-----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, QiDCGjP5pkL2uWONr13rEiO34T0R+CW4IdfwzN93O/ebSrUxp4IZ/a/WbDyBPMwp 8vRXUa25N3d6hEVNxpODYw== 0001193125-08-129458.txt : 20080606 0001193125-08-129458.hdr.sgml : 20080606 20080606131714 ACCESSION NUMBER: 0001193125-08-129458 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080606 DATE AS OF CHANGE: 20080606 EFFECTIVENESS DATE: 20080606 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-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04708 FILM NUMBER: 08885044 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-CSR 1 dncsr.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) John T. Genoy 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) 324-6414 ----------------------------- Date of fiscal year end: March 31 -------------------------- Date of reporting period: March 31, 2008 ------------------------- Item 1. Reports to Stockholders [PHOTO] ANNUAL REPORT 2008 SUNAMERICA Income Funds [LOGO] www.sunamericafunds.com live longer retire stronger/sm/ March 31, 2008 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............................... 63 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..... 78 TRUSTEE AND OFFICER INFORMATION............................. 79 SHAREHOLDER TAX INFORMATION................................. 83 COMPARISONS: PORTFOLIOS vs. INDICES......................... 85
Shareholder Letter Dear Shareholder: Enclosed is the annual report for the SunAmerica Income Funds for the 12-month period ended March 31, 2008. This annual period will certainly go down in history as one of the most interesting and challenging times for the fixed income markets. While the annual period started relatively calmly, the markets were roiled over the summer as the deterioration in the housing market created concern in the subprime mortgage markets. This concern spread throughout the credit markets and a credit crunch began to take hold. Liquidity became scarce, and there was a flight to quality as a general de-leveraging began to take place throughout the U.S. economy. The period also has been marked by a declining U.S. dollar and increasing food and oil prices, which created the specter of renewed inflation over the markets. The Federal Reserve acted in an aggressive fashion, cutting interest rates six times during the fiscal period, as the Federal Funds rate ended the fiscal period at 2.25%, down 300 basis points year-over-year. The Federal Reserve also cut the discount rate and activated other innovative mechanisms to enhance confidence and improve liquidity. In addition, the Federal government responded with a variety of proposals to assist homeowners and to update and improve the regulation of the financial system. The question of whether the U.S. economy is in a recession, or is heading towards one, remains unanswered. While the credit markets appear to be improving, no one knows what future credit events may lie ahead. In such uncertain times, it is important to talk with your financial adviser and review your asset allocation, investment goals and risk profile. 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. Be sure 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 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 -- March 31, 2008 -- (unaudited) Disclosure of Portfolio Expenses in Shareholder Reports As a shareholder of a fund (each, a "Fund" and collectively the "Funds") in the SunAmerica Income Funds (the "Trust"), you may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments, contingent deferred sales charges and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. The example set forth below is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at October 1, 2007 and held until March 31, 2008. Actual Expenses The "Actual" section of the table provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the column under the heading entitled "Expenses Paid During the Six Months Ended March 31, 2008" to estimate the expenses you paid on your account during this period. The "Expenses Paid During the Six Months Ended March 31, 2008" 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 March 31, 2008" 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 March 31, 2008" 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 March 31, 2008" 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 March 31, 2008" 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 March 31, 2008" 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 -- March 31, 2008 -- (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 October 1, March 31, March 31, at October 1, March 31, March 31, March 31, Fund 2007 2008 2008* 2007 2008 2008* 2008* - ---- ------------- -------------- ------------- ------------- -------------- ------------- --------- U.S. Government Securities Class A#................ $1,000.00 $1,068.80 $ 5.12 $1,000.00 $1,020.05 $ 5.00 0.99% Class B#................ $1,000.00 $1,065.35 $ 8.47 $1,000.00 $1,016.80 $ 8.27 1.64% Class C#................ $1,000.00 $1,065.41 $ 8.47 $1,000.00 $1,016.80 $ 8.27 1.64% GNMA Class A#................ $1,000.00 $1,065.86 $ 5.11 $1,000.00 $1,020.05 $ 5.00 0.99% Class B#................ $1,000.00 $1,062.32 $ 8.46 $1,000.00 $1,016.80 $ 8.27 1.64% Class C#................ $1,000.00 $1,062.28 $ 8.46 $1,000.00 $1,016.80 $ 8.27 1.64% Strategic Bond Class A................. $1,000.00 $1,009.37 $ 6.43 $1,000.00 $1,018.60 $ 6.46 1.28% Class B................. $1,000.00 $1,006.05 $ 9.68 $1,000.00 $1,015.35 $ 9.72 1.93% Class C................. $1,000.00 $1,003.38 $ 9.72 $1,000.00 $1,015.30 $ 9.77 1.94% High Yield Bond Class A#................ $1,000.00 $ 940.30 $ 6.60 $1,000.00 $1,018.20 $ 6.86 1.36% Class B#................ $1,000.00 $ 939.49 $ 9.75 $1,000.00 $1,014.95 $10.13 2.01% Class C#................ $1,000.00 $ 937.67 $ 9.74 $1,000.00 $1,014.95 $10.13 2.01% Tax Exempt Insured Class A................. $1,000.00 $1,003.43 $ 6.51 $1,000.00 $1,018.50 $ 6.56 1.30% Class B................. $1,000.00 $ 999.95 $10.45 $1,000.00 $1,014.55 $10.53 2.09% Class C#................ $1,000.00 $1,000.36 $ 9.75 $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 March 31, 2008" and the "Expenses Ratios" would have been higher. 4 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2008
U.S. Government Strategic Securities GNMA Bond Fund Fund Fund --------------- ------------ ------------ ASSETS: Long-term investment securities, at market value* (unaffiliated)..................... $223,166,187 $414,723,011 $745,030,719 Short term investment securities, at market value* (unaffiliated).................... 8,000,000 35,000,000 27,163,000 Repurchase agreements (cost approximates market value)............................... 1,500,000 1,818,000 31,121,000 ------------ ------------ ------------ Total investments.................................................................. 232,666,187 451,541,011 803,314,719 ------------ ------------ ------------ Cash................................................................................. 554 977 679,051 Foreign cash*........................................................................ -- -- 3,660,741 Receivable for: Shares of beneficial interest sold................................................. 583,995 595,395 3,029,226 Dividends and interest............................................................. 1,635,255 1,984,967 12,712,519 Investments sold................................................................... -- 30,275,521 10,253,818 Prepaid Expenses and other assets.................................................... 504 1,125 2,593 Due from investment adviser for expense reimbursements/fee waivers................... 47,571 62,303 -- ------------ ------------ ------------ Total assets......................................................................... 234,934,066 484,461,299 833,652,667 ------------ ------------ ------------ LIABILITIES: Payable for: Shares of beneficial interest redeemed............................................. 572,978 472,972 1,567,023 Investments purchased.............................................................. 10,364,583 70,969,792 27,482,342 Investment advisory and management fees............................................ 122,255 159,365 420,994 Distribution and service maintenance fees.......................................... 83,748 166,212 410,904 Transfer agent fees and expenses................................................... 54,949 94,941 164,254 Trustees' fees and expenses........................................................ 85,392 57,817 39,231 Other accrued expenses............................................................. 118,908 149,157 280,687 Dividends payable.................................................................. 123,724 200,437 1,035,225 Due to custodian..................................................................... -- -- -- Commitments (Note 11)................................................................ -- -- -- ------------ ------------ ------------ Total liabilities.................................................................... 11,526,537 72,270,693 31,400,660 ------------ ------------ ------------ Net assets........................................................................... $223,407,529 $412,190,606 $802,252,007 ============ ============ ============ NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value....................................... $ 230,862 $ 357,353 $ 2,289,865 Paid-in capital...................................................................... 220,184,556 402,314,049 837,693,680 ------------ ------------ ------------ 220,415,418 402,671,402 839,983,545 Accumulated undistributed net investment income (loss)............................... 24,694 201,906 6,775,150 Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions............................. (4,327,579) 1,282,873 (28,535,306) Unrealized appreciation (depreciation) on investment................................. 7,294,996 8,034,425 (16,248,810) Unrealized appreciation (depreciation) on foreign exchange transactions.............. -- -- 277,428 ------------ ------------ ------------ Net assets........................................................................... $223,407,529 $412,190,606 $802,252,007 ============ ============ ============ *Cost Long-term investment securities (unaffiliated)..................................... $215,871,191 $406,688,586 $761,279,529 ============ ============ ============ Short-term securities (unaffiliated)............................................... $ 8,000,000 $ 35,000,000 $ 27,163,000 ============ ============ ============ Foreign cash....................................................................... $ -- $ -- $ 3,562,813 ============ ============ ============
