)(7). 1,587 0 Maxim Crane Works Holdings, Inc. Expires 01/20/10 (strike price $33.04)(1)(7). 1,619 0 Maxim Crane Works Holdings, Inc. Expires 01/20/10 (strike price $31.58)(1)(7). 1,182 0 ----------- 0 -----------
59 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Value Security Description Shares (Note 2) --------------------------------------------------------------------- WARRANTS (continued) Telecommunications -- 0.0% GT Group Telecom, Inc. Expires 02/01/10 (strike price $0.00)*(1)(7).. 2,650 27 KMC Telecom Holdings, Inc. Expires 01/31/08 (strike price $0.01)(1)(7)... 3,650 0 Leap Wireless International, Inc. Expires 04/15/10 (strike price $96.80)*(1)(7). 2,250 0 Leap Wireless International, Inc. Expires 04/15/10 (strike price $96.80)*(1)(7). 1,950 0 ------------ 27 ------------ Total Warrants (cost $1,333,505)............................. 1,152 ------------ Total Investment Securities -- (cost $254,668,208)........................... 269,686,114 ------------ TOTAL INVESTMENTS -- (cost $254,668,208)@.......................... 110.4% 269,686,114 Liabilities in excess of other assets............ (10.4) (25,466,257) ----- ------------ NET ASSETS -- 100.0% $244,219,857 ===== ============
- -------- + Non-income producing security # Security represents an investment in an affiliated company; see Note 7. * Securities exempt from registration under Rule 144A of the Securities Act of 1933. The Fund has no rights to demand registration of these securities. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2005, the aggregate value of these securities was $45,609,200 representing 18.7% of net assets. Unless otherwise indicated, these securities are not considered to be illiquid. @ See Note 5 for cost of investments on a tax basis. (1)Fair valued security; see Note 2. (2)Bond in default. (3)Company has filed for Chapter 11 bankruptcy protection. (4)Security is a "step-up" bond where the coupon rate increases or steps up at a predetermined rate. Rate shown reflects the increased rate. (5)Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of September 30, 2005. (6)PIK ("Payment-in-Kind") payment made with additional securities in lieu of cash. (7)Illiquid security. (8)Security is subject to litigation, the outcome of which is still to be determined. (9)To the extent permitted by the Statement of Additional Information, the High Yield Bond Fund may invest in restricted securities. The Fund has no right to demand registration of these securities. The securities are valued pursuant to Note 1. 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, 2005, the High Yield Bond Fund held the following restricted securities:
% of Acquisition Acquisition Market Net Name Date Shares Cost Value Assets ---- ----------- ------ ----------- -------- ------ Rent-Way, Inc. 8.00% Preferred Stock.... 05/29/2003 10 $100,000 $116,808 0.05% Rent-Way, Inc. 8.00% Preferred Stock.... 05/14/2004 3 $ 30,000 $ 35,043 0.01% Shreveport Gaming Holdings, Inc...... 07/29/2005 11,829 272,336 272,339 0.11 Shreveport Gaming Holdings, Inc...... 07/21/2005 2,321 53,448 53,436 0.02 -------- ---- $477,626 0.19% ======== ====
(10) Subsequent to 09/30/05 bond in default. See Notes to Financial Statements 60 SunAmerica Tax Exempt Insured Fund PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited) Industry Allocation* Ohio.......... 18.4% California.... 11.3 Massachusetts. 10.3 Michigan...... 10.3 New York...... 8.4 Missouri...... 8.1 Alabama....... 6.9 Indiana....... 5.3 New Mexico.... 5.3 South Dakota.. 3.3 Michigan...... 3.2 Arizona....... 2.9 Washington.... 2.2 South Carolina 2.0 Connecticut... 0.6 North Carolina 0.3 Georgia....... 0.2 ---- 99.0% ====
Credit Quality+# AAA 80.9% AA. 3.3 A.. 11.5 BBB 4.3 ----- 100.0% =====
- -------- * Calculated as a percentage on net assets. + Sources Standard & Poors. # Calculated as a percentage of total debt issues, excluding short-term securities. 61 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited)
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------------ MUNICIPAL BONDS -- 90.4% Alabama -- 6.9% Jefferson County, Alabama Sewer, Capital Improvement, Series D, 5.25% due 02/01/26(1).......................... $4,500,000 $ 4,968,270 ----------- Arizona -- 2.9% Phoenix, Arizona Civic Improvement Corp. Wastewater Systems Revenue, Junior Lien, 5.00% due 07/01/28(1).......................... 2,000,000 2,105,420 ----------- California -- 11.3% California State, Variable Purpose, 5.50% due 04/01/28............................. 2,500,000 2,745,025 East Bay California Municipal Utility District, Water Systems Revenue, Sub. Series A, 5.00% due 06/01/29(1).......................... 2,000,000 2,104,720 San Francisco California Bay Area Rapid Transit District Sales Tax Revenue, Series A, 5.00% due 07/01/18(1).......................... 3,000,000 3,239,850 ----------- 8,089,595 ----------- Georgia -- 0.2% Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/13(1).......................... 85,000 98,117 Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/09(1).......................... 60,000 66,015 ----------- 164,132 ----------- Indiana -- 5.3% Indiana Transportation Finance Authority Highway Revenue, Series A, 5.25% due 06/01/26(1).......................... 3,500,000 3,766,805 ----------- Massachusetts -- 10.3% Massachusetts State Water Resources Authority, Series A, 5.00% due 08/01/24(1).......................... 3,910,000 4,150,230 University Massachusetts Building Authority Project Revenue, Series 4, 5.25% due 11/01/27(1).......................... 3,000,000 3,235,500 ----------- 7,385,730 ----------- Michigan -- 10.3% Detroit Michigan Sewage Disposal Revenue Series A 6.00% due 07/01/07(1).......................... 3,000,000 3,150,690 Kent Hospital Finance Authority Michigan Revenue Refunding Spectrum Health Series B 5.00% due 07/15/11............................. 2,000,000 2,134,020 Michigan State Building Authority Revenue, Refunding Facilities Program, Series I, 5.00% due 10/15/07(1).......................... 2,000,000 2,077,300 ----------- 7,362,010 ----------- Missouri -- 7.8% Sikeston, Missouri, Electric Revenue, 6.20% due 06/01/10(1).......................... 5,000,000 5,611,600 -----------
Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------------- New Mexico -- 5.3% New Mexico Finance Authority Transportation, Sr. Lien Series A, 5.25% due 06/15/21(1)........................... 3,500,000 3,799,670 ----------- New York -- 8.4% New York State Thruway Authority Highway & Bridge, Series B, 5.00% due 04/01/18(1)........................... $2,500,000 $ 2,697,775 New York, New York, Series D, 5.00% due 11/01/28.............................. 2,000,000 2,070,740 Niagara Falls, New York Public Improvement, General Obligation, 7.50% due 03/01/13(1)........................... 445,000 552,013 Niagara Falls, New York, Public Improvement, General Obligation, 7.50% due 03/01/14(1)........................... 555,000 702,003 ----------- 6,022,531 ----------- Ohio -- 18.4% Cincinnati, Ohio City School District, Classroom Facilities Construction & Improvement, 5.00% due 12/01/24(1)........................... 3,000,000 3,162,000 Cuyahoga County, Ohio Revenue, Cleveland Clinic Health Systems, Series A, 5.75% due 01/01/24.............................. 2,000,000 2,198,720 Franklin County, Ohio Hospital Revenue, OhioHealth Corp., Series C, 5.25% due 05/15/23.............................. 3,000,000 3,203,250 Olentangy Local School District Ohio, School Facilities Construction & Improvement, Series A, 5.25% due 12/01/27(1)........................... 3,250,000 3,495,310 Woodridge, Ohio Local School District, General Obligation, 6.80% due 12/01/14(1)........................... 1,000,000 1,171,240 ----------- 13,230,520 ----------- South Dakota -- 3.3% South Dakota State Health & Educational Facilities Revenue, McKennan Hospital, 6.25% due 07/01/10(1)........................... 2,120,000 2,373,404 ----------- Total Long-Term Investment Securities (cost $61,363,765).............................. 64,879,687 ----------- SHORT-TERM INVESTMENT SECURITIES -- 8.6% Connecticut -- 0.6% Connecticut State Housing Finance Authority, Mortgage Housing Finance, Subseries B-2, 2.78% due 10/06/05(1)(2)........................ 400,000 400,000 ----------- Michigan -- 3.2% Michigan State Housing Development Authority, Rental Housing Revenue, Series A, 2.78% due 10/05/05(1)(2)........................ 2,295,000 2,295,000 ----------- Missouri -- 0.3% Missouri Higher Education Loan Authority, Student Loan Revenue, Series B, 2.79% due 10/05/05(1)(2)........................ 200,000 200,000 -----------
62 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (unaudited) (continued)
Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- SHORT-TERM INVESTMENT SECURITIES (continued) North Carolina -- 0.3% Charlotte North Carolina Certificates Participation, Governmental Facilities, Series F, 2.75% due 10/06/05(2)..................... 200,000 200,000 ----------- South Carolina -- 2.0% Piedmont Municipal Power Agency South Carolina Electric Revenue, Refunding Subseries B6, 2.72% due 10/05/05(1)(2).................. $1,450,000 $ 1,450,000 ----------- Washington -- 2.2% Washington State Health Care Facilities Authority Revenue, Virginia Mason Medical Center, Series B, 2.93% due 10/03/05(1)(2).................. 1,600,000 1,600,000 ----------- Registered Investment Companies -- 0.0% SSGA Tax Free Money Market Fund............ 8,836 8,836 ----------- Total Short-Term Investment Securities (cost $6,153,836)......................... 6,153,836 ----------- TOTAL INVESTMENTS -- (cost $67,517,601)@....................... 99.0% 71,033,523 Other assets less liabilities................ 1.0 746,374 ---------- ----------- NET ASSETS -- 100.0% $71,779,897 ========== ===========
