-----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, KItxuW0VOGTRKxANJAGg0SYYQn3CSU3lwExF8hq800VG/Si2uRNR+kOVDDTi+OkS w245CY5K0c7htmJYTcqitg== 0001193125-07-261326.txt : 20071207 0001193125-07-261326.hdr.sgml : 20071207 20071207153711 ACCESSION NUMBER: 0001193125-07-261326 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070930 FILED AS OF DATE: 20071207 DATE AS OF CHANGE: 20071207 EFFECTIVENESS DATE: 20071207 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: 071292548 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 0000795307 S000007631 GNMA Securities C000020820 Class A C000020821 Class B C000020822 Class C 0000795307 S000007632 U.S. Government Securities C000020823 Class A C000020824 Class B C000020825 Class C 0000795307 S000007633 High Yield Bond C000020826 Class A C000020827 Class B C000020828 Class C 0000795307 S000007634 Strategic Bond C000020829 Class A C000020830 Class B C000020831 Class C 0000795307 S000007635 Tax Exempt Insured C000020832 Class A C000020833 Class B C000020834 Class C 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 811-4708 --------------------------------------------- SunAmerica Income Funds - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Vincent M. Marra Senior Vice President 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, 2007 ------------------------- Item 1. Reports to Stockholders [PHOTO] SEMI-ANNUAL REPORT 2007 AIG SUNAMERICA Income Funds [LOGO] www.sunamericafunds.com live longer retire stronger/sm/ September 30, 2007 SEMI-ANNUAL REPORT SUNAMERICA INCOME FUNDS SunAmerica U.S. Government Securities Fund (SGTAX) SunAmerica GNMA Fund (GNMAX) SunAmerica Strategic Bond Fund (SDIAX) SunAmerica High Yield Bond Fund (SHNAX) 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. 8 FINANCIAL HIGHLIGHTS............... 11 PORTFOLIO OF INVESTMENTS........... 16 NOTES TO FINANCIAL STATEMENTS...... 62 APPROVAL OF ADVISORY AGREEMENT..... 77
Shareholder Letter Dear Shareholder: Enclosed is the semi-annual report for the SunAmerica Income Funds for the six-month period ended September 30, 2007. The semi-annual period was a turbulent one for the fixed-income markets and presented many challenges. Unquestionably, the top story of the six-month period was the credit crunch that hit the markets in August. The deterioration in the housing market created concern regarding the subprime mortgage market. This concern spread throughout the credit markets and caused great uncertainty as the era of seemingly endless liquidity came to an end. Banks tightened lending standards and investors ran to short-term Treasuries, driving yields down. The period was also marked by rising oil prices and a declining dollar which raised the specter of inflation in some circles. As the equity markets sold off and the credit markets weren't functioning efficiently, the state of the economy hung in the balance. Fortunately, the Federal Reserve decided to take action. In August it initiated a 50-basis point cut in the discount rate (the rate at which the Federal Reserve lends money to banks). They followed that cut with a 50-basis point cut in the Federal Funds rate (the rate at which banks lend to other banks overnight) in September, which sparked a strong stock rally. This reversed the decline in the equity markets which had occurred earlier in the quarter. The Federal Reserve's actions seemed to instill confidence in the market that the central bank would move aggressively to ward off a possible recession. While the immediate pressure on the fixed-income markets appears to have been reduced, we are not out of the woods yet. Uncertainty still reigns over the housing market and no one knows what other credit events may occur. We recommend that investors meet with their financial adviser to review their portfolios, make sure they are properly diversified and have the appropriate level of risk. We thank you for your investment in the SunAmerica Income Funds. We continue to work diligently, and strive to preserve and grow your capital consistent with each Fund's individual investment objective. We also encourage you to visit our website, www.sunamericafunds.com, for more information. Sincerely, The SunAmerica Income Funds Investment Professionals AIG SunAmerica Asset Management Corp. AIG Investments ------------------------------------- - Michael Cheah Matthew Meyer Rob Vanden Assem Andrew Doulos J. Hutchison Bryan Bryan Petermann Raphael Davis Geoffrey Cornell John Yovanovic Anthony King Peter Stevenson Tim Lindvall Rajeev Mittal
- -------- Past performance is no guarantee of future results. 2 SunAmerica Income Funds EXPENSE EXAMPLE -- September 30, 2007 -- (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 (loads) on purchase payments, contingent deferred sales charges and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. The example set forth below is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at April 1, 2007 and held until September 30, 2007. 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, 2007" to estimate the expenses you paid on your account during this period. The "Expenses Paid During the Six Months Ended September 30, 2007" 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, 2007" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Trust's prospectus and/or your retirement plan document for a full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2007" column would have been higher and the "Ending Account Value" would have been lower. Hypothetical Example for Comparison Purposes The "Hypothetical" section of the table provides information about hypothetical account values and hypothetical expenses based on 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 these Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. The "Expenses Paid During the Six Months Ended September 30, 2007" 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, 2007" column does not include administrative fees that may apply to qualified retirement plan accounts. See the Fund's prospectus and/or your retirement plan document for a full description of these fees. Had these fees been included, the "Expenses Paid During the Six Months Ended September 30, 2007" column would have been higher and the "Ending Account Value" would have been lower. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, including sales charges on purchase payments, contingent deferred sales charges; small account fees and administrative fees, if applicable to your account. Please refer to 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, 2007 -- (unaudited) (continued)
Actual Hypothetical ------------------------------------------ ------------------------------------------ Ending Account Ending Account Expenses Paid Value Using Expenses Paid Value Using During the a Hypothetical During the Expense Beginning Actual Six Months Beginning 5% Assumed Six Months Ratio Account Value Return at Ended Account Value Return at Ended as of at April 1, September 30, September 30, at April 1, September 30, September 30, September 30, Fund 2007 2007 2007* 2007 2007 2007* 2007* - ---- ------------- -------------- ------------- ------------- -------------- ------------- ------------- U.S. Government Securities Class A#........... $1,000.00 $1,020.15 $ 5.00 $1,000.00 $1,020.05 $ 5.00 0.99% Class B#........... $1,000.00 $1,016.86 $ 8.27 $1,000.00 $1,016.80 $ 8.27 1.64% Class C#........... $1,000.00 $1,016.86 $ 8.27 $1,000.00 $1,016.80 $ 8.27 1.64% GNMA Class A#........... $1,000.00 $1,019.76 $ 5.00 $1,000.00 $1,020.05 $ 5.00 0.99% Class B#........... $1,000.00 $1,016.47 $ 8.27 $1,000.00 $1,016.80 $ 8.27 1.64% Class C#........... $1,000.00 $1,015.56 $ 8.26 $1,000.00 $1,016.80 $ 8.27 1.64% Strategic Bond Class A............ $1,000.00 $1,016.27 $ 6.45 $1,000.00 $1,018.60 $ 6.46 1.28% Class B............ $1,000.00 $1,010.03 $ 9.80 $1,000.00 $1,015.25 $ 9.82 1.95% Class C............ $1,000.00 $1,012.96 $ 9.76 $1,000.00 $1,015.30 $ 9.77 1.94% High Yield Bond Class A#........... $1,000.00 $1,000.51 $ 6.80 $1,000.00 $1,018.20 $ 6.86 1.36% Class B#........... $1,000.00 $ 997.34 $10.04 $1,000.00 $1,014.95 $10.13 2.01% Class C#........... $1,000.00 $ 995.32 $10.03 $1,000.00 $1,014.95 $10.13 2.01% Tax Exempt Insured Class A............ $1,000.00 $1,005.69 $ 6.62 $1,000.00 $1,018.40 $ 6.66 1.32% Class B............ $1,000.00 $ 1000.70 $11.50 $1,000.00 $1,013.50 $11.58 2.30% Class C#........... $1,000.00 $1,002.54 $ 9.76 $1,000.00 $1,015.25 $ 9.82 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 366 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 or assumed, the "Actual/Hypothetical Ending Account Value" would have been lower and the "Actual/Hypothetical Expenses Paid During the Six Months Ended September 30, 2007" and the "Expenses Ratios" would have been higher. 4 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2007 -- (unaudited)
U.S. Government Strategic Securities GNMA Bond Fund Fund Fund --------------- ------------ ------------ ASSETS: Long-term investment securities, at market value* (unaffiliated).......... $153,867,093 $394,986,583 $783,235,038 Short term investment securities, at market value* (unaffiliated)......... -- -- 17,067,000 Repurchase agreements (cost approximates market value).................... 29,653,000 42,227,000 6,047,000 ------------ ------------ ------------ Total investments....................................................... 183,520,093 437,213,583 806,349,038 ------------ ------------ ------------ Cash...................................................................... 467 415 938,794 Foreign cash*............................................................. -- -- 1,424,208 Receivable for: Shares of beneficial interest sold...................................... 363,815 523,679 3,500,688 Dividends and interest.................................................. 1,365,168 2,033,657 12,450,993 Investments sold........................................................ 4,013,121 15,049,203 32,664,143 Prepaid expenses and other assets......................................... 1,924 2,714 3,538 Due from investment adviser for expense reimbursements/fee waivers........ 67,545 53,335 -- ------------ ------------ ------------ Total assets.............................................................. 189,332,133 454,876,586 857,331,402 ------------ ------------ ------------ LIABILITIES: Payable for: Shares of beneficial interest redeemed.................................. 729,638 713,377 1,289,646 Investments purchased................................................... 4,011,089 55,454,919 39,185,947 Interest on securities sold short....................................... -- -- -- Investment advisory and management fees................................. 101,438 150,480 409,081 Distribution and service maintenance fees............................... 67,640 156,073 391,043 Transfer agent fees and expenses........................................ 52,126 96,306 154,919 Trustees' fees and expenses............................................. 88,159 56,207 27,739 Other accrued expenses.................................................. 89,035 131,782 110,004 Dividends payable......................................................... 113,212 176,949 827,342 Due to custodian.......................................................... -- -- -- Securities sold short, at market value#................................... -- -- -- Commitments (Note 10)..................................................... -- -- -- ------------ ------------ ------------ Total liabilities......................................................... 5,252,337 56,936,093 42,395,721 ------------ ------------ ------------ Net assets................................................................ $184,079,796 $397,940,493 $814,935,681 ============ ============ ============ NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value............................ $ 199,533 $ 359,826 $ 2,264,002 Paid-in capital........................................................... 196,992,839 404,883,237 829,612,897 ------------ ------------ ------------ 197,192,372 405,243,063 831,876,899 Accumulated undistributed net investment income (loss).................... 3,886 94,434 1,456,268 Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions....... (13,851,811) (4,453,798) (24,873,863) Unrealized appreciation (depreciation) on investments..................... 735,349 (2,943,206) 6,287,852 Unrealized appreciation (depreciation) on securities sold short........... -- Unrealized appreciation (depreciation) on foreign exchange transactions... -- -- 188,525 ------------ ------------ ------------ Net assets................................................................ $184,079,796 $397,940,493 $814,935,681 ============ ============ ============ *Cost Long-term investment securities (unaffiliated).......................... $153,131,744 $397,929,789 $776,947,186 ============ ============ ============ Short-term securities (unaffiliated).................................... $ -- $ -- $ 17,067,000 ============ ============ ============ Foreign cash............................................................ $ -- $ -- $ 1,346,039 ============ ============ ============ #Proceeds from securities sold short...................................... $ $ $ -- ============ ============ ============
High Yield Tax Exempt Bond Insured Fund Fund ------------ ----------- ASSETS: Long-term investment securities, at market value* (unaffiliated).......... $267,080,153 $52,386,793 Short term investment securities, at market value* (unaffiliated)......... -- 5,741,558 Repurchase agreements (cost approximates market value).................... 13,896,000 -- ------------ ----------- Total investments....................................................... 280,976,153 58,128,351 ------------ ----------- Cash...................................................................... -- -- Foreign cash*............................................................. -- -- Receivable for: Shares of beneficial interest sold...................................... 383,851 17,980 Dividends and interest.................................................. 5,698,377 788,486 Investments sold........................................................ 1,264,953 -- Prepaid expenses and other assets......................................... 72,869 1,525 Due from investment adviser for expense reimbursements/fee waivers........ 59,117 3,288 ------------ ----------- Total assets.............................................................. 288,455,320 58,939,630 ------------ ----------- LIABILITIES: Payable for: Shares of beneficial interest redeemed.................................. 1,981,186 16,728 Investments purchased................................................... 3,165,620 1,670,705 Interest on securities sold short....................................... 4,278 -- Investment advisory and management fees................................. 166,205 22,822 Distribution and service maintenance fees............................... 142,744 20,122 Transfer agent fees and expenses........................................ 62,587 12,388 Trustees' fees and expenses............................................. 48,372 27,795 Other accrued expenses.................................................. 123,980 64,455 Dividends payable......................................................... 406,344 38,483 Due to custodian.......................................................... 18,645 1,446,833 Securities sold short, at market value#................................... 1,150,897 -- Commitments (Note 10)..................................................... -- -- ------------ ----------- Total liabilities......................................................... 7,270,858 3,320,331 ------------ ----------- Net assets................................................................ $281,184,462 $55,619,299 ============ =========== NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value............................ $ 606,468 $ 44,470 Paid-in capital........................................................... 367,407,561 53,384,737 ------------ ----------- 368,014,029 53,429,207 Accumulated undistributed net investment income (loss).................... (2,241,803) (43,507) Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions....... (92,013,350) 197,545 Unrealized appreciation (depreciation) on investments..................... 7,428,358 2,036,054 Unrealized appreciation (depreciation) on securities sold short........... (2,772) Unrealized appreciation (depreciation) on foreign exchange transactions... -- -- ------------ ----------- Net assets................................................................ $281,184,462 $55,619,299 ============ =========== *Cost Long-term investment securities (unaffiliated).......................... $259,651,795 $50,350,739 ============ =========== Short-term securities (unaffiliated).................................... $ -- $ 5,741,558 ============ =========== Foreign cash............................................................ $ -- $ -- ============ =========== #Proceeds from securities sold short...................................... $ (1,148,125) $ ============ ===========
See Notes to Financial Statements 5 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2007 -- (unaudited) (continued)
U.S. Government Strategic Securities GNMA Bond Fund Fund Fund --------------- ------------ ------------ Class A (unlimited shares authorized): Net assets........................................................................ $160,325,678 $321,145,317 $508,419,434 Shares of beneficial interest issued and outstanding.............................. 17,378,113 29,055,300 141,410,788 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 9.23 $ 11.05 $ 3.60 Maximum sales charge (4.75% of offering price).................................... 0.46 0.55 0.18 ------------ ------------ ------------ Maximum offering price to public.................................................. $ 9.69 $ 11.60 $ 3.78 ============ ============ ============ Class B (unlimited shares authorized): Net assets........................................................................ $ 13,277,833 $ 49,408,670 $ 53,670,752 Shares of beneficial interest issued and outstanding.............................. 1,438,647 4,458,724 14,931,735 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 9.23 $ 11.08 $ 3.59 ============ ============ ============ Class C (unlimited shares authorized): Net assets........................................................................ $ 10,476,285 $ 27,386,506 $252,845,495 Shares of beneficial interest issued and outstanding.............................. 1,136,544 2,468,610 70,057,719 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 9.22 $ 11.09 $ 3.61 ============ ============ ============
High Yield Tax Exempt Bond Insured Fund Fund ------------ ----------- Class A (unlimited shares authorized): Net assets........................................................................ $159,756,141 $47,845,520 Shares of beneficial interest issued and outstanding.............................. 34,515,725 3,825,662 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 4.63 $ 12.51 Maximum sales charge (4.75% of offering price).................................... 0.23 0.62 ------------ ----------- Maximum offering price to public.................................................. $ 4.86 $ 13.13 ============ =========== Class B (unlimited shares authorized): Net assets........................................................................ $ 42,692,424 $ 3,972,170 Shares of beneficial interest issued and outstanding.............................. 9,210,861 317,604 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 4.64 $ 12.51 ============ =========== Class C (unlimited shares authorized): Net assets........................................................................ $ 78,735,897 $ 3,801,609 Shares of beneficial interest issued and outstanding.............................. 16,920,213 303,739 Net asset value, offering and redemption price per share (excluding any applicable contingent deferred sales charge)................................................ $ 4.65 $ 12.52 ============ ===========
See Notes to Financial Statements 6 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the six months ended September 30, 2007 -- (unaudited)
U.S. Government Strategic Securities GNMA Bond Fund Fund Fund --------------- ----------- ----------- INCOME: Dividend (unaffiliated).......................................................... $ -- $ -- $ 213,061 Interest (unaffiliated).......................................................... 4,659,499 10,496,243 26,080,839 ----------- ----------- ----------- Total investment income*........................................................ 4,659,499 10,496,243 26,293,900 ----------- ----------- ----------- EXPENSES: Investment advisory and management fees.......................................... 587,897 903,790 2,420,790 Distribution and service maintenance fees: Class A......................................................................... 274,464 546,219 849,195 Class B......................................................................... 68,431 263,294 273,496 Class C......................................................................... 51,843 142,836 1,189,051 Transfer agent fees: Class A......................................................................... 195,618 361,704 549,803 Class B......................................................................... 20,641 67,166 65,515 Class C......................................................................... 13,932 35,811 268,163 Registration fees: Class A......................................................................... 12,887 12,721 35,367 Class B......................................................................... 8,312 7,858 7,831 Class C......................................................................... 10,379 10,131 31,633 Custodian and accounting fees.................................................... 39,642 75,937 134,249 Reports to shareholders.......................................................... 18,360 34,873 48,040 Audit and tax fees............................................................... 20,588 20,757 21,692 Legal fees....................................................................... 5,361 5,773 10,412 Trustees' fees and expenses...................................................... 6,314 13,749 19,384 Interest expense................................................................. -- -- 1,828 Interest expense on securities sold short........................................ -- -- -- Other expenses................................................................... 8,195 10,254 12,158 ----------- ----------- ----------- Total expenses before fee waivers, expense reimbursements, and custody credits.. 1,342,864 2,512,873 5,938,607 Fees waived and expenses reimbursed by investment advisor (Note 3).............. (368,307) (301,733) -- Custody credits earned on cash balances......................................... (966) (67) (119,474) ----------- ----------- ----------- Net expenses.................................................................... 973,591 2,211,073 5,819,133 ----------- ----------- ----------- Net investment income (loss)....................................................... 3,685,908 8,285,170 20,474,767 ----------- ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)............................. (2,186,884) 400,870 (7,196,210) Net realized foreign exchange gain (loss) on other assets and liabilities.......... -- -- 6,407,798 ----------- ----------- ----------- Net realized gain (loss) on investments and foreign currencies..................... (2,186,884) 400,870 (788,412) ----------- ----------- ----------- Change in unrealized appreciation (depreciation) on investments (unaffiliated)..... 2,317,611 (869,666) (8,728,200) Change in unrealized foreign exchange gain (loss) on other assets and liabilities.. -- -- 108,417 Change in unrealized appreciation (depreciation) on securities sold short.......... -- -- -- ----------- ----------- ----------- Net unrealized gain (loss) on investments and foreign currencies................... 2,317,611 (869,666) (8,619,783) ----------- ----------- ----------- Net realized and unrealized gain (loss) on investments and foreign currencies...... 130,727 (468,796) (9,408,195) ----------- ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ 3,816,635 $ 7,816,374 $11,066,572 =========== =========== =========== - -------- *Net of foreign withholding taxes on interest and dividends of..................... $ -- $ -- $ 76,717 =========== =========== ===========
High Yield Tax Exempt Bond Insured Fund Fund ------------ ---------- INCOME: Dividend (unaffiliated).......................................................... $ 268,872 $ -- Interest (unaffiliated).......................................................... 13,586,637 1,332,226 ------------ ---------- Total investment income*........................................................ 13,855,509 1,332,226 ------------ ---------- EXPENSES: Investment advisory and management fees.......................................... 1,321,745 141,404 Distribution and service maintenance fees: Class A......................................................................... 398,646 84,268 Class B......................................................................... 236,858 23,356 Class C......................................................................... 418,243 18,688 Transfer agent fees: Class A......................................................................... 265,871 58,865 Class B......................................................................... 56,958 6,745 Class C......................................................................... 97,391 5,379 Registration fees: Class A......................................................................... 25,778 10,035 Class B......................................................................... 9,252 7,720 Class C......................................................................... 10,913 10,098 Custodian and accounting fees.................................................... 65,326 16,141 Reports to shareholders.......................................................... 29,636 3,766 Audit and tax fees............................................................... 22,014 19,263 Legal fees....................................................................... 8,074 3,804 Trustees' fees and expenses...................................................... 11,625 2,159 Interest expense................................................................. 44,361 -- Interest expense on securities sold short........................................ 97,818 -- Other expenses................................................................... 10,554 6,483 ------------ ---------- Total expenses before fee waivers, expense reimbursements, and custody credits.. 3,131,063 418,174 Fees waived and expenses reimbursed by investment advisor (Note 3).............. (257,702) (10,458) Custody credits earned on cash balances......................................... (7,590) (213) ------------ ---------- Net expenses.................................................................... 2,865,771 407,503 ------------ ---------- Net investment income (loss)....................................................... 10,989,738 924,723 ------------ ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated)............................. (5,209,297) (266,199) Net realized foreign exchange gain (loss) on other assets and liabilities.......... 7,339 -- ------------ ---------- Net realized gain (loss) on investments and foreign currencies..................... (5,201,958) (266,199) ------------ ---------- Change in unrealized appreciation (depreciation) on investments (unaffiliated)..... (9,507,185) (405,566) Change in unrealized foreign exchange gain (loss) on other assets and liabilities.. (4,510) -- Change in unrealized appreciation (depreciation) on securities sold short.......... (2,772) -- ------------ ---------- Net unrealized gain (loss) on investments and foreign currencies................... (9,514,467) (405,566) ------------ ---------- Net realized and unrealized gain (loss) on investments and foreign currencies...... (14,716,425) (671,765) ------------ ---------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ $ (3,726,687) $ 252,958 ============ ========== - -------- *Net of foreign withholding taxes on interest and dividends of..................... $ 5,210 $ -- ============ ==========
See Notes to Financial Statements 7 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS
U.S. Government Securities Fund -------------------------- For the six months ended For the year September 30, ended 2007 March 31, (unaudited) 2007 ------------- ------------ Operations: Net investment income (loss).......................................................... $ 3,685,908 $ 6,828,045 Net realized gain (loss) on investments and foreign currencies........................ (2,186,884) (68,459) Net unrealized gain (loss) on investments and foreign currencies...................... 2,317,611 1,657,175 ------------ ------------ Net increase (decrease) in net assets resulting from operations......................... 3,816,635 8,416,761 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (3,309,163) (6,264,372) Net investment income (Class B)....................................................... (244,460) (608,171) Net investment income (Class C)....................................................... (185,020) (312,901) Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (3,738,643) (7,185,444) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) 7,165,604 (3,236,594) ------------ ------------ Total increase (decrease) in net assets................................................. 7,243,596 (2,005,277) NET ASSETS: Beginning of period..................................................................... 176,836,200 178,841,477 ------------ ------------ End of period+.......................................................................... $184,079,796 $176,836,200 ============ ============ - -------- +Includes accumulated undistributed net investment income (loss)........................ $ 3,886 $ 56,621 ============ ============
See Notes to Financial Statements 8 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund ------------------------------- For the six months ended For the year September 30, ended 2007 March 31, (unaudited) 2007 ------------------ ------------ Operations: Net investment income (loss).......................................................... $ 8,285,170 $ 16,306,209 Net realized gain (loss) on investments and foreign currencies........................ 400,870 (171,039) Net unrealized gain (loss) on investments and foreign currencies...................... (869,666) 4,010,650 ------------ ------------ Net increase (decrease) in net assets resulting from operations......................... 7,816,374 20,145,820 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (6,967,662) (13,350,095) Net investment income (Class B)....................................................... (1,005,628) (2,448,583) Net investment income (Class C)....................................................... (545,349) (1,311,888) Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (8,518,639) (17,110,566) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) 304,154 (24,531,303) ------------ ------------ Total increase (decrease) in net assets................................................. (398,111) (21,496,049) NET ASSETS: Beginning of period..................................................................... 398,338,604 419,834,653 ------------ ------------ End of period+.......................................................................... $397,940,493 $398,338,604 ============ ============ - -------- +Includes accumulated undistributed net investment income (loss)........................ $ 94,434 $ 327,903 ============ ============
Strategic Bond Fund ------------------------------- For the six months ended For the year September 30, ended 2007 March 31, (unaudited) 2007 ------------------ ------------ Operations: Net investment income (loss).......................................................... $ 21,139,310 $ 25,776,555 Net realized gain (loss) on investments and foreign currencies........................ (788,412) 3,735,857 Net unrealized gain (loss) on investments and foreign currencies...................... (9,284,326) 13,298,249 ------------ ------------ Net increase (decrease) in net assets resulting from operations......................... 11,066,572 42,810,661 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)....................................................... (11,876,768) (18,128,377) Net investment income (Class B)....................................................... (1,153,076) (2,175,396) Net investment income (Class C)....................................................... (5,033,975) (6,149,737) Net realized gain on securities (Class A)............................................. -- -- Net realized gain on securities (Class B)............................................. -- -- Net realized gain on securities (Class C)............................................. -- -- ------------ ------------ Total distributions to shareholders..................................................... (18,063,819) (26,453,510) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6) 94,556,542 400,002,265 ------------ ------------ Total increase (decrease) in net assets................................................. 87,559,295 416,359,416 NET ASSETS: Beginning of period..................................................................... 727,376,386 311,016,970 ------------ ------------ End of period+.......................................................................... $814,935,681 $727,376,386 ============ ============ - -------- +Includes accumulated undistributed net investment income (loss)........................ $ 1,456,268 $ (954,680) ============ ============