High Yield Tax Exempt Bond Insured Fund Fund ------------ ----------- ASSETS: Long-term investment securities, at market value* (unaffiliated)..................... $196,144,065 $52,121,490 Short term investment securities, at market value* (unaffiliated).................... -- 1,611,534 Repurchase agreements (cost approximates market value)............................... 5,281,000 -- ------------ ----------- Total investments.................................................................. 201,425,065 53,733,024 ------------ ----------- Cash................................................................................. -- -- Foreign cash*........................................................................ -- -- Receivable for: Shares of beneficial interest sold................................................. 2,100,412 55,964 Dividends and interest............................................................. 4,965,991 797,294 Investments sold................................................................... 1,302,145 -- Prepaid Expenses and other assets.................................................... 73,259 166 Due from investment adviser for expense reimbursements/fee waivers................... 14,521 -- ------------ ----------- Total assets......................................................................... 209,881,393 54,586,448 ------------ ----------- LIABILITIES: Payable for: Shares of beneficial interest redeemed............................................. 461,046 37,630 Investments purchased.............................................................. 3,132,084 -- Investment advisory and management fees............................................ 129,541 22,830 Distribution and service maintenance fees.......................................... 113,948 19,971 Transfer agent fees and expenses................................................... 53,462 14,472 Trustees' fees and expenses........................................................ 50,328 26,913 Other accrued expenses............................................................. 164,248 83,314 Dividends payable.................................................................. 397,933 45,908 Due to custodian..................................................................... 124,082 -- Commitments (Note 11)................................................................ -- -- ------------ ----------- Total liabilities.................................................................... 4,626,672 251,038 ------------ ----------- Net assets........................................................................... $205,254,721 $54,335,410 ============ =========== NET ASSETS REPRESENTED BY: Shares of beneficial interest, $0.01 par value....................................... $ 492,576 $ 44,368 Paid-in capital...................................................................... 317,289,296 53,260,546 ------------ ----------- 317,781,872 53,304,914 Accumulated undistributed net investment income (loss)............................... (1,882,760) (54,332) Accumulated undistributed net realized gain (loss) on investments, futures contracts, securities sold short and foreign exchange transactions............................. (91,048,274) (110,829) Unrealized appreciation (depreciation) on investment................................. (19,596,117) 1,195,657 Unrealized appreciation (depreciation) on foreign exchange transactions.............. -- -- ------------ ----------- Net assets........................................................................... $205,254,721 $54,335,410 ============ =========== *Cost Long-term investment securities (unaffiliated)..................................... $215,740,182 $50,925,833 ============ =========== Short-term securities (unaffiliated)............................................... $ -- $ 1,611,534 ============ =========== Foreign cash....................................................................... $ -- $ -- ============ ===========
See Notes to Financial Statements 5 SunAmerica Income Funds STATEMENT OF ASSETS AND LIABILITIES -- March 31, 2008 -- (continued)
U.S. Government Strategic High Yield Securities GNMA Bond Bond Fund Fund Fund Fund --------------- ------------ ------------ ------------ Class A (unlimited shares authorized): Net assets.............................................................. $191,056,902 $330,202,296 $483,819,822 $109,219,362 Shares of beneficial interest issued and outstanding.................... 19,742,472 28,644,517 138,270,204 26,260,314 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 9.68 $ 11.53 $ 3.50 $ 4.16 Maximum sales charge (4.75% of offering price).......................... 0.48 0.57 0.17 0.21 ------------ ------------ ------------ ------------ Maximum offering price to public........................................ $ 10.16 $ 12.10 $ 3.67 $ 4.37 ============ ============ ============ ============ Class B (unlimited shares authorized): Net assets.............................................................. $ 15,353,723 $ 46,389,280 $ 52,528,008 $ 34,911,277 Shares of beneficial interest issued and outstanding.................... 1,585,903 4,013,955 15,016,144 8,381,254 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 9.68 $ 11.56 $ 3.50 $ 4.17 ============ ============ ============ ============ Class C (unlimited shares authorized): Net assets.............................................................. $ 16,996,904 $ 35,599,030 $265,904,177 $ 61,124,082 Shares of beneficial interest issued and outstanding.................... 1,757,802 3,076,796 75,700,195 14,616,003 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 9.67 $ 11.57 $ 3.51 $ 4.18 ============ ============ ============ ============
Tax Exempt Insured Fund ----------- Class A (unlimited shares authorized): Net assets.............................................................. $46,843,293 Shares of beneficial interest issued and outstanding.................... 3,825,543 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 12.24 Maximum sales charge (4.75% of offering price).......................... 0.61 ----------- Maximum offering price to public........................................ $ 12.85 =========== Class B (unlimited shares authorized): Net assets.............................................................. $ 3,350,631 Shares of beneficial interest issued and outstanding.................... 273,245 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 12.26 =========== Class C (unlimited shares authorized): Net assets.............................................................. $ 4,141,486 Shares of beneficial interest issued and outstanding.................... 337,992 Net asset value and redemption price per share (excluding any applicable contingent deferred sales charge)...................................... $ 12.25 ===========
See Notes to Financial Statements 6 SunAmerica Income Funds STATEMENT OF OPERATIONS -- For the year ended March 31, 2008
U.S. Government Securities GNMA Fund Fund --------------- ----------- INCOME: Dividends (unaffiliated)................................................................. $ -- $ -- Interest (unaffiliated).................................................................. 9,321,588 20,430,660 ----------- ----------- Total investment income*............................................................... 9,321,588 20,430,660 ----------- ----------- EXPENSES: Investment advisory and management fees.................................................. 1,256,875 1,826,963 Distribution and service maintenance fees: Class A................................................................................ 587,514 1,114,860 Class B................................................................................ 138,450 500,830 Class C................................................................................ 119,046 290,439 Transfer agent fees: Class A................................................................................ 409,785 729,103 Class B................................................................................ 36,716 124,163 Class C................................................................................ 30,214 71,785 Registration fees: Class A................................................................................ 24,227 25,014 Class B................................................................................ 11,653 14,955 Class C................................................................................ 13,372 15,569 Custodian and accounting fees............................................................ 92,429 205,622 Reports to shareholders.................................................................. 59,568 85,145 Audit and tax fees....................................................................... 40,091 39,742 Legal fees............................................................................... 13,975 7,345 Trustees' fees and expenses.............................................................. 15,133 31,379 Interest expense......................................................................... -- -- Interest expense on securities sold short................................................ -- -- Other expenses........................................................................... 14,555 19,818 ----------- ----------- Total expenses before fee waivers, reimbursements, and custody credits................. 2,863,603 5,102,732 Fees waived and expenses reimbursed by investment advisor (Note 3)..................... (778,516) (651,523) Custody credits earned on cash balances................................................ (966) (67) ----------- ----------- Net expenses........................................................................... 2,084,121 4,451,142 ----------- ----------- Net investment income (loss).............................................................. 7,237,467 15,979,518 ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated).................................... 1,008,787 6,905,478 Net realized foreign exchange gain (loss) on other assets and liabilities................. -- -- Net realized gains (loss) on securities sold short........................................ -- -- ----------- ----------- Net realized gain (loss) on investments and foreign currencies............................ 1,008,787 6,905,478 ----------- ----------- Change in unrealized appreciation (depreciation) on investments (unaffiliated)............ 8,877,258 10,107,965 Change in unrealized foreign exchange gain (loss) on other assets and liabilities......... -- -- ----------- ----------- Net unrealized gain (loss) on investments and foreign currencies.......................... 8,877,258 10,107,965 ----------- ----------- Net realized and unrealized gain (loss) on investments and foreign currencies............. 9,886,045 17,013,443 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................... $17,123,512 $32,992,961 =========== =========== - -------- * Net of foreign withholding taxes on interest and dividends of.......................... $ -- $ -- ----------- -----------
Strategic High Yield Bond Bond Fund Fund ------------ ------------ INCOME: Dividends (unaffiliated)................................................................. $ 386,287 $ 519,370 Interest (unaffiliated).................................................................. 51,882,486 25,985,637 ------------ ------------ Total investment income*............................................................... 52,268,773 26,505,007 ------------ ------------ EXPENSES: Investment advisory and management fees.................................................. 4,936,399 2,223,971 Distribution and service maintenance fees: Class A................................................................................ 1,720,656 630,960 Class B................................................................................ 536,315 428,998 Class C................................................................................ 2,483,190 773,776 Transfer agent fees: Class A................................................................................ 1,117,778 428,013 Class B................................................................................ 128,434 103,801 Class C................................................................................ 562,793 180,617 Registration fees: Class A................................................................................ 86,055 42,937 Class B................................................................................ 16,729 17,511 Class C................................................................................ 59,049 22,001 Custodian and accounting fees............................................................ 214,699 115,110 Reports to shareholders.................................................................. 163,468 96,743 Audit and tax fees....................................................................... 44,401 44,401 Legal fees............................................................................... 29,485 20,215 Trustees' fees and expenses.............................................................. 61,545 25,746 Interest expense......................................................................... 2,121 62,252 Interest expense on securities sold short................................................ -- 168,768 Other expenses........................................................................... 26,146 18,517 ------------ ------------ Total expenses before fee waivers, reimbursements, and custody credits................. 12,189,263 5,404,337 Fees waived and expenses reimbursed by investment advisor (Note 3)..................... -- (525,466) Custody credits earned on cash balances................................................ (123,211) (9,572) ------------ ------------ Net expenses........................................................................... 12,066,052 4,869,299 ------------ ------------ Net investment income (loss).............................................................. 40,202,721 21,635,708 ------------ ------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated).................................... 6,681,808 (3,861,306) Net realized foreign exchange gain (loss) on other assets and liabilities................. 344,687 7,339 Net realized gains (loss) on securities sold short........................................ -- 53,931 ------------ ------------ Net realized gain (loss) on investments and foreign currencies............................ 7,026,495 (3,800,036) ------------ ------------ Change in unrealized appreciation (depreciation) on investments (unaffiliated)............ (31,264,862) (36,531,660) Change in unrealized foreign exchange gain (loss) on other assets and liabilities......... 197,320 (4,510) ------------ ------------ Net unrealized gain (loss) on investments and foreign currencies.......................... (31,067,542) (36,536,170) ------------ ------------ Net realized and unrealized gain (loss) on investments and foreign currencies............. (24,041,047) (40,336,206) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................... $ 16,161,674 $(18,700,498) ============ ============ - -------- * Net of foreign withholding taxes on interest and dividends of.......................... $ 131,642 $ -- ------------ ------------