- -------- @ See Note 5 for cost of investment on a tax basis. (1)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"). The aggregate value is $58,472,932 or 81.5% of Net Assets. (2)Variable rate security -- the rate reflected is as of September 30, 2005; maturity date reflects next reset date. See Notes to Financial Statements 63 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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, SunAmerica High Yield Bond 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. 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. 64 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) Class C shares are offered at net asset value per share without an initial sales charge and may be subject to a contingent deferred sales charge on redemptions made within 12 months of purchase. Effective February 23, 2004, Class II shares were redesignated as Class C shares. 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. Effective December 29, 2003, Class I shares of the GNMA Fund and High Yield Bond Fund are no longer being offered for sale. Effective September 24, 2004, Class I shares of the Strategic Bond Fund are no longer being offered for sale. Effective July 11, 2005, Class X shares of the GNMA Fund are no longer being offered for sale. Each class of shares bears the same voting, dividend, liquidation and other rights and conditions. Class A, Class B and Class C shares each 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 C shares are subject to higher distribution fee rates. There are no distribution payments applicable to Class I, Class X and Class Z. 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. Significant Accounting Policies The preparation of financial statements in accordance with U.S. generally accepted accounting principles 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: Shares of the Fund are valued at least daily as of the close of regular trading on the New York Stock Exchange (generally, 4:00 p.m. Eastern time). The Fund calculates the net asset value of its shares by dividing the total value of its net assets by the number of shares outstanding. The days and times of such computation may, in the future, be changed by the Trustees in the event that the portfolio securities are traded in significant amounts in markets other than the New York Stock Exchange, or on days or at times other than those during which the New York Stock Exchange is open for trading. Stocks are generally valued based upon closing sales prices reported on recognized securities exchanges. Stocks listed on the NASDAQ are valued using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last sale price unless the reported trade for the stock is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. For listed securities having no sales reported and for unlisted securities, such securities will be valued based upon the last reported bid price. As of the close of regular trading on the New York Stock Exchange, securities traded primarily on security exchanges outside the United States are valued at the last sale price on such exchanges on the day of valuation, or if there is no sale on the day of valuation, at the last-reported bid price. If a security's price is available from more than one exchange, a Fund uses the exchange that is the primary market for the security. However, depending on the foreign market, closing prices may be up to 15 hours old when they are used to price the Fund's shares, and the Fund may determine that certain closing prices are unreliable. This determination will be based on review of a number of factors, including developments in foreign markets, the performance of U. S. securities markets, and the performance of instruments trading in U. S. markets that represent foreign securities and baskets of foreign securities. If the Fund determines that closing prices do not reflect the fair value of the securities, the Fund will adjust the previous closing prices in accordance with pricing procedures approved by the Board to reflect what it believes to be the fair value of the securities as of the close of regular trading on the New York Stock Exchange. The Fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open. For foreign equity securities, the Fund uses an outside pricing service to provide it with closing market prices and information used for adjusting those prices. 65 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) Non-convertible bonds and debentures, other long-term debt securities, and short term debt securities with maturities in excess of 60 days, are valued at bid prices obtained for the day of valuation from a bond pricing service, when such prices are available. If a vendor quote is unavailable the securities may be priced at the mean of two independent quotes obtained from brokers. Securities for which market quotations are not readily available are valued as determined pursuant to procedures adopted in good faith by the Board of Trustees. Short-term securities with 60 days or less to maturity are amortized to maturity based on their cost to the Fund if acquired within 60 days of maturity or, if already held by the Fund on the 60th day, are amortized to maturity based on the value determined on the 61st day. Securities for which market quotations are not readily available or if a development/significant event occurs that may significantly impact the value of the security, then these securities are valued, as determined pursuant to procedures adopted in good faith by the Board of Trustees. Repurchase Agreements: The Funds, along with other affiliated registered investment companies, pursuant to exemptive relief granted by the Securities and Exchange Commission, may transfer uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. For repurchase agreements and joint repurchase agreements, the Funds' custodian takes possession of the collateral pledged for investments in such repurchase agreements. The underlying collateral is valued daily on a mark to market basis to ensure that the value, at the time the agreement is entered into, is equal to at least 102% of the repurchase price, including accrued interest. In the event of default of the obligation to repurchase, a Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. At September 30, 2005, the following Funds held an undivided interest in a joint repurchase agreement with State Street Bank & Trust Co.:
Fund Percentage Interest Principal Amount - ---- ------------------- ---------------- GNMA Fund.......... 12.46% $10,604,000 Strategic Bond Fund 0.64 544,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: State Street Bank & Trust Co., dated September 30, 2005, bearing interest at a rate of 3.05% per annum, with a principal amount of $85,086,000, a repurchase price of $85,107,626 and a maturity date of October 3, 2005. The repurchase agreement is collateralized by the following:
Type of Collateral Interest Rate Maturity Date Principal Amount Market Value - ------------------ ------------- ------------- ---------------- ------------ U.S. Treasury Notes 3.13% 10/15/08 $ 3,460,000 $ 3,412,425 U.S. Treasury Notes 3.25 08/15/07 14,060,000 13,901,825 U.S. Treasury Notes 3.38 12/15/08 5,760,000 5,673,600 U.S. Treasury Notes 4.00 09/30/07 62,140,000 61,984,650 U.S. Treasury Bonds 10.38 11/15/12 1,565,000 1,819,313
In addition, at September 30, 2005, the following Funds held a percentage of an undivided interest in a joint repurchase agreement with UBS Securities, LLC:
Fund Percentage Interest Principal Amount - ---- ------------------- ---------------- GNMA Fund.......... 45.00% $90,000,000 Strategic Bond Fund 2.50 5,000,000
66 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities, LLC, dated September 30, 2005, bearing interest at a rate of 3.30% per annum, with a principal amount of $200,000,000, a repurchase price of $200,055,000, and a maturity date of October 3, 2005. The repurchase agreement is collateralized by the following:
Type of Collateral Interest Rate Maturity Date Principal Amount Market Value - ------------------ ------------- ------------- ---------------- ------------ U.S. Treasury Inflation Index Bonds 3.63% 04/15/28 $ 23,933,000 $ 38,502,214 U.S. Treasury Inflation Index Bonds 3.88 04/15/29 100,000,000 165,500,000
Securities Transactions, Investment Income, Expenses, Dividends and Distributions to Shareholders: Security transactions are recorded on a trade date basis. Realized gains and losses on sales of investments are calculated on the identified cost basis. Interest income, is accrued daily except when collection is not expected. Dividend income is recorded on the ex-dividend date except for certain dividends from foreign securities, which are recorded as soon as the Fund is informed after 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. Under applicable foreign law, a withholding tax may be imposed on interest, dividends, and capital gains at various rates. Expenses common to all Funds, not directly related to individual Funds 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 Funds record dividends and distributions to their shareholders on the ex-dividend date. 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 by these reclassifications. 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, 2005, U.S. Government Securities Fund and GNMA 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 interest expense on the Statement of Operations. During the six months ended September 30, 2005, $747 of broker rebates were reclassified to interest expense for the U.S. Government Securities Fund. 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, 2005 there were no loaned securities outstanding in the U.S. Government Securities Fund or the GNMA Fund. 67 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) Forward Foreign Currency Contracts: Certain Funds 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 Fund as unrealized gain or loss. On the settlement date, the Fund 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 the end of the period. 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: Each Fund may engage in "short sales against the box." A short sale is against the box to the extent that the Fund contemporaneously owns, or has the right to obtain without payment, securities identical to those sold short. In addition, 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 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, 2005, the Core Bond Fund, U.S. Government Securities Fund and 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. 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. 68 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) 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 3. Investment Advisory and Management Agreement, Distribution Agreement and Service Agreement The Trust, on behalf of each Fund, has an Investment Advisory and Management Agreement (the "Agreement") with 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. 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) $300 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
Effective September 1, 2004, SAAMCo has contractually agreed to waive fees and/or reimburse expenses, if necessary, so that the total net expense ratios for the following classes do not exceed the amounts set forth below.