See Notes to Financial Statements 9 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
High Yield Bond Fund Tax Exempt Insured Fund -------------------------- ------------------------- For the six For the six months ended For the year months ended For the year September 30, ended September 30, ended 2007 March 31, 2007 March 31, (unaudited) 2007 (unaudited) 2007 ------------- ------------ ------------- ------------ Operations: Net investment income (loss).......................... $ 14,776,873 $ 20,209,713 $ 924,723 $ 1,996,138 Net realized gain (loss) on investments and foreign currencies.......................................... (5,201,958) 6,213,051 (266,199) 481,567 Net unrealized gain (loss) on investments and foreign currencies.......................................... (13,301,602) 6,288,956 (405,566) 281,498 ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations............................................ (3,726,687) 32,711,720 252,958 2,759,203 ------------ ------------ ----------- ----------- Distributions to shareholders from: Net investment income (Class A)....................... (6,913,817) (13,055,050) (810,473) (1,775,224) Net investment income (Class B)....................... (1,281,344) (3,241,816) (55,721) (149,453) Net investment income (Class C)....................... (2,262,539) (5,181,540) (51,086) (115,967) Net realized gain on securities (Class A)............. -- -- -- (365,409) Net realized gain on securities (Class B)............. -- -- -- (39,551) Net realized gain on securities (Class C)............. -- -- -- (31,739) ------------ ------------ ----------- ----------- Total distributions to shareholders.................... (10,457,700) (21,478,406) (917,280) (2,477,343) ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from capital share transactions (Note 6)................... (84,442,347) 32,050,805 (2,836,547) (9,226,947) ------------ ------------ ----------- ----------- Total increase (decrease) in net assets................ (98,626,734) 43,284,119 (3,500,869) (8,945,087) NET ASSETS: Beginning of period.................................... 379,811,196 336,527,077 59,120,168 68,065,255 ------------ ------------ ----------- ----------- End of period+......................................... $281,184,462 $379,811,196 $55,619,299 $59,120,168 ============ ============ =========== =========== - -------- +Includes accumulated undistributed net investment income (loss)......................................... $ (2,241,803) $ (2,773,841) $ (43,507) $ (50,950) ============ ============ =========== ===========
See Notes to Financial Statements 10 SunAmerica Income Funds FINANCIAL HIGHLIGHTS
U.S. GOVERNMENT SECURITIES FUND ------------------------------- Net gain (loss) on Net investments Distributions Net Net Asset (both Dividends from net Asset Assets, Ratio of Value, Net realized Total from from net realized Total Value, end of expenses beginning investment and investment investment gains on Distri- end of Total period to average Period Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) net assets(3) - ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- ------------- Class A - - 03/31/03 $8.80 $0.37 $ 0.86 $ 1.23 $(0.40) $-- $(0.40) $9.63 14.14% $210,848 1.21% 03/31/04 9.63 0.30 0.01 0.31 (0.30) -- (0.30) 9.64 3.29 204,618 0.99 03/31/05 9.64 0.31 (0.26) 0.05 (0.32) -- (0.32) 9.37 0.61 174,905 0.99 03/31/06 9.37 0.36 (0.20) 0.16 (0.37) -- (0.37) 9.16 1.68 151,284 0.99 03/31/07 9.16 0.37 0.10 0.47 (0.39) -- (0.39) 9.24 5.25 152,239 0.99 09/30/07+ 9.24 0.19 (0.01) 0.18 (0.19) -- (0.19) 9.23 2.02 160,326 0.99(5) Class B - - 03/31/03 $8.80 $0.30 $ 0.87 $ 1.17 $(0.33) $-- $(0.33) $9.64 13.51% $ 62,595 1.76% 03/31/04 9.64 0.24 0.01 0.25 (0.24) -- (0.24) 9.65 2.62 36,605 1.64 03/31/05 9.65 0.25 (0.27) (0.02) (0.26) -- (0.26) 9.37 (0.14) 27,013 1.64 03/31/06 9.37 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.16 1.02 19,276 1.64 03/31/07 9.16 0.32 0.09 0.41 (0.33) -- (0.33) 9.24 4.57 14,716 1.64 09/30/07+ 9.24 0.16 (0.01) 0.15 (0.16) -- (0.16) 9.23 1.69 13,278 1.64(5) Class C* - - 03/31/03 $8.79 $0.30 $ 0.87 $ 1.17 $(0.33) $-- $(0.33) $9.63 13.52% $ 24,322 1.75% 03/31/04 9.63 0.24 0.01 0.25 (0.24) -- (0.24) 9.64 2.62 15,139 1.64 03/31/05 9.64 0.25 (0.27) (0.02) (0.26) -- (0.26) 9.36 (0.14) 9,945 1.64 03/31/06 9.36 0.30 (0.20) 0.10 (0.31) -- (0.31) 9.15 1.02 8,281 1.64 03/31/07 9.15 0.31 0.10 0.41 (0.33) -- (0.33) 9.23 4.57 9,881 1.64 09/30/07+ 9.23 0.16 (0.01) 0.15 (0.16) -- (0.16) 9.22 1.69 10,476 1.64(5)
- Ratio of net investment income to average Portfolio net assets(3) Turnover - ------------- --------- - - 3.88% 630%(4) 3.14 267(4) 3.26 253(4) 3.80 357 4.05 243 4.16(5) 186 - 3.20% 630%(4) 2.45 267(4) 2.61 253(4) 3.14 357 3.40 243 3.52(5) 186 - 3.18% 630%(4) 2.45 267(4) 2.61 253(4) 3.14 357 3.40 243 3.51(5) 186
- -------- * 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)Net of the following expense reimbursements, if applicable (based on average net assets):
03/31/03 03/31/04 03/31/05 03/31/06 03/31/07 09/30/07(5)+ -------- -------- -------- -------- -------- ------------ U.S. Government Securities Fund Class A. 0.21% 0.37% 0.39% 0.36% 0.38% 0.38% U.S. Government Securities Fund Class B. 0.23 0.37 0.43 0.43 0.43 0.54 U.S. Government Securities Fund Class C. 0.27 0.38 0.48 0.57 0.43 0.59
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydowns on securities and was as follows:
2003 2004 2005 ---- ---- ---- U.S. Government Securities Fund......... 614% 256% 246%
(5)Annualized See Notes to Financial Statements 11 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
GNMA FUND --------- Net gain (loss) on Net investments Distributions Net Net Asset (both Dividends from net Asset Assets, Ratio of Value, Net realized Total from from net realized Total Value, end of expenses Period beginning investment and investment investment gains on Distri- end of Total period to average Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) net assets(3) - --------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- -------- ------------- Class A - - 03/31/03 $10.77 $0.37 $ 0.93 $1.30 $(0.42) $(0.11) $(0.53) $11.54 12.29% $255,096 0.99% 03/31/04 11.54 0.28 0.07 0.35 (0.31) (0.20) (0.51) 11.38 3.06 337,467 0.99 03/31/05 11.38 0.31 (0.16) 0.15 (0.33) -- (0.33) 11.20 1.41 338,031 0.99 03/31/06 11.20 0.35 (0.07) 0.28 (0.40) (0.08) (0.48) 11.00 2.18 303,343 0.99 03/31/07 11.00 0.46 0.10 0.56 (0.48) -- (0.48) 11.08 5.23 310,508 0.99 09/30/07+ 11.08 0.24 (0.03) 0.21 (0.24) -- (0.24) 11.05 1.98 321,145 0.99(5) Class B - - 03/31/03 $10.80 $0.30 $ 0.93 $1.23 $(0.35) $(0.11) $(0.46) $11.57 11.54% $189,323 1.64% 03/31/04 11.57 0.21 0.06 0.27 (0.23) (0.20) (0.43) 11.41 2.39 136,923 1.64 03/31/05 11.41 0.24 (0.16) 0.08 (0.26) -- (0.26) 11.23 0.75 102,497 1.64 03/31/06 11.23 0.28 (0.08) 0.20 (0.33) (0.08) (0.41) 11.02 1.43 76,304 1.64 03/31/07 11.02 0.39 0.11 0.50 (0.41) -- (0.41) 11.11 4.64 57,224 1.64 09/30/07+ 11.11 0.21 (0.03) 0.18 (0.21) -- (0.21) 11.08 1.65 49,409 1.64(5) Class C* - - 03/31/03 $10.81 $0.29 $ 0.94 $1.23 $(0.35) $(0.11) $(0.46) $11.58 11.53% 137,173 1.64% 03/31/04 11.58 0.20 0.07 0.27 (0.23) (0.20) (0.43) 11.42 2.39 88,184 1.64 03/31/05 11.42 0.24 (0.16) 0.08 (0.26) -- (0.26) 11.24 0.75 54,936 1.64 03/31/06 11.24 0.28 (0.07) 0.21 (0.33) (0.08) (0.41) 11.04 1.53 40,188 1.64 03/31/07 11.04 0.40 0.10 0.50 (0.41) -- (0.41) 11.13 4.64 30,606 1.64 09/30/07+ 11.13 0.21 (0.04) 0.17 (0.21) -- (0.21) 11.09 1.56 27,387 1.64(5)
Ratio of net investment income to average Portfolio net assets(3) Turnover - ------------- --------- 3.36% 436%(4) 2.51 225(4) 2.73 204(4) 3.17 138 4.19 142 4.35(5) 159 2.71% 436%(4) 1.77 225(4) 2.10 204(4) 2.50 138 3.53 142 3.70(5) 159 2.59% 436%(4) 1.74 225(4) 2.11 204(4) 2.49 138 3.53 142 3.70(5) 159
- -------- * 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)Net of the following expense reimbursements, if applicable (based on average net assets):
03/31/03 03/31/04 03/31/05 03/31/06 03/31/07 09/30/07(5)+ -------- -------- -------- -------- -------- ------------ GNMA Fund Class A............. 0.13% 0.18% 0.17% 0.13% 0.15% 0.14% GNMA Fund Class B............. 0.14 0.16 0.18 0.17 0.18 0.19 GNMA Fund Class C............. 0.13 0.16 0.18 0.19 0.17 0.22
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydowns on securities and was as follows:
2003 2004 2005 ---- ---- ---- GNMA Fund............................... 421% 213% 204%
(5)Annualized See Notes to Financial Statements 12 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
STRATEGIC BOND FUND ------------------- Net gain (loss) on Net investments Distributions Net Net Asset (both Dividends from net Asset Assets, Ratio of Value, Net realized Total from from net realized Total Value, end of expense Period beginning investment and investment investment gains on Distri- end of Total period to average Ended of period income(1) unrealized) operations income investments butions period+ Return(2) (000's) net assets(4) - --------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ------------- Class A - - 03/31/03 $3.00 $0.20 $ 0.06 $0.26 $(0.18) $-- $(0.18) $3.08 9.07%(7) $ 37,136 1.62% 03/31/04 3.08 0.21 0.33 0.54 (0.21) -- (0.21) 3.41 18.04 43,840 1.55(3) 03/31/05 3.41 0.20 0.11 0.31 (0.23) -- (0.23) 3.49 9.36 59,279 1.40(3) 03/31/06 3.49 0.17 0.05 0.22 (0.18) -- (0.18) 3.53 6.54 167,072 1.34 03/31/07 3.53 0.16 0.12 0.28 (0.18) -- (0.18) 3.63 8.07 453,893 1.26 09/30/07+ 3.63 0.10 (0.04) 0.06 (0.09) -- (0.09) 3.60 1.63 508,419 1.28(6) Class B - - 03/31/03 $3.00 $0.18 $ 0.06 $0.24 $(0.16) $-- $(0.16) $3.08 8.36%(7) $ 27,879 2.28% 03/31/04 3.08 0.19 0.33 0.52 (0.19) -- (0.19) 3.41 17.29 36,110 2.19(3) 03/31/05 3.41 0.18 0.10 0.28 (0.21) -- (0.21) 3.48 8.35 37,250 2.05(3) 03/31/06 3.48 0.16 0.05 0.21 (0.16) -- (0.16) 3.53 6.14 46,294 2.00(3) 03/31/07 3.53 0.15 0.10 0.25 (0.15) -- (0.15) 3.63 7.36 55,728 1.94 09/30/07+ 3.63 0.09 (0.05) 0.04 (0.08) -- (0.08) 3.59 1.00 53,671 1.95(6) Class C* - - 03/31/03 $3.01 $0.19 $ 0.05 $0.24 $(0.16) $-- $(0.16) $3.09 8.47%(7) $ 14,423 2.17%(3) 03/31/04 3.09 0.19 0.34 0.53 (0.20) -- (0.20) 3.42 17.43 22,064 2.16(3) 03/31/05 3.42 0.18 0.11 0.29 (0.21) -- (0.21) 3.50 8.65 36,867 2.05(3) 03/31/06 3.50 0.15 0.05 0.20 (0.16) -- (0.16) 3.54 5.84 97,651 1.99(3) 03/31/07 3.54 0.14 0.12 0.26 (0.16) -- (0.16) 3.64 7.36 217,755 1.93 09/30/07+ 3.64 0.09 (0.04) 0.05 (0.08) -- (0.08) 3.61 1.30 252,845 1.94(6)
Ratio of net investment income to average Portfolio net assets(4) Turnover - ------------- --------- 6.93% 67%(5) 6.41(3) 71(5) 5.94(3) 190(5) 5.19 119 4.84 131 5.48(6) 65 6.26% 67%(5) 5.76(3) 71(5) 5.32(3) 190(5) 4.51(3) 119 4.17 131 4.81(6) 65 6.37%(3) 67%(5) 5.78(3) 71(5) 5.29(3) 190(5) 4.54(3) 119 4.17 131 4.82(6) 65
- -------- * 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)Net of the following expense reimbursements, if applicable (based on average net assets):
03/31/03 03/31/04 03/31/05 03/31/06 -------- -------- -------- -------- Strategic Bond Fund Class A............. -- % 0.02% 0.03% -- % Strategic Bond Fund Class B............. -- 0.02 0.02 0.00 Strategic Bond Fund Class C............. 0.11 0.02 0.03 0.00
(4)Net of custody credits of:
03/31/03 03/31/04 03/31/05 03/31/06 03/31/07 9/30/07(6)+ -------- -------- -------- -------- -------- ----------- Strategic Bond Fund..................... 0.01% 0.02% 0.01% 0.07% 0.05% 0.03%
(5)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydowns on securities and was as follows:
2003 2004 2005 - ---- ---- ---- Strategic Bond Fund 65% 69% 188%
(6)Annualized (7)Total return for each class was increased by less than 0.01% from reimbursements for losses realized on the disposal of investments in violation of investment restrictions. See Notes to Financial Statements 13 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
HIGH YIELD BOND FUND -------------------- Net gain (loss) on Net investments Distributions Net Asset (both Dividends from net Asset Net Assets, Ratio of Value, Net realized Total from from net realized Total Value, end of expense Period beginning investment and investment investment gains on Distri- end of Total period to average Ended of period income(1) unrealized) operations income investment butions period Return(2) (000's) net assets - -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ----------- ---------- Class A - - 03/31/03 $4.13 $0.37 $(0.49) $(0.12) $(0.35) $-- $(0.35) $3.66 (2.54)% $ 66,521 1.56% 03/31/04 3.66 0.33 0.60 0.93 (0.36) -- (0.36) 4.23 26.05 93,818 1.49 03/31/05 4.23 0.33 0.21 0.54 (0.34) -- (0.34) 4.43 13.26 101,661 1.38(3) 03/31/06 4.43 0.31 0.19 0.50 (0.33) -- (0.33) 4.60 11.61 214,041 1.36(3)(5) 03/31/07 4.60 0.30 0.19 0.49 (0.32) -- (0.32) 4.77 11.01 241,554 1.36(3) 09/30/07+ 4.77 0.16 (0.16) 0.00 (0.14) -- (0.14) 4.63 0.05 159,756 1.36(3)(6) Class B - - 03/31/03 $4.13 $0.35 $(0.49) $(0.14) $(0.33) $-- $(0.33) $3.66 (3.06)% $ 57,596 2.18% 03/31/04 3.66 0.31 0.60 0.91 (0.33) -- (0.33) 4.24 25.55 73,751 2.14 03/31/05 4.24 0.31 0.20 0.51 (0.31) -- (0.31) 4.44 12.57 61,961 2.03(3) 03/31/06 4.44 0.31 0.16 0.47 (0.30) -- (0.30) 4.61 10.88 52,346 2.01(3)(5) 03/31/07 4.61 0.27 0.19 0.46 (0.29) -- (0.29) 4.78 10.29 51,479 2.01(3) 09/30/07+ 4.78 0.14 (0.15) (0.01) (0.13) -- (0.13) 4.64 (0.27) 42,692 2.01(3)(6) Class C* - - 03/31/03 $4.15 $0.34 $(0.48) $(0.14) $(0.33) $-- $(0.33) $3.68 (2.97)% $ 27,814 2.15%(3) 03/31/04 3.68 0.30 0.60 0.90 (0.33) -- (0.33) 4.25 25.14 52,868 2.11(3) 03/31/05 4.25 0.30 0.22 0.52 (0.31) -- (0.31) 4.46 12.77 65,385 2.03(3) 03/31/06 4.46 0.30 0.17 0.47 (0.30) -- (0.30) 4.63 10.86 70,140 2.01(3)(5) 03/31/07 4.63 0.27 0.19 0.46 (0.29) -- (0.29) 4.80 10.27 86,777 2.01(3) 09/30/07+ 4.80 0.13 (0.15) (0.02) (0.13) -- (0.13) 4.65 (0.47) 78,736 2.01(3)(6)
Ratio of net investment income to average Portfolio net assets Turnover - ---------- --------- 10.26% 117%(4) 8.15 126(4) 7.59(3) 85(4) 7.20(3)(5) 91 6.44(3) 86 6.37(3)(6) 39 9.63% 117%(4) 7.52 126(4) 7.04(3) 85(4) 6.71(3)(5) 91 5.82(3) 86 5.73(3)(6) 39 9.67%(3) 117%(4) 7.53(3) 126(4) 6.97(3) 85(4) 6.67(3)(5) 91 5.80(3) 86 5.68(3)(6) 39
- -------- * 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)Net of the following expense reimbursements, if applicable (based on average net assets):
03/31/03 03/31/04 03/31/05 03/31/06 03/31/07 09/30/07(6)+ -------- -------- -------- -------- -------- ------------ High Yield Bond Fund Class A............ -- % -- % 0.08% 0.11% 0.09% 0.14% High Yield Bond Fund Class B............ -- -- 0.07 0.14 0.11 0.17 High Yield Bond Fund Class C............ 0.10 0.01 0.09 0.12 0.10 0.15
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydown on securities and was as follows:
2003 2004 2005 ---- ---- ---- High Yield Bond Fund 117% 126% 85%
(5)Net of custody credits of 0.01%. (6)Annualized See Notes to Financial Statements 14 SunAmerica Income Funds FINANCIAL HIGHLIGHTS -- (continued)
TAX EXEMPT INSURED FUND ----------------------- Net gain (loss) on Net investments Distributions Net Net Asset (both Dividends from net Asset Assets, Ratio of Value, Net realized Total from from net realized Total Value, end of expenses beginning investment and investment investment gains on Distri- end of Total period to average Period Ended of period income(1) unrealized) operations income investments butions period Return(2) (000's) net assets - ------------ --------- ---------- ----------- ---------- ---------- ------------- ------- ------ --------- ------- ---------- Class A - - 03/31/03 $12.72 $0.41 $ 0.73 $1.14 $(0.43) $(0.09) $(0.52) $13.34 9.08% $78,358 1.24% 03/31/04 13.34 0.39 0.24 0.63 (0.37) (0.44) (0.81) 13.16 4.86 69,098 1.26 03/31/05 13.16 0.41 (0.18) 0.23 (0.41) (0.17) (0.58) 12.81 1.83 62,032 1.25 03/31/06 12.81 0.41 (0.10) 0.31 (0.40) (0.13) (0.53) 12.59 2.43 56,875 1.30 03/31/07 12.59 0.42 0.15 0.57 (0.42) (0.09) (0.51) 12.65 4.63 50,036 1.27 09/30/07+ 12.65 0.21 (0.14) 0.07 (0.21) -- (0.21) 12.51 0.57 47,846 1.32(4) Class B - - 03/31/03 $12.72 $0.32 $ 0.73 $1.05 $(0.34) $(0.09) $(0.43) $13.34 8.30% $19,031 1.97% 03/31/04 13.34 0.30 0.23 0.53 (0.27) (0.44) (0.71) 13.16 4.10 16,632 1.96 03/31/05 13.16 0.33 (0.18) 0.15 (0.32) (0.17) (0.49) 12.82 1.21 9,000 1.94 03/31/06 12.82 0.32 (0.09) 0.23 (0.32) (0.13) (0.45) 12.60 1.77 6,694 1.95 03/31/07 12.60 0.31 0.15 0.46 (0.32) (0.09) (0.41) 12.65 3.72 5,093 2.11 09/30/07+ 12.65 0.16 (0.15) 0.01 (0.15) -- (0.15) 12.51 0.07 3,972 2.30(4) Class C* - - 03/31/03 $12.72 $0.31 $ 0.74 $1.05 $(0.34) $(0.09) $(0.43) $13.34 8.32% $ 6,451 1.95%(3) 03/31/04 13.34 0.30 0.24 0.54 (0.28) (0.44) (0.72) 13.16 4.14 5,803 1.95(3) 03/31/05 13.16 0.32 (0.18) 0.14 (0.32) (0.17) (0.49) 12.81 1.12 5,701 1.95(3) 03/31/06 12.81 0.32 (0.09) 0.23 (0.32) (0.13) (0.45) 12.59 1.81 4,497 1.95(3) 03/31/07 12.59 0.33 0.17 0.50 (0.34) (0.09) (0.43) 12.66 3.98 3,991 1.95(3) 09/30/07+ 12.66 0.17 (0.14) 0.03 (0.17) -- (0.17) 12.52 0.25 3,802 1.95(3)(4)
Ratio of net investment income to average Portfolio net assets Turnover - ---------- --------- 3.12% 195% 2.90 131 3.14 153 3.14 81 3.28 84 3.39(4) 27 2.39% 195% 2.20 131 2.44 153 2.48 81 2.44 84 2.41(4) 27 2.40%(3) 195% 2.21(3) 131 2.44(3) 153 2.48(3) 81 2.60(3) 84 2.76(3)(4) 27
- -------- * 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)Net of the following expense reimbursements, if applicable (based on average net assets):
03/31/03 03/31/04 03/31/05 03/31/06 03/31/07 09/30/07(4)+ -------- -------- -------- -------- -------- ------------ Tax Exempt Insured Fund Class C......... 0.00% 0.12% 0.09% 0.20% 0.09% 0.56%
(4)Annualized. See Notes to Financial Statements 15 SunAmerica U.S. Government Securities Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) Industry Allocation* Government National Mtg. Assoc. 42.2% United States Treasury Notes... 21.7 Repurchase Agreements.......... 16.1 United States Treasury Bonds... 12.4 Finance -- Other Services...... 5.5 Small Business Administration.. 0.9 Federal Farm Credit Bank....... 0.7 Federal National Mtg. Assoc.... 0.2 ---- 99.7% ====
Credit Quality+# Government -- Agency.. 52.5% Government -- Treasury 40.9 AA.................... 6.6 ----- 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. 16 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited)
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- U.S. GOVERNMENT AGENCIES -- 49.5% Federal Farm Credit Bank -- 0.7% 5.64% due 04/04/11................... $ 500,000 $ 519,402 6.00% due 03/07/11................... 200,000 209,648 6.30% due 12/03/13(1)................ 500,000 540,647 ----------- 1,269,697 ----------- Federal Home Loan Mtg. Corp. -- 0.0% 8.00% due 06/01/08................... 436 437 ----------- Federal National Mtg. Assoc. -- 0.2% 6.53% due 05/25/30................... 354,553 353,706 8.00% due 01/01/23................... 33,286 35,174 11.00% due 02/01/15.................. 31 35 11.50% due 09/01/19.................. 8,969 9,956 ----------- 398,871 ----------- Finance-Other Services -- 5.5% Private Export Funding Corp. 5.87% due 07/31/08................... 10,000,000 10,097,060 ----------- Government National Mtg. Assoc. -- 42.2% 4.50% due 05/15/18................... 885,323 856,504 4.50% due 08/15/18................... 1,384,217 1,339,158 4.50% due 09/15/18................... 4,115,076 3,981,123 4.50% due 10/15/18................... 4,086,236 3,953,222 4.50% due 09/15/33................... 4,622,102 4,346,406 5.00% due 04/15/18................... 4,088,970 4,028,229 5.00% due 04/15/33................... 27,525 26,675 5.00% due 08/15/33................... 1,791,375 1,736,054 5.00% due 09/15/33................... 823,375 797,947 5.00% due 10/15/33................... 577,818 559,974 5.00% due 04/15/34................... 28,071 27,192 5.00% due 11/15/34................... 200,196 193,922 5.00% due 02/15/35................... 25,900 25,075 5.00% due 03/15/35................... 505,049 488,963 5.00% due 04/15/35................... 62,756 60,757 5.00% due 05/15/35................... 2,136,008 2,067,973 5.00% due 09/15/35................... 971,511 940,567 5.00% due 10/15/35................... 153,297 148,414 5.00% due 12/15/35................... 96,128 93,066 5.00% due 03/15/36................... 891,483 862,582 5.00% due 05/15/36................... 1,394,852 1,349,633 5.00% due 06/15/36................... 944,917 914,284 5.00% due 09/15/36................... 2,115,260 2,046,277 5.00% due 10/15/36................... 504,313 487,964 5.00% due 11/15/36................... 54,517 52,750 5.00% due 12/15/36................... 401,957 388,926 5.00% due 01/15/37................... 4,619,152 4,468,482 5.00% due 02/15/37................... 2,108,322 2,039,551 5.00% due 03/15/37................... 1,702,028 1,646,510 5.00% due 04/15/37................... 1,812,502 1,753,381 5.50% due 11/15/32................... 14,141 13,966 5.50% due 03/15/33................... 444,045 438,470 5.50% due 04/15/33................... 527,305 520,685 5.50% due 05/15/33................... 1,232,672 1,217,196 5.50% due 06/15/33................... 5,839,625 5,766,314 5.50% due 07/15/33................... 1,569,428 1,549,725 5.50% due 10/15/33................... 1,603,139 1,583,013
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- Government National Mtg. Assoc. (continued) 5.50% due 12/15/33...................... $ 336,833 $ 332,604 5.50% due 01/15/34...................... 3,449,861 3,405,394 5.50% due 02/15/34...................... 1,952,722 1,927,553 6.00% due 01/15/28...................... 2,408 2,432 6.00% due 04/15/28...................... 1,255,000 1,268,134 6.00% due 05/15/28...................... 1,366 1,380 6.00% due 10/15/28...................... 3,567 3,602 6.00% due 03/15/29...................... 56,961 57,510 6.00% due 04/15/29...................... 43,761 44,183 6.00% due 05/15/29...................... 69,987 70,662 6.00% due 06/15/29...................... 27,787 28,054 6.00% due 04/15/31...................... 24,247 24,472 6.00% due 05/15/31...................... 45,381 45,801 6.00% due 11/15/31...................... 165,897 167,434 6.00% due 12/15/31...................... 340,588 343,741 6.00% due 01/15/32...................... 159,697 161,076 6.00% due 02/15/32...................... 39,413 39,754 6.00% due 03/15/32...................... 8,396 8,469 6.00% due 08/15/32...................... 256,146 258,358 6.00% due 11/15/32...................... 37,172 37,493 6.00% due 12/15/32...................... 9,422 9,503 6.00% due 01/15/33...................... 18,238 18,388 6.00% due 02/15/33...................... 55,028 55,482 6.00% due 03/15/33...................... 80,114 80,776 6.00% due 04/15/33...................... 319,524 322,162 6.00% due 07/15/33...................... 234,609 236,546 6.00% due 08/15/33...................... 2,349,924 2,370,672 6.00% due 09/15/33...................... 327,958 330,666 6.00% due 10/15/33...................... 1,329,310 1,340,291 6.00% due 11/15/33...................... 147,039 148,252 6.00% due 12/15/33...................... 690,686 696,388 6.00% due 02/15/34...................... 322,247 324,668 6.00% due 05/15/34...................... 42,220 42,537 6.00% due 06/15/34...................... 42,219 42,536 6.00% due 07/15/34...................... 1,413,945 1,424,568 6.00% due 08/15/34...................... 170,518 171,800 6.00% due 09/15/34...................... 1,186,536 1,195,451 6.00% due 10/15/34...................... 4,413,486 4,446,648 6.00% due 12/15/34...................... 314,329 316,691 6.00% due 06/15/35...................... 267,303 269,128 6.00% due 08/15/35...................... 315,047 317,198 6.50% due 02/15/29...................... 14,143 14,504 6.50% due 05/15/31...................... 10,931 11,204 6.50% due 06/15/31...................... 64,206 65,807 6.50% due 07/15/31...................... 36,291 37,195 6.50% due 08/15/31...................... 73,725 75,563 6.50% due 09/15/31...................... 188,354 193,049 6.50% due 10/15/31...................... 284,569 291,663 6.50% due 11/15/31...................... 12,678 12,994 6.50% due 12/15/31...................... 19,020 19,494 6.50% due 01/15/32...................... 30,302 31,043 6.50% due 02/15/32...................... 508,240 520,657 6.50% due 06/15/32...................... 50,908 52,152 7.00% due 07/15/23...................... 30,487 31,976 7.00% due 10/15/23...................... 44,683 46,865 7.00% due 09/15/25...................... 216,352 227,017 7.00% due 03/20/29...................... 16,261 16,989
17 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Government National Mtg. Assoc. (continued) 7.00% due 06/20/29...................... $ 2,681 $ 2,801 7.00% due 11/20/30...................... 67,787 70,798 7.50% due 04/15/17...................... 10,213 10,676 7.50% due 08/15/23...................... 178,471 187,349 7.50% due 09/15/23...................... 530,809 557,217 7.50% due 10/15/23...................... 16,371 17,185 8.00% due 02/15/08...................... 37 38 9.00% due 12/15/16...................... 56,161 60,215 11.00% due 08/20/15..................... 127 142 11.00% due 09/20/15..................... 393 440 11.50% due 05/20/15..................... 3,572 4,063 12.50% due 09/15/14..................... 5,069 5,755 13.00% due 01/15/11..................... 1,330 1,491 13.00% due 02/15/11..................... 2,198 2,464 13.00% due 03/15/11..................... 160 179 13.00% due 04/15/11..................... 386 433 13.00% due 09/15/13..................... 4,525 5,137 13.00% due 10/20/14..................... 1,025 1,154 13.00% due 11/15/14..................... 651 743 13.00% due 02/20/15..................... 608 684 13.50% due 02/15/13..................... 8,112 9,296 15.00% due 01/15/12..................... 368 427 15.00% due 02/15/12..................... 930 1,079 15.00% due 06/15/12..................... 9,892 11,483 15.00% due 09/15/12..................... 562 653 15.50% due 09/15/11..................... 29,961 34,662 ------------ 77,794,123 ------------ Small Business Administration -- 0.9% 6.30% due 06/01/18...................... 1,575,042 1,615,109 ------------ Total U.S. Government Agencies (cost $92,712,093)...................... 91,175,297 ------------ U.S. GOVERNMENT TREASURIES -- 34.1% United States Treasury Bonds -- 12.4% 5.00% due 05/15/37...................... 4,000,000 4,103,124 4.75% due 02/15/37...................... 19,000,000 18,737,268 ------------ 22,840,392 ------------ United States Treasury Notes -- 21.7% 4.50% due 05/15/17...................... 34,000,000 33,808,750 5.13% due 06/30/08...................... 6,000,000 6,042,654 ------------ 39,851,404 ------------ Total U.S. Government Treasuries (cost $60,419,651)...................... 62,691,796 ------------ Total Long-Term Investment Securities (cost $153,131,744)..................... 153,867,093 ------------
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- REPURCHASE AGREEMENT -- 16.1% UBS Securities, LLC Joint Repurchase Agreement(2) (cost $29,653,000).................. $29,653,000 $ 29,653,000 ------------ TOTAL INVESTMENTS (cost $182,784,744)(3).............. 99.7% 183,520,093 Other assets less liabilities.......... 0.3 559,703 ----------- ------------ NET ASSETS 100.0% $184,079,796 =========== ============
- -------- (1) Collateralized Mortgage Obligation (2) See Note 2 for details of Joint Repurchase Agreements. (3) See Note 5 for cost of investments on a tax basis. See Notes to Financial Statements 18 SunAmerica GNMA Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) Industry Allocation* Government National Mtg. Assoc. 87.7% Repurchase Agreements.......... 10.6 United States Treasury Notes... 6.3 United States Treasury Bonds... 4.8 Federal National Mtg. Assoc.... 0.4 Small Business Administration.. 0.1 ----- 109.9% =====
Credit Quality+# Government -- Agency.. 88.8% Government -- Treasury 11.2% ----- 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. 19 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------------ U.S. GOVERNMENT AGENCIES -- 88.2% Federal National Mtg. Assoc. -- 0.4% Federal National Mtg. Assoc. Series 2005 -- 20 5.00% due 01/25/18(1)......................... $ 1,588,903 $ 1,585,641 ----------- Government National Mtg. Assoc. -- 87.7% 4.50% due 05/15/18............................ 1,770,647 1,713,009 4.50% due 08/15/18............................ 891,274 862,261 4.50% due 09/15/18............................ 3,088,710 2,988,167 4.50% due 10/15/18............................ 4,771,978 4,616,641 4.50% due 08/15/33............................ 2,683,041 2,523,005 4.50% due 09/15/33............................ 3,347,203 3,147,552 5.00% due 03/15/18............................ 547,717 539,581 5.00% due 04/15/18............................ 6,477,117 6,380,898 5.00% due 05/15/18............................ 9,200,358 9,063,692 5.00% due 01/15/33............................ 17,774 17,225 5.00% due 05/15/33............................ 12,113 11,744 5.00% due 08/15/33............................ 2,711,838 2,628,091 5.00% due 09/15/33............................ 2,530,271 2,452,131 5.00% due 10/15/33............................ 5,813,402 5,633,874 5.00% due 04/15/34............................ 53,603 51,923 5.00% due 05/15/34............................ 152,352 147,578 5.00% due 11/15/34............................ 684,958 663,493 5.00% due 12/15/34............................ 673,455 652,351 5.00% due 09/15/35............................ 21,174 20,499 5.00% due 10/15/35............................ 131,675 127,481 5.00% due 11/15/35............................ 130,751 126,587 5.00% due 12/15/35............................ 69,858 67,633 5.00% due 02/15/36............................ 163,580 158,277 5.00% due 04/15/36............................ 517,443 500,669 5.00% due 06/15/36............................ 1,542,015 1,492,026 5.00% due 07/15/36............................ 491,762 475,820 5.00% due 08/15/36............................ 26,447 25,590 5.00% due 09/15/36............................ 911,730 881,907 5.00% due 10/15/36............................ 26,336 25,483 5.00% due 11/15/36............................ 487,505 471,701 5.00% due 12/15/36............................ 1,304,080 1,261,804 5.00% due 01/15/37............................ 827,695 800,697 5.00% due 02/15/37............................ 889,933 860,905 5.00% due 04/15/37............................ 10,056,889 9,728,849 5.50% due 06/15/29............................ 5,660 5,596 5.50% due 01/15/32............................ 44,868 44,312 5.50% due 12/15/32............................ 719,936 711,021 5.50% due 01/15/33............................ 471,868 465,944 5.50% due 02/15/33............................ 1,869,918 1,846,443 5.50% due 03/15/33............................ 1,068,789 1,055,372 5.50% due 04/15/33............................ 5,791,927 5,719,214 5.50% due 05/15/33............................ 6,783,687 6,698,523 5.50% due 06/15/33............................ 7,496,786 7,402,773 5.50% due 07/15/33............................ 384,009 379,188 5.50% due 08/15/33............................ 2,319,140 2,290,025 5.50% due 09/15/33............................ 381,999 377,204 5.50% due 10/15/33............................ 6,245,874 6,167,462 5.50% due 12/15/33............................ 7,166,834 7,076,860 5.50% due 01/15/34............................ 9,505,749 9,383,224 5.50% due 02/15/34............................ 1,278,583 1,262,102 5.50% due 04/15/35............................ 2,181,715 2,152,703 5.50% due 07/15/35............................ 2,461,699 2,428,964 5.50% due 09/15/35............................ 24,716,499 24,387,822
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- Government National Mtg. Assoc. (continued) 5.50% due 10/15/35...................... $15,928,459 $ 15,716,644 5.50% due 11/15/35...................... 30,667,645 30,259,831 5.50% due 12/15/35...................... 18,783,478 18,533,698 5.50% due 02/15/36...................... 2,614,417 2,578,340 5.50% due 03/15/36...................... 10,159,645 10,019,449 5.50% due 04/15/36...................... 447,055 440,886 5.50% due 05/15/36...................... 3,308,042 3,262,395 6.00% due 11/15/23...................... 3,935 3,980 6.00% due 01/15/24...................... 5,503 5,565 6.00% due 07/15/28...................... 5,101 5,152 6.00% due 11/15/28...................... 297,727 300,685 6.00% due 12/15/28...................... 298,720 301,688 6.00% due 01/15/29...................... 626,005 632,039 6.00% due 02/15/29...................... 746,731 753,929 6.00% due 03/15/29...................... 553,478 558,815 6.00% due 04/15/29...................... 1,446,334 1,460,329 6.00% due 05/15/29...................... 70,607 71,288 6.00% due 06/15/29...................... 610,163 616,072 6.00% due 07/15/29...................... 170,736 172,382 6.00% due 08/15/29...................... 20,184 20,379 6.00% due 10/15/29...................... 104,905 105,916 6.00% due 04/15/31...................... 16,649 16,803 6.00% due 07/15/31...................... 15,185 15,326 6.00% due 10/15/31...................... 83,918 84,695 6.00% due 11/15/31...................... 1,385,415 1,398,242 6.00% due 12/15/31...................... 581,832 587,220 6.00% due 01/15/32...................... 658,719 664,408 6.00% due 02/15/32...................... 50,868 51,307 6.00% due 03/15/32...................... 434,192 437,942 6.00% due 07/15/32...................... 108,315 109,250 6.00% due 08/15/32...................... 1,564,134 1,578,367 6.00% due 09/15/32...................... 1,046,514 1,055,552 6.00% due 10/15/32...................... 202,843 204,595 6.00% due 11/15/32...................... 6,211 6,265 6.00% due 12/15/32...................... 169,282 170,744 6.00% due 01/15/33...................... 1,514,111 1,526,612 6.00% due 02/15/33...................... 1,638,649 1,652,178 6.00% due 03/15/33...................... 1,191,900 1,201,742 6.00% due 04/15/33...................... 1,289,957 1,300,607 6.00% due 05/15/33...................... 1,365,215 1,376,485 6.00% due 06/15/33...................... 1,000,800 1,009,061 6.00% due 08/15/33...................... 1,566,078 1,579,180 6.00% due 10/15/33...................... 481,525 485,501 6.00% due 11/15/33...................... 1,606,140 1,619,406 6.00% due 12/15/33...................... 3,117,194 3,142,928 6.00% due 01/15/34...................... 1,577,537 1,589,391 6.00% due 02/15/34...................... 10,170,476 10,246,892 6.00% due 03/15/34...................... 305,077 307,369 6.00% due 04/15/34...................... 3,547,402 3,574,057 6.00% due 05/15/34...................... 263,799 265,782 6.00% due 06/15/34...................... 316,984 319,365 6.00% due 07/15/34...................... 3,480,524 3,506,676 6.00% due 08/15/34...................... 5,040,191 5,077,955 6.00% due 09/15/34...................... 249,285 251,149 6.00% due 10/15/34...................... 696,080 701,310 6.00% due 11/15/34...................... 1,654,341 1,666,771