Tax Exempt Insured Fund ----------- INCOME: Dividends (unaffiliated)................................................................. $ -- Interest (unaffiliated).................................................................. 2,605,432 ----------- Total investment income*............................................................... 2,605,432 ----------- EXPENSES: Investment advisory and management fees.................................................. 279,493 Distribution and service maintenance fees: Class A................................................................................ 167,414 Class B................................................................................ 42,064 Class C................................................................................ 38,596 Transfer agent fees: Class A................................................................................ 117,715 Class B................................................................................ 11,920 Class C................................................................................ 10,960 Registration fees: Class A................................................................................ 15,094 Class B................................................................................ 10,146 Class C................................................................................ 11,039 Custodian and accounting fees............................................................ 29,937 Reports to shareholders.................................................................. 10,358 Audit and tax fees....................................................................... 39,185 Legal fees............................................................................... 8,716 Trustees' fees and expenses.............................................................. 4,651 Interest expense......................................................................... -- Interest expense on securities sold short................................................ -- Other expenses........................................................................... 13,172 ----------- Total expenses before fee waivers, reimbursements, and custody credits................. 810,460 Fees waived and expenses reimbursed by investment advisor (Note 3)..................... (11,901) Custody credits earned on cash balances................................................ (967) ----------- Net expenses........................................................................... 797,592 ----------- Net investment income (loss).............................................................. 1,807,840 ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on investments (unaffiliated).................................... (110,884) Net realized foreign exchange gain (loss) on other assets and liabilities................. -- Net realized gains (loss) on securities sold short........................................ -- ----------- Net realized gain (loss) on investments and foreign currencies............................ (110,884) ----------- Change in unrealized appreciation (depreciation) on investments (unaffiliated)............ (1,245,963) Change in unrealized foreign exchange gain (loss) on other assets and liabilities......... -- ----------- Net unrealized gain (loss) on investments and foreign currencies.......................... (1,245,963) ----------- Net realized and unrealized gain (loss) on investments and foreign currencies............. (1,356,847) ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............................... $ 450,993 =========== - -------- * Net of foreign withholding taxes on interest and dividends of.......................... $ -- -----------
See Notes to Financial Statements 7 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS
U.S. Government Securities Fund -------------------------- For the year For the year ended ended March 31, March 31, 2008 2007 ------------ ------------ Operations: Net investment income (loss)............................... $ 7,237,467 $ 6,828,045 Net realized gain (loss) on investments and foreign currencies............................................... 1,008,787 (68,459) Net unrealized gain (loss) on investments and foreign currencies............................................... 8,877,258 1,657,175 ------------ ------------ Increase (decrease) in net assets resulting from operations. 17,123,512 8,416,761 ------------ ------------ Distributions to shareholders from: Net investment income (Class A)............................ (6,695,513) (6,264,372) Net investment income (Class B)............................ (464,501) (608,171) Net investment income (Class C)............................ (392,650) (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......................... (7,552,664) (7,185,444) ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6)........................ 37,000,481 (3,236,594) ------------ ------------ Total increase (decrease) in net assets..................... 46,571,329 (2,005,277) NET ASSETS: Beginning of period......................................... 176,836,200 178,841,477 ------------ ------------ End of period+.............................................. $223,407,529 $176,836,200 ============ ============ - -------- +Includes accumulated undistributed net investment income (loss)..................................................... $ 24,694 $ 56,621 ============ ============
See Notes to Financial Statements 8 SunAmerica Income Funds STATEMENT OF CHANGES IN NET ASSETS -- (continued)
GNMA Fund Strategic Bond Fund -------------------------- -------------------------- For the year For the year For the year For the year ended ended ended ended March 31, March 31, March 31, March 31, 2008 2007 2008 2007 ------------ ------------ ------------ ------------ Operations: Net investment income (loss)............................... $ 15,979,518 $ 16,306,209 $ 40,202,721 $ 25,776,555 Net realized gain (loss) on investments and foreign currencies............................................... 6,905,478 (171,039) 7,026,495 3,735,857 Net unrealized gain (loss) on investments and foreign currencies............................................... 10,107,965 4,010,650 (31,067,542) 13,298,249 ------------ ------------ ------------ ------------ Increase (decrease) in net assets resulting from operations. 32,992,961 20,145,820 16,161,674 42,810,661 ------------ ------------ ------------ ------------ Distributions to shareholders from: Net investment income (Class A)............................ (13,925,153) (13,350,095) (29,257,025) (18,128,377) Net investment income (Class B)............................ (1,870,179) (2,448,583) (2,805,432) (2,175,396) Net investment income (Class C)............................ (1,078,120) (1,311,888) (13,185,521) (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......................... (16,873,452) (17,110,566) (45,247,978) (26,453,510) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from capital share transactions (Note 6)........................ (2,267,507) (24,531,303) 103,961,925 400,002,265 ------------ ------------ ------------ ------------ Total increase (decrease) in net assets..................... 13,852,002 (21,496,049) 74,875,621 416,359,416 NET ASSETS: Beginning of period......................................... 398,338,604 419,834,653 727,376,386 311,016,970 ------------ ------------ ------------ ------------ End of period+.............................................. $412,190,606 $398,338,604 $802,252,007 $727,376,386 ============ ============ ============ ============ - -------- +Includes accumulated undistributed net investment income (loss)..................................................... $ 201,906 $ 327,903 $ 6,775,150 $ (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 year For the year For the year For the year ended ended ended ended March 31, March 31, March 31, March 31, 2008 2007 2008 2007 ------------- ------------ ------------ ------------ Operations: Net investment income (loss).......................... $ 21,635,708 $ 20,209,713 $ 1,807,840 $ 1,996,138 Net realized gain (loss) on investments and foreign currencies.......................................... (3,800,036) 6,213,051 (110,884) 481,567 Net unrealized gain (loss) on investments and foreign currencies.......................................... (36,536,170) 6,288,956 (1,245,963) 281,498 ------------- ------------ ----------- ----------- Increase (decrease) in net assets resulting from operations............................................ (18,700,498) 32,711,720 450,993 2,759,203 ------------- ------------ ----------- ----------- Distributions to shareholders from: Net investment income (Class A)....................... (12,979,716) (13,055,050) (1,606,491) (1,775,224) Net investment income (Class B)....................... (2,908,997) (3,241,816) (99,116) (149,453) Net investment income (Class C)....................... (5,292,760) (5,181,540) (105,563) (115,967) Net realized gain on securities (Class A)............. -- -- (396,574) (365,409) Net realized gain on securities (Class B)............. -- -- (32,437) (39,551) Net realized gain on securities (Class C)............. -- -- (34,730) (31,739) ------------- ------------ ----------- ----------- Total distributions to shareholders.................... (21,181,473) (21,478,406) (2,274,911) (2,477,343) ------------- ------------ ----------- ----------- Net increase (decrease) in net assets resulting from capital share transactions (Note 6)................... (134,674,504) 32,050,805 (2,960,840) (9,226,947) ------------- ------------ ----------- ----------- Total increase (decrease) in net assets................ (174,556,475) 43,284,119 (4,784,758) (8,945,087) NET ASSETS: Beginning of period.................................... 379,811,196 336,527,077 59,120,168 68,065,255 ------------- ------------ ----------- ----------- End of period+......................................... $ 205,254,721 $379,811,196 $54,335,410 $59,120,168 ============= ============ =========== =========== - -------- +Includes accumulated undistributed net investment income (loss)......................................... $ (1,882,760) $ (2,773,841) $ (54,332) $ (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 - - 03/31/04 $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 03/31/08 9.24 0.35 0.46 0.81 (0.37) -- (0.37) 9.68 9.03 191,057 0.99 Class B - - 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 03/31/08 9.24 0.30 0.45 0.75 (0.31) -- (0.31) 9.68 8.33 15,354 1.64 Class C* - - 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 03/31/08 9.23 0.29 0.46 0.75 (0.31) -- (0.31) 9.67 8.34 16,997 1.64