Fund Percentage - ---- ---------- Core Bond Class A 1.10% Core Bond Class B 1.75
69 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
Fund Percentage - ---- ---------- Core Bond Class C...... 1.75% Core Bond Class I...... 1.00 Core Bond Class Z...... 0.53 Strategic Bond Class A. 1.40 Strategic Bond Class B. 2.05 Strategic Bond Class C. 2.05 High Yield Bond Class A 1.36 High Yield Bond Class B 2.01 High Yield Bond Class C 2.01 High Yield Bond Class Z 0.79
Effective September 1, 2004, SAAMCo is voluntarily waiving fees and/or reimbursing expenses, if necessary, so that the total net expense ratios for the following classes do not exceed the amounts set forth below.
Fund Percentage - ---- ---------- U.S. Government Securities Fund Class A 0.99% U.S. Government Securities Fund Class B 1.64 U.S. Government Securities Fund Class C 1.64 GNMA Fund Class A...................... 0.99 GNMA Fund Class B...................... 1.64 GNMA Fund Class C...................... 1.64 Tax Exempt Insured Fund Class C........ 1.95
70 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) For the six months ended September 30, 2005, SAAMCo has agreed to reimburse expenses as follows:
Fund Amount - ---- -------- Core Bond Class A................. $104,705 Core Bond Class B................. 8,990 Core Bond Class C................. 13,432 Core Bond Class I................. 765 Core Bond Class Z................. 8,115 U.S. Government Securities Class A 323,016 U.S. Government Securities Class B 59,337 U.S. Government Securities Class C 30,789 GNMA Class A...................... 211,318 GNMA Class B...................... 78,457 GNMA Class C...................... 49,014 GNMA Class X...................... -- Strategic Bond Class A............ -- Strategic Bond Class B............ 179 Strategic Bond Class C............ 528 High Yield Bond Class A........... 98,255 High Yield Bond Class B........... 40,953 High Yield Bond Class C........... 41,601 High Yield Bond Class Z........... 20,804 Tax Exempt Insured Class A........ -- Tax Exempt Insured Class B........ -- Tax Exempt Insured Class C........ 8,000
- -------- 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 C Plan." In adopting the Class A Plan, the Class B Plan and the Class C Plan, the Trustees determined that there was a reasonable likelihood that each 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 C 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 C 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 C 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 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, 2005, SACS received fees (see the Statement of Operations) based upon the aforementioned rates. In addition, SACS 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. For the six months ended September 30, 2005, SACS earned fees (see Statement of Operations) based upon the aforementioned rates. 71 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) SACS receives sales charges on each Fund's Class A 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 C shares. SACS has advised the Funds that for the six months ended September 30, 2005, the proceeds received from Class A sales (and paid out to affiliated and non-affiliated broker-dealers) and Class A, Class B and Class C redemptions were as follows:
Class A Class B -------------------------------------- -------------- Contingent Sales Affiliated Non-affiliated Deferred Sales Fund Charges Broker-dealers Broker-dealers Charges - ---- -------- -------------- -------------- -------------- U.S. Government Securities.... $ 24,341 $ 5,400 $ 15,317 $ 36,799 GNMA.......................... 88,392 30,495 43,230 215,476 Strategic Bond................ 431,798 74,484 283,249 51,998 High Yield Bond............... 226,116 30,204 157,660 129,408 Core Bond..................... 10,569 3,925 4,681 4,932 Tax Exempt Insured............ 18,216 7,070 7,861 20,890
Class C -------------- Contingent Deferred Sales Fund Charges - ---- -------------- U.S. Government Securities.... $ 811 GNMA.......................... 7,179 Strategic Bond................ 6,016 High Yield Bond............... 16,506 Core Bond..................... 46 Tax Exempt Insured............ 152
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. Except for Class Z shares 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, 2005 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, 2005 -------- ------------------ Core Bond Class A................. $188,896 $31,147 Core Bond Class B................. 5,476 898 Core Bond Class C................. 4,779 751 Core Bond Class I................. 1,534 251 U.S. Government Securities Class A 191,251 30,618 U.S. Government Securities Class B 28,984 4,565 U.S. Government Securities Class C 10,862 1,683 GNMA Fund Class A................. 372,941 60,773 GNMA Fund Class B................. 108,394 16,909 GNMA Fund Class C................. 59,324 9,201 GNMA Fund Class X................. 766 -- Strategic Bond Class A............ 84,284 16,952 Strategic Bond Class B............ 44,402 7,683 Strategic Bond Class C............ 56,108 11,409 High Yield Bond Class A........... 171,723 32,446 High Yield Bond Class B........... 64,657 10,501 High Yield Bond Class C........... 72,574 12,560 Tax Exempt Insured Class A........ 67,007 10,740 Tax Exempt Insured Class B........ 9,402 1,427 Tax Exempt Insured Class C........ 6,410 978
72 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) At September 30, 2005, affiliate funds of the SunAmerica Focused Funds, Inc. owned 93%, 7%, 49% and 5% of the outstanding Class A shares of Core Bond Fund, U.S. Government Securities Fund, GNMA Fund, and High Yield Bond Fund, respectively. At September 30, 2005, AIGGIC, an indirect wholly owned subsidiary of AIG, owned 100% of the outstanding Class Z shares of the Core Bond Fund and the High Yield Bond Fund. Note 4. Purchases and Sales of Investment Securities The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the six months ended September 30, 2005 were as follows:
U.S. Core Government Tax Exempt Bond Securities GNMA Strategic High Yield Insured Fund Fund Fund Bond Fund Bond Fund Fund ------------ ------------ ------------ ------------ ------------ ----------- Purchases (excluding U.S. government securities)........................ $135,208,429 $ -- $ -- $131,624,800 $100,736,920 $29,051,259 Sales (excluding U.S. government securities)........................ 116,290,015 -- -- 73,234,316 157,401,987 33,880,526 Purchases of U.S. government securities......................... 69,429,049 377,607,595 328,554,755 57,198,826 -- -- Sales of U.S. government securities. 80,432,657 359,444,191 336,303,318 36,933,082 -- --
Note 5. Federal Income Taxes The following details the tax basis of distributions as well as the components of distributable earnings. The tax basis components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences primarily arising from wash sales, Fund mergers, treatment of defaulted securities and derivative transactions.