20 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Government National Mtg. Assoc. (continued) 6.00% due 12/15/34...................... $ 58,621 $ 59,061 6.00% due 01/15/35...................... 96,778 97,440 6.00% due 02/15/35...................... 1,003,909 1,010,762 6.00% due 04/15/35...................... 59,880 60,289 6.00% due 05/15/35...................... 117,296 118,097 6.00% due 06/15/35...................... 423,910 426,803 6.00% due 11/15/35...................... 22,016 22,166 6.00% due 12/15/35...................... 1,525,346 1,535,349 6.00% due 01/15/36...................... 1,037,528 1,044,265 6.00% due 02/15/36...................... 1,910,184 1,922,587 6.00% due 03/15/36...................... 1,788,468 1,800,080 6.00% due 04/15/36...................... 5,217,187 5,251,061 6.00% due 05/15/36...................... 6,002,723 6,041,698 6.00% due 06/15/36...................... 3,124,335 3,144,621 6.00% due 07/15/36...................... 1,660,392 1,671,173 6.00% due 08/15/36...................... 23,195 23,351 6.00% due 09/15/36...................... 240,334 241,894 6.00% due 10/15/36...................... 1,743,587 1,755,093 6.00% due 11/15/36...................... 2,730,049 2,747,774 6.00% due October TBA................... 40,000,000 40,250,000 6.50% due 03/15/28...................... 24,443 25,100 6.50% due 08/15/28...................... 39,166 40,190 6.50% due 12/15/28...................... 695 713 6.50% due 01/15/29...................... 4,454 4,568 6.50% due 02/15/29...................... 1,543 1,583 6.50% due 03/15/29...................... 110,229 113,047 6.50% due 04/15/29...................... 1,764 1,809 6.50% due 05/15/29...................... 12,061 12,375 6.50% due 06/15/29...................... 38,054 39,027 6.50% due 07/15/29...................... 4,571 4,688 6.50% due 10/15/29...................... 3,467 3,555 6.50% due 08/15/31...................... 236,359 242,252 6.50% due 09/15/31...................... 17,513 17,949 6.50% due 10/15/31...................... 284,569 291,663 6.50% due 11/15/31...................... 149,428 153,153 6.50% due 12/15/31...................... 179,159 183,625 6.50% due 02/15/32...................... 220,470 225,857 6.50% due 05/15/32...................... 1,373,472 1,407,028 6.50% due 06/15/32...................... 119,794 122,720 7.00% due 03/15/23...................... 89,655 94,033 7.00% due 01/20/24...................... 613 641 7.00% due 03/20/24...................... 633 662 7.00% due 07/20/25...................... 3,429 3,587 7.00% due 09/15/25...................... 93,957 98,589 7.00% due 01/20/29...................... 37,712 39,400 7.00% due 02/20/29...................... 7,202 7,524 7.00% due 06/20/29...................... 13,296 13,892 7.00% due 07/20/29...................... 50,342 52,596 7.00% due 09/20/29...................... 4,982 5,206 7.00% due 10/20/29...................... 10,321 10,784 7.00% due 11/20/29...................... 3,359 3,509 7.00% due 03/20/30...................... 4,804 5,018 7.00% due 06/20/30...................... 7,603 7,941 7.00% due 08/20/30...................... 28,047 29,293 7.00% due 09/20/30...................... 25,353 26,479 7.00% due 10/20/30...................... 29,737 31,057
Market Principal Value Security Description Amount (Note 2) ----------------------------------------------------------------- Government National Mtg. Assoc. (continued) 8.00% due 11/15/26.................. $ 166,042 $ 176,550 8.00% due 12/15/29.................. 16,154 17,179 8.00% due 04/15/30.................. 34,161 36,342 8.00% due 05/15/30.................. 5,512 5,864 8.00% due 08/15/30.................. 42,584 45,302 8.50% due 03/15/17.................. 16,003 17,182 8.50% due 05/15/21.................. 50,010 53,939 8.50% due 12/15/22.................. 44,920 48,501 8.50% due 01/15/23.................. 114,238 123,456 8.50% due 09/15/24.................. 31,490 34,058 9.00% due 07/15/16.................. 62,017 66,492 9.00% due 10/15/16.................. 5,485 5,881 ------------ 348,749,914 ------------ Small Business Administration -- 0.1% 6.30% due 06/01/18................... 525,014 538,370 ------------ Total U.S. Government Agencies (cost $354,909,630)................. 350,873,925 ------------ U.S. GOVERNMENT TREASURIES --11.1% United States Treasury Bonds -- 4.8% 4.75% due 02/15/37................... 14,000,000 13,806,408 5.00% due 05/15/37................... 5,000,000 5,128,905 ------------ 18,935,313 ------------ United States Treasury Notes -- 6.3% 4.50% due 05/15/17................... 5,000,000 4,971,875 4.75% due 08/15/17................... 10,000,000 10,134,380 5.13% due 06/30/08................... 10,000,000 10,071,090 ------------ 25,177,345 ------------ Total U.S. Government Treasuries (cost $43,020,159).................. 44,112,658 ------------ Total Long-Term Investment Securities (cost $397,929,789)................. 394,986,583 ------------ REPURCHASE AGREEMENT -- 10.6% UBS Securities, LLC Joint Repurchase Agreement(2) (cost $42,227,000).................. 42,227,000 42,227,000 ------------ TOTAL INVESTMENTS (cost $440,156,789) (3).............. 109.9% 437,213,583 Liabilities in excess of other assets.. (9.9) (39,273,090) ----------- ------------ NET ASSETS 100.0% $397,940,493 =========== ============
- -------- (1) Collateralized Mortgage Obligation (2) See Note 2 for details of Joint Repurchase Agreements. (3) See Note 5 for cost of investments on a tax basis. TBA --Securities purchased on a forward commitment basis with an approximate principal amount and no definite maturity date. The actual principal and maturity date will be determined upon settlement date. See Notes to Financial Statements 21 SunAmerica Strategic Bond Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) Industry Allocation* Foreign Government Agencies........... 32.3% Federal National Mtg. Assoc........... 9.6 Diversified Financial Services........ 4.7 Federal Home Loan Mtg. Corp........... 4.7 United States Treasury Notes.......... 2.2 Oil Companies-Exploration & Production 2.1 Telephone-Integrated.................. 2.1 Time Deposits......................... 2.1 Special Purpose Entities.............. 1.6 Medical-Hospitals..................... 1.5 Cable TV.............................. 1.4 Cellular Telecom...................... 1.4 Independent Power Producers........... 1.3 Pipelines............................. 1.3 Chemicals-Specialty................... 1.1 Electric-Integrated................... 1.1 Finance-Auto Loans.................... 1.1 Electronic Components-Semiconductors.. 0.9 Auto-Cars/Light Trucks................ 0.8 Medical-Drugs......................... 0.8 Banks-Commercial...................... 0.7 Casino Hotels......................... 0.7 Finance-Investment Banker/Broker...... 0.7 Repurchase Agreements................. 0.7 Telecom Services...................... 0.7 Television............................ 0.7 Transport-Air Freight................. 0.7 Containers-Metal/Glass................ 0.6 Electric-Generation................... 0.6 Metal-Diversified..................... 0.6 Multimedia............................ 0.6 Satellite Telecom..................... 0.6 Paper & Related Products.............. 0.5 Retail-Drug Store..................... 0.5 Agricultural Chemicals................ 0.4 Airlines.............................. 0.4 Building & Construction Products-Misc. 0.4 Containers-Paper/Plastic.............. 0.4 Finance-Mortgage Loan/Banker.......... 0.4 Gambling (Non-Hotel).................. 0.4 Medical Products...................... 0.4 Office Automation & Equipment......... 0.4 Real Estate Investment Trusts......... 0.4 Savings & Loans/Thrifts............... 0.4 Steel-Producers....................... 0.4 Theaters.............................. 0.4 United States Treasury Bonds.......... 0.4 Banks-Super Regional.................. 0.3 Broadcast Services/Program............ 0.3 Chemicals-Diversified................. 0.3 Computer Services..................... 0.3 Diversified Manufacturing Operations.. 0.3 Food-Meat Products.................... 0.3 Investment Management/Advisor Services 0.3 Non-Hazardous Waste Disposal.......... 0.3 Oil Companies-Integrated.............. 0.3 Oil-Field Services.................... 0.3 Recycling............................. 0.3 Rental Auto/Equipment................. 0.3 Transport-Rail........................ 0.3
Transport-Services................... 0.3% Aerospace/Defense-Equipment.......... 0.2 Auto/Truck Parts & Equipment-Original 0.2 Banks-Money Center................... 0.2 Consumer Products-Misc............... 0.2 Distribution/Wholesale............... 0.2 Energy-Alternate Sources............. 0.2 Food-Misc............................ 0.2 Funeral Services & Related Items..... 0.2 Medical-HMO.......................... 0.2 Metal Processors & Fabrication....... 0.2 Printing-Commercial.................. 0.2 Publishing-Periodicals............... 0.2 Advertising Services................. 0.1 Applications Software................ 0.1 Brewery.............................. 0.1 Building Products-Wood............... 0.1 Building-Residential/Commercial...... 0.1 Commercial Services-Finance.......... 0.1 Computers............................ 0.1 Computers-Memory Devices............. 0.1 Cosmetics & Toiletries............... 0.1 Data Processing/Management........... 0.1 Direct Marketing..................... 0.1 Electronic Components-Misc........... 0.1 Electronics-Military................. 0.1 Federal Home Loan Bank............... 0.1 Finance-Consumer Loans............... 0.1 Finance-Credit Card.................. 0.1 Food-Retail.......................... 0.1 Golf................................. 0.1 Home Furnishings..................... 0.1 Hotels/Motels........................ 0.1 Insurance Brokers.................... 0.1 Insurance-Multi-line................. 0.1 Insurance-Property/Casualty.......... 0.1 Leisure Products..................... 0.1 Machinery-Farming.................... 0.1 Medical Information Systems.......... 0.1 Medical-Nursing Homes................ 0.1 Metal-Aluminum....................... 0.1 Oil Refining & Marketing............. 0.1 Physicians Practice Management....... 0.1 Poultry.............................. 0.1 Research & Development............... 0.1 Retail-Discount...................... 0.1 Retail-Petroleum Products............ 0.1 Retail-Restaurants................... 0.1 Rubber-Tires......................... 0.1 Storage/Warehousing.................. 0.1 Transactional Software............... 0.1 Transport-Marine..................... 0.1 Transport-Truck...................... 0.1 Travel Services...................... 0.1 ---- 98.9% ====
- -------- * Calculated as a percentage of net assets 22 SunAmerica Strategic Bond Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) (continued) Country Allocation* United States. 61.1% Brazil........ 3.9 Canada........ 3.6 Australia..... 2.4 Norway........ 2.1 Japan......... 2.0 United Kingdom 1.9 Philippines... 1.7 Russia........ 1.7 Venezuela..... 1.7 Argentina..... 1.6 Sweden........ 1.6 Germany....... 1.5 Turkey........ 1.4 Mexico........ 1.1 Colombia...... 0.9 Cayman Islands 0.7 Denmark....... 0.7 France........ 0.7 Luxembourg.... 0.7 Ukraine....... 0.7 Uruguay....... 0.7 Bermuda....... 0.6 Indonesia..... 0.6 Peru.......... 0.6 Belgium....... 0.4 Spain......... 0.4 Ecuador....... 0.3 Greece........ 0.3 Egypt......... 0.2 Ireland....... 0.2 Netherlands... 0.2 Panama........ 0.2 Poland........ 0.2 South Africa.. 0.2 Pakistan...... 0.1 ---- 98.9% ====
- -------- * Calculated as a percentage of net assets Credit Quality+# Government -- Treasury 2.7% Government -- Agency.. 15.0 AAA................... 17.2 AA.................... 2.9 A..................... 5.2 BBB................... 10.4 BB.................... 19.1 B..................... 16.3 CCC................... 8.9 Below C............... 0.8 Not Rated@............ 1.5 ----- 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. 23 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- ASSET BACKED SECURITIES -- 4.3% Diversified Financial Services -- 4.3% Banc of America Funding Corp., Series 2007-C, Class 5A1 5.37% due 05/20/36(1)......................... $1,590,878 $1,582,153 Banc of America Funding Corp., Series 2006-J, Class 2A1 5.89% due 01/20/47(1)(2)...................... 1,596,849 1,618,817 Bear Stearns Commercial Mtg. Securities, Inc., Series 2007-PW15, Class A2 5.21% due 02/11/44(1)......................... 825,000 818,790 Bear Stearns Commercial Mtg. Securities, Inc., Series 2006-PW12, Class G 5.75% due 09/11/38*(1)........................ 59,000 49,633 Bear Stearns Commercial Mtg. Securities, Inc., Series 2007-PW15, Class H 5.93% due 02/11/44*(1)(2)..................... 1,250,000 930,190 Bear Stearns Commercial Mtg. Securities, Inc., Series 2006-PW12, Class F 5.93% due 09/11/38*(1)(2)..................... 345,000 304,939 Chase Mtg. Finance Corp. Series 2007-A2, Class 1A1 4.56% due 07/25/37(2)......................... 3,246,857 3,228,166 Commercial Mtg. Pass Through Certificates, Series 2004-LB2A, Class A3 4.22% due 03/10/39(1)......................... 86,000 84,223 Commercial Mtg. Pass Through Certificates, Series 2004-LB4A, Class A3, 4.41% due 10/15/37(1)......................... 1,500,000 1,470,019 Commercial Mtg. Pass Through Certificates Series CN2A, Class A2FL 5.99% due 02/05/19*(1)(2)..................... 1,575,000 1,552,024 Countrywide Asset-Backed Certificates, Series 2006-S6, Class A3 5.66% due 03/25/34............................ 1,596,000 1,565,746 Countrywide Asset-Backed Certificates Series 2006-S4, Class A3 5.80% due 10/25/36............................ 2,800,000 2,762,750 CS First Boston Mtg. Securities Corp. Series 2002-CKN2, Class A3 6.13% due 04/15/37(1)......................... 2,250,000 2,331,611 Deutsche ALT-A Securities, Inc. Alternate Loan Trust, Series 2006-AB2, Class A5A, 6.09% due 06/25/36(1)......................... 600,000 575,707 JP Morgan Chase Commercial Mtg. Securities Corp., Series 2006-CB16, Class E 5.84% due 05/12/45*(1)........................ 445,000 447,554 LB-UBS Commercial Mtg. Trust, Series 2007-C6, Class AM 6.11% due 07/17/40(1)......................... 6,600,000 6,719,330 LB-UBS Commercial Mtg. Trust, Series 2007-C6, Class B 6.45% due 07/17/40(1)(2)...................... 675,000 671,026 Merrill Lynch Mtg. Investors Trust, Series 2004-A1, Class 3A 4.84% due 02/25/34(1)(2)...................... 1,022,844 1,013,377
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------- Diversified Financial Services (continued) Merrill Lynch/ Countrywide Commercial Mtg. Trust, Series 2007-5, Class H 6.12% due 08/25/48*(1)(3)................. $ 595,000 $ 453,864 Morgan Stanley Capital I, Series 2006-IQ12, Class D 5.53% due 12/15/43(1)..................... 715,000 668,110 Ocwen Advance Receivables Backed Notes, Series 2006-1A 5.34% due 11/24/15*(3).................... 830,000 705,500 Wachovia Bank Commercial Mtg. Trust, Series 2006-WL7A, Class F 6.09% due 09/15/21*(1)(2)................. 1,525,000 1,501,002 Wells Fargo Mtg. Backed Securities Trust, Series 2006-AR17, Class A2 5.84% due 10/25/36(1)(2).................. 3,105,848 3,136,060 Wells Fargo Mtg. Backed Securities Trust, Series 2006-AR12, Class 2A1 6.10% due 09/25/36(1)(2).................. 724,283 733,013 ----------- Total Asset Backed Securities (cost $35,503,069)........................ 34,923,604 ----------- CONVERTIBLE BONDS & NOTES -- 0.1% Electronic Components-Semiconductors -- 0.1% Advanced Micro Devices, Inc. Senior Notes 6.00% due 05/01/15*....................... 50,000 44,937 Spansion, Inc. Senior Sub. Notes 2.25% due 06/15/16*....................... 800,000 599,000 ----------- 643,937 ----------- Medical Instruments -- 0.0% Kyphon, Inc. Senior Notes 1.25% due 02/01/14*....................... 75,000 97,875 ----------- Medical-Biomedical/Gene -- 0.0% Nektar Therapeutics Sub. Notes 3.25% due 09/28/12........................ 125,000 107,188 ----------- Telecom Services -- 0.0% ICO North America, Inc. Notes 7.50% due 08/15/09(3)(4)(5)............... 265,000 257,050 ----------- Total Convertible Bonds & Notes (cost $1,211,240)......................... 1,106,050 ----------- CORPORATE BONDS & NOTES -- 35.2% Advertising Services -- 0.1% R.H. Donnelley Corp. Senior Notes 6.88% due 01/15/13........................ 400,000 378,000 R.H. Donnelley Corp. Senior Notes 8.88% due 10/15/17*....................... 375,000 380,625 ----------- 758,625 -----------
24 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Aerospace/Defense-Equipment -- 0.2% United Technologies Corp. Senior Notes 6.10% due 05/15/12.............. $1,314,000 $1,369,001 ---------- Agricultural Chemicals -- 0.4% Mosaic Global Holdings, Inc. Debentures 7.38% due 08/01/18.............. 320,000 310,400 The Mosaic Co. Senior Notes 7.38% due 12/01/14*............. 1,895,000 1,989,750 The Mosaic Co. Senior Notes 7.63% due 12/01/16*............. 605,000 645,081 ---------- 2,945,231 ---------- Airlines -- 0.4% American Airlines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.82% due 05/23/11.............. 1,675,000 1,633,125 Continental Airlines, Inc. Pass Through Certs., Series 1991, Class A 6.55% due 02/02/19.............. 656,117 660,218 Continental Airlines, Inc. Pass Through Certs. Series 2000-2, Class B 8.31% due 04/02/18.............. 62,681 62,524 Delta Air Lines, Inc. Pass Through Certs. Series 2000-1, Class A-2 7.57% due 11/18/10.............. 275,000 282,047 Northwest Airlines, Inc. Pass Through Certs. Series 2002-1 Class G2 6.26% due 11/20/21.............. 283,968 280,063 United Air Lines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.20% due 09/01/08.............. 77,189 76,996 ---------- 2,994,973 ---------- Applications Software -- 0.1% SS&C Technologies, Inc. Company Guar. Notes 11.75% due 12/01/13............. 530,000 561,800 ---------- Auto-Cars/Light Trucks -- 0.8% DaimlerChrysler NA Holding Corp. Company Guar. Notes 6.05% due 03/13/09(6)........... 240,000 238,424 Ford Motor Co. Debentures 6.38% due 02/01/29.............. 3,515,000 2,583,525 General Motors Corp. Debentures 8.25% due 07/15/23.............. 1,930,000 1,688,750
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- Auto-Cars/Light Trucks (continued) General Motors Corp. Senior Bonds 8.38% due 07/15/33........................... $2,340,000 $2,050,425 ---------- 6,561,124 ---------- Auto/Truck Parts & Equipment-Original -- 0.2% Lear Corp. Senior Notes 8.75% due 12/01/16........................... 800,000 752,000 Visteon Corp. Senior Notes 8.25% due 08/01/10........................... 610,000 536,800 ---------- 1,288,800 ---------- Auto/Truck Parts & Equipment-Replacement -- 0.0% Exide Corp. Notes 10.00% due 03/15/25+(3)(5)................... 225,000 0 ---------- Banks-Commercial -- 0.4% American Express Centurion Bank Notes 6.00% due 09/13/17........................... 240,000 238,791 Colonial Bank NA Sub. Notes 6.38% due 12/01/15........................... 451,000 445,531 Compass Bank Notes 5.50% due 04/01/20........................... 430,000 410,901 Compass Bank Sub. Notes 6.40% due 10/01/17........................... 560,000 556,686 Popular North America, Inc. Company Guar. Notes 5.65% due 04/15/09........................... 135,000 136,070 Silicon Valley Bank Senior Notes 5.70% due 06/01/12........................... 398,000 397,154 SouthTrust Bank Sub. Notes 4.75% due 03/01/13........................... 340,000 332,737 SouthTrust Corp. Sub. Notes 5.80% due 06/15/14........................... 470,000 470,405 Union Bank of California NA Sub. Notes 5.95% due 05/11/16........................... 330,000 327,569 ---------- 3,315,844 ---------- Banks-Super Regional -- 0.3% Banc One Corp. Sub. Debentures 8.00% due 04/29/27........................... 135,000 159,072 Capital One Financial Corp. Senior Notes 5.70% due 09/15/11........................... 813,000 814,350 Capital One Financial Corp. Senior Notes 6.75% due 09/15/17........................... 443,000 453,604
25 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Banks-Super Regional (continued) JPMorgan Chase Bank NA Sub. Notes 6.00% due 10/01/17......................... $ 660,000 $ 666,398 JPMorgan Chase Bank NA Sub. Notes 6.13% due 11/01/08......................... 198,000 199,407 ---------- 2,292,831 ---------- Beverages-Non-alcoholic -- 0.0% Cott Beverages USA Inc. Company Guar. Notes 8.00% due 12/15/11......................... 350,000 344,750 ---------- Beverages-Wine/Spirits -- 0.0% Constellation Brands, Inc. Senior Notes 7.25% due 05/15/17*........................ 125,000 125,000 ---------- Brewery -- 0.1% Anheuser-Busch Cos., Inc. Bonds 6.00% due 11/01/41......................... 871,000 829,804 ---------- Broadcast Services/Program -- 0.2% Fisher Communications, Inc. Senior Notes 8.63% due 09/15/14......................... 1,290,000 1,335,150 Nexstar Finance, Inc. Senior Sub. Notes 7.00% due 01/15/14......................... 650,000 624,000 ---------- 1,959,150 ---------- Building & Construction Products-Misc. -- 0.4% Associated Materials, Inc. Senior Sub. Notes 9.75% due 04/15/12......................... 965,000 979,475 Dayton Superior Corp. Senior Sec. Notes 10.75% due 09/15/08........................ 1,040,000 1,045,200 Interline Brands, Inc. Senior Sub. Notes 8.13% due 06/15/14......................... 770,000 760,375 NTK Holdings, Inc. Senior Notes 10.75% due 03/01/14(7)..................... 650,000 399,750 ---------- 3,184,800 ---------- Building Products-Air & Heating -- 0.0% American Standard, Inc. Company Guar. Notes 7.38% due 02/01/08......................... 347,000 348,647 ---------- Building Products-Wood -- 0.1% Masonite Corp. Company Guar. Notes 11.00% due 04/06/15........................ 688,000 581,360 ---------- Building-Residential/Commercial -- 0.1% Centex Corp. Senior Notes 5.45% due 08/15/12......................... 250,000 228,256
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- Building-Residential/Commercial (continued) D.R. Horton, Inc. Company Guar. Notes 5.00% due 01/15/09......................... $ 266,000 $ 255,822 ----------- 484,078 ----------- Cable TV -- 1.4% Cablevision Systems Corp. Senior Notes 8.00% due 04/15/12......................... 810,000 785,700 CCH I LLC Company Guar. Notes 11.00% due 10/01/15........................ 2,402,000 2,462,050 CCH II LLC/CCH II Capital Corp. Senior Notes, Series B 10.25% due 09/15/10........................ 115,000 119,600 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 10.25% due 10/01/13........................ 4,117,000 4,291,972 CCO Holdings LLC/CCO Holdings Capital Corp. Senior Notes 8.75% due 11/15/13......................... 460,000 462,300 Comcast Corp. Company Guar. Notes 5.85% due 11/15/15......................... 310,000 307,434 Comcast Corp. Company Guar. Notes 5.88% due 02/15/18......................... 1,074,000 1,056,430 CSC Holdings, Inc. Senior Notes 7.63% due 04/01/11......................... 625,000 626,563 Insight Communications Co., Inc. Senior Notes 12.25% due 02/15/11(7)..................... 900,000 929,250 ----------- 11,041,299 ----------- Casino Hotels -- 0.7% Circus & Eldorado Joint Venture Mtg. Notes 10.13% due 03/01/12........................ 575,000 599,437 Eldorado Casino Corp. (Shreveport) Sec. Bonds 10.00% due 08/01/12(5)(8).................. 946,489 955,954 Eldorado Resorts LLC Senior Notes 9.00% due 04/15/14(3)(5)................... 425,000 425,000 MGM Mirage, Inc. Senior Notes 5.88% due 02/27/14......................... 1,600,000 1,474,000 Station Casinos, Inc. Senior Sub. Notes 6.63% due 03/15/18......................... 600,000 502,500 Station Casinos, Inc. Senior Sub. Notes 6.88% due 03/01/16......................... 355,000 308,850 Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 12/15/10*........................ 425,000 433,500
26 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Casino Hotels (continued) Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 09/15/14*................... $ 800,000 $ 828,000 ---------- 5,527,241 ---------- Cellular Telecom -- 0.9% American Cellular Corp. Senior Notes 10.00% due 08/01/11................... 296,000 309,320 Centennial Communications Corp. Senior Notes 10.00% due 01/01/13................... 736,000 778,320 Centennial Communications Corp. Senior Notes 10.13% due 06/15/13................... 100,000 106,000 Centennial Communications Corp. Senior Notes 11.11% due 01/01/13(6)................ 1,020,000 1,050,600 Cingular Wireless Services, Inc. Senior Notes 7.88% due 03/01/11.................... 1,406,000 1,521,306 Cricket Communications, Inc. Company Guar. Notes 9.38% due 11/01/14.................... 275,000 279,125 Cricket Communications, Inc. Company Guar. Notes 9.38% due 11/01/14*................... 825,000 837,375 MetroPCS Wireless, Inc. Senior Notes 9.25% due 11/01/14*................... 1,075,000 1,096,500 Nextel Communications, Inc. Company Guar. Notes 5.95% due 03/15/14.................... 600,000 572,826 Rural Cellular Corp. Senior Sub. Notes 8.62% due 06/01/13*(6)................ 850,000 871,250 Rural Cellular Corp. Senior Notes 11.11% due 11/01/12(6)................ 275,000 280,500 ---------- 7,703,122 ---------- Chemicals-Diversified -- 0.3% Lyondell Chemical Co. Company Guar. Notes 6.88% due 06/15/17.................... 825,000 895,125 Lyondell Chemical Co. Company Guar. Notes 8.00% due 09/15/14.................... 1,100,000 1,210,000 Rohm & Haas Co. Notes 6.00% due 09/15/17.................... 310,000 310,902 ---------- 2,416,027 ----------
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Chemicals-Specialty -- 1.1% Huntsman International LLC Senior Sub. Notes 7.38% due 01/01/15................... $1,380,000 $1,442,100 Huntsman International LLC Company Guar. Notes 7.88% due 11/15/14................... 1,355,000 1,443,075 JohnsonDiversey Holdings, Inc. Company Guar. Notes 9.63% due 05/15/12................... 525,000 532,875 Lubrizol Corp. Senior Notes 4.63% due 10/01/09................... 1,300,000 1,289,380 Momentive Performance Materials, Inc. Senior Sub. Notes 11.50% due 12/01/16*................. 2,520,000 2,494,800 Tronox Worldwide LLC Company Guar. Notes 9.50% due 12/01/12................... 1,760,000 1,755,600 ---------- 8,957,830 ---------- Commercial Services-Finance -- 0.1% The Western Union Co. Senior Notes 5.40% due 11/17/11................... 672,000 670,729 ---------- Computer Services -- 0.3% Compucom Systems, Inc. Senior Notes 12.00% due 11/01/14*................. 575,000 724,500 Compucom Systems, Inc. Senior Sub. Notes 12.50% due 10/01/15*................. 1,225,000 1,194,375 Computer Sciences Corp. Notes 3.50% due 04/15/08................... 150,000 148,014 Sungard Data Systems, Inc. Company Guar. Notes 9.13% due 08/15/13................... 485,000 504,400 ---------- 2,571,289 ---------- Computers -- 0.1% International Business Machines Corp. Senior Notes 5.70% due 09/14/17................... 650,000 653,405 ---------- Computers-Integrated Systems -- 0.0% Activant Solutions, Inc. Company Guar. Notes 9.50% due 05/01/16................... 225,000 198,000 ---------- Consumer Products-Misc. -- 0.2% American Achievement Corp. Senior Sub. Notes 8.25% due 04/01/12................... 406,000 403,970 Jostens Holding Corp. Senior Notes 10.25% due 12/01/13(7)............... 458,000 425,940 Prestige Brands, Inc. Senior Sub. Notes 9.25% due 04/15/12................... 325,000 328,250
27 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Consumer Products-Misc. (continued) Visant Holding Corp. Senior Notes 8.75% due 12/01/13....................... $ 125,000 $ 127,812 ---------- 1,285,972 ---------- Containers-Metal/Glass -- 0.4% Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23....................... 1,510,000 1,479,800 Owens-Brockway Glass Container, Inc. Company Guar. Notes 8.25% due 05/15/13....................... 1,633,000 1,690,155 Owens-Brockway Glass Container, Inc. Company Guar. Notes 8.88% due 02/15/09....................... 218,000 221,270 ---------- 3,391,225 ---------- Containers-Paper/Plastic -- 0.4% Jefferson Smurfit Corp. Company Guar. Notes 8.25% due 10/01/12....................... 520,000 521,300 Pliant Corp. Company Guar. Notes 11.13% due 09/01/09...................... 1,080,000 972,000 Smurfit-Stone Container Enterprises, Inc. Senior Notes 8.00% due 03/15/17....................... 1,630,000 1,601,475 ---------- 3,094,775 ---------- Cosmetics & Toiletries -- 0.1% Revlon Consumer Products Corp. Senior Sub. Notes 8.63% due 02/01/08....................... 700,000 689,500 Revlon Consumer Products Corp. Senior Notes 9.50% due 04/01/11....................... 150,000 142,500 ---------- 832,000 ---------- Data Processing/Management -- 0.1% Seitel, Inc. Senior Notes 9.75% due 02/15/14....................... 620,000 585,900 ---------- Direct Marketing -- 0.1% Affinity Group, Inc. Senior Sub. Notes 9.00% due 02/15/12....................... 1,114,000 1,136,280 ---------- Distribution/Wholesale -- 0.2% Varietal Distribution, Inc. Senior Notes 10.25% due 07/15/15*..................... 1,350,000 1,269,000 ---------- Diversified Financial Services -- 0.1% AXA Financial, Inc. Senior Notes 6.50% due 04/01/08....................... 210,000 211,165 General Electric Capital Corp. Senior Notes 5.63% due 09/15/17....................... 323,000 322,912
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Diversified Financial Services (continued) General Electric Capital Corp. Notes 6.75% due 03/15/32............................ $279,000 $ 307,171 ---------- 841,248 ---------- Diversified Manufacturing Operations -- 0.2% Harland Clarke Holdings Corp. Notes 9.50% due 05/15/15............................ 525,000 468,563 Harland Clarke Holdings Corp. Notes 10.31% due 05/15/15(6)........................ 425,000 378,781 Indalex Holding Corp. Sec. Notes 11.50% due 02/01/14........................... 625,000 587,500 ---------- 1,434,844 ---------- Diversified Operations -- 0.0% Capmark Financial Group, Inc. Company Guar. Notes 5.88% due 05/10/12*........................... 255,000 232,235 ---------- Electric-Generation -- 0.6% Bruce Mansfield Unit Trust Pass Through Certs. 6.85% due 06/01/34............................ 649,000 650,548 Edison Mission Energy Senior Notes 7.20% due 05/15/19*........................... 475,000 467,875 Edison Mission Energy Senior Notes 7.50% due 06/15/13............................ 425,000 435,625 Edison Mission Energy Senior Notes 7.63% due 05/15/27*........................... 950,000 916,750 Edison Mission Energy Senior Notes 7.75% due 06/15/16............................ 775,000 802,125 Reliant Energy Mid-Atlantic Power Holdings LLC Pass Through Certs. Series B 9.24% due 07/02/17............................ 143,337 154,088 The AES Corp. Sec. Notes 8.75% due 05/15/13*........................... 935,000 978,244 The AES Corp. Senior Notes 8.88% due 02/15/11............................ 550,000 574,062 ---------- 4,979,317 ---------- Electric-Integrated -- 1.0% Centerpoint Energy, Inc. Senior Notes 5.88% due 06/01/08............................ 150,000 149,856 Commonwealth Edison Co. 1st Mtg. Bonds 5.90% due 03/15/36............................ 505,000 472,848
28 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Electric-Integrated (continued) Commonwealth Edison Co. 1st Mtg. Bonds 5.95% due 08/15/16....................... $1,290,000 $1,285,591 Commonwealth Edison Co. 1st Mtg. Notes 6.15% due 09/15/17....................... 288,000 289,712 Consumers Energy Co. 1st Mtg. Bonds Series C 4.25% due 04/15/08....................... 180,000 178,728 Dominion Resources, Inc. Senior Notes 5.69% due 05/15/08(7).................... 176,000 176,077 Dominion Resources, Inc. Jr. Sub. Notes 6.30% due 09/30/11(9).................... 374,000 370,540 Duke Energy Corp. Senior Notes 4.20% due 10/01/08....................... 305,000 301,906 Duke Energy Indiana, Inc. Debentures 5.00% due 09/15/13....................... 200,000 192,243 Entergy Louisiana LLC 1st Mtg. Bonds 5.83% due 11/01/10....................... 195,000 195,402 Mackinaw Power LLC Secured Notes 6.30% due 10/31/23*...................... 671,000 686,610 Mirant Americas Generation LLC Senior Notes 8.30% due 05/01/11....................... 1,975,000 1,994,750 Mirant Americas Generation LLC Senior Notes 8.50% due 10/01/21....................... 505,000 481,013 Nisource Finance Corp. Company Guar. Notes 5.25% due 09/15/17....................... 180,000 167,061 Pepco Holdings, Inc. Senior Notes 6.45% due 08/15/12....................... 940,000 978,940 PSEG Power LLC Company Guar. Notes 7.75% due 04/15/11....................... 50,000 53,539 Puget Sound Energy, Inc. Senior Notes 5.20% due 10/01/15....................... 433,000 414,375 Southern California Edison Co. 1st Mtg. Bonds 5.75% due 04/01/35....................... 80,000 76,105 Southern Energy, Inc. Notes 7.90% due 07/15/09*+(3)(4)(5)............ 1,550,000 0 ---------- 8,465,296 ---------- Electronic Components-Semiconductors -- 0.7% Advanced Micro Devices, Inc. Senior Notes 7.75% due 11/01/12....................... 515,000 473,800 Amkor Technology, Inc. Senior Notes 9.25% due 06/01/16....................... 1,390,000 1,403,900