- Ratio of net investment income to average Portfolio net assets(3) Turnover - ------------- --------- - - 3.14% 267%(4) 3.26 253(4) 3.80 357 4.05 243 3.83 343 - 2.45% 267%(4) 2.61 253(4) 3.14 357 3.40 243 3.20 343 - 2.45% 267%(4) 2.61 253(4) 3.14 357 3.40 243 3.14 343
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. (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):
03/31/04 03/31/05 03/31/06 03/31/07 03/31/08 -------- -------- -------- -------- -------- U.S. Government Securities Fund Class A. 0.37% 0.39% 0.36% 0.38% 0.39% U.S. Government Securities Fund Class B. 0.37 0.43 0.43 0.43 0.48 U.S. Government Securities Fund Class C. 0.38 0.48 0.57 0.43 0.50
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydowns on securities and was as follows:
2004 2005 ---- ---- U.S. Government Securities Fund......... 256% 246%
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 - - 03/31/04 $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 03/31/08 11.08 0.46 0.48 0.94 (0.49) -- (0.49) 11.53 8.69 330,202 0.99 Class B - - 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 03/31/08 11.11 0.40 0.47 0.87 (0.42) -- (0.42) 11.56 7.98 46,389 1.64 Class C* - - 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 03/31/08 11.13 0.39 0.47 0.86 (0.42) -- (0.42) 11.57 7.88 35,599 1.64
Ratio of net investment income to average Portfolio net assets(3) Turnover - ------------- --------- 2.51% 225%(4) 2.73 204(4) 3.17 138 4.19 142 4.15 354 1.77% 225%(4) 2.10 204(4) 2.50 138 3.53 142 3.52 354 1.74% 225%(4) 2.11 204(4) 2.49 138 3.53 142 3.49 354
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. (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):
03/31/04 03/31/05 03/31/06 03/31/07 03/31/08 -------- -------- -------- -------- -------- GNMA Fund Class A............. 0.18% 0.17% 0.13% 0.15% 0.15% GNMA Fund Class B............. 0.16 0.18 0.17 0.18 0.19 GNMA Fund Class C............. 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:
2004 2005 ---- ---- GNMA Fund............................... 213% 204%
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 - -------- --------- ---------- ----------- ---------- ---------- ------------- ------- ------- --------- -------- ---------- Class A - - 03/31/04 $3.08 $0.21 $ 0.33 $0.54 $(0.21) $-- $(0.21) $3.41 18.04% $ 43,840 1.55%(3)(4) 03/31/05 3.41 0.20 0.11 0.31 (0.23) -- (0.23) 3.49 9.36 59,279 1.40(3)(4) 03/31/06 3.49 0.17 0.05 0.22 (0.18) -- (0.18) 3.53 6.54 167,072 1.34(4) 03/31/07 3.53 0.16 0.12 0.28 (0.18) -- (0.18) 3.63 8.07 453,893 1.31(6) 03/31/08 3.63 0.19 (0.11) 0.08 (0.21) -- (0.21) 3.50 2.29 483,820 1.28(6) Class B - - 03/31/04 $3.08 $0.19 $ 0.33 $0.52 $(0.19) $-- $(0.19) $3.41 17.29% $ 36,110 2.19%(3)(4) 03/31/05 3.41 0.18 0.10 0.28 (0.21) -- (0.21) 3.48 8.35 37,250 2.05(3)(4) 03/31/06 3.48 0.16 0.05 0.21 (0.16) -- (0.16) 3.53 6.14 46,294 2.00(3)(4) 03/31/07 3.53 0.15 0.10 0.25 (0.15) -- (0.15) 3.63 7.36 55,728 1.99(6) 03/31/08 3.63 0.16 (0.10) 0.06 (0.19) -- (0.19) 3.50 1.61 52,528 1.96(6) Class C* - - 03/31/04 $3.09 $0.19 $ 0.34 $0.53 $(0.20) $-- $(0.20) $3.42 17.43% $ 22,064 2.16%(3)(4) 03/31/05 3.42 0.18 0.11 0.29 (0.21) -- (0.21) 3.50 8.65 36,867 2.05(3)(4) 03/31/06 3.50 0.15 0.05 0.20 (0.16) -- (0.16) 3.54 5.84 97,651 1.99(3)(4) 03/31/07 3.54 0.14 0.12 0.26 (0.16) -- (0.16) 3.64 7.36 217,755 1.98(6) 03/31/08 3.64 0.17 (0.11) 0.06 (0.19) -- (0.19) 3.51 1.64 265,904 1.94(6)
Ratio of net investment income to average Portfolio net assets Turnover - ---------- --------- 6.41%(3)(4) 71%(5) 5.94(3)(4) 190(5) 5.19(4) 119 4.79(6) 131 5.30(6) 151 5.76%(3)(4) 71%(5) 5.32(3)(4) 190(5) 4.51(3)(4) 119 4.12(6) 131 4.63(6) 151 5.78%(3)(4) 71%(5) 5.29(3)(4) 190(5) 4.54(3)(4) 119 4.12(6) 131 4.65(6) 151
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. (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):
03/31/04 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............. 0.02 0.03 0.00
(4)Net of custody credits of:
03/31/04 03/31/05 03/31/06 -------- -------- -------- Strategic Bond Fund..................... 0.02% 0.01% 0.07%
(5)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydowns on securities and was as follows:
2004 2005 - ---- ---- Strategic Bond Fund 69% 188%
(6)Gross of custody credits of:
03/31/07 03/31/08 -------- -------- Strategic Bond Fund..................... 0.05% 0.02%
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 - - 03/31/04 $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) 03/31/08 4.77 0.36 (0.63) (0.27) (0.34) -- (0.34) 4.16 (5.92) 109,219 1.36(3) Class B - - 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) 03/31/08 4.78 0.31 (0.60) (0.29) (0.32) -- (0.32) 4.17 (6.50) 34,911 2.01(3) Class C* - - 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) 03/31/08 4.80 0.31 (0.61) (0.30) (0.32) -- (0.32) 4.18 (6.67) 61,125 2.01(3)
Ratio of net investment income to average Portfolio net assets Turnover - ---------- --------- 8.15% 126%(4) 7.59(3) 85(4) 7.20(3)(5) 91 6.44(3) 86 7.49(3) 72 7.52% 126%(4) 7.04(3) 85(4) 6.71(3)(5) 91 5.82(3) 86 6.80(3) 72 7.53%(3) 126%(4) 6.97(3) 85(4) 6.67(3)(5) 91 5.80(3) 86 6.75(3) 72
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. (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):
03/31/04 03/31/05 03/31/06 03/31/07 03/31/08 -------- -------- -------- -------- -------- High Yield Bond Fund Class A............ -- % 0.08% 0.11% 0.09% 0.17% High Yield Bond Fund Class B............ -- 0.07 0.14 0.11 0.20 High Yield Bond Fund Class C............ 0.01 0.09 0.12 0.10 0.18
(4)Portfolio turnover includes paydowns on securities. Previously, portfolio turnover was calculated prior to including paydown on securities and was as follows:
2004 2005 ---- ---- High Yield Bond Fund 126% 85%
(5)Net of custody credits of 0.01%. 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 - - 03/31/04 $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 03/31/08 12.65 0.42 (0.31) 0.11 (0.42) (0.10) (0.52) 12.24 0.91 46,843 1.32 Class B - - 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 03/31/08 12.65 0.31 (0.31) (0.00) (0.29) (0.10) (0.39) 12.26 0.06 3,351 2.21 Class C* - - 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) 03/31/08 12.66 0.34 (0.31) 0.03 (0.34) (0.10) (0.44) 12.25 0.29 4,141 1.95(3)
Ratio of net investment income to average Portfolio net assets Turnover - ---------- --------- 2.90% 131% 3.14 153 3.14 81 3.28 84 3.35 57 2.20% 131% 2.44 153 2.48 81 2.44 84 2.46 57 2.21%(3) 131% 2.44(3) 153 2.48(3) 81 2.60(3) 84 2.71(3) 57
- -------- * Effective February 23, 2004, Class II was redesignated to Class C. (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):
03/31/04 03/31/05 03/31/06 03/31/07 03/31/08 -------- -------- -------- -------- -------- Tax Exempt Insured Fund Class C......... 0.12% 0.09% 0.20% 0.09% 0.31%
See Notes to Financial Statements 15 SunAmerica U.S. Government Securities Fund PORTFOLIO PROFILE -- March 31, 2008 -- (unaudited) Industry Allocation* United States Treasury Notes...................... 45.6% Government National Mtg. Assoc.................... 38.3 United States Treasury Bonds...................... 10.2 Private Export Funding............................ 4.5 U.S. Government Agencies.......................... 3.6 Repurchase Agreements............................. 0.7 Small Business Administration..................... 0.6 Federal Farm Credit Bank.......................... 0.6 ----- 104.1% =====
Credit Quality+# Government -- Treasury 55.9% Government -- Agency.. 39.6 AA.................... 4.5 ----- 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 -- March 31, 2008
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- U.S. GOVERNMENT AGENCIES -- 44.0% Federal Farm Credit Bank -- 0.6% 5.64% due 04/04/11................... $ 500,000 $ 541,734 6.00% due 03/07/11................... 200,000 218,323 6.30% due 12/03/13................... 500,000 572,022 ----------- 1,332,079 ----------- Federal Home Loan Mtg. Corp. -- 0.0% 8.00% due 06/01/08.................... 40 43 ----------- Federal National Mtg. Assoc. -- 0.0% 8.00% due 01/01/23.................... 32,538 35,398 11.00% due 02/01/15................... 29 35 11.50% due 09/01/19................... 8,446 9,780 ----------- 45,213 ----------- Private Export Funding Corp. -- 4.5% 5.87% due 07/31/08.................... 10,000,000 10,113,690 ----------- Government National Mtg. Assoc. -- 38.3% 4.50% due 05/15/18.................... 821,993 825,165 4.50% due 08/15/18.................... 1,273,095 1,278,008 4.50% due 09/15/18.................... 3,832,464 3,847,253 4.50% due 10/15/18.................... 3,663,351 3,677,487 4.50% due 09/15/33.................... 4,380,842 4,260,884 5.00% due 04/15/18.................... 3,817,188 3,881,659 5.00% due 04/15/33.................... 27,250 27,301 5.00% due 08/15/33.................... 1,682,281 1,685,540 5.00% due 09/15/33.................... 762,569 764,002 5.00% due 10/15/33.................... 537,322 538,332 5.00% due 04/15/34.................... 26,517 26,560 5.00% due 11/15/34.................... 180,443 180,731 5.00% due 02/15/35.................... 24,808 24,841 5.00% due 03/15/35.................... 499,719 500,400 5.00% due 04/15/35.................... 57,704 57,782 5.00% due 05/15/35.................... 1,933,223 1,935,858 5.00% due 09/15/35.................... 854,894 856,059 5.00% due 10/15/35.................... 145,422 145,620 5.00% due 12/15/35.................... 92,801 92,927 5.00% due 03/15/36.................... 884,226 885,315 5.00% due 05/15/36.................... 1,327,663 1,329,297 5.00% due 06/15/36.................... 912,075 913,199 5.00% due 09/15/36.................... 2,046,960 2,048,238 5.00% due 10/15/36.................... 500,495 501,112 5.00% due 11/15/36.................... 54,093 54,160 5.00% due 12/15/36.................... 377,573 378,038 5.00% due 01/15/37.................... 4,580,414 4,586,303 5.00% due 02/15/37.................... 2,068,650 2,071,308 5.00% due 03/15/37.................... 1,662,440 1,664,576 5.00% due 04/15/37.................... 1,767,131 1,769,403 5.50% due 11/15/32.................... 13,405 13,707 5.50% due 03/15/33.................... 418,826 428,150 5.50% due 04/15/33.................... 499,162 510,277 5.50% due 05/15/33.................... 1,150,373 1,176,021 5.50% due 06/15/33.................... 5,459,790 5,581,350 5.50% due 07/15/33.................... 1,476,576 1,509,451 5.50% due 10/15/33.................... 1,535,997 1,570,196 5.50% due 12/15/33.................... 314,896 321,907 5.50% due 01/15/34.................... 3,337,953 3,410,864 5.50% due 02/15/34.................... 1,879,576 1,920,631 6.00% due 01/15/28.................... 2,374 2,463
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- Government National Mtg. Assoc. (continued) 6.00% due 04/15/28....................... $ 1,166,672 $ 1,210,473 6.00% due 05/15/28....................... 1,350 1,401 6.00% due 10/15/28....................... 3,527 3,659 6.00% due 03/15/29....................... 32,684 33,909 6.00% due 04/15/29....................... 35,507 36,837 6.00% due 05/15/29....................... 65,719 68,181 6.00% due 06/15/29....................... 25,195 26,139 6.00% due 04/15/31....................... 23,926 24,806 6.00% due 05/15/31....................... 40,748 42,246 6.00% due 11/15/31....................... 162,126 168,086 6.00% due 12/15/31....................... 334,375 346,666 6.00% due 01/15/32....................... 148,554 153,934 6.00% due 02/15/32....................... 35,337 36,616 6.00% due 03/15/32....................... 7,613 7,889 6.00% due 08/15/32....................... 233,220 241,666 6.00% due 11/15/32....................... 36,730 38,060 6.00% due 12/15/32....................... 5,689 5,895 6.00% due 01/15/33....................... 18,025 18,669 6.00% due 02/15/33....................... 53,181 55,079 6.00% due 03/15/33....................... 74,393 77,049 6.00% due 04/15/33....................... 291,690 302,102 6.00% due 07/15/33....................... 215,014 222,689 6.00% due 08/15/33....................... 2,171,544 2,250,542 6.00% due 09/15/33....................... 310,536 321,620 6.00% due 10/15/33....................... 1,138,571 1,179,216 6.00% due 11/15/33....................... 124,203 128,636 6.00% due 12/15/33....................... 663,129 686,799 6.00% due 02/15/34....................... 292,829 303,053 6.00% due 05/15/34....................... 35,183 36,411 6.00% due 06/15/34....................... 38,366 39,706 6.00% due 07/15/34....................... 1,270,017 1,314,361 6.00% due 08/15/34....................... 169,175 175,082 6.00% due 09/15/34....................... 1,025,085 1,060,878 6.00% due 10/15/34....................... 4,034,407 4,175,278 6.00% due 12/15/34....................... 311,698 322,582 6.00% due 06/15/35....................... 213,826 221,087 6.00% due 08/15/35....................... 260,194 269,029 6.00% due April TBA...................... 10,000,000 10,318,750 6.50% due 02/15/29....................... 13,251 13,857 6.50% due 05/15/31....................... 10,817 11,305 6.50% due 06/15/31....................... 47,570 49,716 6.50% due 07/15/31....................... 35,980 37,604 6.50% due 08/15/31....................... 67,939 71,003 6.50% due 09/15/31....................... 186,188 194,587 6.50% due 10/15/31....................... 244,693 255,731 6.50% due 11/15/31....................... 12,191 12,741 6.50% due 12/15/31....................... 18,866 19,717 6.50% due 01/15/32....................... 30,010 31,322 6.50% due 02/15/32....................... 471,340 491,949 6.50% due 06/15/32....................... 50,267 52,465 7.00% due 07/15/23....................... 28,762 30,811 7.00% due 10/15/23....................... 41,384 44,333 7.00% due 09/15/25....................... 210,221 225,245 7.00% due 03/20/29....................... 15,760 16,834 7.00% due 06/20/29....................... 2,484 2,653 7.00% due 11/20/30....................... 62,226 66,434 7.50% due 04/15/17....................... 9,791 10,508