Distributable Earnings Tax Distributions For the year ended March 31, 2005 For the year ended March 31, 2005 ------------------------------------------ ------------------------------------ Long-term Unrealized Ordinary Gains/Capital Appreciation Ordinary Long-term Fund Income Loss Carryforward (Depreciation) Income Capital Gains Tax Exempt - ---- ---------- ----------------- -------------- ----------- ------------- ---------- Core Bond................. $ 142,616 $ (829,951) $(1,772,744) $ 8,948,407 $2,408,211 $ -- U.S. Government Securities 204,257 (8,261,085) (3,082,198) 7,670,802 -- -- GNMA...................... 1,981,521 175,792 (3,451,608) 14,716,823 -- -- Strategic Bond............ 898,394 (31,658,823) 3,121,797 6,802,946 -- -- High Yield Bond........... 584,405 (108,983,290) 13,407,456 25,444,795 -- -- Tax Exempt Insured........ 67,635 307,430 3,404,127 543,743 516,966 2,496,568
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......................................... $196,560,732 $208,198,089 $631,660,897 $195,185,341 $252,572,133 $67,521,596 ============ ============ ============ ============ ============ =========== Appreciation................................. 2,161,462 1,658,012 827,053 9,956,858 33,483,262 3,531,856 Depreciation................................. (2,447,986) (2,985,014) (4,592,687) (4,948,898) (17,726,865) (19,929) ------------ ------------ ------------ ------------ ------------ ----------- Unrealized appreciation (depreciation) -- net $ (286,524) $ (1,327,002) $ (3,765,634) $ 5,007,960 $ 15,756,397 $ 3,511,927 ============ ============ ============ ============ ============ ===========
73 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) As of March 31, 2005, for Federal income tax purposes, the Funds indicated below have capital loss carryforwards, which expire in the year indicated, which are available to offset future capital gains, if any:
Capital Loss Carryforward ------------------------------------------------------------------------ Fund 2007 2008 2009 2010 2011 2012 2013 - ---- ---------- ----------- ----------- ----------- ----------- ---- -------- Core Bond................. $ -- $ -- $ -- $ -- $ -- $-- $829,951 U.S. Government Securities 997,836 7,263,249 -- -- -- -- -- Strategic Bond............ 4,743,799 4,808,434 5,601,470 6,464,175 10,040,945 -- -- High Yield Bond........... -- 16,495,916 11,242,842 32,249,552 48,994,980 -- --
Included in the capital loss carryforward amounts at March 31, 2005 are the amounts of losses acquired from the following acquired Funds as a result of the reorganizations of the North American Funds ("NA Funds") on November 7, 2001. North American U.S. Government Securities Fund $ 997,836 North American Strategic Income Fund.......... 4,735,632 North American High Yield Bond Fund........... 8,284,211
As a result of reorganizations into some of these Funds during the period ended March 31, 2002, 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. The Fund's indicated below utilized capital loss carryforwards, which offset net taxable gains realized in the year ended March 31, 2005:
Capital Loss Fund Utilized - ---- ------------ U.S. Government Securities Fund $ 380,510 GNMA Fund...................... 333,039 Strategic Bond Fund............ 4,611,883 High Yield Bond Fund........... 10,252,262
As of March 31, 2005, U.S. Government Securities Fund had $832,102 of capital loss carryforwards that expired. 74 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) Note 6. 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 For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ------------------------ ------------------------- ------------------- ----------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ ------- --------- -------- ----------- Shares sold....... 847,123* $ 8,663,729* 4,080,810** $ 41,782,506** 59,025 $ 602,697 75,896 $ 777,468 Reinvested shares. 348,246 3,569,119 820,201 8,427,158 5,794 59,233 16,776 171,948 Shares redeemed... (902,362) (9,246,152) (1,771,439) (18,067,712) (72,713)* (742,890)* (143,212)** (1,463,512)** ---------- ------------ ---------- ------------ ------- --------- -------- ----------- Net increase (decrease)....... 293,007 $ 2,986,696 3,129,572 $ 32,141,952 (7,894) $ (80,960) (50,540) $ (514,096) ========== ============ ========== ============ ======= ========= ======== =========== Core Bond Fund --------------------------------------------------------------------------------------------------- Class C+ Class I --------------------------------------------------- --------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ------------------------ ------------------------- ------------------- ----------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ ------- --------- -------- ----------- Shares sold....... 33,521 $ 342,822 92,653 $ 949,365 14,501 $ 148,471 51,056 $ 524,372 Reinvested shares. 5,580 57,114 19,166 196,692 2,905 29,802 10,987 112,886 Shares redeemed... (108,209) (1,105,617) (150,429) (1,541,314) (19,392) (198,649) (217,983) (2,213,708) ---------- ------------ ---------- ------------ ------- --------- -------- ----------- Net increase (decrease)....... (69,108) $ (705,681) (38,610) $ (395,257) (1,986) $ (20,376) (155,940) $(1,576,450) ========== ============ ========== ============ ======= ========= ======== =========== Core Bond Fund --------------------------------------------------- Class Z --------------------------------------------------- For the six months ended For the September 30, 2005 year ended (unaudited) March 31, 2005 ------------------------ ------------------------- Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold....... -- $ -- -- $ -- Reinvested shares. 34,253 351,381 225,039 2,309,447 Shares redeemed... (1,206,409) (12,300,000) (4,558,155) (46,800,000) ---------- ------------ ---------- ------------ Net increase (decrease)....... (1,172,156) $(11,948,619) (4,333,116) $(44,490,553) ========== ============ ========== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 3,817 shares of Class B shares in the amount of $37,865 to 3,808 shares of Class A shares in the amount of $37,865. ** Includes automatic conversion of 8,993 shares of Class B shares in the amount of $91,677 to 8,970 shares of Class A shares in the amount of $91,677. 75 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
U.S. Government Securities Fund --------------------------------------------------------------------------------------------------------- Class A Class B --------------------------------------------------- --------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ------------------------ ------------------------- ---------------------- -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Shares sold.... 1,658,080* $ 15,739,767* 1,851,870** $ 17,318,940** 205,471 $ 1,950,325 270,431 $ 2,539,712 Reinvested shares........ 258,493 2,455,243 517,015 4,852,956 31,752 301,666 68,488 642,865 Shares redeemed (2,416,317) (22,937,635) (4,914,341) (46,091,272) (477,190)* (4,524,180)* (1,250,517)** (11,737,869)** ---------- ------------ ---------- ------------ -------- ----------- ---------- ------------ Net increase (decrease).... (499,744) $ (4,742,625) (2,545,456) $(23,919,376) (239,967) $(2,272,189) (911,568) $ (8,555,292) ========== ============ ========== ============ ======== =========== ========== ============ U.S. Government Securities Fund --------------------------------------------------- Class C+ --------------------------------------------------- For the six months ended For the September 30, 2005 year ended (unaudited) March 31, 2005 ------------------------ ------------------------- Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold.... 203,128 $ 1,928,492 225,967 $ 2,132,586 Reinvested shares........ 12,178 115,566 27,763 260,245 Shares redeemed (289,206) (2,737,546) (762,001) (7,152,432) ---------- ------------ ---------- ------------ Net increase (decrease).... (73,900) $ (693,488) (508,271) $ (4,759,601) ========== ============ ========== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 97,546 shares of Class B shares in the amount of $813,416 to 97,606 shares of Class A shares in the amount of $813,416. ** Includes automatic conversion of 181,948 shares of Class B shares in the amount of $1,713,174 to 182,020 shares of Class A shares in the amount of $1,713,174. 76 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
GNMA Fund ------------------------------------------------------------------------------------------------------------ Class A Class B --------------------------------------------------- ------------------------------------------------------ For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ------------------------ ------------------------- ------------------------- -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Shares sold.... 2,064,587* $ 23,305,123* 6,894,773** $ 77,011,294** 293,123 $ 3,317,577 508,758 $ 5,716,800 Reinvested shares........ 433,163 4,888,805 796,791 8,909,301 85,359 965,980 173,434 1,942,448 Shares redeemed (2,900,939) (32,745,897) (7,168,924) (80,162,014) (1,299,878)* (14,702,073)* (3,556,936)** (39,827,017)** ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease).... (403,189) $ (4,551,969) 522,640 $ 5,758,581 (921,396) $(10,418,516) (2,874,744) $(32,167,769) ========== ============ ========== ============ ========== ============ ========== ============ GNMA Fund ------------------------------------------------------------------------------------------------------------ Class C+ Class X --------------------------------------------------- ------------------------------------------------------ For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ------------------------ ------------------------- ------------------------- -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Shares sold.... 440,339 $ 4,989,778 853,099 $ 9,604,217 2,510 $ 28,279 273,192 $ 3,065,920 Reinvested shares........ 46,759 529,803 101,604 1,138,268 821 9,297 22,436 251,259 Shares redeemed (944,500) (10,692,015) (3,789,770) (42,453,144) (93,618) (1,057,899) (946,348) (10,755,314) ---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------ Net increase (decrease).... (457,402) $ (5,172,434) (2,835,067) $(31,710,659) (90,287) $ (1,020,323) (650,720) $ (7,438,135) ========== ============ ========== ============ ========== ============ ========== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 106,996 shares of Class B shares in the amount of $1,129,651 to 107,281 shares of Class A shares in the amount of $1,129,651. ** Includes automatic conversion of 130,250 shares of Class B shares in the amount of $1,464,891 to 130,598 shares of Class A shares in the amount of $1,464,891. 77 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