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Electronic Components-Semiconductors (continued) Freescale Semiconductor, Inc. Senior Notes 9.13% due 12/15/14...................... $ 975,000 $ 901,875 Freescale Semiconductor, Inc. Senior Sub. Notes 10.13% due 12/15/16..................... 1,905,000 1,771,650 National Semiconductor Corp. Senior Notes 6.60% due 06/15/17...................... 590,000 604,354 Spansion, Inc. Senior Notes 11.25% due 01/15/16*.................... 305,000 298,900 ---------- 5,454,479 ---------- Electronics-Military -- 0.1% L-3 Communications Corp. Company Guar. Notes 6.13% due 07/15/13...................... 825,000 810,562 L-3 Communications Corp. Company Guar. Notes 6.38% due 10/15/15...................... 175,000 171,938 ---------- 982,500 ---------- Energy-Alternate Sources -- 0.2% Aventine Renewable Energy Holdings, Inc. Notes 10.00% due 04/01/17..................... 715,000 647,075 VeraSun Energy Corp. Senior Notes 9.38% due 06/01/17*..................... 300,000 258,000 VeraSun Energy Corp. Sec. Notes 9.88% due 12/15/12...................... 510,000 515,100 ---------- 1,420,175 ---------- Finance-Auto Loans -- 1.1% Ford Motor Credit Co. LLC Senior Notes 5.80% due 01/12/09...................... 58,000 56,020 Ford Motor Credit Co. LLC Notes 7.38% due 10/28/09...................... 5,115,000 5,015,549 Ford Motor Credit Co. LLC Notes 7.88% due 06/15/10...................... 1,000,000 977,524 General Motors Acceptance Corp. Senior Notes 6.00% due 12/15/11...................... 500,000 461,489 General Motors Acceptance Corp. Notes 6.88% due 09/15/11...................... 1,480,000 1,408,463 General Motors Acceptance Corp. Notes 6.88% due 08/28/12...................... 30,000 28,140 General Motors Acceptance Corp. Notes 7.82% due 12/01/14(6)................... 945,000 871,194 ---------- 8,818,379 ----------
29 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Finance-Commercial -- 0.0% Transamerica Finance Corp. Senior Notes 6.40% due 09/15/08................... $ 36,000 $ 36,360 ---------- Finance-Consumer Loans -- 0.1% John Deere Capital Corp. Debentures 5.10% due 01/15/13................... 1,030,000 1,014,201 ---------- Finance-Credit Card -- 0.1% Capital One Bank Senior Sub. Notes 6.50% due 06/13/13................... 1,091,000 1,105,789 ---------- Finance-Investment Banker/Broker -- 0.7% Citigroup, Inc. Senior Notes 5.88% due 05/29/37................... 280,000 269,899 Goldman Sachs Group, Inc. Sub. Notes 6.45% due 05/01/36................... 310,000 302,480 JPMorgan Chase & Co. Senior Notes 5.38% due 01/15/14................... 520,000 516,540 Lehman Brothers Holdings, Inc. Notes 5.50% due 04/04/16................... 1,040,000 980,824 Lehman Brothers Holdings, Inc. Sub. Notes 6.50% due 07/19/17................... 315,000 319,233 Lehman Brothers Holdings, Inc. Sub. Notes 6.88% due 07/17/37................... 437,000 433,492 Lehman Brothers Holdings, Inc. Senior Notes 7.00% due 09/27/27................... 381,000 390,101 Morgan Stanley Senior Notes 5.75% due 08/31/12................... 620,000 621,049 The Bear Stearns Cos., Inc. Senior Notes 6.40% due 10/02/17................... 1,240,000 1,234,491 The Goldman Sachs Group, Inc. Sub. Notes 6.75% due 10/01/37................... 551,000 554,537 ---------- 5,622,646 ---------- Finance-Mortgage Loan/Banker -- 0.3% Countrywide Financial Corp. Company Guar. Notes 5.80% due 06/07/12................... 58,000 54,362 Countrywide Financial Corp. Sub. Notes 6.25% due 05/15/16................... 346,000 313,118 Countrywide Home Loans, Inc. Notes 4.13% due 09/15/09................... 90,000 82,718 Residential Capital LLC Senior Notes 7.50% due 06/01/12................... 828,000 670,680 Residential Capital LLC Company Guar. Notes 7.50% due 04/17/13................... 532,000 429,590
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- Finance-Mortgage Loan/Banker (continued) Residential Capital LLC Company Guar. Notes 7.88% due 06/30/15..................... $ 924,000 $ 746,130 ---------- 2,296,598 ---------- Food-Meat Products -- 0.1% Smithfield Foods, Inc. Senior Notes 7.00% due 08/01/11..................... 150,000 151,875 Smithfield Foods, Inc. Senior Notes 7.75% due 07/01/17..................... 750,000 768,750 ---------- 920,625 ---------- Food-Misc. -- 0.2% Del Monte Corp. Company Guar. Notes 6.75% due 02/15/15..................... 425,000 408,000 Kraft Foods, Inc. Senior Notes 7.00% due 08/11/37..................... 671,000 703,934 Wornick Co. Sec. Notes 10.88% due 07/15/11+(14)............... 600,000 420,000 ---------- 1,531,934 ---------- Food-Retail -- 0.0% The Kroger Co. Company Guar. Notes 6.40% due 08/15/17..................... 155,000 158,050 ---------- Funeral Services & Related Items -- 0.2% Service Corp. International Senior Notes 6.75% due 04/01/16..................... 1,225,000 1,186,719 Service Corp. International Senior Notes 7.00% due 06/15/17..................... 185,000 181,763 Service Corp. International Senior Notes 7.38% due 10/01/14..................... 225,000 231,187 Service Corp. International Senior Notes 7.63% due 10/01/18..................... 200,000 207,500 ---------- 1,807,169 ---------- Gambling (Non-Hotel) -- 0.4% Downstream Development Authority Senior Notes 12.00% due 10/15/15*................... 900,000 909,000 Greektown Holdings LLC Senior Notes 10.75% due 12/01/13*................... 960,000 950,400 Jacobs Entertainment, Inc. Company Guar. Bonds 9.75% due 06/15/14..................... 650,000 646,750 Shingle Springs Tribal Gaming Authority Senior Notes 9.38% due 06/15/15*.................... 275,000 277,750
30 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Gambling (Non-Hotel) (continued) Waterford Gaming LLC Senior Notes 8.63% due 09/15/14....................... $ 675,000 $ 695,250 ----------- 3,479,150 ----------- Golf -- 0.1% True Temper Sports, Inc. Company Guar. Notes 8.38% due 09/15/11....................... 895,000 492,250 ----------- Home Furnishings -- 0.1% Simmons Co. Senior Notes 10.00% due 12/15/14(7)................... 1,529,000 1,219,377 ----------- Hotels/Motels -- 0.1% Gaylord Entertainment Co. Company Guar. Notes 6.75% due 11/15/14....................... 695,000 667,200 Hilton Hotels Corp. Senior Notes 7.20% due 12/15/09....................... 68,000 71,768 Starwood Hotels & Resorts Worldwide, Inc. Senior Notes 6.25% due 02/15/13....................... 310,000 311,132 ----------- 1,050,100 ----------- Human Resources -- 0.0% Team Health, Inc. Company Guar. Notes 11.25% due 12/01/13...................... 225,000 238,500 ----------- Independent Power Producers -- 1.3% Calpine Corp. Sec. Notes 8.75% due 07/15/13*(10).................. 5,578,000 6,080,020 NRG Energy, Inc. Company Guar. Notes 7.38% due 02/01/16....................... 2,550,000 2,556,375 Orion Power Holdings, Inc. Senior Notes 12.00% due 05/01/10...................... 100,000 109,500 Reliant Energy, Inc. Senior Notes 7.63% due 12/31/14....................... 525,000 528,938 Reliant Energy, Inc Senior Notes 7.88% due 12/31/17....................... 950,000 955,937 ----------- 10,230,770 ----------- Insurance Brokers -- 0.1% Marsh & McLennan Cos., Inc. Senior Notes 5.15% due 09/15/10....................... 200,000 199,300 Marsh & McLennan Cos., Inc. Senior Notes 7.13% due 06/15/09....................... 170,000 175,756 USI Holdings Corp. Senior Notes 9.43% due 11/15/14*(6)................... 525,000 498,750
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- Insurance Brokers (continued) USI Holdings Corp. Senior Sub. Notes 9.75% due 05/15/15*.............. $ 300,000 $ 269,250 ---------- 1,143,056 ---------- Insurance-Life/Health -- 0.0% Americo Life, Inc. Notes 7.88% due 05/01/13*.............. 38,000 38,809 Monumental Global Funding II Notes 5.65% due 07/14/11*.............. 174,000 178,118 ---------- 216,927 ---------- Insurance-Property/Casualty -- 0.1% The Travelers Cos., Inc. Senior Notes 6.25% due 06/15/37............... 460,000 443,713 ---------- Investment Management/Advisor Services -- 0.3% Ameriprise Financial, Inc. Senior Notes 5.35% due 11/15/10............... 81,000 81,532 LVB Acquisition Merger Sub, Inc. Senior Notes 10.38% due 10/15/17*............. 575,000 555,594 LVB Acquisition Merger Sub, Inc. Senior Sub. Notes 11.63% due 10/15/17*............. 850,000 824,500 LVB Acquisition Merger, Inc. Senior Notes 10.00% due 10/15/17*............. 625,000 625,000 ---------- 2,086,626 ---------- Machinery-Farming -- 0.1% Case Corp. Notes 7.25% due 01/15/16............... 680,000 703,800 Case New Holland, Inc. Senior Notes 6.00% due 06/01/09............... 325,000 322,563 ---------- 1,026,363 ---------- Medical Information Systems -- 0.1% Spheris, Inc. Senior Sub. Notes 11.00% due 12/15/12.............. 1,025,000 1,025,000 ---------- Medical Products -- 0.4% Baxter International, Inc. Senior Notes 5.90% due 09/01/16............... 1,001,000 1,009,213 ReAble Therapeutics Finance LLC Company Guar. Notes 11.75% due 11/15/14.............. 1,040,000 988,000 Universal Hospital Services, Inc. Sec. Bonds 8.50% due 06/01/15*.............. 500,000 495,000
31 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Medical Products (continued) Universal Hospital Services, Inc. Sec. Notes 8.76% due 06/01/15*(6).................... $ 575,000 $ 572,125 ----------- 3,064,338 ----------- Medical-Drugs -- 0.3% American Home Products Corp. Notes 6.95% due 03/15/11........................ 361,000 378,346 Schering-Plough Corp. Senior Notes 6.00% due 09/15/17........................ 650,000 652,921 Wyeth Bonds 5.50% due 02/01/14........................ 1,074,000 1,067,990 ----------- 2,099,257 ----------- Medical-HMO -- 0.2% Coventry Health Care, Inc. Senior Notes 5.95% due 03/15/17........................ 202,000 195,342 Multiplan, Inc. Senior Sub. Notes 10.38% due 04/15/16*...................... 1,205,000 1,205,000 WellPoint, Inc. Notes 3.75% due 12/14/07........................ 633,184 630,881 ----------- 2,031,223 ----------- Medical-Hospitals -- 1.5% Community Health Systems, Inc. Senior Notes 8.88% due 07/15/15*....................... 3,585,000 3,683,587 HCA, Inc. Senior Notes 6.25% due 02/15/13........................ 945,000 836,325 HCA, Inc. Sec. Notes 9.13% due 11/15/14*....................... 965,000 1,018,075 HCA, Inc. Sec. Notes 9.25% due 11/15/16*....................... 4,865,000 5,169,062 HCA, Inc. Sec. Notes 9.63% due 11/15/16*....................... 455,000 485,713 IASIS Healthcare LLC / IASIS Capital Corp. Bank Guar. Notes 8.75% due 06/15/14........................ 1,185,000 1,199,813 ----------- 12,392,575 ----------- Medical-Nursing Homes -- 0.1% Sun Healthcare Group, Inc. Senior Sub. Notes 9.13% due 04/15/15*....................... 675,000 688,500 -----------
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ Metal Processors & Fabrication -- 0.2% Commercial Metals Co. Senior Notes 6.50% due 07/15/17.................. $ 515,000 $ 534,563 Metals USA, Inc. Sec. Notes 11.13% due 12/01/15................. 510,000 543,150 Timken Co. Notes 5.75% due 02/15/10.................. 162,000 164,369 ---------- 1,242,082 ---------- Metal-Aluminum -- 0.1% Alcoa, Inc. Notes 6.00% due 01/15/12.................. 312,000 318,208 Alcoa, Inc. Bonds 6.50% due 06/15/18.................. 634,000 652,137 ---------- 970,345 ---------- Metal-Diversified -- 0.6% Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.25% due 04/01/15.................. 550,000 594,000 Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.38% due 04/01/17.................. 2,350,000 2,567,375 Noranda Aluminum Acquisition Corp. Senior Notes 9.36% due 05/15/15*(6).............. 1,450,000 1,363,000 Noranda Aluminum Holding Corp. Senior Notes 11.14% due 11/15/14*(6)............. 500,000 482,500 ---------- 5,006,875 ---------- Mining -- 0.0% Newmont Mining Corp. Company Guar. Notes 5.88% due 04/01/35.................. 250,000 220,271 ---------- Multimedia -- 0.5% Belo Corp. Senior Notes 6.75% due 05/30/13.................. 145,000 148,717 Cox Enterprises, Inc. Notes 7.88% due 09/15/10*................. 578,000 618,398 Haights Cross Operating Co. Company Guar. Senior Notes 11.75% due 08/15/11................. 125,000 129,688 News America, Inc. Company Guar. Bonds 7.30% due 04/30/28.................. 1,074,000 1,121,596 Time Warner Entertainment Co. LP Senior Notes 8.38% due 07/15/33.................. 650,000 762,197
32 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Multimedia (continued) Viacom, Inc. Senior Notes 6.88% due 04/30/36......................... $1,074,000 $1,069,526 ---------- 3,850,122 ---------- Networking Products -- 0.0% Cisco Systems, Inc. Senior Notes 5.50% due 02/22/16......................... 347,000 344,680 ---------- Non-Ferrous Metals -- 0.0% Renco Metals, Inc. Bonds 11.50% due 7/01/03+(3)(5)(10)(11).......... 500,000 0 ---------- Non-Hazardous Waste Disposal -- 0.3% Allied Waste North America, Inc. Company Guar. Notes 6.88% due 06/01/17......................... 1,090,000 1,095,450 Waste Management, Inc. Company Guar. Notes 6.88% due 05/15/09......................... 985,000 1,018,105 Waste Management, Inc. Company Guar. Notes 7.75% due 05/15/32......................... 250,000 280,760 ---------- 2,394,315 ---------- Office Automation & Equipment -- 0.4% IKON Office Solutions, Inc. Senior Notes 7.75% due 09/15/15......................... 1,775,000 1,783,875 Pitney Bowes, Inc. Notes 5.25% due 01/15/37......................... 680,000 652,388 Pitney Bowes, Inc. Notes 5.75% due 09/15/17......................... 553,000 553,801 ---------- 2,990,064 ---------- Oil Companies-Exploration & Production -- 1.3% Anadarko Petroleum Corp. Senior Notes 5.95% due 09/15/16......................... 500,000 495,205 Apache Corp. Senior Notes 6.25% due 04/15/12......................... 1,300,000 1,353,405 Belden & Blake Corp. Company Guar. Sec. Notes 8.75% due 07/15/12......................... 175,000 178,063 Brigham Exploration Co. Company Guar. Notes 9.63% due 05/01/14......................... 950,000 895,375 Chaparral Energy, Inc. Company Guar. Notes 8.50% due 12/01/15......................... 895,000 839,062 Chaparral Energy, Inc. Company Guar. Senior Notes 8.88% due 02/01/17*........................ 150,000 140,625
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Oil Companies-Exploration & Production (continued) Chesapeake Energy Corp. Senior Notes 6.25% due 01/15/18................ $ 300,000 $ 289,500 Chesapeake Energy Corp. Senior Notes 6.63% due 01/15/16................ 1,350,000 1,343,250 Costilla Energy, Inc. Senior Notes 10.25% due 10/01/06+(3)(5)........ 500,000 0 Dune Energy, Inc. Sec. Notes 10.50% due 06/01/12*.............. 425,000 405,875 Encore Acquisition Co. Senior Sub. Notes 6.00% due 07/15/15................ 950,000 857,375 Encore Acquisition Co. Senior Sub. Notes 6.25% due 04/15/14................ 175,000 163,625 Energy Partners, Ltd. Senior Notes 9.75% due 04/15/14*............... 525,000 504,000 Exco Resources, Inc. Company Guar. Notes 7.25% due 01/15/11................ 100,000 99,500 Hilcorp Energy I LP Senior Notes 7.75% due 11/01/15*............... 990,000 967,725 Quicksilver Resources, Inc. Company Guar. Notes 7.13% due 04/01/16................ 275,000 270,875 Sabine Pass LNG LP Company Guar. Senior Notes 7.25% due 11/30/13................ 400,000 394,000 Sabine Pass LNG LP Sec. Notes 7.50% due 11/30/16................ 1,130,000 1,113,050 Transmeridian Exploration, Inc. Company Guar. Notes 12.00% due 12/15/10............... 375,000 363,281 ----------- 10,673,791 ----------- Oil Companies-Integrated -- 0.2% Hess Corp. Bonds 7.88% due 10/01/29................ 461,000 529,881 Marathon Oil Corp. Notes 6.60% due 10/01/37................ 477,000 487,708 Phillips Petroleum Co. Debentures 7.00% due 03/30/29................ 286,000 309,397 ----------- 1,326,986 ----------- Oil Refining & Marketing -- 0.1% The Premcor Refining Group, Inc Company Guar. Notes 6.75% due 05/01/14................ 666,000 694,191 -----------
33 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Oil-Field Services -- 0.2% Allis-Chalmers Energy, Inc. Company Guar. Notes 9.00% due 01/15/14........................ $610,000 $ 614,575 Oslo Seismic Services, Inc. 1st Mtg. Bonds 8.28% due 06/01/11........................ 147,372 152,295 Weatherford International, Inc. Company Guar. Notes 6.80% due 06/15/37*....................... 530,000 544,361 ---------- 1,311,231 ---------- Paper & Related Products -- 0.3% AbitibiBowater, Inc. Notes 6.50% due 06/15/13........................ 700,000 511,000 Caraustar Industries, Inc. Notes 7.38% due 06/01/09........................ 650,000 593,125 Georgia-Pacific Corp. Company Guar. Notes 7.00% due 01/15/15*....................... 920,000 897,000 Georgia-Pacific Corp. Company Guar. Notes 7.13% due 01/15/17*....................... 350,000 338,625 ---------- 2,339,750 ---------- Physical Therapy/Rehabilation Centers -- 0.0% Psychiatric Solutions, Inc. Senior Sub. Notes 7.75% due 07/15/15........................ 158,000 159,975 ---------- Physicians Practice Management -- 0.1% US Oncology, Inc. Senior Sub. Notes 10.75% due 08/15/14....................... 660,000 681,450 ---------- Pipelines -- 1.2% Atlas Pipeline Partners LP Company Guar. Notes 8.13% due 12/15/15........................ 525,000 517,125 CenterPoint Energy Resources Corp. Notes 7.75% due 02/15/11........................ 990,000 1,052,302 Copano Energy LLC Company Guar. Notes 8.13% due 03/01/16........................ 540,000 549,450 Duke Energy Field Services LLC Notes 6.88% due 02/01/11........................ 178,000 184,692 Dynegy Holdings, Inc. Senior Notes 8.75% due 02/15/12........................ 965,000 996,362 Dynegy-Roseton Danskammer Pass Through Certs. Series B 7.67% due 11/08/16........................ 720,000 723,600 El Paso Corp. Senior Sub. Notes 6.88% due 06/15/14........................ 925,000 936,563
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Pipelines (continued) El Paso Natural Gas Co. Senior Notes 5.95% due 04/15/17*.................. $ 375,000 $ 366,239 MarkWest Energy Partners LP Senior Notes 6.88% due 11/01/14................... 255,000 235,875 MarkWest Energy Partners LP Company Guar. Notes 8.50% due 07/15/16................... 550,000 541,750 NGC Corp Capital Trust Guar. Bonds 8.32% due 06/01/27................... 1,045,000 966,625 ONEOK Partners LP Company Guar. Notes 6.85% due 10/15/37................... 507,000 510,989 Transcontinental Gas Pipe Line Corp. Notes 7.00% due 08/15/11................... 150,000 155,625 Williams Cos., Inc. Senior Notes 7.88% due 09/01/21................... 1,955,000 2,126,062 ---------- 9,863,259 ---------- Poultry -- 0.1% Pilgrim's Pride Corp. Senior Sub. Notes 8.38% due 05/01/17................... 450,000 459,000 ---------- Printing-Commercial -- 0.1% Valassis Communications, Inc. Senior Notes 8.25% due 03/01/15................... 790,000 687,300 ---------- Publishing-Newspapers -- 0.0% Knight Ridder, Inc. Debentures 6.88% due 03/15/29................... 205,000 166,577 Medianews Group, Inc. Senior Sub. Notes 6.88% due 10/01/13................... 220,000 167,200 ---------- 333,777 ---------- Publishing-Periodicals -- 0.2% The Reader's Digest Association, Inc. Senior Sub. Notes 9.00% due 02/15/17*.................. 1,505,000 1,354,500 ---------- Radio -- 0.0% Chancellor Media Corp. Company Guar. Notes 8.00% due 11/01/08................... 148,000 150,401 ---------- Real Estate Investment Trusts -- 0.4% Health Care Property Investors, Inc. Senior Notes 5.65% due 12/15/13................... 845,000 816,234 Liberty Property LP Senior Notes 5.63% due 10/01/17................... 310,000 309,422
34 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Real Estate Investment Trusts (continued) New Plan Excel Realty Trust Senior Notes 4.50% due 02/01/11.................... $ 484,000 $ 474,012 Omega Healthcare Investors, Inc. Senior Notes 7.00% due 04/01/14.................... 600,000 598,500 PPF Funding, Inc. Bonds 5.35% due 04/15/12*................... 270,000 267,660 Reckson Operating Partnership LP Senior Notes 6.00% due 03/31/16.................... 86,000 81,716 Simon Property Group LP Notes 5.38% due 08/28/08.................... 124,000 123,282 Vornado Realty LP Notes 4.50% due 08/15/09.................... 210,000 206,728 ---------- 2,877,554 ---------- Recycling -- 0.3% Aleris International, Inc. Senior Notes 9.00% due 12/15/14.................... 1,250,000 1,156,250 Aleris International, Inc. Senior Sub. Notes 10.00% due 12/15/16................... 1,090,000 964,650 ---------- 2,120,900 ---------- Rental Auto/Equipment -- 0.3% Erac USA Finance Co. Notes 7.35% due 06/15/08*................... 620,000 626,762 H&E Equipment Services, Inc. Company Guar. Notes 8.38% due 07/15/16.................... 20,000 19,500 United Rentals North America, Inc. Senior Sub. Notes 7.75% due 11/15/13.................... 1,665,000 1,714,950 ---------- 2,361,212 ---------- Research & Development -- 0.1% Alion Science and Technology Corp. Company Guar. Notes 10.25% due 02/01/15................... 815,000 739,613 ---------- Retail-Discount -- 0.1% Dollar General Corp. Senior Notes 10.63% due 07/15/15*.................. 450,000 423,000 ---------- Retail-Drug Store -- 0.5% CVS Caremark Corp. Senior Notes 6.25% due 06/01/27.................... 510,000 494,252 CVS Lease Pass Through Trust Pass Through Certs. 6.04% due 12/10/28*................... 1,052,492 1,022,318
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- Retail-Drug Store (continued) General Nutrition Centers, Inc. Senior Notes 10.01% due 03/15/14*(6)................ $ 375,000 $ 360,000 Rite Aid Corp. Senior Notes 9.25% due 06/01/13..................... 425,000 403,750 Rite Aid Corp. Company Guar. Notes 9.50% due 06/15/17*.................... 1,925,000 1,799,875 ---------- 4,080,195 ---------- Retail-Major Department Stores -- 0.0% Saks, Inc. Company Guar. Notes 9.88% due 10/01/11..................... 375,000 399,375 ---------- Retail-Petroleum Products -- 0.1% Ferrellgas LP Senior Notes 6.75% due 05/01/14..................... 1,090,000 1,062,750 ---------- Retail-Regional Department Stores -- 0.0% JC Penney Corp., Inc. Senior Notes 5.75% due 02/15/18..................... 57,000 54,719 ---------- Retail-Restaurants -- 0.1% Dave & Buster's, Inc. Company Guar. Notes 11.25% due 03/15/14.................... 445,000 449,450 NPC International, Inc. Company Guar. Notes 9.50% due 05/01/14..................... 765,000 696,150 ---------- 1,145,600 ---------- Rubber-Tires -- 0.1% Cooper Standard Automotive, Inc. Company Guar. Notes 8.38% due 12/15/14..................... 625,000 543,750 ---------- Rubber/Plastic Products -- 0.0% Venture Holdings Co. LLC Company Guar. Notes 11.00% due 06/01/07+(5)(11)(13)........ 100,000 400 ---------- Savings & Loans/Thrifts -- 0.4% Independence Community Bank Corp. Sub. Notes 3.50% due 06/20/08(9).................. 172,000 169,250 Sovereign Bancorp, Inc. Senior Notes 4.80% due 09/01/10..................... 405,000 395,678 Washington Mutual Bank Sub. Notes 5.13% due 01/15/15..................... 880,000 819,630 Washington Mutual Preferred Funding III 6.90% due 06/15/12*(6)(15)............. 600,000 614,687 Washington Mutual, Inc. Senior Notes 5.50% due 08/24/11..................... 760,000 750,308
35 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Savings & Loans/Thrifts (continued) Western Financial Bank Senior Debentures 9.63% due 05/15/12.......................... $ 333,000 $ 357,471 ---------- 3,107,024 ---------- Soap & Cleaning Preparation -- 0.0% JohnsonDiversey Holdings, Inc. Notes 10.67% due 05/15/13(7)...................... 75,000 75,750 ---------- Special Purpose Entities -- 1.2% AAC Group Holding Corp. Senior Notes 10.25% due 10/01/12(7)...................... 565,000 502,850 AMR HoldCo, Inc./EmCare HoldCo, Inc. Senior Sub. Notes 10.00% due 02/15/15......................... 125,000 132,500 BAE Systems Holdings, Inc. Notes 5.20% due 08/15/15*......................... 1,065,000 1,015,015 Capital One Capital IV 6.75% due 02/17/37(6)....................... 255,000 227,398 CCM Merger, Inc. Notes 8.00% due 08/01/13*......................... 625,000 609,375 Consolidated Communications Illinois/Texas Holdings, Inc. Senior Notes 9.75% due 04/01/12.......................... 632,000 638,320 Cyrus Reinsurance Holdings SPC Senior Notes 6.36% due 12/01/07*(3)(9)................... 239,000 234,220 Hawker Beechcraft Acquisition Co. LLC/Hawker Beechcraft Notes Co. Senior Sub. Notes 9.75% due 04/01/17*......................... 510,000 521,475 Hexion US Finance Corp. Company Guar. Notes 9.75% due 11/15/14.......................... 475,000 522,500 ING USA Global Funding Trust Notes 4.50% due 10/01/10.......................... 268,000 265,260 KAR Holdings, Inc. Senior Notes 8.75% due 05/01/14*......................... 305,000 292,037 KAR Holdings, Inc. Senior Notes 9.36% due 05/01/14*(6)...................... 600,000 574,500 Local TV Finance LLC Senior Notes 9.25% due 06/15/15*......................... 600,000 564,000 MedCath Holdings Corp. Senior Notes 9.88% due 07/15/12.......................... 129,000 136,740 MXEnergy Holdings, Inc. Senior Notes 12.81% due 08/01/11(6)...................... 650,000 601,250
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ Special Purpose Entities (continued) Norbord Delaware GP I Company Guar. Notes 6.45% due 02/15/17*................ $ 193,000 $ 175,540 PNA Intermediate Holding Corp. Senior Notes 12.56% due 02/15/13*(6)............ 350,000 343,000 Pricoa Global Funding I Notes 5.30% due 09/27/13*................ 320,000 321,624 Principal Life Global Funding I Sec. Notes 5.25% due 01/15/13*................ 296,000 295,193 Snoqualmie Entertainment Authority Sec. Notes 9.06% due 02/01/14*(6)............. 75,000 72,938 Snoqualmie Entertainment Authority Notes 9.13% due 02/01/15*................ 475,000 467,875 Southern Star Central Corp. Senior Notes 6.75% due 03/01/16................. 125,000 119,531 Visant Corp. Company Guar. Notes 7.63% due 10/01/12................. 800,000 814,000 ---------- 9,447,141 ---------- Specified Purpose Acquisitions -- 0.0% ESI Tractebel Acquisition Corp. Company Guar. Bonds 7.99% due 12/30/11................. 189,000 194,923 ---------- Steel-Producers -- 0.3% International Steel Group, Inc. Senior Notes 6.50% due 04/15/14................. 540,000 536,179 Reliance Steel & Aluminum Co. Company Guar. Notes 6.85% due 11/15/36................. 1,070,000 1,044,860 Steel Dynamics, Inc. Senior Notes 6.75% due 04/01/15*................ 700,000 675,500 United States Steel Corp. Senior Notes 6.05% due 06/01/17................. 360,000 344,491 United States Steel Corp. Senior Notes 6.65% due 06/01/37................. 232,000 214,033 ---------- 2,815,063 ---------- Steel-Specialty -- 0.0% Allegheny Technologies, Inc. Notes 8.38% due 12/15/11................. 75,000 79,125 ---------- Storage/Warehousing -- 0.1% Mobile Mini, Inc. Notes 6.88% due 05/01/15................. 500,000 486,250
36 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Storage/Warehousing (continued) Mobile Services Group, Inc. Senior Notes 9.75% due 08/01/14*.................. $ 655,000 $ 655,000 ---------- 1,141,250 ---------- Telecom Services -- 0.5% Cincinnati Bell Telephone Co. Company Guar. Notes 7.18% due 12/15/23................... 50,000 48,250 Cincinnati Bell Telephone Co. Company Guar. Notes 7.20% due 11/29/23................... 225,000 214,875 Insight Midwest LP Senior Notes 9.75% due 10/01/09................... 52,000 52,065 MasTec, Inc. Senior Notes 7.63% due 02/01/17................... 400,000 389,000 PAETEC Holding Corp. Senior Notes 9.50% due 07/15/15*.................. 1,200,000 1,197,000 Qwest Corp. Senior Notes 7.50% due 10/01/14................... 1,440,000 1,497,600 Verizon Global Funding Corp. Senior Notes 6.88% due 06/15/12................... 750,000 799,557 ---------- 4,198,347 ---------- Telephone-Integrated -- 1.3% AT&T Corp. Senior Notes 7.30% due 11/15/11................... 1,003,000 1,077,505 BellSouth Corp. Senior Notes 6.00% due 10/15/11................... 1,300,000 1,331,823 Cincinnati Bell, Inc. Senior Notes 7.25% due 06/15/23................... 25,000 23,750 Cincinnati Bell, Inc. Company Guar. Notes 8.38% due 01/15/14................... 1,265,000 1,261,837 Citizens Communications Co. Senior Notes 7.13% due 03/15/19................... 775,000 763,375 Citizens Communications Co. Senior Notes 9.00% due 08/15/31................... 1,502,000 1,524,530 GTE Northwest, Inc. Debentures 5.55% due 10/15/08................... 55,000 55,130 Level 3 Financing, Inc. Company Guar. Notes 9.25% due 11/01/14................... 500,000 492,500 New England Telephone & Telegraph Co. Debentures 7.88% due 11/15/29................... 174,000 193,336
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------- Telephone-Integrated (continued) Qwest Communications International, Inc. Company Guar. Notes 7.50% due 02/15/14...................... $2,725,000 $ 2,759,062 Sprint Capital Corp. Company Guar. Notes 6.88% due 11/15/28...................... 787,000 759,532 Verizon New York, Inc. Debentures 6.88% due 04/01/12...................... 261,000 274,939 ----------- 10,517,319 ----------- Television -- 0.7% Allbritton Communications Co. Senior Sub. Notes 7.75% due 12/15/12...................... 1,175,000 1,186,750 Bonten Media Acquisition Co. Company Guar. Notes 9.00% due 06/01/15*..................... 250,000 223,750 ION Media Networks, Inc. Senior Notes 8.49% due 01/15/12*(6).................. 25,000 24,875 LIN Television Corp. Senior Sub. Notes 6.50% due 05/15/13...................... 960,000 933,600 Paxson Communication Corp. Sec. Senior Notes 11.49% due 01/15/13*(6)................. 2,225,000 2,269,500 Univision Communications, Inc. Company Guar. Notes 3.50% due 10/15/07...................... 80,000 79,400 Young Broadcasting, Inc. Senior Sub. Notes 8.75% due 01/15/14...................... 380,000 321,100 Young Broadcasting, Inc. Company Guar. Notes 10.00% due 03/01/11..................... 1,035,000 954,787 ----------- 5,993,762 ----------- Theaters -- 0.4% AMC Entertainment, Inc. Senior Sub. Notes 8.00% due 03/01/14...................... 2,195,000 2,090,737 Cinemark, Inc. Senior Notes 9.75% due 03/15/14(7)................... 1,585,000 1,497,825 ----------- 3,588,562 ----------- Transactional Software -- 0.1% Open Solutions, Inc. Senior Sub. Notes 9.75% due 02/01/15*..................... 1,225,000 1,179,062 ----------- Transport-Air Freight -- 0.7% Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class A-2 6.88% due 01/02/11...................... 193,987 190,107
37 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Transport-Air Freight (continued) Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class A-1 7.20% due 01/02/19.............. $1,475,567 $1,449,744 Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class B 7.63% due 01/02/15.............. 1,701,936 1,957,227 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20.............. 320,355 336,773 Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class C 8.77% due 01/02/11.............. 62,428 60,556 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class B 9.06% due 07/02/17.............. 1,346,314 1,642,503 ---------- 5,636,910 ---------- Transport-Rail -- 0.3% BNSF Funding Trust I 6.61% due 01/15/26(9)........... 580,000 523,224 CSX Corp. Senior Notes 6.25% due 03/15/18.............. 620,000 623,255 Union Pacific Corp. Notes 3.88% due 02/15/09.............. 875,000 857,003 ---------- 2,003,482 ---------- Transport-Services -- 0.1% Bristow Group, Inc. Senior Notes 7.50% due 09/15/17*............. 250,000 255,000 FedEx Corp. Company Guar. Notes 5.50% due 08/15/09.............. 135,000 136,510 PHI, Inc. Company Guar. Notes 7.13% due 04/15/13.............. 300,000 288,000 Ryder System, Inc. Notes 5.85% due 03/01/14.............. 125,000 126,003 ---------- 805,513 ---------- Transport-Truck -- 0.1% Saint Acquisition Corp. Senior Sec. Notes 13.31% due 05/15/15*(6)......... 325,000 221,000 Swift Acquisition Corp. Sec. Notes 12.50% due 05/15/17*............ 375,000 251,250 ---------- 472,250 ----------
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Travel Services -- 0.1% Travelport LLC Company Guar. Notes 9.88% due 09/01/14.......................... $820,000 $ 836,400 Travelport LLC Company Guar. Notes 10.25% due 09/01/14(6)...................... 225,000 224,437 ------------ 1,060,837 ------------ Total Corporate Bonds & Notes (cost $290,444,175)......................... 286,509,235 ------------ FOREIGN CORPORATE BONDS & NOTES -- 5.9% Banks-Commercial -- 0.3% Caisse Nationale des Caisses d'Epargne et de Prevoyance Notes 4.93% due 12/30/09(15)...................... 141,000 113,152 Credit Agricole SA Jr. Sub. Notes 6.64% due 05/31/17*(6)(15).................. 557,000 519,649 HSBC Holdings PLC Sub. Notes 6.50% due 09/15/37.......................... 650,000 654,246 Royal Bank of Scotland Group PLC Bonds 6.99% due 10/15/17*(6)(15).................. 660,000 672,349 Societe Generale Sub. Notes 5.92% due 04/15/17*(6)(15).................. 270,000 255,771 ------------ 2,215,167 ------------ Banks-Money Center -- 0.1% HBOS Capital Funding LP Bank Guar. Bonds 6.85% due 03/23/09(15)...................... 175,000 166,688 Mizuho Financial Group Cayman, Ltd. Bank Guar. Bonds 8.38% due 04/27/09(15)...................... 175,000 182,276 National Westminster Bank PLC Sub. Notes 7.75% due 10/16/07(6)(15)................... 67,000 67,127 ------------ 416,091 ------------ Broadcast Services/Program -- 0.1% Grupo Televisa SA Senior Notes 6.63% due 03/18/25.......................... 496,000 504,057 ------------ Building & Construction-Misc. -- 0.0% North American Energy Partners, Inc. Senior Notes 8.75% due 12/01/11.......................... 275,000 277,750 ------------ Building Products-Doors & Windows -- 0.0% Masonite International Corp. Company Guar. Notes 11.00% due 04/06/15......................... 117,000 99,450 ------------
38 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ FOREIGN CORPORATE BONDS & NOTES (continued) Cellular Telecom -- 0.2% Mobile Telesystems Finance SA Company Guar. Senior Notes 8.38% due 10/14/10....................... $1,650,000 $1,685,062 ---------- Computers-Memory Devices -- 0.1% Seagate Technology HDD Holdings Company Guar. Notes 6.80% due 10/01/16....................... 435,000 425,213 ---------- Containers-Metal/Glass -- 0.2% Vitro SAB de CV Senior Notes 9.13% due 02/01/17....................... 2,040,000 2,004,300 ---------- Cruise Lines -- 0.0% Royal Caribbean Cruises, Ltd. Senior Notes 7.00% due 06/15/13....................... 400,000 397,779 ---------- Diversified Financial Services -- 0.3% CIT Group Funding Co. of Canada Company Guar. Notes 5.20% due 06/01/15....................... 447,000 405,866 TNK-BP Finance SA Senior Notes 6.13% due 03/20/12....................... 1,380,000 1,324,938 TNK-BP Finance SA Company Guar. Senior Notes 6.88% due 07/18/11....................... 350,000 347,214 ---------- 2,078,018 ---------- Diversified Manufacturing Operations -- 0.1% Bombardier, Inc. Senior Notes 8.00% due 11/15/14*...................... 415,000 434,713 Tyco International Group SA Company Guar. Notes 6.00% due 11/15/13....................... 310,000 312,920 ---------- 747,633 ---------- Diversified Operations -- 0.0% Hutchison Whampoa Finance, Ltd. Company Guar. Notes 7.50% due 08/01/27*...................... 150,000 167,499 ---------- Electric-Integrated -- 0.1% Enel Finance International SA Company Guar. Notes 6.25% due 09/15/17*...................... 201,000 201,744 Enel Finance International SA Company Guar. Notes 6.80% due 09/15/37*...................... 675,000 687,338 ---------- 889,082 ---------- Electronic Components-Misc. -- 0.1% NXP BV / NXP Funding LLC Company Guar. Notes 9.50% due 10/15/15....................... 830,000 773,975 ---------- Electronic Components-Semiconductors -- 0.1% Avago Technologies Finance Company Guar. Notes 10.13% due 12/01/13...................... 590,000 634,250