17 SunAmerica U.S. Government Securities Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Government National Mtg. Assoc. (continued) 7.50% due 08/15/23....................... $ 174,161 $ 187,769 7.50% due 09/15/23....................... 509,577 549,395 9.00% due 12/15/16....................... 35,939 39,234 11.00% due 08/20/15...................... 122 143 11.00% due 09/20/15...................... 371 437 11.50% due 05/20/15...................... 3,414 4,088 12.50% due 09/15/14...................... 4,788 5,702 13.00% due 01/15/11...................... 793 912 13.00% due 02/15/11...................... 1,920 2,108 13.00% due 03/15/11...................... 118 136 13.00% due 04/15/11...................... 325 374 13.00% due 09/15/13...................... 4,258 5,054 13.00% due 10/20/14...................... 972 1,150 13.00% due 11/15/14...................... 593 709 13.00% due 02/20/15...................... 571 671 13.50% due 02/15/13...................... 7,556 9,052 15.00% due 01/15/12...................... 325 393 15.00% due 02/15/12...................... 845 1,022 15.00% due 06/15/12...................... 8,951 10,825 15.00% due 09/15/12...................... 517 626 15.50% due 09/15/11...................... 27,171 32,106 ------------ 85,668,177 ------------ Small Business Administration -- 0.6% 6.30% due 06/01/18....................... 1,376,682 1,428,932 ------------ Total U.S. Government Agencies (cost $97,509,400)...................... 98,588,134 ------------ U.S. GOVERNMENT TREASURIES -- 55.8% United States Treasury Bonds -- 10.2% 4.75% due 02/15/37....................... 17,000,000 18,284,299 5.00% due 05/15/37....................... 4,000,000 4,474,688 ------------ 22,758,987 ------------ United States Treasury Notes -- 45.6% 2.00% due 02/28/10....................... 4,000,000 4,027,812 2.75% due 02/28/13....................... 20,000,000 20,275,000 2.88% due 01/31/13....................... 14,000,000 14,270,158 3.38% due 11/30/12....................... 10,000,000 10,417,970 3.50% due 02/15/18....................... 8,000,000 8,046,248 4.25% due 11/15/17....................... 20,000,000 21,339,060 4.50% due 05/15/17....................... 16,000,000 17,387,504 5.13% due 06/30/08....................... 6,000,000 6,055,314 ------------ 101,819,066 ------------ Total U.S. Government Treasuries (cost $118,361,791)..................... 124,578,053 ------------ Total Long-Term Investment Securities (cost $215,871,191)..................... 223,166,187 ------------
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ SHORT-TERM INVESTMENT SECURITIES -- 3.6% U.S. Government Agencies -- 3.6% Federal Home Loan Bank Discount Notes 1.50% due 04/01/08 (cost $8,000,000).................... $8,000,000 $ 8,000,000 ------------ REPURCHASE AGREEMENT -- 0.7% UBS Securities, LLC Joint Repurchase Agreement(1) (cost $1,500,000).................... 1,500,000 1,500,000 ------------ TOTAL INVESTMENTS -- (cost $225,371,191)(2)............... 104.1% 232,666,187 Liabilities in excess of other assets... (4.1) (9,258,658) ---------- ------------ NET ASSETS -- 100.0% $223,407,529 ========== ============
- -------- (1) See Note 2 for details of Joint Repurchase Agreements. (2) 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 definitive maturity date. The actual principal and maturity date will be determined upon settlement date. See Notes to Financial Statements 18 SunAmerica GNMA Fund PORTFOLIO PROFILE -- March 31, 2008 -- (unaudited) Industry Allocation* Government National Mtg. Assoc. 81.6% United States Treasury Notes... 16.0 U.S. Government Agencies....... 8.5 United States Treasury Bonds... 2.9 Repurchase Agreements.......... 0.4 Small Business Administration.. 0.1 ----- 109.5% =====
Credit Quality+# Government -- Agency.. 82.7% Government -- Treasury 17.3 ----- 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 -- March 31, 2008
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- U.S. GOVERNMENT AGENCIES -- 81.7% Government National Mtg. Assoc. -- 81.6% 4.50% due 05/15/18.................... $ 1,643,985 $ 1,650,329 4.50% due 08/15/18.................... 815,652 818,800 4.50% due 09/15/18.................... 2,884,541 2,895,672 4.50% due 10/15/18.................... 4,379,684 4,396,584 4.50% due 08/15/33.................... 2,483,951 2,415,935 4.50% due 09/15/33.................... 3,112,887 3,027,649 5.00% due 03/15/18.................... 527,880 536,795 5.00% due 04/15/18.................... 5,929,045 6,029,185 5.00% due 05/15/18.................... 8,407,396 8,549,392 5.00% due 01/15/33.................... 17,435 17,468 5.00% due 05/15/33.................... 11,489 11,516 5.00% due 08/15/33.................... 2,554,800 2,559,605 5.00% due 09/15/33.................... 2,252,234 2,256,469 5.00% due 10/15/33.................... 5,377,672 5,387,785 5.00% due 04/15/34.................... 53,048 53,133 5.00% due 05/15/34.................... 144,082 144,312 5.00% due 11/15/34.................... 617,373 618,359 5.00% due 12/15/34.................... 615,986 616,970 5.00% due 09/15/35.................... 20,281 20,308 5.00% due 10/15/35.................... 122,033 122,199 5.00% due 11/15/35.................... 124,215 124,385 5.00% due 12/15/35.................... 68,419 68,513 5.00% due 02/15/36.................... 141,826 142,001 5.00% due 04/15/36.................... 476,046 476,633 5.00% due 06/15/36.................... 1,489,234 1,491,069 5.00% due 07/15/36.................... 488,186 488,787 5.00% due 08/15/36.................... 26,253 26,285 5.00% due 09/15/36.................... 870,849 871,117 5.00% due 10/15/36.................... 26,150 26,182 5.00% due 11/15/36.................... 483,879 484,475 5.00% due 12/15/36.................... 1,192,363 1,193,831 5.00% due 01/15/37.................... 821,363 822,418 5.00% due 02/15/37.................... 883,461 884,596 5.00% due 04/15/37.................... 9,733,343 9,745,852 5.50% due 06/15/29.................... 5,228 5,349 5.50% due 01/15/32.................... 42,676 43,638 5.50% due 12/15/32.................... 670,597 685,717 5.50% due 01/15/33.................... 449,916 459,933 5.50% due 02/15/33.................... 1,750,894 1,789,876 5.50% due 03/15/33.................... 1,031,755 1,054,726 5.50% due 04/15/33.................... 5,372,418 5,492,033 5.50% due 05/15/33.................... 6,306,203 6,447,150 5.50% due 06/15/33.................... 6,972,045 7,127,436 5.50% due 07/15/33.................... 361,699 369,752 5.50% due 08/15/33.................... 2,140,199 2,187,850 5.50% due 09/15/33.................... 359,657 367,665 5.50% due 10/15/33.................... 5,984,289 6,117,528 5.50% due 12/15/33.................... 6,712,889 6,862,351 5.50% due 01/15/34.................... 8,551,312 8,738,097 5.50% due 02/15/34.................... 1,227,669 1,254,486 5.50% due 04/15/35.................... 1,951,036 1,993,533 5.50% due 07/15/35.................... 2,289,830 2,339,706 5.50% due 09/15/35.................... 22,849,852 23,347,559 5.50% due 10/15/35.................... 14,519,968 14,836,237 5.50% due 11/15/35.................... 28,080,112 28,691,742 5.50% due 12/15/35.................... 17,923,365 18,313,766 5.50% due 02/15/36.................... 2,505,786 2,559,398
Market Principal Value Security Description Amount (Note 2) ----------------------------------------------------------------- Government National Mtg. Assoc. (continued) 5.50% due 03/15/36....................... $9,496,452 $9,699,631 5.50% due 04/15/36....................... 437,025 446,376 5.50% due 05/15/36....................... 3,222,502 3,291,448 6.00% due 11/15/23....................... 3,823 3,974 6.00% due 01/15/24....................... 5,403 5,614 6.00% due 07/15/28....................... 4,016 4,167 6.00% due 11/15/28....................... 293,880 304,909 6.00% due 12/15/28....................... 261,836 271,662 6.00% due 01/15/29....................... 591,371 613,526 6.00% due 02/15/29....................... 694,498 720,514 6.00% due 03/15/29....................... 535,423 555,482 6.00% due 04/15/29....................... 1,374,034 1,425,521 6.00% due 05/15/29....................... 59,834 62,074 6.00% due 06/15/29....................... 541,313 561,599 6.00% due 07/15/29....................... 158,659 164,603 6.00% due 08/15/29....................... 19,876 20,620 6.00% due 10/15/29....................... 103,739 107,626 6.00% due 04/15/31....................... 16,449 17,053 6.00% due 07/15/31....................... 15,050 15,603 6.00% due 10/15/31....................... 82,785 85,828 6.00% due 11/15/31....................... 1,329,149 1,378,008 6.00% due 12/15/31....................... 548,837 569,011 6.00% due 01/15/32....................... 637,429 660,513 6.00% due 02/15/32....................... 47,132 48,839 6.00% due 03/15/32....................... 412,767 427,716 6.00% due 07/15/32....................... 98,169 101,724 6.00% due 08/15/32....................... 1,443,007 1,495,848 6.00% due 09/15/32....................... 974,621 1,009,918 6.00% due 10/15/32....................... 191,636 198,577 6.00% due 11/15/32....................... 6,136 6,359 6.00% due 12/15/32....................... 167,111 173,163 6.00% due 01/15/33....................... 1,452,583 1,504,433 6.00% due 02/15/33....................... 1,480,958 1,533,818 6.00% due 03/15/33....................... 1,133,209 1,173,657 6.00% due 04/15/33....................... 1,162,383 1,203,874 6.00% due 05/15/33....................... 1,245,937 1,290,409 6.00% due 06/15/33....................... 892,586 924,446 6.00% due 08/15/33....................... 1,389,459 1,439,251 6.00% due 10/15/33....................... 440,865 456,601 6.00% due 11/15/33....................... 1,505,870 1,559,627 6.00% due 12/15/33....................... 2,662,409 2,757,443 6.00% due 01/15/34....................... 1,521,090 1,574,202 6.00% due 02/15/34....................... 9,221,184 9,543,159 6.00% due 03/15/34....................... 241,138 249,558 6.00% due 04/15/34....................... 3,061,029 3,167,909 6.00% due 05/15/34....................... 259,440 268,499 6.00% due 06/15/34....................... 314,152 325,120 6.00% due 07/15/34....................... 3,181,378 3,292,461 6.00% due 08/15/34....................... 4,699,226 4,863,174 6.00% due 09/15/34....................... 190,039 196,664 6.00% due 10/15/34....................... 662,749 685,890 6.00% due 11/15/34....................... 1,470,152 1,521,485 6.00% due 12/15/34....................... 58,127 60,157 6.00% due 01/15/35....................... 96,050 99,311 6.00% due 02/15/35....................... 886,912 917,030 6.00% due 04/15/35....................... 59,440 61,458 6.00% due 05/15/35....................... 92,506 95,647 6.00% due 06/15/35....................... 396,576 410,044