Strategic Bond Fund ---------------------------------------------------------------------------------------------------------- Class A Class B -------------------------------------------------- ----------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ----------------------- ------------------------- ------------------------ -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Shares sold.... 12,812,905* $45,135,547* 6,957,950** $ 24,096,113** 2,813,052 $ 9,877,067 3,302,013 $ 11,307,598 Reinvested shares........ 355,624 1,255,576 532,965 1,826,684 137,829 485,740 359,941 1,230,161 Shares redeemed (2,269,846) (7,988,971) (3,331,876) (11,327,054) (1,614,668)* (5,674,367)* (3,556,677)** (12,132,722)** ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Net increase (decrease).... 10,898,683 $38,402,152 4,159,039 $ 14,595,743 1,336,213 $ 4,688,440 105,277 $ 405,037 ========== =========== ========== ============ ========== =========== ========== ============ Strategic Bond Fund ---------------------------------------------------------------------------------------------------------- Class C+ Class I -------------------------------------------------- ----------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 ----------------------- ------------------------- ------------------------ -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Shares sold.... 9,151,373 $32,276,623 5,570,700 $ 19,497,879 -- $ -- -- $ -- Reinvested shares........ 155,027 548,638 243,819 839,417 -- -- 29,881 99,113 Shares redeemed (1,523,555) (5,386,989) (1,723,947) (5,880,680) -- -- (1,122,765) (3,817,402) ---------- ----------- ---------- ------------ ---------- ----------- ---------- ------------ Net increase (decrease).... 7,782,845 $27,438,272 4,090,572 $ 14,456,616 -- $ -- (1,092,884) $ (3,718,289) ========== =========== ========== ============ ========== =========== ========== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 444,916 shares of Class B shares in the amount of $1,553,449 to 444,798 shares of Class A shares in the amount of $1,553,449. ** Includes automatic conversion of 457,044 shares of Class B shares in the amount of $1,587,294 to 456,684 shares of Class A shares in the amount of $1,587,294. 78 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
High Yield Bond Fund ----------------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------- ------------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 -------------------------- --------------------------- -------------------------- -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ----------- ------------ ---------- ------------ Shares sold. 27,542,912* $ 121,874,566* 33,645,561** $ 144,289,277** 1,321,943 $ 5,938,989 2,940,030 $ 12,724,157 Reinvested shares..... 606,463 2,730,156 1,222,912 5,293,782 181,736 817,277 485,730 2,096,352 Shares redeemed... (25,679,345) (116,599,326) (34,116,411) (147,909,905) (3,132,766)* (14,009,946)* (6,876,355)** (29,724,616)** ----------- ------------- ----------- ------------- ----------- ------------ ---------- ------------ Net increase (decrease). 2,470,030 $ 8,005,396 752,062 $ 1,673,154 (1,629,087) $ (7,253,680) (3,450,595) $(14,904,107) =========== ============= =========== ============= =========== ============ ========== ============ High Yield Bond Fund ----------------------------------------------------------------------------------------------------------------- Class C+ Class Z ------------------------------------------------------- ------------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 -------------------------- --------------------------- -------------------------- -------------------------- Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ----------- ------------ ---------- ------------ Shares sold. 3,634,962 $ 16,389,291 7,504,054 $ 32,828,182 -- $ -- -- $ -- Reinvested shares..... 218,299 986,425 475,915 2,070,792 365,067 1,619,179 1,616,351 6,993,860 Shares redeemed... (4,763,645) (21,542,848) (5,742,182) (25,067,974) (18,560,165) (81,900,000) -- -- ----------- ------------- ----------- ------------- ----------- ------------ ---------- ------------ Net increase (decrease). (910,384) $ (4,167,132) 2,237,787 $ 9,831,000 (18,195,098) $(80,280,821) 1,616,351 $ 6,993,860 =========== ============= =========== ============= =========== ============ ========== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 760,994 shares of Class B shares in the amount of $3,222,926 to 762,312 shares of Class A shares in the amount of $3,222,926. ** Includes automatic conversion of 949,983 shares of Class B shares in the amount of $4,158,286 to 951,789 shares of Class A shares in the amount of $4,158,286. 79 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued)
Tax Exempt Insured Fund ------------------------------------------------------------------------------------------------- Class A Class B ---------------------------------------------- ------------------------------------------------ For the For the six months ended For the six months ended For the September 30, 2005 year ended September 30, 2005 year ended (unaudited) March 31, 2005 (unaudited) March 31, 2005 --------------------- ----------------------- ---------------------- ----------------------- Shares Amount Shares Amount Shares Amount Shares Amount -------- ----------- -------- ------------ -------- ----------- -------- ----------- Shares sold............ 59,092* $ 767,182* 224,481** $ 2,913,673** 4,823 $ 62,707 31,978 $ 416,668 Reinvested shares...... 42,710 554,912 143,521 1,856,004 4,450 57,855 19,131 247,355 Shares redeemed........ (400,361) (5,197,029) (777,009) (10,040,254) (107,896)* (1,398,908)* (612,542)** (7,956,706)** -------- ----------- -------- ------------ -------- ----------- -------- ----------- Net increase (decrease) (298,559) $(3,874,935) (409,007) $ (5,270,577) (98,623) $(1,278,346) (561,433) $(7,292,683) ======== =========== ======== ============ ======== =========== ======== =========== Tax Exempt Insured Fund ---------------------------------------------- Class C+ ---------------------------------------------- For the six months ended For the September 30, 2005 year ended (unaudited) March 31, 2005 --------------------- ----------------------- Shares Amount Shares Amount -------- ----------- -------- ------------ Shares sold............ 39,918 $ 517,160 104,291 $ 1,344,350 Reinvested shares...... 2,885 37,502 9,966 128,971, Shares redeemed........ (70,228) (907,067) (110,179) (1,429,778) -------- ----------- -------- ------------ Net increase (decrease) (27,425) $ (352,405) 4,078 $ 43,543 ======== =========== ======== ============
- -------- + Effective February 23, 2004, Class II shares were redesignated to Class C shares. * Includes automatic conversion of 16,091 shares of Class B shares in the amount of $191,440 to 16,103 shares of Class A shares in the amount of $191,440. ** Includes automatic conversion of 104,915 shares of Class B shares in the amount of $1,365,087 to 104,980 shares of Class A shares in the amount of $1,365,087. Note 7. Transactions with Affiliates As disclosed in the Portfolio of Investments, certain Funds own securities issued by American International Group, Inc. ("AIG") or an affiliate thereof. During the six months ended September 30, 2005, the following Funds recorded realized gains (losses) and income on security transactions of affiliates of AIG as follows:
Market Change in Market Value at Realized Unrealized Value at March 31, Cost of Proceeds Gain/ Gain/ September 30, Fund Security Income 2005 Purchases of Sales (Loss) (Loss) 2005 - ---- ---------------------- ------- --------- --------- -------- -------- ---------- ------------- Core Bond...... Riviera Holdings Corp. $ 6,875 $138,125 $-- $-- $-- $ (3,125) $135,000 Strategic Bond. Riviera Holdings Corp. 7,425 149,175 -- -- -- (3,375) 145,800 High Yield Bond Riviera Holdings Corp. 44,000 884,000 -- -- -- (20,000) 864,000
Note 8. Lines of Credit The AIG 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 other expenses on the Statement of Operations. Borrowings under the line of credit will commence when the Fund's cash shortfall exceeds $100,000. For the six months ended September 30, 2005, the following Funds had borrowings:
Weighted Days Interest Average Average Fund Outstanding Charges Debt Utilized Interest - ---- ----------- -------- ------------- -------- U.S. Government Securities 1 $ 314 $ 2,544,274 4.44% High Yield Bond........... 38 74,160 17,636,316 3.64
At September 30, 2005, the U.S. Government Securities and High Yield Bond Funds had balances open under the line of credit agreement of $2,544,274 and $40,303,004, respectively. Note 9. Interfund Lending Agreement 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 80 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (unaudited) (continued) 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 six months ended September 30, 2005 none of the Funds participated in this program. Note 10. Trustees Retirement Plan The Trustees of the SunAmerica Income Funds have adopted the AIG 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 AIG SunAmerica mutual funds (an "Eligible Trustee") retires after reaching age 60 but before age 70, or who has at least 5 years of consecutive service after reaching age 65 but before age 70, or dies while a Trustee, such person will be eligible to receive a retirement or death benefit from each AIG 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 AIG SunAmerica mutual fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% of any amounts credited under the preceding 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 8.50%. The following amounts of the Retirement Plan liability are included in the Trustees' fees and expenses line on the Statement of Assets and Liabilities and the amount for the Retirement Plan expenses are included in the Trustees' fees and expenses line on the Statement of Operations.