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Electronic Components-Semiconductors (continued) STATS ChipPAC, Ltd. Company Guar. Notes 6.75% due 11/15/11........................... $325,000 $ 325,813 ---------- 960,063 ---------- Food-Meat Products -- 0.2% JBS SA Company Guar. Notes 9.38% due 02/07/11........................... 850,000 873,375 JBS SA Senior Notes 10.50% due 08/04/16*......................... 650,000 687,375 ---------- 1,560,750 ---------- Food-Retail -- 0.1% Delhaize Group Notes 6.50% due 06/15/17*.......................... 555,000 559,734 ---------- Independent Power Producer -- 0.0% AES Drax Energy, Ltd. Sec. Notes 11.50% due 08/30/10+(5)(14).................. 725,000 725 ---------- Insurance-Multi-line -- 0.1% Aegon NV Sub. Bonds 5.40% due 07/15/14(15)....................... 201,000 156,780 AXA SA Sub. Notes 6.38% due 12/14/36*(6)(15)................... 285,000 256,966 ING Groep NV Bonds 5.78% due 12/18/15(6)(15).................... 765,000 722,802 ---------- 1,136,548 ---------- Investment Companies -- 0.0% Canadian Oil Sands, Ltd. Notes 5.80% due 08/15/13*.......................... 207,000 205,172 ---------- Medical-Drugs -- 0.4% Angiotech Pharmaceuticals, Inc. Company Guar. Notes 7.75% due 04/01/14........................... 400,000 366,000 Angiotech Pharmaceuticals, Inc. Company Guar. Notes 9.37% due 12/01/13(6)........................ 590,000 604,750 AstraZeneca PLC Notes 6.45% due 09/15/37........................... 616,000 638,709 Elan Finance PLC Company Guar. Bonds 7.75% due 11/15/11........................... 895,000 877,100 Elan Finance PLC Company Guar. Notes 8.88% due 12/01/13........................... 790,000 776,175
39 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES (continued) Medical-Drugs (continued) Elan Finance PLC Company Guar. Notes 9.56% due 11/15/11(6).......... $ 5,000 $ 4,963 ---------- 3,267,697 ---------- Metal-Aluminum -- 0.0% Alcan, Inc. Notes 6.13% due 12/15/33............. 403,000 386,986 ---------- Multimedia -- 0.1% Quebecor Media, Inc. Senior Notes 7.75% due 03/15/16*............ 375,000 357,656 The Thomson Corp. Notes 5.70% due 10/01/14............. 620,000 614,755 ---------- 972,411 ---------- Music -- 0.0% Corporacion Interamericana de Entetenimiento SA de CV Senior Notes 8.88% due 06/14/15*............ 275,000 270,188 ---------- Oil Companies-Exploration & Production -- 0.5% Compton Petroleum Finance Corp. Company Guar. Notes 7.63% due 12/01/13............. 965,000 931,225 Nexen, Inc. Bonds 6.40% due 05/15/37............. 415,000 403,278 OPTI Canada, Inc. Secured Notes 7.88% due 12/15/14*............ 1,100,000 1,100,000 OPTI Canada, Inc. Company Guar. Notes 8.25% due 12/15/14*............ 575,000 579,313 Paramount Resources, Ltd. Senior Notes 8.50% due 01/31/13............. 675,000 688,500 ---------- 3,702,316 ---------- Oil Companies-Integrated -- 0.1% ENI Coordination Center SA Company Guar. Notes 5.25% due 12/27/07............. GBP 205,000 418,683 ---------- Paper & Related Products -- 0.2% Abitibi-Consolidated, Inc. Notes 5.25% due 06/20/08............. 100,000 95,500 Abitibi-Consolidated, Inc. Notes 6.00% due 06/20/13............. 300,000 210,000 Abitibi-Consolidated, Inc. Notes 8.55% due 08/01/10............. 955,000 787,875
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ Paper & Related Products (continued) Bowater Canada Finance Corp. Company Guar. Notes 7.95% due 11/15/11....................... $ 200,000 $ 164,500 ---------- 1,257,875 ---------- Pipelines -- 0.1% Enbridge, Inc. Bonds 5.80% due 06/15/14....................... 931,000 927,898 Kinder Morgan Finance Co. ULC Company Guar. Notes 5.70% due 01/05/16....................... 183,000 166,336 ---------- 1,094,234 ---------- Printing-Commercial -- 0.1% Quebecor World Capital Corp. Senior Notes 8.75% due 03/15/16*...................... 745,000 676,088 ---------- Real Estate Operations & Development -- 0.0% Brascan Corp. Notes 8.13% due 12/15/08....................... 76,000 78,913 ---------- Satellite Telecom -- 0.6% Intelsat Bermuda, Ltd. Company Guar. Notes 8.89% due 01/15/15(6).................... 1,055,000 1,065,550 Intelsat Bermuda, Ltd. Senior Notes 11.25% due 06/15/16...................... 985,000 1,055,181 Intelsat Intermediate Holding Co., Ltd. Senior Notes 9.25% due 02/01/15(7).................... 1,925,000 1,583,313 Intelsat, Ltd. Senior Notes 6.50% due 11/01/13....................... 935,000 710,600 Intelsat, Ltd. Senior Notes 7.63% due 04/15/12....................... 475,000 406,125 ---------- 4,820,769 ---------- Semiconductor Equipment -- 0.0% MagnaChip Semiconductor SA Sec. Notes 6.88% due 12/15/11....................... 100,000 81,500 MagnaChip Semiconductor SA Sec. Notes 8.94% due 12/15/11(6).................... 75,000 63,750 ---------- 145,250 ---------- Special Purpose Entities -- 0.3% Hellas Telecommunications Luxembourg II Sub. Notes 11.11% due 01/15/15*(6).................. 1,155,000 1,117,463 Hybrid Capital Funding I LP Sub. Notes 8.00% due 06/30/11(15)................... 338,000 312,509
40 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES (continued) Special Purpose Entities (continued) Rio Tinto Finance USA, Ltd. Notes 2.63% due 09/30/08............................... $ 165,000 $ 161,567 SMFG Preferred Capital, Ltd. 6.08% due 01/25/17*(6)(15)....................... 373,000 344,909 SovRisc BV Notes 4.63% due 10/31/08*.............................. 133,000 133,117 ---------- 2,069,565 ---------- Steel-Producer -- 0.1% Citibank Global Markets Deutschland for Severstal Notes 8.63% due 02/24/09............................... 1,100,000 1,121,417 ---------- Telecom Services -- 0.2% Global Crossing UK Finance PLC Company Guar. Notes 10.75% due 12/15/14.............................. 375,000 392,812 Telenet Group Holdings NV Notes 11.50% due 06/15/14*(7).......................... 1,231,000 1,218,690 ---------- 1,611,502 ---------- Telephone-Integrated -- 0.7% British Telecommunications PLC Bonds 9.13% due 12/15/30............................... 1,807,000 2,392,833 Telecom Italia Capital SA Company Guar. Bonds 5.25% due 10/01/15............................... 1,074,000 1,019,578 Telecom Italia Capital SA Company Guar. Bonds 6.20% due 07/18/11............................... 1,000,000 1,024,696 Telefonica Emisiones SAU Company Guar. Notes 6.22% due 07/03/17............................... 481,000 485,913 Telefonica Emisones SAU Company Guar. Notes 6.42% due 06/20/16............................... 685,000 702,916 ---------- 5,625,936 ---------- Transport-Marine -- 0.1% Navios Maritime Holdings, Inc. Senior Notes 9.50% due 12/15/14............................... 325,000 335,156 Ultrapetrol Bahamas, Ltd. 1st Mtg. Bonds 9.00% due 11/24/14............................... 525,000 502,032 ---------- 837,188 ---------- Transport-Rail -- 0.1% Canadian National Railway Co. Notes 6.38% due 10/15/11............................... 315,000 326,948 Canadian National Railway Co. Debentures 6.38% due 11/15/37............................... 448,000 453,380
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Transport-Rail (continued) Kansas City Southern de Mexico SA de CV Senior Notes 7.38% due 03/01/14*............... $ 175,000 $ 171,063 ----------- 951,391 ----------- Transport-Services -- 0.2% TGI International Ltd. Senior Notes 9.50% due 10/03/17*............... 1,720,000 1,720,000 ----------- Total Foreign Corporate Bonds & Notes (cost $49,456,227)................ 48,132,477 ----------- FOREIGN GOVERNMENT AGENCIES -- 31.1% Sovereign -- 31.1% Arab Republic of Egypt Notes 8.75% due 07/18/12*............... EGP 7,200,000 1,298,319 Federal Republic of Brazil Bonds 6.00% due 01/17/17................ 3,390,000 3,435,765 Federal Republic of Brazil Bonds 6.43% due 01/05/16................ 2,894,000 1,835,393 Federal Republic of Brazil Bonds 7.13% due 01/20/37................ 1,620,000 1,809,540 Federal Republic of Brazil Notes 7.88% due 03/07/15................ 900,000 1,016,550 Federal Republic of Brazil Notes 8.00% due 01/15/18................ 6,230,000 6,952,680 Federal Republic of Brazil Bonds 8.25% due 01/20/34................ 1,430,000 1,801,085 Federal Republic of Brazil Notes 8.75% due 02/04/25................ 2,825,000 3,616,000 Federal Republic of Brazil Bonds 8.88% due 10/14/19................ 2,110,000 2,626,950 Federal Republic of Brazil Notes 8.88% due 04/15/24................ 845,000 1,087,937 Federal Republic of Brazil Bonds 10.50% due 07/14/14............... 1,115,000 1,410,475 Federal Republic of Brazil Notes 11.00% due 08/17/40............... 4,790,000 6,406,625 Federal Republic of Germany Bonds 4.13% due 07/04/08................ EUR2,530,000 3,608,194 Federal Republic of Germany Bonds 4.25% due 07/04/14................ EUR5,190,000 7,398,681
41 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- FOREIGN GOVERNMENT AGENCIES (continued) Sovereign (continued) Federal Republic of Germany Bonds 5.50% due 01/04/31......... $ 500,000 $ 800,364 Government of Australia Bonds 5.25% due 08/15/10......... AUD 6,960,000 5,985,045 Government of Australia Bonds 5.75% due 06/15/11......... AUD 9,180,000 7,967,169 Government of Australia Bonds 7.50% due 09/15/09......... AUD 6,355,000 5,748,063 Government of Canada Bonds 4.00% due 09/01/10......... CAD 9,639,000 9,647,334 Government of Canada Bonds 5.00% due 06/01/14......... CAD 6,230,000 6,523,508 Government of Canada Bonds 5.25% due 06/01/13......... CAD 2,920,000 3,082,433 Government of France Bonds 4.75% due 04/25/35......... EUR 3,425,000 4,952,545 Government of Japan Bonds 1.40% due 06/20/12......... JPY 815,000,000 7,169,673 Government of Japan Bonds 1.40% due 12/20/15......... JPY1,080,000,000 9,332,614 Government of Norway Bonds 6.00% due 05/16/11......... NOK 10,200,000 1,969,826 Government of Poland Bonds 5.75% due 03/24/10......... PLN4,400,000 1,680,027 Kingdom of Denmark Bonds 7.00% due 11/15/07......... DKK29,310,000 5,621,360 Kingdom of Norway Bonds 5.50% due 05/15/09......... NOK40,140,000 7,519,383 Kingdom of Norway Bonds 6.50% due 05/15/13......... NOK40,460,000 8,125,163 Kingdom of Spain Bonds 5.75% due 07/30/32......... EUR925,000 1,523,370 Kingdom of Sweden Bonds 4.00% due 12/01/09......... SEK41,000,000 6,349,048 Kingdom of Sweden Bonds 4.50% due 08/12/15......... SEK6,810,000 1,070,836 Kingdom of Sweden Bonds 5.00% due 01/28/09......... SEK36,900,000 5,800,608
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------- Sovereign (continued) Republic of Argentina Notes 5.25% due 12/31/38(7).. $ 7,369,761 $3,003,178 Republic of Argentina Bonds 7.00% due 03/28/11..... 785,000 735,937 Republic of Argentina Bonds 7.00% due 09/12/13..... 3,450,000 3,004,950 Republic of Argentina Bonds 7.00% due 10/03/15..... 2,680,000 2,190,900 Republic of Argentina Notes 8.28% due 12/31/33..... 4,011,108 3,640,081 Republic of Colombia Notes 7.38% due 01/27/17..... 1,500,000 1,631,250 Republic of Colombia Bonds 7.38% due 09/18/37..... 1,615,000 1,776,500 Republic of Colombia Bonds 8.13% due 05/21/24..... 710,000 827,150 Republic of Colombia Notes 8.25% due 12/22/14..... 1,950,000 2,193,750 Republic of Colombia Bonds 12.00% due 10/22/15.... COP980,000,000 532,477 Republic of Ecuador Bonds 10.00% due 08/15/30(7). 2,410,000 2,169,000 Republic of El Salvador Bonds 7.65% due 06/15/35*.... 525,000 589,313 Republic of Ghana Notes 8.50% due 10/04/17*.... 710,000 710,000 Republic of Greece Senior Bonds 4.50% due 09/20/37..... EUR1,365,000 1,809,880 Republic of Indonesia Bonds 6.63% due 02/17/37..... 1,450,000 1,396,733 Republic of Indonesia Bonds 7.50% due 01/15/16..... 1,270,000 1,376,361 Republic of Indonesia Notes 8.50% due 10/12/35..... 1,300,000 1,539,946 Republic of Pakistan Bonds 6.88% due 06/01/17*.... 1,340,000 1,159,100 Republic of Panama Bonds 6.70% due 01/26/36..... 1,910,000 1,962,525
42 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------ FOREIGN GOVERNMENT AGENCIES (continued) Sovereign (continued) Republic of Peru Bonds 6.55% due 03/14/37....... $1,130,000 $1,166,160 Republic of Peru Notes 7.35% due 07/21/25....... 2,760,000 3,153,300 Republic of Peru Bonds 8.75% due 11/21/33....... 720,000 945,720 Republic of Philippines Bonds 7.75% due 01/14/31....... 2,090,000 2,314,675 Republic of Philippines Notes 8.00% due 01/15/16....... 2,680,000 2,994,900 Republic of Philippines Notes 8.25% due 01/15/14....... 1,360,000 1,519,800 Republic of Philippines Notes 8.88% due 03/17/15....... 2,990,000 3,460,925 Republic of Philippines Senior Notes 9.50% due 02/02/30....... 2,380,000 3,105,900 Republic of South Africa Bonds 5.88% due 05/30/22....... 1,880,000 1,840,050 Republic of Turkey Notes 6.88% due 03/17/36....... 1,620,000 1,545,075 Republic of Turkey Notes 7.00% due 06/05/20....... 3,460,000 3,477,473 Republic of Turkey Notes 7.25% due 03/15/15....... 2,460,000 2,564,550 Republic of Turkey Notes 8.00% due 02/14/34....... 1,480,000 1,603,950 Republic of Turkey Notes 9.50% due 01/15/14....... 1,870,000 2,166,862 Republic of Uruguay Bonds 8.00% due 11/18/22....... 4,080,000 4,528,800 Republic of Uruguay Notes 9.25% due 05/17/17....... 400,000 474,000 Republic of Venezuela Bonds 5.75% due 02/26/16....... 1,970,000 1,664,650 Republic of Venezuela Bonds 6.00% due 12/09/20....... 540,000 434,700 Republic of Venezuela Bonds 7.00% due 12/01/18....... 700,000 623,829
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Sovereign (continued) Republic of Venezuela Bonds 7.65% due 04/21/25................. $ 2,290,000 $ 2,049,550 Republic of Venezuela Notes 8.50% due 10/08/14................. 1,060,000 1,062,650 Republic of Venezuela Bonds 9.25% due 09/15/27................. 3,650,000 3,777,750 Republic of Venezuela Bonds 9.38% due 01/13/34................. 3,580,000 3,732,150 Russian Federation Bonds 7.50% due 03/31/30(7).............. 10,328,100 11,649,064 Russian Federation Bonds 7.50% due 03/31/30*(7)............. 646,750 722,743 Russian Federation Notes 12.75% due 06/24/28................ 770,000 1,372,525 Ukrainian Soviet Socialist Republic Bonds 6.39% due 06/26/12*................ 1,700,000 1,715,963 Ukrainian Soviet Socialist Republic Senior Bonds 6.58% due 11/21/16*................ 1,580,000 1,595,800 Ukrainian Soviet Socialist Republic Senior Notes 6.58% due 11/21/16................. 1,100,000 1,116,665 Ukrainian Soviet Socialist Republic Notes 7.65% due 06/11/13................. 1,270,000 1,355,788 United Mexican States Notes 5.63% due 01/15/17................. 2,250,000 2,250,000 United Mexican States Bonds 8.00% due 09/24/22................. 2,550,000 3,094,425 United Mexican States Bonds 8.30% due 08/15/31................. 650,000 832,975 ------------ Total Foreign Government Agencies (cost $243,693,547)................ 253,334,961 ------------ FOREIGN GOVERNMENT TREASURIES -- 1.2% Sovereign -- 1.2% Government of United Kingdom Bonds 4.00% due 03/07/09................. GBP660,000 1,331,062 Government of United Kingdom Bonds 4.00% due 09/07/16................. GBP2,255,000 4,281,953 Government of United Kingdom Bonds 4.25% due 03/07/11................. GBP1,930,000 3,849,662 ------------ Total Foreign Government Treasuries (cost $8,962,556).................. 9,462,677 ------------
43 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------------- LOANS -- 0.2% Leisure Products -- 0.0% AMC Entertainment Holdings, Inc. -- First Lien 10.65% due 06/15/12(4)(5)(16)(17)............. $ 411,051 $ 401,802 Medical Drugs -- 0.2% Triax Pharmaceuticals LLC -- First Lien 15.54% due 08/30/11(3)(4)(5)(16)(17)(21)(22)............. 1,500,000 1,348,961 Total Loans (cost $1,752,752).............................. 1,750,763 ----------- U.S. GOVERNMENT AGENCIES -- 14.4% Federal Home Loan Bank -- 0.1% 4.50% due 09/08/08............................. 600,000 599,342 ----------- Federal Home Loan Mtg. Corp. -- 4.7% 4.13% due 07/12/10............................ 300,000 297,647 4.35% due 06/02/08............................ 600,000 598,275 4.45% due 03/06/08............................ 600,000 598,792 4.50% due 02/01/20............................ 200,295 192,826 4.50% due 08/01/20............................ 386,726 372,305 4.75% due 01/18/11............................ 310,000 312,818 5.00% due 09/01/18............................ 461,823 453,972 5.00% due 07/01/20............................ 756,344 741,587 5.00% due 02/01/34............................ 448,842 429,635 5.00% due 05/01/34............................ 283,898 271,520 5.00% due 02/01/35............................ 646,922 618,716 5.00% due 08/01/35............................ 2,585,775 2,470,623 5.00% due 04/01/36............................ 557,769 532,930 5.00% due 05/01/36............................ 390,766 372,850 5.00% due 08/01/36............................ 468,880 447,383 5.00% due 11/01/36............................ 592,313 565,158 5.00% due 01/01/37............................ 1,067,985 1,019,022 5.33% due 12/01/35(6)......................... 422,324 423,493 5.47% due 03/01/36(6)......................... 280,966 277,950 5.50% due 07/01/35............................ 2,460,647 2,412,394 5.50% due 05/01/37............................ 2,058,493 2,015,646 5.70% due 08/01/36(6)......................... 2,446,959 2,453,026 5.80% due 01/01/37(6)......................... 809,705 815,471 5.81% due 01/01/37............................ 186,725 186,850 5.98% due 10/01/36............................ 4,103,050 4,107,244 6.00% due 07/01/35............................ 182,146 182,509 6.00% due 06/01/36............................ 872,369 873,563 6.00% due 05/01/37............................ 2,935,669 2,939,142 6.00% TBA due October......................... 5,541,000 5,546,198 6.20% due 09/01/36(6)......................... 841,551 852,896 6.50% due 05/01/29............................ 6,207 6,369 6.50% due 02/01/35............................ 581,849 594,116 6.50% due 05/01/37............................ 1,371,979 1,396,586 6.88% due 09/15/10............................ 1,156,000 1,232,168 7.00% due 06/01/29............................ 13,675 14,223 8.50% due 05/01/08............................ 1,060 1,071 REMIC Series 3349, Class HB 5.50% due 06/15/31............................ 1,724,000 1,719,251 REMIC Series 41, Class F 10.00% due 05/15/20(1)....................... 14,659 14,646 Series 1103, Class N 11.57% due 06/15/21(1)(12)................... 9,139 165 ----------- 38,361,036 -----------
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Federal National Mtg. Assoc. -- 9.6% 4.46% due 02/01/34(6)............... $ 441,028 $ 433,806 4.50% due 06/01/19.................. 504,151 485,896 4.67% due 10/01/35(6)............... 229,025 228,711 4.75% due 12/15/10.................. 375,000 378,319 4.87% due 01/01/35(6)............... 918,269 909,219 5.00% due 06/01/19.................. 259,774 255,098 5.00% due 03/01/34.................. 297,097 284,146 5.00% due 11/01/34.................. 565,835 541,169 5.00% due 05/01/35.................. 1,267,835 1,211,339 5.00% due 01/01/37.................. 2,934,421 2,799,064 5.00% due 05/01/37.................. 3,157,327 3,011,689 5.00% TBA due October............... 14,459,000 13,790,271 5.25% due 08/01/12.................. 300,000 306,123 5.50% due 11/01/19.................. 1,431,207 1,429,575 5.50% due 08/01/20.................. 340,950 340,286 5.50% due 01/01/29.................. 8,213 8,089 5.50% due 06/01/29.................. 157,762 155,303 5.50% due 06/01/34.................. 367,899 361,090 5.50% due 02/01/35.................. 543,178 532,681 5.50% due 12/01/35.................. 737,622 723,367 5.50% due 02/01/36(6)............... 348,780 350,321 5.50% due 05/01/36.................. 4,416,814 4,332,101 5.50% due 11/01/36.................. 583,808 571,939 5.50% due 12/01/36.................. 3,360,779 3,266,551 5.50% due 04/01/37.................. 6,711,688 6,574,083 5.50% due 05/01/37.................. 7,086,574 6,941,284 5.50% due 07/01/37.................. 2,814,733 2,757,025 5.51% due 01/01/37.................. 4,270,880 4,284,582 6.00% due 02/01/32.................. 103,513 104,260 6.00% due 05/01/34.................. 20,123 20,197 6.00% due 10/01/34.................. 536,380 538,344 6.00% due 06/01/35.................. 192,533 192,985 6.00% due 10/01/36.................. 5,890,442 5,900,250 6.00% due 11/01/36.................. 2,462,254 2,445,992 6.00% due 07/01/37.................. 3,326,731 3,331,706 6.50% due 04/01/34.................. 255,312 260,766 6.50% due 02/01/35.................. 79,028 80,561 6.50% due 07/01/36.................. 698,487 711,304 6.50% due 07/01/37.................. 7,608,645 7,747,486 7.50% due 01/01/30.................. 16,926 17,744 7.50% due 09/01/30.................. 3,434 3,594 8.00% due 11/01/28.................. 23,116 24,460 REMIC Series 1989-2, Class D 8.80% due 01/25/19(1).............. 37,587 40,618 Series 1989-17, Class E 10.40% due 04/25/19(1)............. 5,911 6,384 13.00% due 11/01/15................. 5,443 6,090 ------------ 78,695,868 ------------ Government National Mtg. Assoc. -- 0.0% 7.50% due 07/15/27.................. 16,404 17,232 7.50% due 10/15/27.................. 65,653 68,969 ------------ 86,201 ------------ Total U.S. Government Agencies (cost $118,234,813)................. 117,742,447 ------------
44 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Shares/ Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------- U.S. GOVERNMENT TREASURIES -- 2.6% United States Treasury Bonds -- 1.1% 4.50% due 05/15/17........................ $6,000,000 $ 5,966,250 4.75% due 02/15/37........................ 3,000,000 2,958,516 6.25% due 08/15/23........................ 166,000 190,705 ----------- 9,115,471 ----------- United States Treasury Notes -- 1.5% 3.88% due 05/15/10........................ 175,000 174,494 3.88% due 09/15/10........................ 7,000 6,973 4.00% due 02/15/15........................ 6,000,000 5,837,346 4.38% due 12/15/10........................ 101,000 102,034 4.63% due 12/31/11........................ 500,000 508,750 4.75% due 05/31/12........................ 3,400,000 3,477,295 4.88% due 05/31/11........................ 1,800,000 1,847,250 ----------- 11,954,142 ----------- Total U.S. Government Treasuries (cost $20,246,436)........................ 21,069,613 ----------- COMMON STOCK -- 0.4% Casino Services -- 0.0% Shreveport Gaming Holdings, Inc.+(3)(4)(5). 2,441 56,199 ----------- Cellular Telecom -- 0.3% iPCS, Inc.(4)(5)........................... 60,413 2,077,603 ----------- Independent Power Producer -- 0.0% Mirant Corp.+.............................. 1,929 78,472 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC(3)(4)(5)(20)..... 128,418 53,936 ----------- Medical-Outpatient/Home Medical -- 0.0% Critical Care Systems International, Inc.(3)(4)(5)............................. 4,107 21,562 ----------- Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc.+........... 5,362 11,153 ----------- Oil-Field Services -- 0.1% Trico Marine Services, Inc.+............... 40,529 1,207,764 ----------- Telecom Services -- 0.0% NEON Communications Group, Inc............. 152 745 ----------- Total Common Stock (cost $1,596,020)......................... 3,507,434 ----------- PREFERRED STOCK -- 0.7% Banks-Money Center -- 0.1% Santander Finance Preferred SA 5.87%*(6)... 32,800 676,500 ----------- Banks-Super Regional -- 0.0% Wachovia Capital Trust IX 6.38%............ 12,800 295,296 ----------- Diversified Financial Services -- 0.0% General Electric Capital Corp. 8.00%(7).... 16,000 368,800 ----------- Finance-Mortgage Loan/Banker -- 0.1% Freddie Mac, 6.55%......................... 15,205 381,798 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC, Class C (3)(4)(5)(20)............................. 39,177 78,353 -----------
Shares/ Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------------- Oil Companies-Exploration & Production -- 0.3% EXCO Resources, Inc. Convertible Series A-1, 7.00%(3)(4)........................ 190 $ 2,166,000 Transmeridian Exploration, Inc. 15.00%(3)(8)................................... 3,528 289,296 ------------ 2,455,296 ------------ Special Purpose Entity -- 0.1% Structured Repackaged Asset-Backed Trust Securities 5.47%(6)...................... 29,200 593,052 ------------ Telephone-Integrated -- 0.1% AT&T, Inc. 6.38%................................ 35,400 843,228 ------------ Total Preferred Stock (cost $5,799,915).............................. 5,692,323 ------------ WARRANTS -- 0.0% Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc. Expires 12/15/10 (strike price $4.31)+(3)..................................... 13,811 3,453 ------------ Telecom Services -- 0.0% Leap Wireless International, Inc. Expires 04/15/10 (strike price $96.80)*+(3)(5). 500 0 ------------ Telephone-Integrated -- 0.0% GT Group Telecom, Inc. Expires 02/01/10 (strike price $0.00)*+(3)(5).. 150 1 ------------ Total Warrants (cost $46,436)................................. 3,454 ------------ Total Long-Term Investment Securities (cost $776,947,186)............................ 783,235,038 ------------ SHORT-TERM INVESTMENT SECURITIES -- 2.1% Time Deposits -- 2.1% State Street Euro Dollar Time Deposit 1.40% due 10/01/07............................. $ 685,000 685,000 State Street Euro Dollar Time Deposit 3.55% due 10/01/07............................. 16,382,000 16,382,000 ------------ Total Short-Term Investment Securities (cost $17,067,000)............................. 17,067,000 ------------ REPURCHASE AGREEMENT -- 0.7% State Street Bank & Trust Co. Joint Repurchase Agreement(19) (cost $6,047,000).............................. 6,047,000 6,047,000 ------------ TOTAL INVESTMENTS -- (cost $800,061,186)(18)........................ 98.9% 806,349,038 Other assets less liabilities..................... 1.1 8,586,643 ----------- ------------ NET ASSETS -- 100.0% $814,935,681 =========== ============
- -------- * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At September 30, 2007, the aggregate value of these securities was $94,279,556 representing 11.6% of net assets. Unless otherwise indicated these securities are not considered to be illiquid. ** Denominated in United States dollars unless otherwise indicated. + Non-income producing security (1) Collateralized Mortgage Obligation (2) Variable Rate Security -- the rate reflected is as of September 30, 2007, maturity date reflects the stated maturity date. (3) Fair valued security; see Note 2 45 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued) (4) 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 2. 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, 2007, the Strategic Bond Fund held the following restricted securities:
Market Principal Value % of Acquisition Amount/ Acquisition Market per Net Name Date Shares Cost Value Share Assets - ---- ----------- --------- ----------- ---------- --------- ------ AMC Entertainment Holdings, Inc. 10.65% due 06/15/12........ 6/8/2007 400,000 $ 390,000 9/27/2007 11,051 -- --------------------- 411,051 390,000 $ 401,802 $ 0.98 0.05% Critical Care Systems International, Inc. Common Stock........... 7/20/2006 4,107 37,181 21,562 5.25 0.00 EXCO Resources, Inc. Convertible Preferred Stock Series A-1, 7.00%........... 3/29/2007 37 370,000 9/20/2007 153 1,530,000 --------------------- 190 1,900,000 2,166,000 11,400.00 0.27 ICO North America, Inc. 7.50% due 08/15/09........ 8/11/2005 200,000 200,000 4/19/2006 65,000 81,805 --------------------- 265,000 281,805 257,050 0.97 0.03 iPCS, Inc. Common Stock........... 7/28/2005 1,283 0 7/20/2004 59,130 916,515 --------------------- 60,413 916,515 2,077,603 34.39 0.25 Shreveport Gaming Holdings, Inc. Common Stock........... 7/29/2005 2,047 47,128 7/21/2005 394 9,073 --------------------- 2,441 56,201 56,199 23.02 0.01 Southern Energy, Inc. 7.90% due 07/15/09........ 1/25/2006 1,125,000 0 6/6/2006 425,000 0 --------------------- 1,550,000 0 0 0.00 0.00 Triax Pharmaceuticals 15.54% due 08/30/11........ 08/31/2007 1,500,000 1,348,961 1,348,961 0.90 0.17 Triax Pharmaceuticals Common Stock........... 08/31/2007 128,418 53,936 53,936 0.42 0.01 Triax Pharmaceuticals Preferred Stock........... 08/31/2007 39,177 78,353 78,353 2.00 0.01 ---------- ---- $6,461,466 0.79% ========== ====
(5) Illiquid security (6) 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, 2007. (7) "Step-up" security where the rate increases ("steps-up") at a predetermined rate. Rate shown reflects the increased rate. (8) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays interest/dividends in the form of additional bonds or preferred stocks. (9) Variable Rate Security -- the rate reflected is as of September 30, 2007, maturity date reflects next reset date. (10) Company has filed Chapter 11 bankruptcy protection. (11) Bond is in default and did not pay principal at maturity. (12) Interest Only (13) Company has filed Chapter 7 bankruptcy. (14) Bond in default (15) Perpetual maturity -- maturity date reflects the next call date. (16) Senior Loans in the Fund's Portfolio are generally subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a borrower to prepay, prepayments may occur. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. (17) The Fund invests in Senior Loans which generally pay interest at rates which are periodically re-determined by reference to a base lending rate plus a premium. These base lending rates are generally either the lending rate offered by one or more major United States banks, or the certificate of deposit rate. Senior Loans are generally considered to be restrictive in that the Fund is ordinarily contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. (18) See Note 5 for cost of investments on a tax basis. (19) See Note 2 for details of Joint Repurchase Agreement. (20) Consists of more than one class of securities traded together as a unit. (21) A portion of the interest is paid in the form of additional bonds. (22) Loan is subject to an unfunded loan commitment. See Note 10 for details ADR --American Depository Receipt 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. AUD --Australian Dollar CAD --Canadian Dollar COP --Columbian Peso DKK --Danish Krone EGP --Egyptian Pound EUR --Euro GBP --British Pound JPY --Japanese Yen MXN --Mexican Peso NOK --Norwegian Krone PLN --Polish Zloty SEK --Swedish Krona USD --U.S. Dollar ZAR --South African Rand See Notes to Financial Statements 46 SunAmerica High Yield Bond Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) Industry Allocation* Cellular Telecom...................... 5.6% Medical-Hospitals..................... 5.5 Oil Companies-Exploration & Production 5.4 Repurchase Agreements................. 4.9 Independent Power Producers........... 4.4 Chemicals-Specialty................... 3.4 Special Purpose Entities.............. 3.3 Cable TV.............................. 3.1 Transport-Air Freight................. 3.1 Casino Hotels......................... 2.9 Pipelines............................. 2.8 Television............................ 2.4 Electronic Components-Semiconductors.. 2.3 Metal-Diversified..................... 2.3 Containers-Metal/Glass................ 2.2 Telecom Services...................... 2.2 Auto-Cars/Light Trucks................ 1.9 Medical-Drugs......................... 1.9 Finance-Auto Loans.................... 1.7 Telephone-Integrated.................. 1.7 Satellite Telecom..................... 1.6 Oil-Field Services.................... 1.5 Containers-Paper/Plastic.............. 1.4 Paper & Related Products.............. 1.2 Agricultural Chemicals................ 1.1 Building & Construction Products-Misc. 1.1 Computer Services..................... 1.1 Electric-Integrated................... 1.1 Direct Marketing...................... 1.0 Electric-Generation................... 1.0 Gambling (Non-Hotel).................. 1.0 Medical Products...................... 1.0 Theaters.............................. 1.0 Airlines.............................. 0.8 Food-Meat Products.................... 0.8 Investment Management/Advisor Services 0.8 Recycling............................. 0.8 Rental Auto/Equipment................. 0.8 Retail-Drug Store..................... 0.8 Travel Services....................... 0.7 Chemicals-Diversified................. 0.6 Consumer Products-Misc................ 0.6 Diversified Financial Services........ 0.6 Diversified Manufacturing Operations.. 0.6 Beverages-Non-alcoholic............... 0.5 Broadcast Services/Program............ 0.5 Distribution/Wholesale................ 0.5 Funeral Services & Related Items...... 0.5 Medical Information Systems........... 0.5 Medical-HMO........................... 0.5 Publishing-Periodicals................ 0.5 Energy-Alternate Sources.............. 0.4 Home Furnishings...................... 0.4 Insurance Brokers..................... 0.4 Non-Hazardous Waste Disposal.......... 0.4 Printing-Commercial................... 0.4 Research & Development................ 0.4 Retail-Restaurants.................... 0.4 Storage/Warehousing................... 0.4 Auto/Truck Parts & Equipment-Original. 0.3