20 SunAmerica GNMA Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Government National Mtg. Assoc. (continued) 6.00% due 11/15/35....................... $ 20,197 $ 20,883 6.00% due 12/15/35....................... 1,446,482 1,499,847 6.00% due 01/15/36....................... 954,769 986,821 6.00% due 02/15/36....................... 1,872,706 1,935,572 6.00% due 03/15/36....................... 1,662,761 1,718,580 6.00% due 04/15/36....................... 4,557,093 4,710,073 6.00% due 05/15/36....................... 5,591,453 5,779,156 6.00% due 06/15/36....................... 2,905,199 3,002,727 6.00% due 07/15/36....................... 1,506,644 1,557,222 6.00% due 08/15/36....................... 20,698 21,401 6.00% due 09/15/36....................... 209,391 216,421 6.00% due 10/15/36....................... 1,606,603 1,660,801 6.00% due 11/15/36....................... 2,643,107 2,731,835 6.00% due April TBA...................... 40,000,000 41,275,000 6.50% due 03/15/28....................... 22,494 23,540 6.50% due 08/15/28....................... 38,695 40,476 6.50% due 01/15/29....................... 4,063 4,249 6.50% due 02/15/29....................... 1,443 1,509 6.50% due 03/15/29....................... 108,585 113,552 6.50% due 04/15/29....................... 1,510 1,579 6.50% due 05/15/29....................... 11,076 11,585 6.50% due 06/15/29....................... 37,119 38,816 6.50% due 07/15/29....................... 4,018 4,202 6.50% due 10/15/29....................... 3,405 3,560 6.50% due 08/15/31....................... 232,993 243,503 6.50% due 09/15/31....................... 10,766 11,252 6.50% due 10/15/31....................... 244,693 255,731 6.50% due 11/15/31....................... 141,355 147,732 6.50% due 12/15/31....................... 160,336 167,569 6.50% due 02/15/32....................... 168,780 176,159 6.50% due 05/15/32....................... 1,245,098 1,299,537 6.50% due 06/15/32....................... 95,160 99,321 7.00% due 03/15/23....................... 86,763 92,945 7.00% due 01/20/24....................... 568 608 7.00% due 03/20/24....................... 595 636 7.00% due 07/20/25....................... 2,874 3,076 7.00% due 09/15/25....................... 91,295 97,819 7.00% due 01/20/29....................... 33,875 36,183 7.00% due 02/20/29....................... 6,633 7,085 7.00% due 06/20/29....................... 12,318 13,157 7.00% due 07/20/29....................... 45,906 49,034 7.00% due 09/20/29....................... 4,614 4,929 7.00% due 10/20/29....................... 9,574 10,227 7.00% due 11/20/29....................... 3,007 3,211 7.00% due 03/20/30....................... 4,424 4,724 7.00% due 06/20/30....................... 6,924 7,392 7.00% due 08/20/30....................... 25,214 26,919 7.00% due 09/20/30....................... 23,691 25,293 7.00% due 10/20/30....................... 27,162 28,999 8.00% due 11/15/26....................... 153,872 168,776 8.00% due 12/15/29....................... 15,831 17,367 8.00% due 04/15/30....................... 33,887 37,191 8.00% due 05/15/30....................... 4,836 5,308 8.00% due 08/15/30....................... 35,120 38,544 8.50% due 03/15/17....................... 15,204 16,693 8.50% due 05/15/21....................... 47,938 52,858
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------------- Government National Mtg. Assoc. (continued) 8.50% due 12/15/22....................... $ 44,133 $ 48,713 8.50% due 01/15/23....................... 111,737 123,443 8.50% due 09/15/24....................... 23,010 25,439 9.00% due 07/15/16....................... 51,776 56,523 9.00% due 10/15/16....................... 5,259 5,741 ------------ 336,452,014 ------------ Small Business Administration -- 0.1% 6.30% due 06/01/18....................... 458,894 476,310 ------------ Total U.S. Government Agencies (cost $331,249,836)..................... 336,928,324 ------------ U.S. GOVERNMENT TREASURIES -- 18.9% United States Treasury Bonds -- 2.9% 4.75% due 02/15/37....................... 6,000,000 6,453,282 5.00% due 05/15/37....................... 5,000,000 5,593,360 ------------ 12,046,642 ------------ United States Treasury Notes -- 16.0% 2.88% due 01/31/13....................... 25,000,000 25,482,425 3.50% due 02/15/18....................... 30,000,000 30,173,430 5.13% due 06/30/08....................... 10,000,000 10,092,190 ------------ 65,748,045 ------------ Total U.S. Government Treasuries (cost $75,438,750)...................... 77,794,687 ------------ Total Long-Term Investment Securities (cost $406,688,586)..................... 414,723,011 ------------ SHORT-TERM INVESTMENT SECURITIES -- 8.5% U.S. Government Agencies -- 8.5% Federal Home Loan Bank Discount Notes 1.50% due 04/01/08 (cost $35,000,000)...................... 35,000,000 35,000,000 ------------ REPURCHASE AGREEMENT -- 0.4% UBS Securities, LLC Joint Repurchase Agreement(1) (cost $1,818,000)......................... 1,818,000 1,818,000 ------------ TOTAL INVESTMENTS (cost $443,506,586)(2).................. 109.5% 451,541,011 Liabilities in excess of other assets...... (9.5) (39,350,405) ----------- ------------ NET ASSETS 100.0% $412,190,606 =========== ============
- -------- (1) See Note 2 for details of Joint Repurchase Agreements. (2) See Note 5 for cost of investments on a tax basis. TBA --Securities purchased on a forward commitment basis with an approximate principle 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 OF PROFILE -- March 31, 2008 Industry Allocation* Foreign Government Agencies........... 24.7% Federal Home Loan Mtg. Corp........... 9.0 Federal National Mtg. Assoc........... 8.4 Repurchase Agreements................. 3.9 Diversified Financial Services........ 3.5 Time Deposits......................... 3.4 United States Treasury Notes.......... 2.8 Oil Companies-Exploration & Production 2.4 Electric-Integrated................... 2.3 Special Purpose Entities.............. 2.0 Medical-Hospitals..................... 1.7 Telephone-Integrated.................. 1.7 Pipelines............................. 1.5 Cellular Telecom...................... 1.3 Chemicals-Specialty................... 1.3 Finance-Auto Loans.................... 1.1 Finance-Investment Banker/Broker...... 1.1 Medical-Drugs......................... 1.1 Cable TV.............................. 1.0 Diversified Manufacturing Operations.. 0.9 Electric-Generation................... 0.9 Telecom Services...................... 0.9 Paper & Related Products.............. 0.7 Transport-Air Freight................. 0.7 Television............................ 0.7 Casino Hotels......................... 0.7 Steel-Producers....................... 0.7 Containers-Metal/Glass................ 0.6 Metal-Diversified..................... 0.5 Multimedia............................ 0.5 Independent Power Producers........... 0.5 Medical Products...................... 0.5 Electronic Components-Semiconductors.. 0.5 Banks-Commercial...................... 0.5 Agricultural Chemicals................ 0.5 United States Treasury Bonds.......... 0.5 Investment Management/Advisor Services 0.5 Non-Hazardous Waste Disposal.......... 0.4 Retail-Drug Store..................... 0.4 Theaters.............................. 0.4 Real Estate Investment Trusts......... 0.4 Satellite Telecom..................... 0.4 Auto-Cars/Light Trucks................ 0.4 Publishing-Periodicals................ 0.4 Oil-Field Services.................... 0.4 Airlines.............................. 0.3 Office Automation & Equipment......... 0.3 Broadcast Services/Program............ 0.3 Rental Auto/Equipment................. 0.3 Gambling (Non-Hotel).................. 0.3 Banks-Super Regional.................. 0.3 Physicians Practice Management........ 0.3 Funeral Services & Related Items...... 0.3 Computer Services..................... 0.3 Building & Construction Products-Misc. 0.2 Transport-Rail........................ 0.2 Containers-Paper/Plastic.............. 0.2 Food-Meat Products.................... 0.2 Metal-Aluminum........................ 0.2 Insurance Brokers..................... 0.2 Data Processing/Management............ 0.2
Retail-Restaurants................... 0.2% Medical-HMO.......................... 0.2 Travel Services...................... 0.2 Agricultural Operations.............. 0.2 Recycling............................ 0.2 Aerospace/Defense-Equipment.......... 0.2 Savings & Loans/Thrifts.............. 0.2 Consumer Products-Misc............... 0.2 Hotels/Motels........................ 0.2 Food-Misc............................ 0.2 Direct Marketing..................... 0.2 Beverages-Wine/Spirits............... 0.2 Printing-Commercial.................. 0.2 Insurance-Life/Health................ 0.2 Electronic Components-Misc........... 0.2 Storage/Warehousing.................. 0.2 Home Furnishings..................... 0.2 Auto/Truck Parts & Equipment-Original 0.1 Oil Companies-Integrated............. 0.1 Medical Information Systems.......... 0.1 Retail-Petroleum Products............ 0.1 Transactional Software............... 0.1 Government National Mtg. Assoc....... 0.1 Insurance-Multi-line................. 0.1 Commercial Services-Finance.......... 0.1 Energy-Alternate Sources............. 0.1 Electronics-Military................. 0.1 Casino Services...................... 0.1 Food-Retail.......................... 0.1 Building Products-Wood............... 0.1 Banks-Money Center................... 0.1 Medical-Nursing Homes................ 0.1 Metal Processors & Fabrication....... 0.1 Oil Refining & Marketing............. 0.1 Medical-Generic Drugs................ 0.1 Electric-Transmission................ 0.1 Home Decoration Products............. 0.1 Industrial Automated/Robotic......... 0.1 Finance-Consumer Loans............... 0.1 Aerospace/Defense.................... 0.1 Rubber-Tires......................... 0.1 Federal Home Loan Bank............... 0.1 Finance-Mortgage Loan/Banker......... 0.1 Retail-Regional Department Stores.... 0.1 Electronic Measurement Instruments... 0.1 Poultry.............................. 0.1 Quarrying............................ 0.1 Research & Development............... 0.1 Retail-Discount...................... 0.1 Transport-Services................... 0.1 Applications Software................ 0.1 Finance-Commercial................... 0.1 Decision Support Software............ 0.1 Transport-Marine..................... 0.1 Chemicals-Diversified................ 0.1 Computers-Memory Devices............. 0.1 ----- 100.1% =====
- -------- * Calculated as a percentage of net assets 22 SunAmerica Strategic Bond Fund PORTFOLIO OF PROFILE -- March 31, 2008 -- (continued) Country Allocation* United States. 65.9% Switzerland... 4.9 Brazil........ 3.6 Australia..... 2.1 Norway........ 2.1 Mexico........ 2.0 Turkey........ 1.9 Russia........ 1.7 Canada........ 1.5 Japan......... 1.6 Germany....... 1.5 Luxembourg.... 0.9 Colombia...... 1.0 Philippines... 0.9 Denmark....... 0.8 Sweden........ 0.7 United Kingdom 0.9 Indonesia..... 0.7 Uruguay....... 0.7 Venezuela..... 0.6 Netherlands... 0.5 Ireland....... 0.4 Bermuda....... 0.4 Peru.......... 0.4 Greece........ 0.3 Argentina..... 0.3 Cayman Islands 0.4 Spain......... 0.3 South Africa.. 0.2 France........ 0.1 Poland........ 0.2 Ukrainian SSR. 0.2 Belgium....... 0.1 Pakistan...... 0.1 Ecuador....... 0.1 Liberia....... 0.1 ----- 100.1% =====
- -------- * Calculated as a percentage of net assets Credit Quality +# Government -- Treasury 3.5% Government -- Agency.. 18.7 AAA................... 12.7 AA.................... 2.8 A..................... 6.8 BBB................... 10.8 BB.................... 18.7 B..................... 17.4 CCC................... 6.9 BELOW C............... 0.1 Not Rated@............ 1.6 ----- 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 -- March 31, 2008