Retirement Retirement Retirement Plan Plan Plan Liability Expense Payments ---------- ---------- ---------- Fund As of September 30, 2005 - ---- -------------------------------- Core Bond................. $ 22,495 $1,033 $ 471 U.S. Government Securities 100,824 1,152 5,097 GNMA...................... 47,190 2,715 1,253 Strategic Bond............ 24,881 573 1,178 High Yield Bond........... 46,436 1,840 1,810 Tax Exempt Insured........ 30,843 412 1,432
Note 11. Other Information On May 26, 2005, the New York Attorney General and the New York Superintendent of Insurance filed a civil complaint against American International Group, Inc. ("AIG") as well as its former Chairman and Chief Executive Officer and former Vice Chairman and Chief Financial Officer, in the Supreme Court of the State of New York. The complaint asserts claims under New York's Martin Act and Insurance Law, among others, and makes allegations concerning certain transactions entered into by AIG and certain of its subsidiaries, but in no case involving any subsidiary engaged in providing management or administrative services to the Funds. The complaint seeks disgorgement, injunctive relief, punitive damages and costs, among other things. AIG is the indirect parent company and an affiliated person of the AIG SunAmerica Asset Management Corp. ("Adviser") and AIG SunAmerica Capital Services, Inc. (the "Distributor") and AIG Global Investment Corp. (the "Subadviser"). Neither the Adviser, the Distributor, the Subadviser or their respective officers and directors nor the Funds have been named in the complaint, and the complaint does not seek any penalties against them. In the Adviser's view, the matters alleged in the lawsuit are not material in relation to the financial position of the Adviser, the Distributor or the Subadviser or to their ability to provide their respective services to the Funds. Due to a provision in law governing the operation of mutual funds, however, if the lawsuit results in an injunction being entered against AIG, then the Adviser, the Distributor and the Subadviser will need to obtain permission from the Securities and Exchange Commission to continue to service the Funds. While the Securities and Exchange Commission has granted this type of relief to others in the past in similar circumstances, there is no assurance that this permission would be granted. 81 SunAmerica Income Funds APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited) Approval of the Advisory Agreement and Subadvisory Agreements: The Board of Trustees (the "Board"), including the Trustees that are not interested persons of SunAmerica Income Funds (the "Funds") (the "Disinterested Trustees"), last approved the Investment Advisory and Management Agreement between the Funds and AIG SunAmerica Asset Management Corp. ("SAAMCo") (the "Advisory Agreement") for a period of one year, at a meeting held on August 31, 2005. At this same meeting, the Board also approved the renewal of subadvisory agreements between SAAMCo and AIG Global Investment Company ("AIGGIC") with respect to the SunAmerica Core Bond Fund, SunAmerica Strategic Bond Fund, SunAmerica High Yield Bond Fund, and the SunAmerica Tax Exempt Insured Fund (each a "Subadvisory Agreement" and collectively the "Subadvisory Agreements"). The Board noted that the discussion and approval of the Advisory Agreement and Subadvisory Agreements at the August 31, 2005 meeting was the culmination of numerous discussions and meetings that had taken place in recent months. The Board further noted that certain members of the Board had met with senior management on numerous occasions and had in-depth discussions regarding the Funds' performance, advisory expenses and other fees. In accordance with Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act"), the Board was provided with materials relating to its consideration of the Advisory Agreement. These materials assisted the Board in analyzing: (1) the nature, extent and quality of services to be provided by SAAMCo and AIGGIC, including administrative and shareholder services to be provided by SAAMCo and certain other affiliated companies; (2) the costs of services to be provided and benefits realized by SAAMCo and AIGGIC, including a comparison of fees and expense ratios of other similar funds, as well as SAAMCo's profitability and financial condition; (3) the terms of the Advisory Agreement and Subadvisory Agreements; (4) economies of scale and whether the fee levels reflect these economies of scale; (5) SAAMCo's overall organization, compliance policies and history, as well as AIGGIC's compliance policies and history; and (6) the investment performance of the Funds in their peer groups ("Peer Groups") as determined by Lipper, Inc. ("Lipper") and as compared to their relevant benchmarks and indices. Experienced counsel that is independent of SAAMCo provided advice to the Disinterested Trustees ("Independent Counsel"). In considering these factors, as described in more detail below, the Board did not identify any single factor or group of factors as being more important than the others, but considered all factors together. Nature, Extent and Quality of Services The Board, including the Disinterested Trustees, considered the nature, quality and extent of services to be provided by SAAMCo. In making its evaluation, the Board considered that SAAMCo acts as investment manager and adviser to the Funds, manages the daily business affairs of the Funds, and obtains and evaluates economic, statistical and financial information to formulate and implement investment policies. Additionally, SAAMCo provides office space, accounting, legal, compliance, clerical and administrative services (exclusive of, and in addition to, overseeing of any such service provided by any others retained by the Funds), and has authorized its officers and employees, if elected, to serve as officers or trustees of the Funds without compensation. Finally, SAAMCo is responsible for monitoring and reviewing the activities of third-party service providers. In making their determination regarding the nature and quality of SAAMCo's services, the Trustees considered SAAMCo's responsibility to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration of the Funds. With respect to the Funds for which SAAMCo retains the daily investment management responsibility, the Board also reviewed the experience of the portfolio managers and research staff and SAAMCo's investment style and process. With respect to the Funds for which SAAMCo has delegated daily investment management responsibilities to the Subadviser, the Board reviewed SAAMCo's level and process of monitoring the Subadviser. The Board also reviewed the performance of the Funds, the details of which are described below. The Board also reviewed the compliance and administrative services of SAAMCo. The Board noted that SAAMCo provides and compensates a Chief Compliance Officer for the Funds, and that SAAMCo maintains a compliance staff of nine people. The Board analyzed the structure and duties of SAAMCo's accounting, legal and compliance departments and concluded that they were adequate to meet the needs of the Funds. The Board also considered the nature, quality and extent of services to be provided by AIGGIC. The Board considered that AIGGIC, as Subadviser is responsible for providing investment management services, including investment research, advice and supervision, and determining which securities will be purchased or sold by each Fund which it manages. The Board reviewed AIGGIC's history, structure, size, visibility and resources which are needed to attract and retain highly qualified investment professionals. The Board 82 SunAmerica Income Funds APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited) (continued) noted that AIGGIC is an affiliate of SAAMCo and is an indirect wholly owned subsidiary of American International Group ("AIG"). As such, the Board considered SAAMCo's relationship and familiarity with AIGGIC and whether this relationship could benefit the Funds and the shareholders. The Board also considered the expertise and experience of AIGGIC's portfolio managers and research staff, and their investment style and process. With respect to administrative services to be provided by the AIGGIC, the board considered that AIGGIC provides assistance in general marketing assistance and has developed internal procedures for monitoring compliance with investment objectives, policies and restrictions of the Fund as set forth in the prospectus. The Board concluded that it was satisfied with the nature, quality and extent of the services provided by or to be provided by SAAMCo and AIGGIC and that there was a reasonable basis on which to conclude that SAAMCo and AIGGIC would continue to provide a high quality of investment management services. Fees and Expenses The Board, including the Disinterested Trustees, reviewed information regarding the fees paid by the Funds to SAAMCo for investment advisory and management services. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of SAAMCo's services and any additional benefits received by SAAMCo or its affiliates in connection with providing such services to the Funds. To assist in analyzing the reasonableness of the fees, the Board received reports prepared independently by Lipper detailing comparative advisory fee and other information of the Funds' peer groups as determined objectively by Lipper, and rankings within the relevant Lipper categories. The Board also received reports prepared by SAAMCo, including reports on investment management fees charged by SAAMCo to other funds it manages, and by the Board's independent counsel. In considering the reasonableness of the advisory fee, the Board reviewed a number of expense comparisons, including: (i) contractual management fees; (ii) actual total expenses; and (iii) actual and allowable 12b-1 and non-12b-1 fees. The Board also took into account that certain fee arrangements included breakpoints that will adjust the fee downward as the size of Funds increase, thereby allowing the shareholders to participate in economies of scale. The Board also reviewed the reports from the past year on soft dollar commissions, if any. These reports included information on brokers and total commissions paid for each Fund which had any soft dollar commissions. For those Funds which had commissions to report, the reports also detailed the types of research and services obtained in connection with soft dollar commissions. Additionally, the Board reviewed the Funds' expense ratios and analyzed the expense reimbursements and net expense ratio caps contractually agreed upon by SAAMCo. The Board noted that the Core Bond Fund, Strategic Bond Fund and the High Yield Bond Fund have implemented contractual expense ratio caps. The Board compared the Funds' net expense ratios to those of other funds within their respective Peer Groups. Based upon the reports prepared by Lipper and other information provided by SAAMCo and by counsel to the Disinterested Trustees, the Board was satisfied that the fee and expense ratios of the Funds were acceptable given the quality of services expected to be provided and were comparable to the fee and expense ratios of similar funds within the same Peer Groups. In considering the subadvisory fees, the Board, including the Disinterested Trustees, considered that the Funds pay a fee to SAAMCo pursuant to the Advisory Agreement, and that, in turn, SAAMCo rather than the Funds pay a fee to the Subadviser. Therefore, the Board considered the amount retained by SAAMCo and the fee paid to the Subadviser with respect to the different services provided. The Board also considered that the Subadvisory Agreements contain break points in the fee schedules. Therefore, the Board considered that if the Funds grew to certain asset levels, that SAAMCo would benefit by retaining a greater percentage of the fee it received from the Fund. On the basis of the information considered, the Board was satisfied that the advisory and subadvisory fee rates were fair in light of the usual and customary charges made for services of the same nature and quality. Costs of Services and Benefits Derived, as well as the Adviser's Profitability and Financial Condition. The Board, including the Disinterested Trustees, considered the direct and indirect costs and benefits of SAMMCo's providing services to the Funds. The Board reviewed financial statements relating to SAAMCo's profitability and financial condition with respect to the services it provided the Funds, and considered how profit margins could affect SAAMCo's ability to attract and retain qualified investment personnel. The Board concluded that SAAMCo had a satisfactory financial condition, and that their profitability was not excessive as compared to standards set forth in applicable Court cases and other available industry information. 83 SunAmerica Income Funds APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited) (continued) With respect to indirect costs and benefits, the Board was informed, based on management's judgment, that (1) any indirect costs incurred by SAAMCo in connection with rendering investment advisory services to the Funds are inconsequential to the analysis of the adequacy of the advisory fees, and (2) any collateral benefits derived as a result of providing advisory services to the Funds are de minimis and do not impact upon the reasonableness of the advisory fee. The Board also considered the reputational value to SAAMCo from serving as investment adviser. The Board also considered fees and profits , where applicable, earned by affiliates for providing other services to the Funds. The Board concluded that any benefits that SAAMCo and its affiliates could be expected to receive with regard to providing investment advisory and other services to the Funds were not excessive. Terms of the Advisory Agreement and Subadvisory Agreements The Board, including the Disinterested Trustees, received a draft of the proposed Advisory Agreement and Subadvisory Agreements. The Board considered that they may be renewed from year to year, so long as their continuance is specifically approved at least annually in accordance with the requirements of the 1940 Act and that the Agreements provide that they will terminate in the event of an assignment (as defined in the 1940 Act) or upon termination of the agreement. In reviewing the terms of the Advisory Agreement, the Board considered that SAAMCo pays all of its own expenses in connection with the performance of its duties, as well as the salaries, fees and expenses of the Trustees and Officers who are employees of SAAMCo. The Board noted, however, that the Funds bear certain proxy-related expenses, where applicable. The Board also considered the termination and liability provisions of the Advisory Agreement. With respect to the Subadvisory Agreements, the Board further considered, that under the terms of the Subadvisory Agreements, the Subadviser is not liable to the Fund, or its shareholders, for any act or omission by the Subadviser or for any losses sustained by the Fund, or its shareholders, except in the case of willful misfeasance, bad faith, gross negligence and reckless disregard of obligations or duties. The Board also considered that the Subadvisory Agreements provide that the Subadviser will pay all of its own expenses in connection with the performance of its duties as well as the cost of maintaining the staff and personnel as necessary for it to perform its obligations. Economies of Scale The Board, including the Disinterested Trustees, considered whether the Funds have benefited from economies of scale and whether there is potential for future realization of economies with respect to the Funds. The Board concluded that any potential economies of scale are being shared between shareholders and SAAMCo in an appropriate manner. The Board considered that the Funds in the AIG SunAmerica complex share common resources and as a result, an increase in the overall size of the complex could permit each fund to incur lower expenses than they otherwise would achieve as stand-alone entities. The Board also considered the anticipated efficiencies in the processes of SAAMCo as it adds labor and capital to expand the scale of operations. The Board concluded that the advisory fee structure was reasonable and that no changes were currently necessary to further reflect economies of scale. The Board noted that it will continue to review fees, including breakpoints and expense caps in connection with contract renewals. The Overall Organization of SAAMCo The Trustees considered the benefit to shareholders of investing in a Fund that is part of a family of funds offering a variety of types of mutual funds and shareholder services. The Trustees also considered SAAMCo's experience in providing management and investment advisory services to advisory clients, including approximately 130 mutual funds (not including the Funds), and the fact that SAAMCo currently managed, advised and/or administered approximately $42 billion of assets. The Trustees also considered SAAMCo's record of compliance with each Funds' objectives, strategies and restrictions and its positive regulatory and compliance history. The Trustees also considered SAAMCo's relationships with its affiliates and the resources available to them. Compliance The Board considered SAAMCo's and the Subadviser's compliance and regulatory history, and inquired whether SAAMCo or the Subadviser had been the target of any regulatory actions or investigations. In addition, the Board reviewed information concerning 84 SunAmerica Income Funds APPROVAL OF THE ADVISORY AGREEMENT AND SUBADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited) (continued) SAAMCo's compliance staff that would be responsible for providing compliance functions on behalf of the Funds. Finally, the Board reviewed the Code of Ethics of SAAMCo and the Subadviser, and determined that they contain provisions reasonably necessary to prevent fraudulent, deceptive or manipulative acts by personnel in connection with their personal transactions in securities held or to be acquired by the Funds. Investment Performance The Board noted that Fund performance is regularly reviewed at various periods of time throughout the year. At the Board meeting held on August 31, 2005, in connection with the approval of the continuation of the Advisory Agreement and the Subadvisory Agreements, the Board reviewed the Funds' annualized total return for the one-, two- , three-, four- , five- and ten-year periods (for those Funds that do not have ten years of performance history, the Board reviewed performance history since the Fund's inception). The Board, including the Disinterested Trustees, reviewed reports independently prepared by Lipper which showed comparative performance of the Funds against their respective benchmarks, other funds in their respective peer groups, and to appropriate indices or combination of indices. Conclusion After a full and complete discussion, the Board renewed the Advisory Agreement and Subadvisory Agreements with respect to the Funds for a period of one year. Based on their evaluation of all material factors and assisted by the advice of independent counsel, the Board, including the Disinterested Trustees, were satisfied that the terms of the Advisory Agreement and Subadvisory Agreements were fair, and in the best interest of the Funds and its shareholders, and that the advisory fee rates provided in the Advisory Agreement are acceptable in light of the usual and customary charges made for services of similar nature and quality. In arriving at a decision to approve the continuation of the Advisory Agreement and Subadvisory Agreements, the Board did not single out any one factor or group of factors as being more important than other factors, but considered all factors together. 85 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- September 30, 2005 -- (unaudited) The following table contains basic information regarding the Trustees and Officers that oversee operations of the Funds and other investment companies within the Fund complex.