Building Products-Wood........... 0.3% Cosmetics & Toiletries........... 0.3 Human Resources.................. 0.3 Medical-Nursing Homes............ 0.3 Physicians Practice Management... 0.3 Retail-Petroleum Products........ 0.3 Steel-Producers.................. 0.3 Transactional Software........... 0.3 Advertising Services............. 0.2 Applications Software............ 0.2 Building & Construction-Misc..... 0.2 Computers-Memory Devices......... 0.2 Electronic Components-Misc....... 0.2 Electronics-Military............. 0.2 Food-Misc........................ 0.2 Golf............................. 0.2 Hotels/Motels.................... 0.2 Leisure Products................. 0.2 Machinery-Farming................ 0.2 Metal Processors & Fabrication... 0.2 Multimedia....................... 0.2 Poultry.......................... 0.2 Retail-Discount.................. 0.2 Rubber-Tires..................... 0.2 Seismic Data Collection.......... 0.2 Transport-Marine................. 0.2 Transport-Services............... 0.2 Transport-Truck.................. 0.2 Building Products-Doors & Windows 0.1 Casino Services.................. 0.1 Medical Instruments.............. 0.1 Medical-Biomedical/Gene.......... 0.1 Medical-Outpatient/Home Medical.. 0.1 ---- 99.9% ====
- -------- * Calculated as a percentage of net assets. Credit Quality+# BBB....... 0.3% BB........ 15.9 B......... 44.9 CCC....... 29.3 Below C... 3.2 Not Rated@ 6.4 ----- 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. 47 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------- CONVERTIBLE BONDS & NOTES -- 0.5% Electronic Components-Semiconductors -- 0.3% Advanced Micro Devices, Inc. Senior Notes 6.00% due 05/01/15*........... $ 50,000 $ 44,938 Spansion, Inc. Senior Sub. Notes 2.25% due 06/15/16*........... 1,150,000 861,062 ---------- 906,000 ---------- Medical Instruments -- 0.1% Kyphon, Inc. Senior Notes 1.25% due 02/01/14*........... 125,000 163,125 ---------- Medical-Biomedical/Gene -- 0.1% Nektar Therapeutics Sub. Notes 3.25% due 09/28/12............ 250,000 214,375 ---------- Telecom Services -- 0.0% ICO North America, Inc. Notes 7.50% due 08/15/09(1)(2)(3)... 75,000 72,750 ---------- Total Convertible Bonds & Notes (cost $1,477,570)............. 1,356,250 ---------- CORPORATE BONDS & NOTES -- 77.0% Advertising Services -- 0.2% R.H. Donnelley Corp. Senior Notes 8.88% due 10/15/17*........... 400,000 406,000 ---------- Agricultural Chemicals -- 1.1% Mosaic Global Holdings, Inc. Debentures 7.38% due 08/01/18............ 425,000 412,250 The Mosaic Co. Senior Notes 7.38% due 12/01/14*........... 1,675,000 1,758,750 The Mosaic Co. Senior Notes 7.63% due 12/01/16*........... 975,000 1,039,594 ---------- 3,210,594 ---------- Airlines -- 0.8% American Airlines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.82% due 05/23/11............ 1,800,000 1,755,000 Delta Air Lines, Inc. Pass Through Certs. Series 2000-1, Class A-2 7.57% due 11/18/10............ 350,000 358,969 United Air Lines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.20% due 09/01/08............ 250,863 250,236 ---------- 2,364,205 ----------
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- Applications Software -- 0.2% SS&C Technologies, Inc. Company Guar. Notes 11.75% due 12/01/13........................ $ 525,000 $ 556,500 ---------- Auto-Cars/Light Trucks -- 1.9% Ford Motor Co. Debentures 6.38% due 02/01/29......................... 3,455,000 2,539,425 General Motors Corp. Debentures 8.25% due 07/15/23......................... 2,865,000 2,506,875 General Motors Corp. Senior Bonds 8.38% due 07/15/33......................... 454,000 397,817 ---------- 5,444,117 ---------- Auto/Truck Parts & Equipment-Original -- 0.3% Lear Corp. Senior Notes 8.75% due 12/01/16......................... 925,000 869,500 ---------- Auto/Truck Parts & Equipment-Replacement -- 0.0% Exide Corp. Notes 10.00% due 03/15/25+(1)(2)................. 1,650,000 0 ---------- Beverages-Non-alcoholic -- 0.2% Cott Beverages USA Inc. Company Guar. Notes 8.00% due 12/15/11......................... 425,000 418,625 ---------- Broadcast Services/Program -- 0.5% Fisher Communications, Inc. Senior Notes 8.63% due 09/15/14......................... 976,000 1,010,160 Nexstar Finance, Inc. Senior Sub. Notes 7.00% due 01/15/14......................... 500,000 480,000 ---------- 1,490,160 ---------- Building & Construction Products-Misc. -- 1.1% Associated Materials, Inc. Senior Sub. Notes 9.75% due 04/15/12......................... 950,000 964,250 Dayton Superior Corp. Senior Sec. Notes 10.75% due 09/15/08........................ 899,000 903,495 Interline Brands, Inc. Senior Sub. Notes 8.13% due 06/15/14......................... 550,000 543,125 NTK Holdings, Inc. Senior Disc. Notes 10.75% due 03/01/14........................ 925,000 568,875 ---------- 2,979,745 ---------- Building Products-Wood -- 0.3% Masonite Corp. Company Guar. Notes 11.00% due 04/06/15........................ 1,092,000 922,740 ----------
48 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) --------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Cable TV -- 3.1% CCH I LLC Company Guar. Notes 11.00% due 10/01/15............. $3,021,000 $3,096,525 CCH II LLC/CCH II Capital Corp. Senior Notes, Series B 10.25% due 09/15/10............. 1,000,000 1,040,000 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 10.25% due 10/01/13............. 2,527,000 2,634,397 CCO Holdings LLC/CCO Holdings Capital Corp. Senior Notes 8.75% due 11/15/13.............. 500,000 502,500 CSC Holdings, Inc. Senior Notes 7.63% due 04/01/11.............. 300,000 300,750 Insight Communications Co., Inc. Senior Notes 12.25% due 02/15/11(6).......... 1,165,000 1,202,863 ---------- 8,777,035 ---------- Casino Hotels -- 2.9% Eldorado Casino Corp. Sec. Bonds 10.00% due 08/01/12(2)(5)....... 1,721,177 1,738,389 Eldorado Resorts LLC Senior Notes 9.00% due 04/15/14(1)(2)........ 2,675,000 2,675,000 MGM Mirage, Inc. Senior Notes 5.88% due 02/27/14.............. 1,775,000 1,635,219 Station Casinos, Inc. Senior Sub. Notes 6.88% due 03/01/16.............. 1,125,000 978,750 Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 09/15/14*............. 1,200,000 1,242,000 ---------- 8,269,358 ---------- Cellular Telecom -- 2.0% Centennial Communications Corp. Senior Notes 10.00% due 01/01/13............. 834,000 881,955 Centennial Communications Corp. Senior Notes 10.13% due 06/15/13............. 150,000 159,000 Centennial Communications Corp. Senior Notes 10.98% due 01/01/13(4).......... 825,000 849,750 Cricket Communications, Inc. Company Guar. Notes 9.38% due 11/01/14.............. 250,000 253,750 Cricket Communications, Inc. Company Guar. Notes 9.38% due 11/01/14*............. 950,000 964,250
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- Cellular Telecom (continued) MetroPCS Wireless, Inc. Senior Notes 9.25% due 11/01/14*.................. $1,200,000 $1,224,000 Rural Cellular Corp. Senior Sub. Notes 8.62% due 06/01/13*(4)............... 1,225,000 1,255,625 Rural Cellular Corp. Senior Notes 11.11% due 11/01/12(4)............... 100,000 102,000 ---------- 5,690,330 ---------- Chemicals-Diversified -- 0.6% Lyondell Chemical Co. Company Guar. Notes 8.00% due 09/15/14................... 1,575,000 1,732,500 ---------- Chemicals-Specialty -- 3.4% Huntsman International LLC Senior Sub. Notes 7.38% due 01/01/15................... 1,900,000 1,985,500 Huntsman International LLC Company Guar. Notes 7.88% due 11/15/14................... 1,650,000 1,757,250 Momentive Performance Materials, Inc. Senior Sub. Notes 11.50% due 12/01/16*................. 3,425,000 3,390,750 Tronox Worldwide LLC Company Guar. Notes 9.50% due 12/01/12................... 2,375,000 2,369,062 ---------- 9,502,562 ---------- Computer Services -- 0.8% Compucom Systems, Inc. Senior Notes 12.00% due 11/01/14*................. 650,000 819,000 Compucom Systems, Inc. Senior Sub. Notes 12.50% due 10/01/15*................. 1,325,000 1,291,875 ---------- 2,110,875 ---------- Consumer Products-Misc. -- 0.6% American Achievement Corp. Senior Sub. Notes 8.25% due 04/01/12................... 372,000 370,140 Jostens Holding Corp. Senior Notes 10.25% due 12/01/13(6)............... 1,300,000 1,209,000 Visant Holding Corp. Senior Notes 8.75% due 12/01/13................... 150,000 153,375 ---------- 1,732,515 ---------- Containers-Metal/Glass -- 1.4% Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23................... 2,125,000 2,082,500
49 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Containers-Metal/Glass (continued) Owens-Brockway Glass Container, Inc. Company Guar. Notes 8.25% due 05/15/13....................... $1,865,000 $1,930,275 ---------- 4,012,775 ---------- Containers-Paper/Plastic -- 1.4% Jefferson Smurfit Corp. Company Guar. Notes 8.25% due 10/01/12....................... 650,000 651,625 Pliant Corp. Company Guar. Notes 11.13% due 09/01/09...................... 1,790,000 1,611,000 Smurfit-Stone Container Enterprises, Inc. Senior Notes 8.00% due 03/15/17....................... 1,675,000 1,645,687 ---------- 3,908,312 ---------- Cosmetics & Toiletries -- 0.3% Revlon Consumer Products Corp. Senior Sub. Notes 8.63% due 02/01/08....................... 775,000 763,375 Revlon Consumer Products Corp. Senior Notes 9.50% due 04/01/11....................... 175,000 166,250 ---------- 929,625 ---------- Data Processing/Management -- 0.2% Seitel, Inc. Senior Notes 9.75% due 02/15/14....................... 650,000 614,250 ---------- Direct Marketing -- 0.8% Affinity Group, Inc. Senior Sub. Notes 9.00% due 02/15/12....................... 2,100,000 2,142,000 ---------- Distribution/Wholesale -- 0.5% Varietal Distribution, Inc. Senior Notes 10.25% due 07/15/15*..................... 1,375,000 1,292,500 ---------- Diversified Manufacturing Operations -- 0.6% Harland Clarke Holdings Corp. Notes 9.50% due 05/15/15....................... 625,000 557,813 Harland Clarke Holdings Corp. Notes 10.31% due 05/15/15(4)................... 500,000 445,625 Indalex Holding Corp. Sec. Notes 11.50% due 02/01/14...................... 600,000 564,000 ---------- 1,567,438 ---------- Electric-Generation -- 1.0% Edison Mission Energy Senior Notes 7.20% due 05/15/19*...................... 1,500,000 1,477,500 Edison Mission Energy Senior Notes 7.63% due 05/15/27*...................... 950,000 916,750
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ Electric-Generation (continued) Reliant Energy Mid-Atlantic Power Holdings LLC Pass Through Certs. Series B 9.24% due 07/02/17....................... $ 329,676 $ 354,401 ---------- 2,748,651 ---------- Electric-Integrated -- 1.1% Mirant Americas Generation LLC Senior Notes 8.30% due 05/01/11....................... 2,700,000 2,727,000 Mirant Americas Generation LLC Senior Notes 8.50% due 10/01/21....................... 500,000 476,250 Southern Energy, Inc. Notes 7.90% due 07/15/09+(1)(2)(3)............. 3,525,000 0 ---------- 3,203,250 ---------- Electronic Components-Semiconductors -- 1.7% Advanced Micro Devices, Inc. Senior Notes 7.75% due 11/01/12....................... 536,000 493,120 Amkor Technology, Inc. Senior Notes 9.25% due 06/01/16....................... 1,230,000 1,242,300 Freescale Semiconductor, Inc. Senior Notes 9.13% due 12/15/14....................... 1,175,000 1,086,875 Freescale Semiconductor, Inc. Senior Sub. Notes 10.13% due 12/15/16...................... 1,975,000 1,836,750 Spansion, Inc. Senior Notes 11.25% due 01/15/16*..................... 170,000 166,600 ---------- 4,825,645 ---------- Electronics-Military -- 0.2% L-3 Communications Corp. Company Guar. Notes 6.13% due 07/15/13....................... 525,000 515,813 ---------- Energy-Alternate Sources -- 0.4% Aventine Renewable Energy Holdings, Inc. Notes 10.00% due 04/01/17...................... 475,000 429,875 VeraSun Energy Corp. Senior Notes 9.38% due 06/01/17*...................... 275,000 236,500 VeraSun Energy Corp. Sec. Notes 9.88% due 12/15/12....................... 500,000 505,000 ---------- 1,171,375 ---------- Finance-Auto Loans -- 1.7% Ford Motor Credit Co. LLC Notes 7.38% due 10/28/09....................... 4,825,000 4,731,188 ----------
50 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Food-Misc. -- 0.2% Wornick Co. Sec. Notes 10.88% due 07/15/11+(8).............. $ 950,000 $ 665,000 ---------- Funeral Services & Related Items -- 0.5% Service Corp. International Senior Notes 7.00% due 06/15/17................... 825,000 810,562 Service Corp. International Senior Notes 7.63% due 10/01/18................... 105,000 108,938 Stewart Enterprises, Inc. Senior Notes 6.25% due 02/15/13................... 600,000 583,500 ---------- 1,503,000 ---------- Gambling (Non-Hotel) -- 1.0% Downstream Development Authority Senior Notes 12.00% due 10/15/15*................. 1,000,000 1,010,000 Greektown Holdings LLC Senior Notes 10.75% due 12/01/13*................. 600,000 594,000 Shingle Springs Tribal Gaming Authority Senior Notes 9.38% due 06/15/15*.................. 400,000 404,000 Waterford Gaming LLC Senior Notes 8.63% due 09/15/14*.................. 750,000 772,500 ---------- 2,780,500 ---------- Golf -- 0.2% True Temper Sports, Inc. Company Guar. Notes 8.38% due 09/15/11................... 1,000,000 550,000 ---------- Home Furnishings -- 0.4% Simmons Co. Senior Notes 10.00% due 12/15/14(6)............... 1,426,000 1,137,235 ---------- Hotel/Motel -- 0.2% Gaylord Entertainment Co. Company Guar. Notes 6.75% due 11/15/14................... 460,000 441,600 ---------- Human Resources -- 0.3% Team Health, Inc. Company Guar. Notes 11.25% due 12/01/13.................. 800,000 848,000 ---------- Independent Power Producers -- 4.3% Calpine Corp. Sec. Notes 8.75% due 07/15/13*(9)............... 7,085,000 7,722,650 NRG Energy, Inc. Company Guar. Notes 7.38% due 02/01/16................... 2,550,000 2,556,375
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- Independent Power Producers (continued) Orion Power Holdings, Inc. Senior Notes 12.00% due 05/01/10................. $ 200,000 $ 219,000 Reliant Energy, Inc. Senior Notes 7.63% due 12/31/14.................. 525,000 528,938 Reliant Energy, Inc Senior Notes 7.88% due 12/31/17.................. 925,000 930,781 ----------- 11,957,744 ----------- Insurance Brokers -- 0.4% USI Holdings Corp. Senior Notes 9.43% due 11/15/14*(4).............. 725,000 688,750 USI Holdings Corp. Senior Sub. Notes 9.75% due 05/15/15*................. 450,000 403,875 ----------- 1,092,625 ----------- Investment Management/Advisor Services -- 0.8% LVB Acquisition Merger Sub, Inc. Senior Notes 10.38% due 10/15/17*................ 650,000 628,062 LVB Acquisition Merger Sub, Inc. Senior Sub. Notes 11.63% due 10/15/17*................ 925,000 897,250 LVB Acquisition Merger, Inc. Senior Notes 10.00% due 10/15/17*................ 675,000 675,000 ----------- 2,200,312 ----------- Machinery-Farming -- 0.2% Case Corp. Notes 7.25% due 01/15/16.................. 625,000 646,875 ----------- Medical Information Systems -- 0.5% Spheris, Inc. Senior Sub. Notes 11.00% due 12/15/12................. 1,475,000 1,475,000 ----------- Medical Products -- 1.0% ReAble Therapeutics Finance LLC Company Guar. Notes 11.75% due 11/15/14................. 1,300,000 1,235,000 Universal Hospital Services, Inc. Sec. Bonds 8.50% due 06/01/15*................. 725,000 717,750 Universal Hospital Services, Inc. Senior Notes 8.76% due 06/01/15*(4).............. 825,000 820,875 ----------- 2,773,625 ----------- Medical-HMO -- 0.5% Multiplan, Inc. Senior Sub. Notes 10.38% due 04/15/16*................ 1,325,000 1,325,000 -----------
51 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Medical-Hospitals -- 5.2% Community Health Systems, Inc. Senior Sec. Notes 8.88% due 07/15/15*....................... $3,715,000 $ 3,817,162 HCA, Inc. Senior Notes 6.25% due 02/15/13........................ 875,000 774,375 HCA, Inc. Sec. Notes 9.13% due 11/15/14*....................... 1,325,000 1,397,875 HCA, Inc. Sec. Notes 9.25% due 11/15/16*....................... 5,750,000 6,109,375 HCA, Inc. Sec. Notes 9.63% due 11/15/16*....................... 1,000,000 1,067,500 IASIS Healthcare LLC / IASIS Capital Corp. Bank Guaranteed Notes 8.75% due 06/15/14........................ 1,335,000 1,351,688 ----------- 14,517,975 ----------- Medical-Nursing Homes -- 0.3% Sun Healthcare Group, Inc. Senior Sub. Notes 9.13% due 04/15/15*....................... 825,000 841,500 ----------- Metal Processors & Fabrication -- 0.2% Metals USA, Inc. Sec. Notes 11.13% due 12/01/15....................... 500,000 532,500 ----------- Metal-Diversified -- 2.3% Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.25% due 04/01/15........................ 410,000 442,800 Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.38% due 04/01/17........................ 3,045,000 3,326,662 Noranda Aluminium Acquisition Corp. Senior Notes 9.36% due 05/15/15*....................... 1,950,000 1,833,000 Noranda Aluminium Holding Corp. Senior Notes 11.14% due 11/15/14*...................... 750,000 723,750 ----------- 6,326,212 ----------- Multimedia -- 0.1% Haights Cross Operating Co. Company Guar. Senior Notes 11.75% due 08/15/11....................... 325,000 337,188 ----------- Non-Ferrous Metals -- 0.0% Renco Metals, Inc. Bonds 11.50% due 07/01/03+(1)(2)(9)(10)......... 2,150,000 0 ----------- Non-Hazardous Waste Disposal -- 0.4% Allied Waste North America, Inc. Company Guar. Notes 6.88% due 06/01/17........................ 1,225,000 1,231,125 -----------
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- Oil Companies-Exploration & Production -- 2.9% Belden & Blake Corp. Company Guar. Sec. Notes 8.75% due 07/15/12......................... $ 375,000 $ 381,563 Brigham Exploration Co. Company Guar. Notes 9.63% due 05/01/14......................... 875,000 824,687 Chaparral Energy, Inc. Company Guar. Notes 8.50% due 12/01/15......................... 1,025,000 960,937 Chesapeake Energy Corp. Senior Notes 6.63% due 01/15/16......................... 1,325,000 1,318,375 Dune Energy, Inc. Sec. Notes 10.50% due 06/01/12*....................... 425,000 405,875 Encore Acquisition Co. Senior Sub. Notes 6.00% due 07/15/15......................... 550,000 496,375 Energy Partners, Ltd. Senior Notes 9.75% due 04/15/14*........................ 425,000 408,000 Hilcorp Energy I LP Senior Notes 7.75% due 11/01/15*........................ 800,000 782,000 Quicksilver Resources, Inc. Company Guar. Notes 7.13% due 04/01/16......................... 250,000 246,250 Sabine Pass LNG LP Sec. Notes 7.50% due 11/30/16......................... 1,825,000 1,797,625 Transmeridian Exploration, Inc. Company Guar. Notes 12.00% due 12/15/10........................ 650,000 629,688 ---------- 8,251,375 ---------- Oil-Field Services -- 0.4% Allis-Chalmers Energy, Inc. Company Guar. Notes 9.00% due 01/15/14......................... 655,000 659,913 Oslo Seismic Services, Inc. 1st Mtg. Bonds 8.28% due 06/01/11......................... 505,275 522,156 ---------- 1,182,069 ---------- Paper & Related Products -- 0.9% Bowater, Inc. Notes 6.50% due 06/15/13......................... 600,000 438,000 Caraustar Industries, Inc. Notes 7.38% due 06/01/09......................... 825,000 752,812 Georgia-Pacific Corp. Company Guar. Notes 7.00% due 01/15/15*........................ 875,000 853,125
52 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Paper & Related Products (continued) Georgia-Pacific Corp. Company Guar. Notes 7.13% due 01/15/17*.................. $ 575,000 $ 556,313 ---------- 2,600,250 ---------- Physicians Practice Management -- 0.3% US Oncology, Inc. Senior Sub. Notes 10.75% due 08/15/14.................. 810,000 836,325 ---------- Pipelines -- 2.8% Atlas Pipeline Partners LP Company Guar. Notes 8.13% due 12/15/15................... 650,000 640,250 Copano Energy LLC Company Guar. Notes 8.13% due 03/01/16................... 1,075,000 1,093,812 Dynegy Holdings, Inc. Senior Notes 8.75% due 02/15/12................... 750,000 774,375 Dynegy-Roseton Danskammer Pass Through Certs. Series B 7.67% due 11/08/16................... 675,000 678,375 El Paso Corp. Senior Sub. Notes 6.88% due 06/15/14................... 875,000 885,938 MarkWest Energy Partners LP Senior Notes 6.88% due 11/01/14................... 600,000 555,000 MarkWest Energy Partners LP Company Guar. Notes 8.50% due 07/15/16................... 175,000 172,375 NGC Corp Capital Trust Guar. Bonds 8.32% due 06/01/27................... 1,050,000 971,250 Williams Cos., Inc. Senior Notes 7.88% due 09/01/21................... 1,825,000 1,984,687 ---------- 7,756,062 ---------- Poultry -- 0.2% Pilgrim's Pride Corp. Senior Sub. Notes 8.38% due 05/01/17................... 525,000 535,500 ---------- Printing-Commercial -- 0.2% Valassis Communications, Inc. Senior Notes 8.25% due 03/01/15................... 650,000 565,500 ---------- Publishing-Periodicals -- 0.5% The Reader's Digest Association, Inc. Senior Sub. Notes 9.00% due 02/15/17*.................. 1,600,000 1,440,000 ---------- Recycling -- 0.8% Aleris International, Inc. Senior Notes 9.00% due 12/15/14................... 1,315,000 1,216,375
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- Recycling (continued) Aleris International, Inc. Senior Sub. Notes 10.00% due 12/15/16.................. $1,225,000 $1,084,125 ---------- 2,300,500 ---------- Rental Auto/Equipment -- 0.6% United Rentals North America, Inc. Senior Sub. Notes 7.75% due 11/15/13................... 1,650,000 1,699,500 ---------- Research & Development -- 0.4% Alion Science and Technology Corp. Company Guar. Notes 10.25% due 02/01/15.................. 1,080,000 980,100 ---------- Retail-Discount -- 0.2% Dollar General Corp. Senior Notes 10.63% due 07/15/15*................. 600,000 564,000 ---------- Retail-Drug Store -- 0.8% General Nutrition Centers, Inc. Senior Notes 10.01% due 03/15/14*................. 175,000 168,000 Rite Aid Corp. Company Guar. Notes 9.50% due 06/15/17*.................. 2,175,000 2,033,625 ---------- 2,201,625 ---------- Retail-Petroleum Products -- 0.3% Ferrellgas LP Senior Notes 6.75% due 05/01/14................... 725,000 706,875 ---------- Retail-Restaurants -- 0.4% Dave & Buster's, Inc. Company Guar. Notes 11.25% due 03/15/14.................. 475,000 479,750 NPC International, Inc. Company Guar. Notes 9.50% due 05/01/14................... 775,000 705,250 ---------- 1,185,000 ---------- Rubber-Tires -- 0.2% Cooper Standard Automotive, Inc. Company Guar. Notes 8.38% due 12/15/14................... 750,000 652,500 ---------- Rubber/Plastic Products -- 0.0% Venture Holdings Co. LLC Company Guar. Notes 11.00% due 06/01/07+(10)(12)......... 550,000 2,200 ---------- Special Purpose Entities -- 3.2% AAC Group Holding Corp. Senior Notes 10.25% due 10/01/12(6)............... 1,200,000 1,068,000 AMR HoldCo, Inc./EmCare Hold Co, Inc. Senior Sub. Notes 10.00% due 02/15/15.................. 450,000 477,000
53 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Special Purpose Entities (continued) CCM Merger, Inc. Notes 8.00% due 08/01/13*......................... $ 475,000 $ 463,125 CHR Intermediate Holding Corp. Senior Notes 12.61% due 06/01/13*........................ 75,000 76,313 Consolidated Communications Holdings, Inc. Senior Notes 9.75% due 04/01/12.......................... 810,000 818,100 Hawker Beechcraft Acquisition Co. LLC/Hawker Beechcraft Notes Co. Senior Sub. Notes 9.75% due 04/01/17*......................... 425,000 434,562 Hexion US Fin Corp. Company Guar. Notes 9.75% due 11/15/14.......................... 400,000 440,000 KAR Holdings, Inc. Senior Notes 8.75% due 05/01/14*......................... 300,000 287,250 KAR Holdings, Inc. Senior Notes 9.36% due 05/01/14*(4)...................... 725,000 694,187 Local TV Finance LLC Senior Notes 9.25% due 06/15/15*......................... 725,000 681,500 MedCath Holdings Corp. Senior Notes 9.88% due 07/15/12.......................... 646,000 684,760 MXEnergy Holdings, Inc. Senior Notes 12.81% due 08/01/11(4)...................... 1,075,000 994,375 PNA Intermediate Holding Corp. Senior Notes 12.56% due 02/15/13*(4)..................... 300,000 294,000 Snoqualmie Entertainment Authority Notes 9.13% due 02/01/15*......................... 950,000 935,750 Visant Corp. Company Guar. Notes 7.63% due 10/01/12.......................... 750,000 763,125 ---------- 9,112,047 ---------- Steel-Producer -- 0.3% Steel Dynamics, Inc. Senior Notes 6.75% due 04/01/15*......................... 825,000 796,125 ---------- Storage/Warehousing -- 0.4% Mobile Mini, Inc. Senior Notes 6.88% due 05/01/15.......................... 510,000 495,975 Mobile Services Group, Inc. Senior Notes 9.75% due 08/01/14*......................... 725,000 725,000 ---------- 1,220,975 ----------
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Telecom Services -- 1.2% Cincinnati Bell Telephone Co. Company Guar. Notes 7.18% due 12/15/23...................... $ 375,000 $ 361,875 Cincinnati Bell Telephone Co. Company Guar. Notes 7.20% due 11/29/23...................... 1,525,000 1,456,375 PAETEC Holding Corp. Senior Notes 9.50% due 07/15/15*..................... 1,450,000 1,446,375 ---------- 3,264,625 ---------- Telephone-Integrated -- 1.7% Cincinnati Bell, Inc. Senior Notes 7.25% due 06/15/23...................... 225,000 213,750 Cincinnati Bell, Inc. Company Guar. Notes 8.38% due 01/15/14...................... 1,150,000 1,147,125 Citizens Communications Co. Senior Notes 7.13% due 03/15/19...................... 825,000 812,625 Citizens Communications Co. Senior Notes 9.00% due 08/15/31...................... 1,031,000 1,046,465 Qwest Communications International, Inc. Company Guar. Notes 7.50% due 02/15/14...................... 1,650,000 1,670,625 ---------- 4,890,590 ---------- Television -- 2.4% Allbritton Communications Co. Senior Sub. Notes 7.75% due 12/15/12...................... 500,000 505,000 Bonten Media Acquisition Co. Company Guar. Notes 9.00% due 06/01/15*..................... 275,000 246,125 ION Media Networks, Inc. Senior Notes 8.49% due 01/15/12*(4).................. 25,000 24,875 LIN Television Corp. Senior Sub. Notes 6.50% due 05/15/13...................... 1,250,000 1,215,625 Paxson Communication Corp. Sec. Senior Notes 11.49% due 01/15/13*(4)................. 3,275,000 3,340,500 Young Broadcasting, Inc. Senior Sub. Notes 8.75% due 01/15/14...................... 725,000 612,625 Young Broadcasting, Inc. Company Guar. Notes 10.00% due 03/01/11..................... 750,000 691,875 ---------- 6,636,625 ----------
54 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Theaters -- 1.0% AMC Entertainment, Inc. Senior Sub. Notes 8.00% due 03/01/14................. $1,900,000 $ 1,809,750 Cinemark, Inc. Senior Notes 9.75% due 03/15/14(6).............. 925,000 874,125 ------------ 2,683,875 ------------ Transactional Software -- 0.3% Open Solutions, Inc. Senior Sub. Notes 9.75% due 02/01/15*................ 1,000,000 962,500 ------------ Transport-Air Freight -- 3.1% Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class B 7.63% due 01/02/15................. 5,437,354 6,252,957 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20................. 17,935 18,854 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20*................ 791,752 832,329 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class B 9.06% due 07/02/17................. 1,301,358 1,587,657 ------------ 8,691,797 ------------ Transport-Services -- 0.2% Bristow Group, Inc. Senior Notes 7.50% due 09/15/17*................ 250,000 255,000 PHI, Inc. Company Guar. Notes 7.13% due 04/15/13................. 425,000 408,000 ------------ 663,000 ------------ Transport-Truck -- 0.2% Swift Acquisition Corp. Sec. Senior Notes 13.31% due 05/15/15*(4)............ 375,000 255,000 Swift Acquisition Corp. Sec. Notes 12.50% due 05/15/17*............... 450,000 301,500 ------------ 556,500 ------------ Travel Services -- 0.3% Travelport LLC Company Guar. Notes 9.88% due 09/01/14................. 650,000 663,000 Travelport LLC Company Guar. Notes 11.88% due 09/01/16................ 100,000 104,750 ------------ 767,750 ------------ Total Corporate Bonds & Notes (cost $212,869,611)................ 215,028,989 ------------
Market Principal Value Security Description Amount (Note 2) --------------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES -- 8.7% Building & Construction-Misc. -- 0.2% North American Energy Partners, Inc. Senior Notes 8.75% due 12/01/11.................... $ 610,000 $ 616,100 ---------- Building Products-Doors & Windows -- 0.1% Masonite International Corp. Company Guar. Notes 11.00% due 04/06/15................... 233,000 198,050 ---------- Computers-Memory Devices -- 0.2% Seagate Technology HDD Holdings Company Guar. Notes 6.80% due 10/01/16.................... 425,000 415,438 ---------- Containers-Metal/Glass -- 0.8% Vitro SAB de CV Senior Notes 9.13% due 02/01/17.................... 2,300,000 2,259,750 ---------- Electronic Components-Misc. -- 0.2% NXP BV / NXP Funding LLC Company Guar. Notes 9.50% due 10/15/15.................... 610,000 568,825 ---------- Electronic Components-Semiconductors -- 0.3% Avago Technologies Finance Company Guar. Notes 10.13% due 12/01/13................... 650,000 698,750 STATS ChipPAC, Ltd. Company Guar. Notes 6.75% due 11/15/11.................... 225,000 225,562 ---------- 924,312 ---------- Food-Meat Products -- 0.8% JBS SA Company Guar. Notes 9.38% due 02/07/11.................... 1,150,000 1,181,625 JBS SA Notes 9.38% due 02/07/11.................... 250,000 256,875 JBS SA Senior Notes 10.50% due 08/04/16*.................. 825,000 872,437 ---------- 2,310,937 ---------- Independent Power Producer -- 0.0% AES Drax Energy, Ltd. Sec. Notes 11.50% due 08/30/10+(2)(8)............ 4,460,000 4,460 ---------- Medical-Drugs -- 1.4% Angiotech Pharmaceuticals, Inc. Company Guar. Notes 7.75% due 04/01/14.................... 550,000 503,250 Angiotech Pharmaceuticals, Inc. Company Guar. Notes 9.37% due 12/01/13(4)................. 825,000 845,625 Elan Finance PLC Company Guar. Bonds 7.75% due 11/15/11.................... 1,400,000 1,372,000
55 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES (continued) Medical-Drugs (continued) Elan Finance PLC Company Guar. Notes 8.88% due 12/01/13......................... $ 575,000 $ 564,938 Elan Finance PLC Company Guar. Notes 9.56% due 11/15/11(4)...................... 575,000 570,687 ---------- 3,856,500 ---------- Metal Processors & Fabrication -- 0.0% International Utility Structures, Inc. Senior Sub. Notes 10.75% due 02/01/08+(1)(2)(8)(11).......... 2,150,000 43,000 ---------- Multimedia -- 0.1% Quebecor Media, Inc. Senior Notes 7.75% due 03/15/16*........................ 425,000 405,344 ---------- Oil Companies-Exploration & Production -- 1.0% Compton Petroleum Finance Corp. Company Guar. Notes 7.63% due 12/01/13......................... 875,000 844,375 OPTI Canada, Inc. Sec. Notes 7.88% due 12/15/14*........................ 1,150,000 1,150,000 Paramount Resources, Ltd. Senior Notes 8.50% due 01/31/13......................... 650,000 663,000 ---------- 2,657,375 ---------- Paper & Related Products -- 0.3% Abitibi-Consolidated, Inc. Notes 5.25% due 06/20/08......................... 100,000 95,500 Abitibi-Consolidated, Inc. Notes 6.00% due 06/20/13......................... 285,000 199,500 Abitibi-Consolidated, Inc. Notes 8.55% due 08/01/10......................... 700,000 577,500 ---------- 872,500 ---------- Printing-Commercial -- 0.2% Quebecor World Capital Corp. Senior Notes 8.75% due 03/15/16*........................ 625,000 567,188 ---------- Satellite Telecom -- 1.6% Intelsat Bermuda, Ltd. Company Guar. Notes 8.89% due 01/15/15(4)...................... 645,000 651,450 Intelsat Bermuda, Ltd. Senior Notes 11.25% due 06/15/16........................ 1,100,000 1,178,375 Intelsat Intermediate Holding Co., Ltd. Senior Notes 9.25% due 02/01/15(6)...................... 2,010,000 1,653,225
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Satellite Telecom (continued) Intelsat, Ltd. Senior Notes 6.50% due 11/01/13..................... $ 950,000 $ 722,000 Intelsat, Ltd. Senior Notes 7.63% due 04/15/12..................... 450,000 384,750 ----------- 4,589,800 ----------- Special Purpose Entity -- 0.3% Hellas Telecommunications Luxembourg II Sub. Notes 10.99% due 01/15/15*(4)................ 950,000 919,125 ----------- Telecom Services -- 1.0% Global Crossing UK Finance PLC Company Guar. Notes 10.75% due 12/15/14.................... 675,000 707,062 Telenet Group Holdings NV Notes 11.50% due 06/15/14*(6)................ 2,014,000 1,993,860 ----------- 2,700,922 ----------- Transport-Marine -- 0.2% Navios Maritime Holdings, Inc. Senior Notes 9.50% due 12/15/14..................... 475,000 489,844 ----------- Total Foreign Corporate Bonds & Notes (cost $28,869,325)..................... 24,399,470 ----------- LOANS(13)(14) -- 2.6% Beverages-Non-alcoholic -- 0.3% Le-Natures, Inc. 9.39% due 01/01/11+(2)(8)(9)........... 1,200,000 732,000 ----------- Computer Services -- 0.3% CompuCom Systems, Inc., Series B 8.63% due 08/30/14(2).................. 1,000,000 975,000 ----------- Diversified Financial Services -- 0.6% Wind Acquisitions Holdings Finance S.A. 12.61% due 12/21/11(2)(3).............. 1,690,031 1,701,299 ----------- Leisure Products -- 0.2% AMC Entertainment Holdings, Inc. 10.69% due 06/15/12(2)(3).............. 616,576 602,703 ----------- Medical-Drugs -- 0.5% Triax Pharmaceuticals LLC -- First Lien 15.54% due 08/30/11(1)(2)(3)(17)(18)... 1,500,000 1,348,961 ----------- Medical-Hospitals -- 0.3% Iasis Healthcare Corp. 10.61% due 06/15/14(2)................. 1,026,516 980,964 ----------- Oil-Field Services -- 0.3% Stallion Oilfield Service 9.82% due 07/30/12(2).................. 1,000,000 975,000 ----------- Rental Auto/Equipment -- 0.2% Neff Corp. 8.89% due 11/30/14(2).................. 500,000 453,541 -----------