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- ASSET BACKED SECURITIES -- 2.7% Diversified Financial Services -- 2.7% Banc of America Funding Corp. Series 2007-C, Class 5A1 5.40% due 05/20/36(1)(2)..................... $1,531,802 $ 1,504,764 Banc of America Funding Corp. Series 2006-J, Class 2A1 5.89% due 01/20/47(1)(2)..................... 1,541,255 1,303,403 Bear Stearns Commercial Mtg. Securities, Inc. Series 2007-PW15, Class A2 5.21% due 02/11/44(1)........................ 825,000 795,220 Chase Mtg. Finance Corp. Series 2007-A2, Class 1A1 4.67% due 07/25/37(1)(2)..................... 2,328,794 2,219,906 Commercial Mtg. Pass Through Certs. Series CN2A, Class A2FL 3.31% due 02/05/19*(1)(3).................... 1,575,000 1,460,686 Commercial Mtg. Pass Through Certs. Series 2004-LB2A, Class A3 4.22% due 03/10/39(1)........................ 86,000 83,950 Commercial Mtg. Pass Through Certs., Series 2004-LB4A, Class A3, 4.41% due 10/15/37(1)........................ 1,500,000 1,459,032 Countrywide Asset-Backed Certs. Series 2006-S6, Class A3 5.66% due 03/25/34........................... 1,596,000 957,600 Countrywide Asset-Backed Certs., Series 2006-S4, Class A3 5.80% due 10/25/36........................... 2,800,000 1,680,000 CS First Boston Mtg. Securities Corp. Series 2002-CKN2, Class A3 6.13% due 04/15/37(1)........................ 2,250,000 2,327,486 Deutsche ALT-A Securities, Inc., Series 2006-AB2, Class A5A, 6.09% due 06/25/36(1)........................ 600,000 555,267 Ocwen Advance Receivables Backed Notes Series 2006-1A 5.34% due 11/24/15*(4)....................... 830,000 730,400 Swift Master Auto Receivables Trust Series 2007-2, Class A 3.47% due 10/15/12(3)........................ 2,957,126 2,848,168 Wells Fargo Mtg. Backed Securities Trust Series 2006-AR17, Class A2 5.84% due 10/25/36(1)........................ 2,916,429 2,792,161 Wells Fargo Mtg. Backed Securities Trust Series 2006-AR12, Class 2A1 6.10% due 09/25/36(1)(2)..................... 685,828 645,544 ----------- Total Asset Backed Securities (cost $23,972,551)........................... 21,363,587 ----------- CONVERTIBLE BONDS & NOTES -- 0.1% Electronic Components-Semiconductors -- 0.1% Advanced Micro Devices, Inc. Senior Notes 6.00% due 05/01/15*.......................... 50,000 31,438
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- Electronic Components-Semiconductors (continued) Spansion, Inc. Senior Sub. Notes 2.25% due 06/15/16*.............. $1,270,000 $ 569,912 ---------- 601,350 ---------- Medical-Biomedical/Gene -- 0.0% Nektar Therapeutics Sub. Notes 3.25% due 09/28/12............... 125,000 96,562 ---------- Telecom Services -- 0.0% ICO North America, Inc. Notes 7.50% due 08/15/09(4)(5)(6)...... 275,000 236,500 ---------- Total Convertible Bonds & Notes (cost $1,504,612)................ 934,412 ---------- CORPORATE BONDS & NOTES -- 37.4% Aerospace/Defense -- 0.1% Lockheed Martin Corp. Senior Notes 4.12% due 03/14/13............... 610,000 610,876 ---------- Aerospace/Defense-Equipment -- 0.2% United Technologies Corp. Senior Notes 4.88% due 05/01/15............... 1,564,000 1,591,625 ---------- Agricultural Chemicals -- 0.5% Mosaic Global Holdings, Inc. Debentures 7.38% due 08/01/18............... 320,000 326,400 Terra Capital, Inc. Company Guar. Notes 7.00% due 02/01/17............... 1,250,000 1,232,812 The Mosaic Co. Senior Notes 7.38% due 12/01/14*.............. 345,000 369,150 The Mosaic Co. Senior Notes 7.63% due 12/01/16*.............. 1,855,000 1,994,125 ---------- 3,922,487 ---------- Agricultural Operations -- 0.2% Archer-Daniels-Midland Co. Senior Notes 5.45% due 03/15/18............... 440,000 442,317 Archer-Daniels-Midland Co. Senior Notes 6.45% due 01/15/38............... 438,000 444,905 Cargill, Inc. Notes 5.00% due 11/15/13*.............. 720,000 717,519 ---------- 1,604,741 ----------
24 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Airlines -- 0.3% American Airlines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.82% due 05/23/11........................ $1,675,000 $1,578,687 Continental Airlines, Inc. Pass Through Certs., Series 1991, Class A 6.55% due 02/02/19........................ 636,957 612,676 Delta Air Lines, Inc. Pass Through Certs. Series 2000-1, Class A-2 7.57% due 11/18/10........................ 275,000 274,142 Northwest Airlines, Inc. Pass Through Certs. Series 2002-1 Class G2 6.26% due 11/20/21........................ 274,767 271,676 United AirLines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.20% due 09/01/08........................ 54,435 54,299 ---------- 2,791,480 ---------- Applications Software -- 0.1% SS&C Technologies, Inc. Company Guar. Notes 11.75% due 12/01/13....................... 530,000 526,025 ---------- Auto-Cars/Light Trucks -- 0.4% Ford Motor Co. Debentures 6.38% due 02/01/29........................ 1,965,000 1,179,000 General Motors Corp. Debentures 8.25% due 07/15/23........................ 1,930,000 1,351,000 General Motors Corp. Senior Bonds 8.38% due 07/15/33........................ 618,000 435,690 ---------- 2,965,690 ---------- Auto/Truck Parts & Equipment-Original -- 0.1% Lear Corp. Senior Notes 8.75% due 12/01/16........................ 800,000 683,000 Visteon Corp. Senior Notes 8.25% due 08/01/10........................ 610,000 498,675 ---------- 1,181,675 ---------- Auto/Truck Parts & Equipment-Replacement -- 0.0% Exide Corp. Notes 10.00% due 03/15/25+(4)(5)................ 225,000 0 ---------- Banks-Commercial -- 0.3% Colonial Bank NA Sub. Notes 6.38% due 12/01/15........................ 451,000 388,609
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- Banks-Commercial (continued) PNC Bank NA Sub. Notes 6.88% due 04/01/18............... $ 600,000 $ 610,178 SouthTrust Bank Sub. Notes 4.75% due 03/01/13............... 340,000 343,846 SouthTrust Corp. Sub. Notes 5.80% due 06/15/14............... 470,000 495,186 SunTrust Bank Sub. Notes 7.25% due 03/15/18............... 280,000 286,350 Union Bank of California NA Sub. Notes 5.95% due 05/11/16............... 330,000 322,322 ---------- 2,446,491 ---------- Banks-Fiduciary -- 0.0% The Bank of New York Mellon Corp. Senior Notes 4.95% due 11/01/12............... 292,000 299,177 ---------- Banks-Super Regional -- 0.2% Banc One Corp. Sub. Debentures 8.00% due 04/29/27............... 135,000 152,470 Fifth Third Bancorp Sub. Notes 8.25% due 03/01/38............... 510,000 519,677 Fleet Capital Trust V 3.76% due 12/18/28(3)............ 590,000 448,109 JPMorgan Chase Bank NA Sub. Notes 6.13% due 11/01/08............... 198,000 201,432 Wells Fargo Bank NA Sub. Notes 6.45% due 02/01/11............... 550,000 585,000 ---------- 1,906,688 ---------- Beverages-Non-alcoholic -- 0.0% Cott Beverages USA, Inc. Company Guar. Notes 8.00% due 12/15/11............... 350,000 283,500 ---------- Broadcast Services/Program -- 0.3% Fisher Communications, Inc. Senior Notes 8.63% due 09/15/14............... 1,290,000 1,302,900 Nexstar Finance, Inc. Senior Sub. Notes 7.00% due 01/15/14............... 650,000 559,812 Nexstar Finance, Inc. Senior Notes 11.38% due 04/01/13(8)........... 250,000 242,813 ---------- 2,105,525 ----------
25 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Building & Construction Products-Misc. -- 0.2% Associated Materials, Inc. Senior Sub. Notes 9.75% due 04/15/12......................... $ 965,000 $ 936,050 Interline Brands, Inc. Senior Sub. Notes 8.13% due 06/15/14......................... 770,000 735,350 NTK Holdings, Inc. Senior Notes 10.75% due 03/01/14(8)..................... 650,000 315,250 ---------- 1,986,650 ---------- Building Products-Wood -- 0.1% Masonite Corp. Company Guar. Notes 11.00% due 04/06/15........................ 1,088,000 750,720 ---------- Building-Residential/Commercial -- 0.0% D.R. Horton, Inc. Company Guar. Notes 5.00% due 01/15/09......................... 266,000 256,025 ---------- Cable TV -- 1.0% CCH II LLC/CCH II Capital Corp. Senior Notes, Series B 10.25% due 09/15/10........................ 115,000 104,362 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 10.25% due 10/01/13........................ 4,117,000 3,530,327 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 11.00% due 10/01/15........................ 2,402,000 1,651,375 CCO Holdings LLC/CCO Holdings Capital Corp. Senior Notes 8.75% due 11/15/13......................... 285,000 243,675 Charter Communications, Inc. Senior Notes 8.75% due 09/15/14*........................ 775,000 763,375 Comcast Cable Communications LLC Senior Notes 7.13% due 06/15/13......................... 347,000 368,655 Comcast Corp. Company Guar. Notes 5.88% due 02/15/18......................... 727,000 708,125 CSC Holdings, Inc. Senior Notes 7.63% due 04/01/11......................... 625,000 617,969 ---------- 7,987,863 ---------- Casino Hotels -- 0.7% Circus & Eldorado Joint Venture 1st Mtg. Notes 10.13% due 03/01/12........................ 575,000 579,312 Eldorado Casino Corp. (Shreveport) Sec. Bonds 10.00% due 08/01/12(5)(9).................. 946,489 941,757 Eldorado Resorts LLC Senior Notes 9.00% due 04/15/14(4)(5)................... 425,000 425,000 MGM Mirage, Inc. Senior Notes 5.88% due 02/27/14......................... 2,125,000 1,816,875
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- Casino Hotels (continued) Station Casinos, Inc. Senior Sub. Notes 6.63% due 03/15/18.................... $ 350,000 $ 194,250 Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 09/15/14*................... 1,450,000 1,384,750 ---------- 5,341,944 ---------- Casino Services -- 0.1% Indianapolis Downs LLC Sec. Notes 11.00% due 11/01/12*.................. 975,000 848,250 ---------- Cellular Telecom -- 1.0% Centennial Communications Corp. Senior Notes 10.00% due 01/01/13................... 1,036,000 963,480 Centennial Communications Corp. Senior Notes 10.13% due 06/15/13................... 1,050,000 1,036,875 Centennial Communications Corp. Senior Notes 10.48% due 01/01/13(3)................ 1,020,000 887,400 Cingular Wireless Services, Inc. Senior Notes 7.88% due 03/01/11.................... 1,406,000 1,529,319 MetroPCS Wireless, Inc. Senior Notes 9.25% due 11/01/14.................... 1,775,000 1,633,000 Nextel Communications, Inc. Company Guar. Notes 5.95% due 03/15/14.................... 600,000 444,000 Rural Cellular Corp. Senior Sub. Notes 6.08% due 06/01/13(3)................. 850,000 850,000 Rural Cellular Corp. Senior Notes 8.99% due 11/01/12(3)................. 275,000 275,000 ---------- 7,619,074 ---------- Chemicals-Diversified -- 0.1% E.I. Du Pont de Nemours & Co. Senior Notes 5.00% due 01/15/13.................... 405,000 421,707 ---------- Chemicals-Specialty -- 1.3% Huntsman International LLC Senior Sub. Notes 7.38% due 01/01/15.................... 1,380,000 1,428,300 Huntsman International LLC Company Guar. Notes 7.88% due 11/15/14.................... 2,180,000 2,310,800 Johnsondiversey Holdings, Inc. Company Guar. Notes 9.63% due 05/15/12.................... 950,000 935,750 Lubrizol Corp. Senior Notes 4.63% due 10/01/09.................... 1,300,000 1,304,732
26 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Chemicals-Specialty (continued) Momentive Performance Materials, Inc. Senior Sub. Notes 11.50% due 12/01/16.................. $3,145,000 $ 2,394,131 Tronox Worldwide LLC Company Guar. Notes 9.50% due 12/01/12................... 2,485,000 2,124,675 ----------- 10,498,388 ----------- Commercial Services -- 0.0% DI Finance/DynCorp International Senior Sub. Notes 9.50% due 02/15/13................... 277,000 283,233 ----------- Commercial Services-Finance -- 0.1% Credit Suisse/New York NY Sub. Notes 5.75% due 02/15/18................... 292,000 291,303 The Western Union Co. Senior Notes 5.40% due 11/17/11................... 672,000 688,362 ----------- 979,665 ----------- Computer Services -- 0.3% Compucom Systems, Inc. Senior Sub. Notes 12.50% due 10/01/15*................. 1,470,000 1,374,450 Computer Sciences Corp. Senior Notes 3.50% due 04/15/08................... 150,000 149,965 Sungard Data Systems, Inc. Company Guar. Notes 9.13% due 08/15/13................... 485,000 489,850 ----------- 2,014,265 ----------- Computers -- 0.0% Hewlett-Packard Co. Senior Notes 4.50% due 03/01/13................... 320,000 324,636 ----------- Computers-Integrated Systems -- 0.0% Activant Solutions, Inc. Company Guar. Notes 9.50% due 05/01/16................... 225,000 189,000 ----------- Consumer Products-Misc. -- 0.2% American Achievement Corp. Senior Sub. Notes 8.25% due 04/01/12................... 806,000 719,355 Prestige Brands, Inc. Senior Sub. Notes 9.25% due 04/15/12................... 325,000 313,625 Visant Holding Corp. Senior Notes 8.75% due 12/01/13................... 125,000 116,875 Visant Holding Corp. Senior Notes 10.25% due 12/01/13(8)............... 458,000 428,230 ----------- 1,578,085 ----------- Containers-Metal/Glass -- 0.4% Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23................... 1,410,000 1,311,300