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2) - ---------------------- ---------- -------------- ------------------------------------ ------------ ------------------------------ Trustee Jeffrey S. Burum Trustee 2004-present Founder and CEO of National 40 None DOB: February 27, 1963 Housing Development Corporation (January 2000 to present); Founder, Owner and Partner of Colonies Crossroads, Inc. (January 2000 to present; Owner and Managing Member of Diversified Pacific Development Group LLC (June 1990 to present) Dr. Judith L. Craven Trustee 2001-present Retired. 80 Director, A.G. Belo DOB: October 6, 1945 Corporation (1992 to present); Director, Sysco Corporation (1996 to present); Director, Luby's Inc. (1998 to present); Director, University of Texas Board of Regents (2001-Present). William F. Devin Trustee 2001-present Retired. 80 Member of the Board of DOB: December 30, 1938 Governors, Boston Stock Exchange (1985-Present). Samuel M. Eisenstat Chairman 1986-present Attorney, solo practitioner. 50 Director, North European Oil DOB: March 7, 1940 of the Royalty Trust. Board Stephen J. Gutman Trustee 1986-present Associate Corcoran Group (Real 50 None DOB: May 10, 1943 Estate) (2003 to present); Partner and Member of Managing Directors, Beau Brummell-Soho, LLC (licensing of menswear specialty retailing and other activities) (June 1988 to present). Peter A. Harbeck(3) Trustee 1995-present President, CEO and Director, 89 None DOB: January 23, 1954 SAAMCo. (August 1995 to present); Director, AIG SunAmerica Capital Services, Inc. ("SACS") (August 1993 to present); President and CEO AIG Advisor Group, Inc. (June 2004 to present). William J. Shea Trustee 2004-present President and CEO, Conseco, Inc. 50 Chairman of the Board, Royal DOB: February 9, 1948 (Financial Services) (2001 to 2004); and SunAlliance, U.S.A., Inc. Chairman of the Board of (March 2005 to present); Centennial Technologies, Inc. (1998 Director, Boston Private to 2001); Vice Chairman, Bank Holdings (October 2004 to Boston Corporation (1993 to 1998) present).
86 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- September 30, 2005 -- (unaudited) (continued)
Number of Position Term of Funds in Name, Held With Office and Fund Complex Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2) - ------------------ ---------- -------------- -------------------------------- ------------ ------------------- Officers Vincent M. Marra President 2003- Senior Vice President and Chief N/A N/A DOB: May 28, 1950 present Operating Officer, SAAMCo (February 2003-present); Chief Administrative Officer, Chief Operating Officer and Chief Financial Officer, Carret & Co., LLC (June 2002 to February 2003); President and Chief Operating Officer, Bowne Digital Solutions (1999 to May 2002) Donna M. Handel Treasurer 2002- Senior Vice President, SAAMCo N/A N/A DOB: June 25, 1966 present (December 2004 to present); Vice President, SAAMCo (1997 to December 2004); Assistant Treasurer (1993 to 2002)
- -------- * The business address for each Trustee is the Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (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 (9 funds), SunAmerica Income Funds (6 funds), SunAmerica Focused Series, Inc. (17 portfolios), Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (32 portfolios), VALIC Company I (24 portfolios), VALIC Company II (15 funds), Seasons Series Trust (24 portfolios), AIG Series Trust (4 funds), SunAmerica Focused Alpha Growth Fund (1 fund) and SunAmerica Focused Large-Cap Fund, Inc. (1 fund). (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 because he is an officer and director of the advisor and a director of the principal underwriter of the Trust. (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 Trustees is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 87 [LOGO] AIG Sun America Mutual Funds Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors/Trustees Investment Adviser DISCLOSURE OF QUARTERLY Samuel M. Eisenstat PORTFOLIO HOLDINGS Peter A. Harbeck AIG SunAmerica Asset Management Corp. The Trust is required to Dr. Judith L. Craven Harborside Financial file its com-plete William F. Devin Center schedule of portfolio Stephen J. Gutman 3200 Plaza 5 holdings with the U.S. Jeffrey S. Burum Jersey City, NJ Securities and Exchange William J. Shea 07311-4992 Commission for its first and third fiscal quarters Officers Distributor on Form N-Q. Once filed, Vincent M. Marra, AIG SunAmerica Capital the Trust's Form N-Q will President Services, Inc. be available without Donna M. Handel, Harborside Financial charge on the Treasurer Center U.S. Securities and Michael Cheah, Vice 3200 Plaza 5 Exchange Commission President Jersey City, NJ website at www.sec.gov. Timothy P. Pettee, Vice 07311-4992 You can also obtain President cop-ies of Form N-Q by Cynthia Gibbons, Vice Shareholder Servicing (i) visiting the U.S. President and Chief Agent Securities and Exchange Compliance Officer AIG SunAmerica Fund Commis-sion Public J. Steven Neamtz, Vice Services, Inc. Reference Room in President Harborside Financial Wash-ington DC Gregory N. Bressler, Center (information on the Chief Legal Officer 3200 Plaza 5 operation of the Public and Secretary Jersey City, NJ Reference Room may be Nori L. Gabert, Vice 07311-4992 obtained by calling President and 1-800-SEC-0330); (ii) Assistant Secretary Custodian and Transfer sending your re-quest and Thomas Lynch, Assistant Agent a duplicating fee to the Secretary State Street Bank and U.S. Securities and Corey A. Issing, Trust Company Exchange Commission Assistant Secretary P.O. Box 419572 Public Reference Room, Gregory R. Kingston, Kansas City, MO Washington, DC 20549-0102 Vice President and 64141-6572 or (iii) sending your Assistant Treasurer request electronically to Robert A. Chopyak, VOTING PROXIES ON TRUST publicinfo.sec.gov. Assistant Treasurer PORTFOLIO SECURITIES A description of the PROXY VOTING RECORD ON policies and proce-dures SUNAMERICA INCOME FUNDS that the Trust uses to Information regarding how determine how to vote the Trust voted proxies proxies relating to related to securities secu-rities held in the held in the SunAmerica Fund's portfolio which is Income Funds' dur-ing the available in the Trust's twelve month period ended State-ment of Additional June 30, 2005 is Information, may be available without charge, obtained without charge upon request, by calling upon re-quest, by calling (800) 858-8850 or on the (800) 858-8850. The U.S. Secu-rities and information is also Exchange Commission available from the EDGAR web-site at database on the U.S. http://www.sec.gov. Secu-rities and Exchange Commission's website at This report is submitted http://www.sec.gov. solely for the general information of shareholders of the Fund. Distribution of this report to persons other than shareholders of the Fund is authorized only in connection with a currently effective prospectus, setting forth details of the Fund, which must precede or accompany this report. The accompanying report has not been audited by independent accountants and accordingly no opinion has been expressed thereon.
88 [LOGO] AIG Sun America Mutual Funds Distributed by: AIG SunAmerica Capital Services, Inc. Investors should carefully consider the investment objectives, risks, charges and expenses of any mutual fund before investing. This and other important information is contained in the prospectus, which can be obtained from your financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext. 6003. Read the prospectus carefully before investing. www.sunamericafunds.com INSAN - 9/05 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. Schedule of Investments. Included in Item 1 to the Form. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not applicable. Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Not applicable. Item 10. Submission of Matters to a Vote of Security Holders. Not applicable. Item 11. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures. Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits. (a) (1) Not applicable. (2) Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as EXHIBIT 99.CERT. (3) Not applicable. (b) Certification pursuant to 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/ Vincent M. Marra - -------------------------------- Vincent M. Marra President Date: December 8, 2005 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/ Vincent M. Marra - -------------------------------- Vincent M. Marra President Date: December 8, 2005 By: /s/ Donna M. Handel - -------------------------------- Donna M. Handel Treasurer Date: December 8, 2005 EX-99.CERT 2 dex99cert.txt CERTIFICATION PURSUANT TO SECTION 302 EXHIBIT 99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, Vincent M. Marra, 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this 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, 2005 /s/ Vincent M. Marra ------------------------------ Vincent M. Marra 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) and internal control over financial reporting (as defined in Rule 30a-3(d) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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 (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this 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, 2005 /s/ Donna M. Handel ------------------------------ Donna M. Handel Treasurer EX-99.906CERT 3 dex99906cert.txt CERTIFICATION PURSUANT TO SECTION 906 Exhibit 99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Vincent M. Marra, 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, 2005 /s/ Vincent M. Marra --------------- Vincent M. Marra 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-----