56 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Share/ Market Principal Value Security Description Amount (Note 2) ----------------------------------------------------------------------- LOANS (continued) Travel Service -- 0.4% Travelport Holdings, Ltd. 12.35% due 03/27/12(2)(3)..................... $1,064,645 $ 1,020,284 ----------- Total Loans (cost $9,362,016)............................. 8,789,752 ----------- COMMON STOCK -- 4.7% Casino Services -- 0.1% Capital Gaming International, Inc.+(1)(2)...... 77 0 Shreveport Gaming Holdings, Inc.(1)(2)(3)...... 14,150 325,776 ----------- 325,776 ----------- Cellular Telecom -- 3.6% iPCS, Inc.(2)(3)............................... 293,260 10,085,211 ----------- Independent Power Producer -- 0.1% Mirant Corp.+.................................. 4,388 178,504 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC(1)(2)(3)(16)......... 128,418 53,936 ----------- Medical-Outpatient/Home Medical -- 0.1% Critical Care Systems International, Inc.(1)(2)(3).................. 69,700 365,925 ----------- Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc.+............... 14 29 ----------- Oil-Field Services -- 0.8% Trico Marine Services, Inc.+................... 74,859 2,230,798 ----------- Total Common Stock (cost $2,954,714)............................. 13,240,179 ----------- PREFERRED STOCK -- 1.5% Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC, Class C(1)(2)(3)(16).......................... 39,176 78,353 ----------- Oil Companies-Exploration & Production -- 1.5% EXCO Resources, Inc. Convertible 7.00% Series A-1(1)(3)(5)..................... 318 3,625,200 Transmeridian Exploration, Inc. 15.00%(1)..................................... 6,716 550,712 ----------- 4,175,912 ----------- Total Preferred Stock (cost $3,877,803)............................. 4,254,265 ----------- WARRANTS -- 0.0%+ Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc. Expires 12/15/10 (strike price $4.31)*(1)(2).. 44,885 11,221 ----------- Telecom Services -- 0.0% KMC Telecom Holdings, Inc. Expires 01/31/08 (strike price $0.01)*(1)(2).. 3,650 0 Leap Wireless International, Inc. Expires 04/15/10 (strike price $96.80)*(1)(2). 2,250 0 ----------- 0 -----------
Share/ Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Telephone-Integrated -- 0.0% GT Group Telecom, Inc. Expires 02/01/10 (strike price $0.00)*(1)(2)....... $ 2,650 $ 27 ------------ Total Warrants (cost $240,756)................... 11,248 ------------ Total Long-Term Investment Securities (cost $259,651,795)............... 267,080,153 ------------ REPURCHASE AGREEMENT -- 4.9% State Street Bank & Trust Co. Joint Repurchase Agreement (cost $13,896,000)(15)............ 13,896,000 13,896,000 ------------ TOTAL INVESTMENTS -- (cost $273,547,795)(7)............ 99.9% 280,976,153 ------------ Other assets less liabilities........ 0.1 208,309 ----------- ------------ NET ASSETS -- 100.0% $281,184,462 =========== ============ Bonds & Notes Sold Short -- (0.4%) Telephone-Integrated -- (0.4%) Alltel Corp. Debentures 7.00% due 03/15/16 (Proceeds $(1,148,125))........... $(1,375,000) $ (1,150,897) ============
- -------- * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At September 30, 2007, the aggregate value of these securities was $77,171,628 representing 27.5% of net assets. Unless otherwise indicated these securities are not considered to be illiquid. + Non-income producing security (1) Fair valued security; see Note 2 (2) Illiquid security (3) 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 2. 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, 2007, the High Yield Bond Fund held the following restricted securities: 57 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Market Value % of Acquisition Principal/ Acquisition Market per Net Name Date Shares Cost Value Share Assets ---- ----------- ---------- ----------- ----------- ------ ------ AMC Entertainment Holdings 10.69% due 06/15/12 Loan Agreement....... 6/8/2007 600,000 $585,000 9/17/2007 16,576 16,576 --------- --------- --------- 616,576 601,576 $ 602,703 $1 0.21% Critical Care Systems International, Inc. Common Stock........... 7/20/2006 69,700 606,739 365,925 5 0.13% EXCO Resources, Inc. 7.00%, Series A-1 Preferred Stock........... 3/29/2007 318 3,180,000 3,625,200 11,400 1.29% ICO North America, Inc. 7.50% due 08/15/09........ 8/11/2005 75,000 75,000 72,750 1 0.03% iPCS, Inc. Common Stock........... 7/20/2004 285,947 4,432,178 7/28/2005 7,313 0 --------- --------- --------- 293,260 4,432,178 10,085,211 34 3.59% Shreveport Gaming Holdings, Inc. Common Stock........... 7/21/2005 2,321 53,448 7/29/2005 11,829 272,336 --------- --------- --------- 14,150 325,784 325,776 23 0.12% Southern Energy, Inc. 7.90% due 07/15/09........ 1/10/2006 3,525,000 0 0 0 0.00% Stallion Oilfield Service 9.82% due 07/30/12 Loan Agreement....... 7/18/2007 1,000,000 980,000 975,000 0 0.35% Travelport Holdings, Ltd. 12.35% due 03/27/12 Loan Agreement....... 3/30/2007 1,000,000 970,000 6/29/2007 32,390 32,389 9/28/2007 32,255 32,255 --------- --------- --------- 1,064,645 1,034,644 1,020,284 1 0.36% Triax Pharmaceuticals LLC Common Stock........... 8/31/2007 128,418 53,936 53,936 1 0.02% Triax Pharmaceuticals LLC 15.54%, Class C Loan Agreement....... 8/30/2007 1,500,000 1,348,961 1,348,961 1 0.48% Triax Pharmaceuticals, LLC Class C Preferred Stock........... 8/31/2007 39,176 78,353 78,353 2 0.03% Wind Acquisition Holdings Finance S.A. 12.61% due 12/21/11 Loan Agreement....... 2/27/2007 206,305 205,512 3/06/2007 206,305 205,020
Market Value % of Acquisition Principal/ Acquisition Market per Net Name Date Shares Cost Value Share Assets ---- ----------- ---------- ----------- ----------- ------ ------ 3/15/2007 515,763 513,799 3/19/2007 309,459 307,530 6/21/2007 412,748 415,000 8/15/2007 16,438 16,438 7/18/2007 6,575 6,575 7/18/2007 6,575 6,575 7/18/2007 9,863 9,863 --------- --------- --------- 1,690,031 1,646,861 1,701,299 1 0.60 ----------- ---- $20,255,398 7.21% =========== ====
(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, 2007. (5) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays interest/dividends in the form of additional bonds or preferred stocks. (6) "Step-up" security where the rate increases ("steps-up") at a predetermined rate. Rate shown reflects the increased rate. (7) See Note 5 for cost of investments on a tax basis. (8) Security in default (9) Company has filed Chapter 11 bankruptcy protection. (10) Bond is in default and did not pay principal at maturity. (11) Company has filed bankruptcy in country of issuance. (12) Company has filed for Chapter 7 bankruptcy protection. (13) The Fund invests in Senior Loans which generally pay interest at rates which are periodically re-determined by reference to a base lending rate plus a premium. These base lending rates are generally either the lending rate offered by one or more major United States banks, or the certificate of deposit rate. Senior Loans are generally considered to be restrictive in that the Fund is ordinarily contractually obligated to receive approval from the Agent Bank and/or borrower prior to the disposition of a Senior Loan. (14) Senior Loans in the Fund's Portfolio are generally subject to mandatory and/or optional prepayment. Because of these mandatory prepayment conditions and because there may be significant economic incentives for a borrower to prepay, prepayments may occur. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. (15) See Note 2 for details of Joint Repurchase Agreement. (16) Consists of more than one class of securities traded together as a unit. (17) A portion of the interest is paid in the form of additional bonds. (18) Loan is subject to an unfunded loan commitment. See Note 10 for details. ADR --American Depository Receipt See Notes to Financials Statements 58 SunAmerica Tax Exempt Insured Fund PORTFOLIO PROFILE -- September 30, 2007 -- (unaudited) Allocation by States* Ohio......................... 26.8% Massachusetts................ 13.3 New Jersey................... 11.0 New York..................... 8.9 Indiana...................... 6.9 Connecticut.................. 4.9 New Mexico................... 4.8 Michigan..................... 4.7 South Carolina............... 4.5 South Dakota................. 4.1 Alaska....................... 3.7 Georgia...................... 3.1 Alabama...................... 2.9 California................... 2.7 Tennessee.................... 1.3 Texas........................ 0.5 Nevada....................... 0.3 Registered Investment Company 0.1 ----- 104.5% =====
Credit Quality Allocation+# AAA....... 84.8% AA........ 6.0 A......... 7.0 Not Rated@ 2.2 ----- 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. 59 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited)
Market Principal Value Security Description Amount (Note 2) ----------------------------------------------------------------------- MUNICIPAL BONDS & NOTES -- 94.2% Alabama -- 2.9% State of Alabama Series A 5.00% due 08/01/17(1).......................... $1,500,000 $1,632,270 ---------- California -- 2.7% State of California 5.00% due 06/01/37............................. 1,500,000 1,527,525 ---------- Connecticut -- 4.9% State of Connecticut, Refunded, Series B, 5.00% due 06/01/14(1).......................... 2,500,000 2,700,925 ---------- Georgia -- 3.1% City of Augusta GA 5.00% due 10/01/30(1).......................... 1,500,000 1,575,630 Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/09(1).......................... 60,000 62,141 Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/13(1).......................... 85,000 92,799 ---------- 1,730,570 ---------- Indiana -- 6.9% Indiana Transportation Finance Authority Highway Revenue, Series A, 5.25% due 06/01/26(1).......................... 3,500,000 3,826,165 ---------- Massachusetts -- 13.3% Massachusetts State Water Resources Authority, Revenue Bonds, Series A, 5.00% due 08/01/24(1).......................... 3,910,000 4,079,616 University Massachusetts Building Authority Project Revenue, Series 04-1, 5.25% due 11/01/27(1).......................... 3,000,000 3,294,960 ---------- 7,374,576 ---------- Michigan -- 4.3% Detroit Michigan Sewage Disposal Revenue 4.19% due 07/01/32(1)(3)....................... 2,445,000 2,383,410 ---------- New Jersey -- 11.0% Garden State New Jersey Preservation Trust Open Space And Farmland Preservation, Series A, 5.80% due 11/01/17(1).......................... 2,500,000 2,830,050 Tobacco Settlement Financing Corp. 6.13% due 06/01/42............................. 3,000,000 3,315,420 ---------- 6,145,470 ---------- New Mexico -- 4.8% New Mexico Finance Authority Transportation, Series A, 5.25% due 06/15/21(1).......................... 2,500,000 2,665,275 ----------
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------------- New York -- 8.9% City of Niagara Falls New York 7.50% due 03/01/13(1).......................... $ 410,000 $ 485,973 City of Niagara Falls New York Prerefunded 7.50% due 03/01/13(1).......................... 35,000 41,712 City of Niagara Falls New York 7.50% due 03/01/14(1).......................... 510,000 617,422 City of Niagara Falls New York Prerefunded 7.50% due 03/01/14(1).......................... 45,000 54,937 New York State Thruway Authority, Series G, 5.25% due 01/01/27(1).......................... 1,500,000 1,599,030 Sales Tax Asset Receivables Corp., Series A, 5.25% due 10/15/27(1).......................... 2,000,000 2,127,960 ------------ 4,927,034 ------------ Ohio -- 23.6% Cincinnati, Ohio City School District Classroom Facilities, General Obligation, 5.00% due 12/01/24(1).......................... 3,000,000 3,226,650 Cuyahoga County, Ohio Revenue, Series A, 5.75% due 01/01/24............................. 2,000,000 2,129,320 Franklin County, Ohio Hospital Revenue, Series C, 5.25% due 05/15/23............................. 3,000,000 3,122,490 Olentangy Local School District Ohio, Series A, 5.25% due 12/01/27(1).......................... 3,250,000 3,552,868 Woodridge, Ohio, Woodmore Local School District, 6.80% due 12/01/14(1).......................... 1,000,000 1,110,580 ------------ 13,141,908 ------------ South Carolina -- 3.7% South Carolina State Public Service Authority Series A 5.00% due 01/01/32(1).......................... 2,000,000 2,074,820 ------------ South Dakota -- 4.1% South Dakota State Health & Educational Facilities Revenue, Refunding, 6.25% due 07/01/10(1).......................... 2,120,000 2,256,845 ------------ Total Long-Term Investment Securities (cost $50,350,739)............................. 52,386,793 ------------ SHORT-TERM INVESTMENT SECURITIES --10.3% Alaska -- 3.7% Alaska Housing Finance Corp. Series B 3.78% due 10/18/07(1)(2)....................... 2,050,000 2,050,000 ------------ Michigan -- 0.4% Detroit Michigan Water Supply System Series B 3.55% due 10/18/07(1)(2)....................... 200,000 200,000 ------------
60 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- September 30, 2007 -- (unaudited) (continued)
Principal Market Amount/ Value Security Description Shares (Note 2) ----------------------------------------------------------------- SHORT-TERM INVESTMENT SECURITIES (continued) Nevada -- 0.3% Clark County School District Series B 4.13% due 10/18/07(1)(2).............. $ 190,000 $ 190,000 ----------- Ohio -- 3.2% Kent State University Revenues 3.55% due 10/17/07 (1)(2)............. 1,790,000 1,790,000 ----------- South Carolina -- 0.8% Piedmont Municipal Power Agency, South Carolina, Electric Revenue Sub. Series B-1, 3.57% due 10/17/07 (1)(2)............. 150,000 150,000 Piedmont Municipal Power Agency, South Carolina, Electric Revenue, 3.57% due 10/17/07 (1)(2)............. 300,000 300,000 ----------- 450,000 ----------- Tennessee -- 1.3% Jackson Energy Authority 3.57% due 10/18/07(1)(2).............. 705,000 705,000 ----------- Texas -- 0.5% Harris Cnty Tx Hlth Facs Dev Christus Health Ser A 1 3.54% due 10/17/07(1)(2).............. 300,000 300,000 ----------- Registered Investment Company -- 0.1% SSGA Tax Free Money Market Fund........ 56,558 56,558 ----------- Total Short-Term Investment Securities (cost $5,741,558)..................... 5,741,558 ----------- TOTAL INVESTMENTS -- (cost $56,092,297)(@)................. 104.5% 58,128,351 Liabilities in excess of other assets.... (4.5) (2,509,052) ---------- ----------- NET ASSETS -- 100.0% $55,619,299 ========== ===========
- -------- @ See note 5 for cost of investments 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 $47,977,039 or 86.3% of Net Assets. (2)Variable rate security -- the rate reflected is as of September 30, 2007; 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, 2007. See Notes to Financial Statements 61 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) Note 1. Organization The Trust is an open-end diversified management investment company organized as a Massachusetts business trust (the "Trust"). It currently consists of five different series (each, a "Fund" and collectively, the "Funds"). Each Fund is a separate series of the Trust with distinct investment objectives and/or strategies. Each Fund is managed by AIG SunAmerica Asset Management Corp. (the "Adviser" or "AIG SunAmerica"), an indirect wholly-owned subsidiary of American International Group, Inc. ("AIG"). An investor may invest in one or more of the following Funds: SunAmerica U.S. Government Securities Fund, 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 and principal investment techniques for each of the Funds are as follows: U.S. Government Securities Fund seeks high current income consistent with relative safety of capital by the active trading of U.S. government securities, without regard to the maturities of such securities. Under normal market conditions, at least 80% of the Fund's 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 Fund's 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 in tax-exempt municipal bonds that, in addition to having income exempt from federal income taxes, also 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. Under normal market conditions, at least 80% of Fund's assets plus any borrowing for investment purposes will be invested in such securities. Each Fund offers multiple classes of shares. The classes within each Fund are presented in the 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, purchases of Class A shares in excess of $1,000,000 will be purchased at net asset value but will be subject to a contingent deferred sales charge on redemptions made within two years of purchase. Class B shares are offered without an initial sales charge, although a declining contingent deferred sales charge may be imposed on redemptions made within six years of purchase. Class B shares of each Fund convert automatically to Class A shares on the first business day of the month following the eighth anniversary of the issuance of such Class B shares and at such time will be subject to the lower distribution fee applicable to Class A shares. Class 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. Certain Class C shares of particular Funds issued in connection 62 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) with particular reorganizations or mergers will convert automatically to Class A shares approximately ten years after purchase and at such time will be subject to the lower distribution fee applicable to Class A shares. Each class of shares bears the same voting, dividend, liquidation and other rights and conditions except as may otherwise be provided in the Trust's registration statement. Class A, Class B and Class C shares each makes distribution and account maintenance and service fee payments under the distribution plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act") except that Class B and Class C shares are subject to higher distribution fees. Indemnifications: 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 the obligation to indemnify others. The Funds' maximum exposure under these arrangements is unknown. Currently, 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: 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 ("NYSE"), securities traded primarily on security exchanges outside the United States are valued at the last sale price on such exchanges on the day of valuation, or if there is no sale on the day of valuation, at the last-reported bid price. If a security's price is available from more than one exchange, a portfolio 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 a 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 a Fund determines that closing prices do not reflect the fair value of the securities, the Fund will adjust the previous closing prices in accordance with pricing procedures approved by the Board of Trustee's ("The Board") to reflect what it believes to be the fair value of the securities as of the close of regular trading on the NYSE. The Funds may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open. For foreign equity securities, the Funds use an outside pricing service to provide it with closing market prices and information used for adjusting those prices. 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. Forward contracts are valued at the 4:00 p.m. eastern time forward rate. Other securities are valued on the basis of last sale or bid price (if a last sale price is not available) in what is, in the opinion of the Adviser, the broadest and most representative market, that may be either a securities exchange or over-the-counter market. Senior Secured Floating Rate Loans ("Loans") for which an active secondary market exists to a reliable degree, will be valued at the mean of the last available bid and ask prices in the market for such Loans, as provided by a third party pricing service. Short-term securities with 60 days or less to maturity are amortized to maturity based on their cost to a 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. 63 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) Securities for which market quotations are not readily available or where a development/significant event occurs that may significantly impact the value of the security, are fair 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. As of September 30, 2007, the following Funds held an undivided interest in a joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal Fund Interest Amount - ---- ---------- ----------- Strategic Bond. 2.96% $ 6,047,000 High Yield Bond 6.80 13,896,000
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 28, 2007, bearing interest at a rate of 3.70% per annum, with a principle amount of $204,370,000, a repurchase price of $204,433,014 and a maturity date of October 1, 2007. The repurchase agreement is collateralized by the following:
Interest Maturity Principal Market Type of Collateral Rate Date Amount Value - ------------------ -------- -------- ----------- ------------ U.S. Treasury Bills 4.04% 03/13/08 $ 1,221,753 $ 1,246,188 U.S. Treasury Notes 3.75 05/15/08 99,202,846 101,186,903 U.S. Treasury Notes 4.63 02/29/08 18,813,661 19,195,500 U.S. Treasury Bonds 6.25 08/15/23 85,131,740 86,834,375
In addition, at September 30, 2007, the following Funds held an undivided interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal Fund Interest Amount - ---- ---------- ----------- U.S. Government Securities 4.74% $29,653,000 GNMA...................... 6.76 42,227,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities LLC, dated September 28, 2007, bearing interest at a rate of 3.90% per annum, with a principal amount of $625,000,000 a repurchase price of $625,203,125, and a maturity date of October 1, 2007. The repurchase agreement is collateralized by the following:
Interest Maturity Principal Market Type of Collateral Rate Date Amount Value - ------------------ -------- -------- ------------ ------------ U.S. Treasury Inflation Index Bonds 2.63% 07/15/17 $565,650,000 $576,963,081 U.S. Treasury Inflation Index Bonds 2.38 01/15/25 59,350,000 60,537,536
64 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) 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. 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). 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. Dividends from net investment income are accrued daily and paid monthly. Capital gain distributions, if any, are paid annually. The Funds record dividends and distributions to their shareholders on the ex-dividend date. The Funds reserve the right to declare and pay dividends less frequently than disclosed above, provided that the net realized capital gains and net investment income, if any, are paid at least annually. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from 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. New Accounting Pronouncements: On July 13, 2006, the Financial Accounting Standards Board (FASB) released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes" ("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Trust's tax returns to determine whether the tax positions are "more-likely-than-not" of being sustained by the applicable tax authority. Adoption of FIN 48 is required for fiscal years beginning after December 15, 2006 and is to be applied to all open tax years as of the effective date. However, registered investment companies are not required to implement FIN 48 until their last net asset value calculation in the first required financial statement reporting period for fiscal years beginning after December 15, 2006. Management has evaluated the implications of FIN 48 and determined there is no impact to the financial statements. In September 2006, the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards No, 157, "Fair Value Measurements" ("FAS 157"). This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. As of September 30, 2007, the Trust does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value. Reverse Repurchase Agreements During the period ended September 30, 2007, U.S. Government Securities Fund and GNMA Fund entered into reverse repurchase agreements. In a reverse repurchase agreement, the Fund sells a security and agrees to repurchase it at a mutually agreed upon date and price, reflecting the interest rate effective for the term of the agreement. The 65 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) Funds will enter into a reverse repurchase agreement only if the interest income from the investment of the proceeds is expected to be greater than the interest expense of the transaction and the proceeds are invested for a period no longer than the term of the agreement. The Funds will use the proceeds of a reverse repurchase agreement (which are considered to be borrowings under the 1940 Act) to purchase other permitted securities either maturing, or under an agreement to resell, at a date simultaneous with or prior to the expiration of the reverse repurchase agreement. The agreements are collateralized by cash or liquid securities in an amount at least equal to 102% of its purchase obligations under these agreements (including accrued interest). In the event that the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the buyer or its trustee or receiver may receive an extension of time to determine whether to enforce the Funds' repurchase obligation, and the Funds' use of proceeds of the agreement may effectively be restricted pending such decision. At September 30, 2007, there were no reverse repurchase agreements outstanding in the U.S. Government Securities Fund and GNMA Fund. 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 Funds do not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of securities held at the end of the period. Similarly, the Funds do not isolate the effect of changes in foreign exchange rates from the changes in the market prices of portfolio securities sold during the 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 and the GNMA Fund ("Funds") 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 66 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) 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: Certain Funds may enter into dollar roll transactions 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. During the period ended September 30, 2007 none of the Funds entered in dollar roll transactions. 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 AIG SunAmerica. Under the Agreement, AIG SunAmerica provides continuous supervision of a Fund's portfolio and administers its corporate affairs, subject to general review by the Trustees. In connection therewith, AIG SunAmerica furnishes the Funds with office facilities, maintains certain of the Funds' books and records, and pays the salaries and expenses of all personnel, including officers of the Funds, who are employees of AIG SunAmerica and its affiliates. The Funds pay AIG SunAmerica a monthly investment advisory and management fee calculated daily at the following annual percentages of each Fund's average daily net assets:
Management Assets Fees --------------------------- ---------- U.S. Government Securities Fund $0 - $200 million 0.650% (greater than) $200 million 0.620 (greater than) $400 million 0.550 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 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 AIG SunAmerica. AIGGIC is an indirect wholly-owned subsidiary of AIG and an affiliate of AIG SunAmerica. AIGGIC receives the following fees from AIG SunAmerica, based upon each Fund's average daily net assets:
Sub-advisory Fees ------------------------------------- Strategic Bond High Yield Tax Exempt Assets Fund Bond Fund Insured Fund - ------ -------------- ---------- ------------ $0 - $200 million............ 0.35% 0.45% 0.25% (greater than) $200 million 0.25 0.35 0.22 (greater than) $500 million 0.20 0.30 0.15
67 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) AIG SunAmerica has contractually agreed to waive fees and/or reimburse expenses, to the extent necessary to cap the Funds' annual fund operating expenses at the following percentages of each Fund's average net assets. The contractual expense waivers and fee reimbursements will continue indefinitely, subject to termination by the Trustees, including a majority of the Trustees who are not interested persons of the Trust, AIG SunAmerica or AIGGIC, within the meaning of the 1940 Act ("Disinterested Trustees").
Fund Percentage - ---- ---------- U.S. Government Securities Class A 0.99% U.S. Government Securities Class B 1.64 U.S. Government Securities Class C 1.64 GNMA Fund Class A................. 0.99 GNMA Fund Class B................. 1.64 GNMA Fund Class C................. 1.64 Strategic Bond Class A............ 1.40 Strategic Bond Class B............ 2.05 Strategic Bond Class C............ 2.05 High Yield Bond Class A........... 1.36 High Yield Bond Class B........... 2.01 High Yield Bond Class C........... 2.01
Further, AIG SunAmerica 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. The voluntary fee waivers and/or expense reimbursements may be terminated at any time at the option of AIG SunAmerica.
Fund Percentage - ---- ---------- Tax Exempt Insured Fund Class C 1.95%
For the period ended September 30, 2007, pursuant to the contractual and voluntary expense limitations in the above tables AIG SunAmerica has waived and/or reimbursed expenses as follows:
Fund Amount - ---- -------- U.S. Government Securities Class A $300,901 U.S. Government Securities Class B 36,986 U.S. Government Securities Class C 30,420 GNMA Class A...................... 220,839 GNMA Class B...................... 49,041 GNMA Class C...................... 31,853 High Yield Bond Class A........... 156,590 High Yield Bond Class B........... 39,590 High Yield Bond Class C........... 61,522 Tax Exempt Insured Class C........ 10,458
The Trust, on behalf of each Fund, has entered into a Distribution Agreement with AIG SunAmerica Capital Services, Inc. ("SACS" or "Distributor"), an affiliate of the Adviser. Each Fund has adopted a Distribution Plan on behalf of each Class in accordance with the provisions of Rule 12b-1 under the 1940 Act (each a "Plan" and collectively the "Plans"). Hereinafter referred to as the "Class A Plan," the "Class B Plan" and the "Class C Plan." In adopting the Class A Plan, the Class B Plan and the Class C Plan, the Trustees determined that there was a reasonable likelihood that each such Plan would benefit the Trust and the shareholders of the respective class. The sales charge and distribution fees of a particular class will not be used to subsidize the sale of shares of any other class. The Class A, Class B and Class C Plans, provide that the Trust, on behalf of the respective classes, shall pay the Distributor a distribution fee at an annual rate of up to 0.10%, 0.75% and 0.75%, of average daily net assets of such Fund's Class A, Class B and Class C shares respectively, to compensate the Distributor and certain securities firms for providing sales and promotional activities for distributing that class of shares. The distribution costs for which the Distributor may be compensated for, include fees paid to broker-dealers that have sold Fund shares, commissions, and other expenses such as those incurred for sales literature, prospectus printing and distribution and compensation to wholesalers. It is possible that in any given year the amount paid to the Distributor under the Class A Plan, Class B Plan or Class C Plan may exceed the Distributor's distribution costs as described above. The Plans also provide that each class of shares of the Trust will also pay the Distributor an account maintenance fee at the annual rate of up to 0.25% of the aggregate average daily net assets of such class of shares to compensate 68 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) the Distributor and securities firms for account maintenance activities. Accordingly, for the period ended September 30, 2007, SACS received fees (see the Statement of Operations) based upon the aforementioned rates. 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 period ended September 30, 2007, the proceeds received from Class A sales (and paid out to affiliated and non-affiliated broker-dealers) and Class A, Class B and Class C redemptions were as follows:
Class A Class B Class C ----------------------------------------------------- -------------- -------------- Contingent Contingent Contingent Sales Affiliated Non-affiliated Deferred Sales Deferred Sales Deferred Sales Fund Charges Broker-dealers Broker-dealers Charges Charges Charges - ---- -------- -------------- -------------- -------------- -------------- -------------- U.S. Government Securities $ 22,797 $ 2,432 $ 16,364 $171 $11,703 $ 2,210 GNMA...................... 26,021 10,705 10,905 903 75,983 957 Strategic Bond............ 406,041 64,251 271,971 88 78,532 37,850 High Yield Bond........... 196,829 29,045 133,651 -- 56,308 14,241 Tax Exempt Insured........ 34,874 10,946 16,680 -- 2,348 125
The Trust has entered into a Service Agreement with AIG SunAmerica Fund Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service Agreement, SAFS performs certain shareholder account functions by assisting the Funds' transfer agent in connection with the services that it offers to the shareholders of the Funds. The Service Agreement permits the Funds to compensate SAFS for services rendered, based upon an annual rate of 0.22% of average daily net assets, which is approved annually by the Trustees. For the period ended September 30, 2007, 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 Fund Expenses September 30, 2007 - ---- -------- ------------------ US Government Securities Class A $171,658 $29,064 US Government Securities Class B 14,959 2,336 US Government Securities Class C 11,385 1,954 GNMA Class A.................... 342,725 57,432 GNMA Class B.................... 57,788 8,905 GNMA Class C.................... 31,308 4,864 Strategic Bond Class A.......... 533,363 89,903 Strategic Bond Class B.......... 60,111 9,544 Strategic Bond Class C.......... 261,495 44,720 High Yield Bond Class A......... 250,182 27,110 High Yield Bond Class B......... 52,037 7,648 High Yield Bond Class C......... 91,989 14,032 Tax Exempt Insured Class A...... 52,781 8,451 Tax Exempt Insured Class B...... 5,114 716 Tax Exempt Insured Class C...... 4,111 663
At September 30, 2007, affiliated funds of the SunAmerica Focused Series, Inc. owned 4%, 14%, 38% and 59% of the outstanding Class A Shares of High Yield Bond Fund, U.S. Government Securities Fund, GNMA Fund, and Strategic Bond Fund, respectively. 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 period ended September 30, 2007 were as follows:
U.S. Government High Tax Exempt Securities GNMA Strategic Yield Bond Insured Fund Fund Bond Fund Fund Fund --------------- ------------ ------------ ------------ ----------- Purchases (excluding U.S. government securities) $ 9,995,708 $ -- $489,638,103 $131,699,580 $14,130,374 Sales (excluding U.S. government securities).... 194,260 64,753 385,982,639 187,928,644 15,297,398 Purchases of U.S. government securities......... 307,434,349 636,932,141 131,513,857 -- -- Sales of U.S. government securities............. 288,797,243 659,763,382 96,559,511 -- --
69 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) 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, deferred directors compensation, amortization of premium/discount and derivative transactions.
Distributable Earnings Tax Distributions For the year ended March 31, 2007 For the year ended March 31, 2007 --------------------------------------- ------------------------------------ Long-term Gains/Capital Unrealized Ordinary Loss Appreciation Ordinary Long-term Fund Income CarryForward (Depreciation) Income Capital Gains Tax Exempt - ---- ---------- ------------- -------------- ----------- ------------- ---------- U.S. Government Securities $ 405,476 $(11,218,496) $(2,060,965) $ 7,185,444 $ -- $ -- GNMA...................... 864,272 (4,166,987) (2,662,397) 17,110,566 -- -- Strategic Bond............ 1,153,693 (23,321,409) 13,789,453 26,453,510 -- -- High Yield Bond........... 585,040 (86,646,972) 16,787,099 21,478,406 -- -- Tax Exempt Insured........ 133,027* 360,488 2,442,373 -- 436,699 2,040,644 Tax Distributions For the year ended March 31, 2006 ------------------------------------ Ordinary Long-term Fund Income Capital Gains Tax Exempt - ---- ----------- ------------- ---------- U.S. Government Securities......................................... $ 7,599,387 $ -- $ -- GNMA............................................................... 17,568,716 175,792 -- Strategic Bond..................................................... 10,239,110 -- -- High Yield Bond.................................................... 21,693,351 -- -- Tax Exempt Insured................................................. -- 716,341 2,165,823
- -------- * Includes tax exempt distributable earnings of $29,773. The amounts of aggregate unrealized gain (loss) and the cost of investment securities for federal tax purposes, including short-term securities and repurchase agreements, were as follows:
U.S. Government Tax Exempt Securities GNMA Strategic High Yield Insured Fund Fund Bond Fund Bond Fund Fund ------------ ------------ ------------ ------------ ----------- Cost......................................... $183,263,447 $440,745,646 $801,384,082 $272,552,624 $56,091,544 ------------ ------------ ------------ ------------ ----------- Appreciation................................. 2,513,563 1,711,972 21,635,781 20,652,385 2,105,461 Depreciation................................. (2,256,917) (5,244,035) (16,670,825) (13,379,753) (68,654) ------------ ------------ ------------ ------------ ----------- Unrealized appreciation (depreciation) -- net $ 256,646 $ (3,532,063) $ 4,964,956 $ 7,272,632 $ 2,036,807 ============ ============ ============ ============ ===========
As of March 31, 2007, 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 2008 2009 2010 2011 2012 2013 2014 2015 - ---- ---------- ---------- ----------- ----------- ---- ---- ---------- ---------- U.S. Government Securities $7,263,249 $ -- $ -- $ -- $-- $-- $ 271,576 $3,683,671 GNMA...................... -- -- -- -- -- -- 1,498,599 2,668,388 Strategic Bond............ 1,214,819 5,601,470 6,464,175 10,040,945 -- -- -- -- High Yield Bond........... -- 5,402,440 32,249,552 48,994,980 -- -- -- --
Included in the capital loss carryforward amounts at March 31, 2007 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 Strategic Income Fund $2,727,955
70 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) As a result of reorganizations into some of these portfolios 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 Funds indicated below utilized capital loss carryforwards, which offset net taxable gains realized in the year ended March 31, 2007:
Capital Loss Carryforward Fund Utilized - ---- ------------ Strategic Bond Fund. $4,314,618 High Yield Bond Fund 3,520,928
Under the current law, capital losses related to securities and foreign currency realized after October 31 and prior to the Fund's fiscal year end may be deferred as occurring the first day of the following year. For the fiscal year ended March 31, 2007, the Funds elected to defer capital losses as follows:
Deferred Deferred Post-October Post-October Fund Capital Loss Currency Loss - ---- ------------ ------------- U.S. Government Securities $115,204 $-- GNMA...................... 368,974 -- Strategic Bond............ 218,219 -- High Yield Bond........... -- -- Tax Exempt Insured........ -- --
71 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) Note 6. Capital Share Transactions Transactions in capital shares of each class of each series were as follows:
U.S. Government Securities Fund ------------------------------------------------------------------------------------------------ Class A Class B -------------------------------------------------- -------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2007 year ended September 30, 2007 year ended (unaudited) March 31, 2007 (unaudited) March 31, 2007 ------------------------ ------------------------ --------------------- --------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Shares sold(1)(2)(3)(4) 4,262,682 $ 38,900,135 3,646,252 $ 33,613,249 121,731 $ 1,116,242 282,251 $ 2,588,038 Reinvested shares...... 274,434 2,514,386 526,641 4,833,737 20,087 184,040 49,844 457,468 Shares redeemed(1)(3).. (3,642,899) (33,442,926) (4,206,287) (38,554,728) (295,930) (2,707,446) (842,993) (7,715,872) ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Net increase (decrease) 894,217 $ 7,971,595 (33,394) $ (107,742) (154,112) $(1,407,164) (510,898) $(4,670,366) ========== ============ ========== ============ ======== =========== ======== =========== U.S. Government Securities Fund -------------------------------------------------- Class C -------------------------------------------------- For the six months ended For the September 30, 2007 year ended (unaudited) March 31, 2007 ------------------------ ------------------------ Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold............ 377,728 $ 3,456,526 496,953 $ 4,562,238 Reinvested shares...... 14,135 129,372 27,739 254,466 Shares redeemed(2)(4).. (326,157) (2,984,725) (358,841) (3,275,190) ---------- ------------ ---------- ------------ Net increase (decrease) 65,706 $ 601,173 165,851 $ 1,541,514 ========== ============ ========== ============
- -------- (1)For the year ended March 31, 2007, includes automatic conversion of 219,512 shares of Class B shares in the amount of $1,837,805 to 219,626 shares of Class A shares in the amount of $1,837,805. (2)For the year ended March 31, 2006, includes automatic conversion of 14,969 shares of Class C shares in the amount of $136,518 to 14,953 shares of Class A shares in the amount of $136,518. (3)For the six month period ended September 30, 2007, includes automatic conversion of 65,598 shares of Class B shares in the amount of $470,925 to 65,631 shares of Class A shares in the amount of $470,925. (4)For the six month period ended September 30, 2007, includes automatic conversion of 7,231 shares of Class C shares in the amount of $66,035 to 7,226 shares of Class A shares in the amount of $66,035. 72 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued)
GNMA Fund -------------------------------------------------------------------------------------------------------- Class A Class B ----------------------------------------------------- ------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2007 year ended September 30, 2007 year ended (unaudited) March 31, 2007 (unaudited) March 31, 2007 ------------------------- -------------------------- ----------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------ Shares sold(1)(3)(5)(7) 3,487,221 $ 37,933,146 5,070,934 $ 55,936,052 75,937 $ 836,989 202,312 $ 2,228,911 Reinvested shares...... 531,590 5,835,234 1,007,246 11,085,707 68,587 754,940 164,211 1,810,798 Shares redeemed(1)(5).. (2,977,109) (32,744,172) (5,652,486) (62,223,827) (835,284) (9,198,304) (2,138,731) (23,557,708) ----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------ Net increase (decrease) 1,041,702 $ 11,024,208 425,694 $ 4,797,932 (690,760) $(7,606,375) (1,772,208) $(19,517,999) =========== ============ =========== ============= ========== =========== ========== ============ GNMA Fund ----------------------------------------------------- Class C ----------------------------------------------------- For the six months ended For the September 30, 2007 year ended (unaudited) March 31, 2007 ------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------ ----------- ------------- Shares sold............ 134,724 $ 1,485,315 360,698 $ 3,979,813 Reinvested shares...... 36,598 403,257 88,961 982,412 Shares redeemed(3)(7).. (453,786) (5,002,251) (1,340,161) (14,773,461) ----------- ------------ ----------- ------------- Net increase (decrease) (282,464) $ (3,113,679) (890,502) $ (9,811,236) =========== ============ =========== ============= Strategic Bond Fund -------------------------------------------------------------------------------------------------------- Class A Class B ----------------------------------------------------- ------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2007 year ended September 30, 2007 year ended (unaudited) March 31, 2007 (unaudited) March 31, 2007 ------------------------- -------------------------- ----------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------ Shares sold(2)(4)(6)(8) 35,600,154 $127,981,605 102,882,348 $ 365,610,133 1,635,858 $ 5,881,497 5,637,811 $ 20,072,310 Reinvested shares...... 2,500,247 8,944,861 4,121,411 14,717,371 203,013 726,219 390,832 1,394,386 Shares redeemed(2)(6).. (21,831,529) (78,002,600) (29,208,072) (104,210,772) (2,275,445) (8,145,868) (3,782,125) (13,433,833) ----------- ------------ ----------- ------------- ---------- ----------- ---------- ------------ Net increase (decrease) 16,268,872 $ 58,923,866 77,795,687 $ 276,116,732 (436,574) $(1,538,152) 2,246,518 $ 8,032,863 =========== ============ =========== ============= ========== =========== ========== ============ Strategic Bond Fund ----------------------------------------------------- Class C ----------------------------------------------------- For the six months ended For the September 30, 2007 year ended (unaudited) March 31, 2007 ------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------ ----------- ------------- Shares sold............ 16,324,230 $ 58,916,898 38,346,566 $ 137,670,076 Reinvested shares...... 719,241 2,582,153 848,064 3,043,431 Shares redeemed(4)(8).. (6,792,809) (24,328,223) (6,961,530) (24,860,837) ----------- ------------ ----------- ------------- Net increase (decrease) 10,250,662 $ 37,170,828 32,233,100 $ 115,852,670 =========== ============ =========== =============
- -------- (1)For the year ended March 31, 2007, includes automatic conversion of 305,255 shares of Class B shares in the amount of $3,280,252 to 306,071 shares of Class A shares in the amount of $3,280,252. (2)For the year ended March 31, 2007, includes automatic conversion of 1,075,478 shares of Class B shares in the amount of $3,665,333 to 1,075,184 shares of Class A shares in the amount of $3,665,333. (3)For the year ended March 31, 2007, includes automatic conversion of 6,088 shares of Class C shares in the amount of $66,265 to 6,110 shares of Class A shares in the amount of $66,265. (4)For the six month period ended March 31, 2007, includes automatic conversion of 1,181 shares of Class C shares in the amount of $4,180 to 1,185 shares of Class A shares in the amount of $4,180. (5)For the six month period ended September 30, 2007, includes automatic conversion of 148,441 shares of Class B shares in the amount of $1,512,142 to 148,829 shares of Class A shares in the amount of $1,512,142. (6)For the six month period ended September 30, 2007, includes automatic conversion of 512,800 shares of Class B shares in the amount of $1,682,712 to 512,800 shares of Class A shares in the amount of $1,682,712. (7)For the year ended September 30, 2007, includes automatic conversion of 13 shares of Class C shares in the amount of $140 to 13 shares of Class A shares in the amount of $140. (8)Includes automatic conversion of $5,472 shares of Class C shares in the amount of $19,864 to 5,502 shares of Class A shares in the amount of $19,864. 73 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (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, 2007 year ended September 30, 2007 year ended (unaudited) March 31, 2007 (unaudited) March 31, 2007 -------------------------- -------------------------- ----------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ----------- ---------- ------------ Shares sold(1)(4).... 16,285,674 $ 76,452,472 38,615,170 $ 182,039,488 438,968 $ 2,068,470 2,939,699 $ 13,768,068 Reinvested shares........ 1,062,417 4,963,074 1,677,533 7,908,201 135,426 633,466 333,914 1,571,933 Shares redeemed(1)(4) (33,426,180) (153,377,470) (36,217,526) (168,508,994) (2,127,574) (9,930,901) (3,870,265) (18,168,508) ----------- ------------- ----------- ------------- ---------- ----------- ---------- ------------ Net increase (decrease).... (16,078,089) $ (71,961,924) 4,075,177 $ 21,438,695 (1,553,180) $(7,228,965) (596,652) $ (2,828,507) =========== ============= =========== ============= ========== =========== ========== ============ High Yield Bond Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the six months ended For the September 30, 2007 year ended (unaudited) March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold.......... 1,792,174 $ 8,471,361 8,874,645 $ 41,729,495 Reinvested shares........ 241,977 1,135,621 542,788 2,569,206 Shares redeemed...... (3,187,143) (14,858,440) (6,505,750) (30,858,084) ----------- ------------- ----------- ------------- Net increase (decrease).... (1,152,992) $ (5,251,458) 2,911,683 $ 13,440,617 =========== ============= =========== ============= Tax Exempt Insured Fund --------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ ------------------------------------------------- For the For the six months ended For the six months ended For the September 30, 2007 year ended September 30, 2007 year ended (unaudited) March 31, 2007 (unaudited) March 31, 2007 -------------------------- -------------------------- ----------------------- ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ----------- ---------- ------------ Shares sold(2)(3)(5). 177,724 $ 2,208,518 181,928 $ 2,305,652 25,662 $ 320,785 26,325 $ 335,141 Reinvested shares........ 39,038 487,571 104,191 1,320,929 2,559 31,980 8,813 111,816 Shares redeemed(2)(5) (346,641) (4,333,158) (846,556) (10,699,293) (113,253) (1,406,226) (163,672) (2,069,946) ----------- ------------- ----------- ------------- ---------- ----------- ---------- ------------ Net increase (decrease).... (129,879) $ (1,637,069) (560,437) $ (7,072,712) (85,032) $(1,053,461) (128,534) $ (1,622,989) =========== ============= =========== ============= ========== =========== ========== ============ Tax Exempt Insured Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the six months ended For the September 30, 2007 year ended (unaudited) March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold.......... 42,564 $ 529,306 51,686 $ 654,807 Reinvested shares........ 2,493 31,165 6,918 87,817 Shares redeemed(3)... (56,559) (706,488) (100,404) (1,273,870) ----------- ------------- ----------- ------------- Net increase (decrease).... (11,502) $ (146,017) (41,800) $ (531,246) =========== ============= =========== =============
- -------- (1)For the year ended March 31, 2007, includes automatic conversion of 1,213,503 shares of Class B shares in the amount of $5,313,435 to 1,215,237 shares of Class A shares in the amount of $5,313,435. (2)For the year ended March 31, 2007, includes automatic conversion of 71,186 shares of Class B shares in the amount of $494,110 to 71,233 shares of Class A shares in the amount of $494,110. (3)For the year ended March 31, 2007, includes automatic conversion of 751 shares of Class C shares in the amount of $9,445 to 751 shares of Class A shares in the amount of $9,445. (4)For the six month period ended September 30, 2007, includes automatic conversion of 507,206 shares of Class B shares in the amount of $2,318,169 to 507,983 shares of Class A shares in the amount of $2,318,169. (5)For the six month period ended September 30, 2007, includes automatic conversion of 63,333 shares of Class B shares in the amount of $785,110 to 63,334 shares of Class A shares in the amount of $785,110. 74 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) Note 7. 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 period ended September 30, 2007, the following Funds had borrowings:
Weighted Days Interest Average Average Fund Outstanding Charges Debt Utilized Interest - ---- ----------- -------- ------------- -------- Strategic Bond. 3 $ 1,828 $ 3,775,262 5.79% High Yield Bond 27 44,361 10,182,634 5.76
At September 30, 2007, there were no borrowings outstanding. Note 8. Interfund Lending Agreement Pursuant to exemptive relief granted by the Securities and Exchange Commission, the Portfolios are permitted to participate in an interfund lending program among investment companies advised by AIG SunAmerica or an affiliate. The interfund lending program allows the participating Funds to borrow money from and loan money to each other for temporary or emergency purposes. An interfund loan will be made under this facility only if the participating Funds receive a more favorable interest rate than would otherwise be available from a typical bank for a comparable transaction. For the period ended September 30, 2007 none of the Funds participated in this program. Note 9. Trustees Retirement Plan The Trustees of the SunAmerica Equity Funds have adopted the AIG SunAmerica Disinterested Trustees' and Directors' Retirement Plan (the "Retirement Plan") effective January 1, 1993, as amended December 9, 2006, for the unaffiliated Trustees. The Retirement Plan provides generally that an unaffiliated Trustee may become a participant ("Participant") in the Retirement Plan if he or she has at least 10 years of consecutive service as a Disinterested Trustee of any of the adopting AIG SunAmerica mutual funds (the "Adopting Funds") or has attained the age of 60 while a Trustee and completed five (5) consecutive years of service as a Trustee of any Adopting Fund (an "Eligible Trustee"). Pursuant to the Retirement Plan, an Eligible Trustee may receive benefits upon (i) his or her death or disability while a Trustee or (ii) the termination of his or her tenure as a Trustee, other than removal for cause from each of the Adopting Funds with respect to which he or she is an Eligible Trustee. As of each of the first 10 birthdays after becoming a Participant and on which he or she is both a Trustee and Participant, each Eligible Trustee will be credited with an amount equal to 50% of his or her regular fees (excluding committee fees) for services as a Disinterested Trustee of each Adopting Fund for the calendar year in which such birthday occurs. In addition, an amount equal to 8.50% of any amounts credited under the preceding statement during prior years is added to each Eligible Trustee's account. The rights of any Participant to benefits under the Retirement Plan shall be an unsecured claim against the assets of the Adopting Funds. An Eligible Trustee may receive any benefits payable under the Retirement Plan, at his or her election, either in one lump sum or in up to 15 annual installments. Any undistributed amounts shall continue to accrue interest at 8.50%. 75 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- September 30, 2007 -- (unaudited) (continued) The following amounts of the Retirement Plan liabilities 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 Plan Retirement Plan Retirement Plan Liability Expense Payments --------------- --------------- --------------- Fund As of September 30, 2007 - ---- ----------------------------------------------- U.S. Government Securities $87,220 $1,229 $4,412 GNMA...................... 53,925 2,815 1,317 Strategic Bond............ 30,837 4,326 1,090 High Yield Bond........... 48,425 2,366 1,706 Tax Exempt Insured........ 27,399 438 1,250
Note 10. Unfunded Loan Commitments On September 30, 2007, the Strategic Bond Fund and the High Yield Bond Fund had the following unfunded loan commitment which could be extended at the option of the borrower: Maturity Fund Name Type Date Amount - ---- ---- ---- -------- -------- Strategic Bond. Triax Pharmaceuticals LLC Delayed Draw Term Loan 8/30/11 $146,400 High Yield Bond Triax Pharmaceuticals LLC Delayed Draw Term Loan 8/30/11 146,400
Note 11. Other Information The matter related to AIG's settlement with the Securities and Exchange Commission (the "Commission") and other governmental authorities that was reported in recent shareholder reports has been resolved. With respect to such matter, in September 2007, the Commission issued a permanent exemptive order (the "Order") pursuant to Section 9(c) of the Investment Company Act of 1940, as amended, to AIG and certain affiliated persons of AIG, including AIG SunAmerica, AIGGIC and SACS. The Order permits each entity to continue to provide advisory or distribution services to the Funds, as applicable. There has been no adverse impact on the Funds or the Fund's shareholders. 76 SunAmerica Income Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2007 -- (unaudited) Approval of The Investment Advisory and Management Agreement and Subadvisory Agreement The Board, including, the "Disinterested Trustees", approved the continuation of the Investment Advisory and Management Agreement between the Fund and AIG SunAmerica (the "Advisory Agreement") for a one-year period ending August 31, 2008 at a meeting held on August 27, 2007. At this same meeting, the Board also approved the continuation of the Subadvisory Agreement, as amended, between AIG SunAmerica and AIGGIC (the "Subadvisory Agreement") with respect to the SunAmerica Strategic Bond Fund ("Strategic Bond Fund), SunAmerica High Yield Bond Fund ("High, Yield Bond Fund") and SunAmerica Tax Exempt Insured Fund ("Tax Exempt Fund") for a one-year period ending August 31, 2008. In accordance with Section 15(c) of the 1940 Act, the Board requested and the Adviser provided materials relating to the Board's consideration of whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement. In determining whether to approve the continuation of the Advisory Agreement and Subadvisory Agreement, the Board, including Disinterested Trustees, considered the following information: Nature, Extent and Quality of Services Provided by the Adviser and Subadviser The Board, including the Disinterested Trustees, considered the nature, quality and extent of services to be provided by AIG SunAmerica and AIGGIC. The Board noted that the services include acting as investment manager and adviser to the Funds, managing the daily business affairs of the Funds, and obtaining and evaluating economic, statistical and financial information to formulate and implement investment policies. Additionally, the Board observed that AIG SunAmerica would provide office space, accounting, legal, and compliance, clerical and administrative services and has authorized any of its officers and employees, if elected, to serve as officers or trustees of the Funds without compensation. Finally, the Board noted that AIG SunAmerica is responsible for monitoring and reviewing the activities of affiliated and unaffiliated third-party service providers, including AIGGIC. In connection with the services provided by AIG SunAmerica, the Board analyzed the structure and duties of AIG SunAmerica's fund administration, accounting, legal and compliance departments and concluded that they were adequate to meet the needs of the Funds. The Board also reviewed the personnel responsible for providing advisory services to the Funds and other key personnel of AIG SunAmerica and concluded, based on their experience and interaction with AIG SunAmerica, that: (i) AIG SunAmerica is able to retain quality portfolio managers and other personnel; (ii) AIG SunAmerica exhibited a high level of diligence and attention to detail in carrying out its advisory responsibilities under the Advisory Agreement; (iii) AIG SunAmerica had been responsive to requests of the Board; and (iv) AIG SunAmerica had kept the Board apprised of developments relating to the Funds and the industry in general. The Board concluded that the nature and extent of services provided under the Advisory Agreement were reasonable and appropriate in relation to the management fee and that the quality of services continues to be high. The Board also considered AIG SunAmerica's reputation and long-standing relationship with the Funds and considered the benefit to shareholders of investing in funds that are part of a family of funds offering a variety of types of mutual funds and shareholder services. The Board considered AIG SunAmerica's experience in providing management and investment advisory and administrative services to advisory clients and noted that as of July 31, 2007, AIG SunAmerica managed, advised an/or administered approximately $56.2 billion in assets. The Board also considered AIG SunAmerica's code of ethics, and that it has developed internal procedures, adopted by the Board, for monitoring compliance with the investment objectives, policies and restrictions of the Funds as set forth in the Fund's prospectus. Additionally, the Board considered AIG SunAmerica's compliance and regulatory history, and noted that with respect to AIG's settlement with the Commission and other governmental authorities, AIG SunAmerica applied for a permanent exemptive order granting relief from the provisions of Section 9(a) of the 1940 Act./2/ With respect to the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund, for which AIG SunAmerica has delegated daily investment management responsibilities to AIGGIC, the Board also considered the nature, quality and extent of subadvisory - -------- /1/ The Subadvisory Agreement was amended in order to comply with the requirements of the exemptive rules relating to subadvisory affiliates (Rules 17a-10, 10f-3, 12d3-1 and 17e-1 under the 1940 Act) so that the Funds can rely on these provisions. These provisions permit certain exemptions for transactions with subadvisory affiliates. /2/ Please see Note 11 to the Financial Statements contained in this Semi-annual Shareholder report for additional information regarding final resolution of this matter. 77 SunAmerica Income Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2007 -- (unaudited) (continued) services provided by AIGGIC. The Board observed that AIGGIC is responsible for providing investment management services, including investment research, advice and supervision, and determining which securities will be purchased or sold by each of the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund. The Board reviewed AIGGIC's history, structure, size, visibility and resources, which are needed to attract and retain highly qualified investment professionals. The Board reviewed the personnel that are responsible for providing subadvisory services to the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund and concluded, based on their experience with AIGGIC, that: (i) AIGGIC is able to retain high quality portfolio managers and other investment personnel; (ii) AIGGIC exhibited a high level of diligence and attention to detail in carrying out its responsibilities under the Subadvisory Agreement; and (iii) AIGGIC had been responsive to requests of the Board and of AIG SunAmerica. The Board considered that AIGGIC has developed internal policies and procedures for monitoring compliance with the investment objectives, policies and restrictions of the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund as set forth in the Prospectus. The Board also considered AIGGIC's code of ethics, compliance and regulatory history, and noted that AIGGIC also applied for a permanent exemptive order from the provisions of Section 9(a) of the 1940 Act with respect to AIG's settlement with the SEC and other governmental authorities./1/ The Board concluded that the nature and extent of services to be provided by AIGGIC under the Subadvisory Agreement were reasonable and appropriate in relation to the subadvisory fees and that the quality of services continues to be high. Investment Performance The Board, including the Disinterested Trustees, also considered the investment performance of AIG SunAmerica and AIGGIC with respect to the Funds. In connection with its review, the Board received and reviewed information regarding the investment performance of the Funds as compared to each Fund's peer universe ("Peer Universe") and/or peer group ("Peer Group") as determined by Lipper, Inc. ("Lipper") and to an appropriate index or combination of indices. The Board also noted that it regularly reviews the performance of the Funds throughout the year. In preparation for the August 27, 2007 meeting, the Board was provided with reports independently prepared by Lipper. Based on the Lipper reports, the Board reviewed each Fund's annualized total returns for the prior one-, two-, three-, four-, five- and ten-year periods ended June 30, 2007. The Board also received a report prepared by AIG SunAmerica that detailed the Funds' performance for the three- and six-month periods ended June 30, 2007. Specifically, the Board considered that while the SunAmerica GNMA Fund ("GNMA Fund") had ranked in the fourth quintile of its Peer Universe for the prior one- and two-year periods, it continued to have strong performance over longer periods noting that it ranked in the first quintile for the prior five- and ten-year periods. With respect to the SunAmerica U.S. Government Securities Fund ("U.S. Government Fund") the Board considered that while it had ranked in the third-quintile of its Peer Group for the past one-year period and the fifth quintile for the prior two-year period it had generally provided good performance over longer periods noting that it ranked in the second-quintile for the prior three-, five- and ten-year periods. In considering the performance of AIGGIC, the Board noted that the High Yield Bond Fund and the Strategic Bond Fund had both ranked in the third quintile of their respective Peer Groups for the prior one-year period and ranked in the first-quintile in each of the three- and five-year periods. With respect to the Tax Exempt Fund, the Board considered that the Fund ranked in the fourth quintile of its Peer Group for the prior one-, three- and five-year periods. While performance over the prior three-month period was in line with its benchmark, the Board noted its continued concern with the Tax Exempt Fund's underperformance. The Board acknowledged AIG SunAmerica's commitment to enhance the Investments Department, including the addition of a new fixed income analyst. The Board noted, however, that the Tax Exempt Fund continued to underperform and that the Board would continue to monitor performance of the Funds on an ongoing basis and in connection with its consideration of the advisory agreements. - -------- /1/ Please see Note 11 to the Financial Statements contained in this Semi-Annual Shareholder report for additional information regarding final resolution of this matter. 78 SunAmerica Income Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2007 -- (unaudited) (continued) Consideration of the Management Fees and Subadvisory Fees and the Cost of the Services and Profits to be Realized by the Adviser, Subadvisers and their Affiliates from the Relationship with the Funds The Board, including the Disinterested Trustees, received and reviewed information regarding the fees to be paid by the Funds to AIG SunAmerica pursuant to the Advisory Agreement and the fees paid by AIG SunAmerica to AIGGIC pursuant to the Subadvisory Agreement. The Board examined this information in order to determine the reasonableness of the fees in light of the nature and quality of services to be provided and any potential additional benefits to be received by AIG SunAmerica, AIGGIC or their affiliates in connection with providing such services to the Funds. To assist in analyzing the reasonableness of the management fee for each of the Funds, the Board received reports independently prepared by Lipper. The reports showed comparative fee information for each Fund's Peer Group and/or Peer Universe. In considering the reasonableness of the management fee to be paid by each Fund to AIG SunAmerica, the Board reviewed a number of expense comparisons, including: (i) contractual and actual advisory fees; and (ii) actual total operating expenses. In considering each Fund's total operating expenses, the Board analyzed the level of fee waivers and expense reimbursements and the net expense caps contractually agreed upon by AIG SunAmerica with respect to each Fund except the Tax Exempt Fund. The Board compared each Fund's net expense ratio to those of other funds within its Peer Group and/or Peer Universe as a guide to help assess the reasonableness of the Fund's management fee. The Board acknowledged that it was difficult to make precise comparisons with other funds in the Peer Groups and Peer Universes since the exact nature of services provided under the various fund agreements is often not apparent. The Board noted, however, that the comparative fee information provided by Lipper as a whole was useful in assessing whether AIG SunAmerica was providing services at a cost that was competitive with other, similar funds. The Board also considered advisory fees received by AIG SunAmerica with respect to other mutual funds and accounts with similar investment strategies to the Funds. The Board noted the advisory fee paid by the Funds were reasonable as compared to the fees AIG SunAmerica was receiving from other mutual funds and accounts for which it serves as adviser or subadviser. The Board also received and reviewed information regarding the fees paid by AIG SunAmerica to AIGGIC pursuant to the Subadvisory Agreement. To assist in analyzing the reasonableness of the subadvisory fees, the Board received a report prepared independently by Lipper. The report showed comparative fee information of each Fund's Peer Group that the Trustees used as a guide to help assess the reasonableness of the subadvisory fees. The Trustees noted that Peer Group information as a whole was useful in assessing whether AIGGIC was providing services at a cost that was competitive with other similar funds. The Trustees also considered that the subadvisory fees are paid by AIG SunAmerica out of its management fee and not by the Funds, and that subadvisory fees may vary widely within a Peer Group for various reasons, including market pricing demands, existing relationships, experience and success, and individual client needs. The Board further considered the amount of subadvisory fees paid out by AIG SunAmerica and the amount of the management fees which it retained. The Board also considered advisory fees received by AIGGIC with respect to other mutual funds and accounts with similar investment strategies to the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund. The Board noted that the subadvisory fees paid by AIG SunAmerica to AIGGIC were reasonable as compared to fees AIGGIC receives for other mutual funds and accounts for which it serves as adviser or subadviser. In addition, the Board received and reviewed financial statements relating to AIG SunAmerica's financial condition and profitability with respect to the services it provided the Funds and considered how profit margins could affect AIG SunAmerica's ability to attract and retain high quality investment professionals and other key personnel. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by AIG SunAmerica and its affiliates that provide services to the Funds. In particular, the Board considered the profitability of AIG SunAmerica under the Advisory Agreement, and considered the profitability of AIG SunAmerica's affiliates under the Rule 12b-1 Plans, Service Agreements, and Administrative and Shareholder Agreements. Additionally, the Board considered whether AIG SunAmerica, AIGGIC and its affiliates received any indirect benefits from the relationship with the Funds. Specifically, the Board observed that AIG Federal Savings Bank, an affiliate of AIG SunAmerica and AIGGIC, serves as custodian with respect to certain shareholder retirement accounts that are administered by AIG SunAmerica and receives a fee payable by the qualifying shareholders. The Board also reviewed AIGGIC's financial statements and considered whether AIGGIC had the financial resources necessary to attract and retain high quality investment management personnel and to continue to provide the high quality of services that it had provided to the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund to date. 79 SunAmerica Income Funds APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2007 -- (unaudited) (continued) The Board concluded that AIG SunAmerica and AIGGIC had the financial resources necessary to perform their obligations under the Advisory Agreement and Subadvisory Agreement and to continue to provide the Funds with the high quality services that they had provided in the past. The Board also concluded that the management fee and subadvisory fees were reasonable in light of the factors discussed above. Economies of Scale The Board, including the Disinterested Trustees, considered whether the shareholders would benefit from economies of scale and whether there was potential for future realization of economies with respect to the Funds. The Board considered that 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 AIG SunAmerica as it adds labor and capital to expand the scale of operations. The Board also took into account that each of the Funds had management fee arrangements that included breakpoints that will adjust the fee downward as the size of the Fund increases, thereby allowing the shareholders to potentially participate in any economies of scale. The Board further noted that, with the exception of the Tax Exempt Fund, AIG SunAmerica has agreed to contractually cap the total annual operating expenses of each class of the Funds, at certain levels. The Board observed that those expense caps benefited shareholders by keeping total fees down even in the absence of breakpoints or economies of scale. The Board concluded that the Funds' management fee structure was reasonable and that it would continue to review fees in connection with the renewal of the Advisory Agreement, including whether the implementation of additional breakpoints would be appropriate in the future due to an increase in asset size or otherwise. The Board did not review specific information regarding whether there have been economies of scale with respect to AIGGIC's management of the Funds because it regards that information as less relevant at the subadviser level. Rather, the Board considered information regarding economies of scale in the context of the renewal of the Advisory Agreement. Other Factors In consideration of the Advisory Agreement and Subadvisory Agreement, the Board also received information regarding AIG SunAmerica's and AIGGIC's brokerage and soft dollar practices. The Board considered that AIG SunAmerica and AIGGIC are responsible for decisions to buy and sell securities for the portfolios they manage, selection of broker-dealers and negotiation of commission rates. The Board also considered the benefits AIG SunAmerica and AIGGIC derive from their soft dollar arrangements, including arrangements under which brokers provide brokerage and/or research services to AIG SunAmerica and/or AIGGIC in return for allocating brokerage. The Board further observed that when making purchases of new issues with fixed underwriting fees, AIG SunAmerica or AIGGIC may designate the use of broker-dealers who have agreed to provide certain statistical, research and other information. Conclusion After a full and complete discussion, the Board approved the Advisory Agreement and the Subadvisory Agreement with respect to the Strategic Bond Fund, High Yield Bond Fund and Tax Exempt Fund, each for a one-year period ending August 31, 2008. Based upon their evaluation of all these factors in their totality, the Board, including the Disinterested Trustees, was satisfied that the terms of the Advisory Agreement and Subadvisory Agreement were fair and reasonable and in the best interests of the Funds and the Funds' shareholders. In arriving at a decision to approve the Advisory Agreement and Subadvisory Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together. The Disinterested Trustees were also assisted by the advice of independent counsel in making this determination. 80 [LOGO] AIG SunAmerica Mutual Funds Harborside Financial Center 3200 Plaza 5 Jersey City, NJ 07311-4992 Directors/Trustees VOTING PROXIES ON TRUST DISCLOSURE OF QUARTERLY Samuel M. Eisenstat PORTFOLIO SECURITIES PORTFOLIO HOLDINGS Peter A. Harbeck A description of the The Trust is required to Dr. Judith L. Craven policies and proce-dures file its com-plete William F. Devin that the Trust uses to schedule of portfolio Stephen J. Gutman determine how to vote holdings with the U.S. Jeffrey S. Burum proxies relating to Securities and Exchange William J. Shea secu-rities held in a Commission for its first Fund's portfolio which is and third fiscal quarters Officers available in the Trust's on Form N-Q. The Trust's Vincent M. Marra, Statement of Additional Forms N-Q are available President and Chief Information, may be on the U.S. Securities Executive Officer ob-tained without charge and Exchange Commis-sion Donna M. Handel, upon request, by calling website at www.sec.gov. Treasurer (800) 858-8850. The You can also review and James Nichols, Vice in-formation is also obtain copies of the President available from the EDGAR Forms N-Q at the U.S. Timothy Pettee, Vice database on the U.S. Securities and Exchange President Secu-rities and Exchange Commission Public Michael Cheah, Vice Commission's website at Refer-ence Room in President http://www.sec.gov. Washington DC Cynthia Gibbons, Vice (information on the President and Chief DELIVERY OF SHAREHOLDER operation of the Public Compliance Officer DOCUMENTS Reference Room may be Gregory N. Bressler, The Funds have adopted a ob-tained by calling Chief Legal Officer policy that allows them 1-800-SEC-0330). and Secretary to send only one copy of Nori L. Gabert, Vice a Fund's prospectus, PROXY VOTING RECORD ON President and proxy material, annual SUNAMERICA INCOME FUNDS Assistant Secretary report and semi-annual Information regarding how Kathleen Fuentes, report (the "shareholder the SunAmerica Income Assistant Secretary documents") to Funds voted proxies Gregory R. Kingston, shareholders with related to securities Vice President and multiple accounts held in the SunAmerica Assistant Treasurer residing at the same Income Funds during the Chris Okeke, Assistant "household." This most recent twelve month Treasurer practice is called period ended June 30 is Matthew J. Hackethal, householding and reduces available, once filed Anti-Money Laundering Fund expenses, which with the U.S. Securities Compliance Officer benefits you and other and Exchange Commission, shareholders. Unless the without charge, upon Investment Adviser Funds receive request, by calling instructions to the (800) 858-8850 or on the AIG SunAmerica Asset Management Corp. con-trary, you will only U.S. Securities and Harborside Financial receive one copy of the Exchange Commission's Center shareholder documents. website at 3200 Plaza 5 The Funds will continue http://www.sec.gov. Jersey City, NJ to household the 07311-4992 share-holder documents This report is submitted indefinitely, until we solely for the general Distributor are instructed otherwise. information of AIG SunAmerica Capital If you do not wish to shareholders of the Services, Inc. participate in Funds. Distribution of Harborside Financial householding please this report to persons Center contact Shareholder other than shareholders 3200 Plaza 5 Services at (800) of the Funds is Jersey City, NJ 858-8850 ext. 6010 or authorized only in 07311-4992 send a written request con-nection with a with your name, the name currently effective Shareholder Servicing of your fund(s) and your pro-spectus, setting Agent account number(s) to AIG forth details of the AIG SunAmerica Fund SunAmerica Mutual Funds Funds, which must precede Services, Inc. c/o BFDS, P.O. Box or accom-pany this report. Harborside Financial 219186, Kansas City MO, Center 64121-9186. We will The accompanying report 3200 Plaza 5 resume individual has not been audited by Jersey City, NJ mailings for your account independent accountants 07311-4992 within thirty (30) days and accordingly no of receipt of your opinion has been Custodian and Transfer request. expressed thereon. Agent State Street Bank and Trust Company P.O. Box 419572 Kansas City, MO 64141-6572
81 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 - 9/07 [LOGO] 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. There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Trustees that were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by 22(b)(15)) of Schedule 14A (17 CFR 240.14a- 101), or this Item 10. Item 11. Controls and Procedures. (a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant's management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant's disclosure controls and procedures (as defined under Rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c))). Based on that evaluation, the registrant's management, including the President and Treasurer, concluded that the registrant's disclosure controls and procedures are effective. (b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d))) that occurred during the registrant's last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal contro1 over financial reporting. Item 12. Exhibits. (a) (1) Not applicable. (2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes- Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Income Funds By: /s/ Vincent M. Marra ------------------- Vincent M. Marra President Date: December 7, 2007 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 7, 2007 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: December 7, 2007 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 registrant's most recent 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 16, 2007 /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 registrant's most recent 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 16, 2007 /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer EX-99.906CERT 3 dex99906cert.txt CERTIFICATIONS 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 16, 2007 /s/ Vincent M. Marra --------------- Vincent M. Marra President /s/ Donna M. Handel --------------- Donna M. Handel Treasurer -----END PRIVACY-ENHANCED MESSAGE-----