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Containers-Metal/Glass (continued) Owens-Brockway Glass Container, Inc. Company Guar. Notes 8.25% due 05/15/13........................... $1,633,000 $1,690,155 ---------- 3,001,455 ---------- Containers-Paper/Plastic -- 0.2% Jefferson Smurfit Corp. Company Guar. Notes 8.25% due 10/01/12........................... 520,000 468,650 Smurfit-Stone Container Enterprises, Inc. Senior Notes 8.00% due 03/15/17........................... 1,630,000 1,369,200 ---------- 1,837,850 ---------- Cosmetics & Toiletries -- 0.0% Avon Products, Inc. Senior Notes 5.75% due 03/01/18........................... 230,000 234,161 ---------- Data Processing/Management -- 0.2% Fiserv, Inc. Company Guar. Notes 6.80% due 11/20/17........................... 490,000 506,368 Seitel, Inc. Senior Notes 9.75% due 02/15/14........................... 1,370,000 1,154,225 ---------- 1,660,593 ---------- Decision Support Software -- 0.1% Vangent, Inc. Senior Sub. Notes 9.63% due 02/15/15........................... 625,000 501,563 ---------- Direct Marketing -- 0.2% Affinity Group, Inc. Senior Sub. Notes 9.00% due 02/15/12........................... 1,114,000 1,029,057 Visant Corp. Company Guar. Notes 7.63% due 10/01/12........................... 500,000 486,250 ---------- 1,515,307 ---------- Diversified Financial Services -- 0.3% American Express Travel Related Services Co., Inc. Senior Notes 5.25% due 11/21/11*.......................... 305,000 305,720 General Electric Capital Corp. Senior Notes 5.65% due 06/09/14........................... 850,000 880,774 General Electric Capital Corp. Senior Notes 5.88% due 01/14/38........................... 675,000 650,604 General Electric Capital Corp. Notes 6.75% due 03/15/32........................... 279,000 298,003 ---------- 2,135,101 ---------- Diversified Manufacturing Operations -- 0.7% Cooper US, Inc. Senior Notes 5.45% due 04/01/15........................... 640,000 645,894 Danaher Corp. Senior Notes 5.63% due 01/15/18........................... 459,000 476,948
27 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Diversified Manufacturing Operations (continued) Dover Corp. Senior Notes 5.45% due 03/15/18........................... $ 203,000 $ 205,011 Dover Corp. Senior Notes 6.60% due 03/15/38........................... 448,000 462,290 General Electric Co. Senior Notes 5.25% due 12/06/17........................... 750,000 748,965 Harland Clarke Holdings Corp. Notes 7.82% due 05/15/15(3)........................ 425,000 263,500 Harland Clarke Holdings Corp. Notes 9.50% due 05/15/15........................... 1,150,000 839,500 Honeywell International, Inc. Senior Notes 4.25% due 03/01/13........................... 313,000 316,169 Indalex Holding Corp. Sec. Notes 11.50% due 02/01/14.......................... 600,000 489,000 Sally Holdings LLC Company Guar. Notes 10.50% due 11/15/16.......................... 825,000 763,125 ---------- 5,210,402 ---------- Diversified Operations -- 0.0% Capmark Financial Group, Inc. Company Guar. Notes 5.88% due 05/10/12*.......................... 255,000 161,562 ---------- Electric-Generation -- 0.9% Bruce Mansfield Unit Pass Through Certs. 6.85% due 06/01/34........................... 649,000 681,365 Edison Mission Energy Senior Notes 7.20% due 05/15/19........................... 475,000 469,063 Edison Mission Energy Senior Notes 7.63% due 05/15/27........................... 950,000 893,000 Edison Mission Energy Senior Notes 7.75% due 06/15/16........................... 775,000 798,250 Reliant Energy Mid-Atlantic Power Holdings LLC Pass Through Certs. Series B 9.24% due 07/02/17........................... 143,337 149,787 The AES Corp. Senior Notes 7.75% due 10/15/15........................... 1,275,000 1,284,563 The AES Corp. Senior Notes 8.00% due 10/15/17........................... 1,725,000 1,746,562 The AES Corp. Sec. Notes 8.75% due 05/15/13*.......................... 583,000 606,320
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------ Electric-Generation (continued) The AES Corp. Senior Notes 8.88% due 02/15/11............ $ 675,000 $ 707,063 ---------- 7,335,973 ---------- Electric-Integrated -- 2.2% Centerpoint Energy, Inc. Senior Notes 5.88% due 06/01/08............ 150,000 150,228 Commonwealth Edison Co. 1st Mtg. Bonds 5.95% due 08/15/16............ 1,290,000 1,310,262 Consumers Energy Co. 1st Mtg. Bonds Series C 4.25% due 04/15/08............ 180,000 179,999 Dominion Resources, Inc. Senior Notes 5.69% due 05/15/08(8)......... 836,000 837,681 Dominion Resources, Inc. Jr. Sub. Notes 6.30% due 09/30/11(10)........ 374,000 342,034 DTE Energy Co. Senior Notes 7.05% due 06/01/11............ 512,000 547,570 Duke Energy Corp. Senior Notes 4.20% due 10/01/08............ 305,000 306,072 Duke Energy Indiana, Inc. Debentures 5.00% due 09/15/13............ 500,000 503,113 Energy Future Holdings Corp. Company Guar. Notes 10.88% due 11/01/17*.......... 1,100,000 1,111,000 Entergy Louisiana LLC 1st Mtg. Bonds 5.83% due 11/01/10............ 195,000 194,543 FirstEnergy Corp. Senior Notes 6.45% due 11/15/11............ 455,080 476,359 Florida Power & Light Co. 1st Mtg. Notes 5.55% due 11/01/17............ 660,000 690,912 Illinois Power Co. Senior Sec. Notes 6.13% due 11/15/17*........... 280,000 276,879 Mackinaw Power LLC Sec. Notes 6.30% due 10/31/23*........... 642,147 671,869 Mirant Americas Generation LLC Senior Notes 8.30% due 05/01/11............ 1,250,000 1,275,000 Mirant Americas Generation LLC Senior Notes 8.50% due 10/01/21............ 1,005,000 912,038 Nisource Finance Corp. Company Guar. Notes 5.25% due 09/15/17............ 430,000 391,491
28 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Electric-Integrated (continued) Pacific Gas & Electric Co. Senior Notes 4.80% due 03/01/14......................... $ 275,000 $ 277,383 Pepco Holdings, Inc. Senior Notes 6.45% due 08/15/12......................... 940,000 1,001,599 Potomac Electric Power Co. Senior Notes 6.50% due 11/15/37......................... 590,000 576,093 PSEG Power LLC Company Guar. Notes 5.00% due 04/01/14......................... 653,000 635,542 PSEG Power LLC Company Guar. Notes 7.75% due 04/15/11......................... 50,000 53,871 Puget Sound Energy, Inc. Senior Notes 5.20% due 10/01/15......................... 633,000 620,207 Sierra Pacific Power Co. Senior Sec Bonds 6.75% due 07/01/37......................... 1,071,000 1,027,068 Southern California Edison Co. 1st Mtg. Bonds 5.75% due 04/01/35......................... 80,000 78,041 Southern Energy, Inc. Notes 7.90% due 07/15/09+(4)(5)(6)............... 1,550,000 0 Southern Power Co. Senior Notes 4.88% due 07/15/15......................... 289,000 277,252 Texas Competitive Electric Holdings Co. LLC Company Guar. Notes 10.25% due 11/01/15*....................... 1,575,000 1,569,094 Texas Competitive Electric Holdings Co. LLC Company Guar. Notes 10.25% due 11/01/15*....................... 375,000 373,594 Texas Competitive Electric Holdings Co. LLC Senior Notes 10.50% due 11/01/16*....................... 650,000 637,000 ----------- 17,303,794 ----------- Electronic Components-Semiconductors -- 0.4% Advanced Micro Devices, Inc. Senior Notes 7.75% due 11/01/12......................... 515,000 417,150 Amkor Technology, Inc. Senior Notes 7.75% due 05/15/13......................... 750,000 684,375 Amkor Technology, Inc. Senior Notes 9.25% due 06/01/16......................... 640,000 616,000 Freescale Semiconductor, Inc. Senior Notes 9.13% due 12/15/14......................... 975,000 711,750 Freescale Semiconductor, Inc. Senior Sub. Notes 10.13% due 12/15/16........................ 530,000 357,750
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Electronic Components-Semiconductors (continued) National Semiconductor Corp. Senior Notes 6.60% due 06/15/17........................... $ 590,000 584,725 Spansion, Inc. Senior Notes 11.25% due 01/15/16*......................... 180,000 109,800 --------- 3,481,550 --------- Electronic Measurement Instruments -- 0.1% Agilent Technologies, Inc. Senior Notes 6.50% due 11/01/17........................... 576,000 577,994 --------- Electronics-Military -- 0.1% L-3 Communications Corp. Company Guar. Notes 6.13% due 07/15/13........................... 825,000 806,437 L-3 Communications Corp. Company Guar. Notes 6.38% due 10/15/15........................... 175,000 171,063 --------- 977,500 --------- Energy-Alternate Sources -- 0.1% VeraSun Energy Corp. Senior Notes 9.38% due 06/01/17*.......................... 300,000 205,500 VeraSun Energy Corp. Sec. Notes 9.88% due 12/15/12........................... 835,000 772,375 --------- 977,875 --------- Finance-Auto Loans -- 1.1% Ford Motor Credit Co. LLC Senior Notes 5.80% due 01/12/09........................... 58,000 55,256 Ford Motor Credit Co. LLC Senior Notes 7.38% due 10/28/09........................... 5,115,000 4,660,445 Ford Motor Credit Co. LLC Notes 7.88% due 06/15/10........................... 1,000,000 871,937 GMAC LLC Senior Notes 6.00% due 12/15/11........................... 500,000 373,746 GMAC LLC Senior Notes 6.88% due 09/15/11........................... 4,118,000 3,151,769 GMAC LLC Senior Notes 6.88% due 08/28/12........................... 30,000 22,798 --------- 9,135,951 --------- Finance-Commercial -- 0.1% Caterpillar Financial Services Corp. Notes 4.70% due 03/15/12........................... 463,000 473,106 Transamerica Finance Corp. Senior Notes 6.40% due 09/15/08........................... 36,000 36,550 --------- 509,656 ---------
29 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Finance-Consumer Loans -- 0.1% John Deere Capital Corp. Senior Notes 4.50% due 04/03/13................... $ 334,000 $ 333,452 John Deere Capital Corp. Senior Notes 5.35% due 04/03/18................... 291,000 290,110 ---------- 623,562 ---------- Finance-Investment Banker/Broker -- 1.0% Citigroup, Inc. Senior Notes 5.00% due 09/15/14................... 320,000 301,576 Citigroup, Inc. Senior Notes 5.85% due 07/02/13................... 580,000 588,484 Citigroup, Inc. Global Sub. Notes 6.00% due 10/31/33................... 280,000 239,229 JP Morgan Chase & Co. Sub. Notes 5.75% due 01/02/13................... 451,000 471,145 JP Morgan Chase & Co. Senior Notes 6.00% due 01/15/18................... 539,000 562,081 JP Morgan Chase & Co. Senior Notes 5.38% due 01/15/14................... 520,000 532,802 Lehman Brothers Holdings, Inc. Sub. Notes 6.50% due 07/19/17................... 1,986,000 1,885,997 Lehman Brothers Holdings, Inc. Senior Notes 8.80% due 03/01/15................... 470,000 505,970 Merrill Lynch & Co., Inc. Notes 5.45% due 02/05/13................... 668,000 657,218 Morgan Stanley Senior Bonds 6.60% due 04/01/12................... 320,000 331,769 Morgan Stanley Senior Notes 6.63% due 04/01/18................... 504,000 504,177 Schwab Capital Trust I 7.50% due 11/15/17(10)............... 138,000 128,268 The Bear Stearns Cos., Inc. Notes 4.50% due 10/28/10................... 40,000 37,697 The Goldman Sachs Group, Inc. Senior Notes 6.15% due 04/01/18................... 780,000 778,843 The Goldman Sachs Group, Inc. Senior Notes 6.75% due 10/01/37................... 802,000 746,127 ---------- 8,271,383 ----------
Market Principal Value Security Description Amount** (Note 2) -------------------------------------------------------------- Finance-Mortgage Loan/Banker -- 0.1% Countrywide Financial Corp. Company Guar. Notes 5.80% due 06/07/12................... $ 9,000 $ 8,154 Countrywide Financial Corp. Sub. Notes 6.25% due 05/15/16................... 113,000 91,686 Countrywide Home Loans, Inc. Notes 4.13% due 09/15/09................... 90,000 81,087 Residential Capital LLC Company Guar. Notes 6.50% due 04/17/13................... 532,000 258,020 Residential Capital LLC Company Guar. Notes 6.38% due 06/30/10................... 285,000 143,212 ---------- 582,159 ---------- Food-Meat Products -- 0.0% Smithfield Foods, Inc. Senior Notes 7.00% due 08/01/11................... 75,000 73,875 Smithfield Foods, Inc. Senior Notes 7.75% due 07/01/17................... 275,000 268,125 ---------- 342,000 ---------- Food-Misc. -- 0.2% Kellogg Co. Senior Notes 4.25% due 03/06/13................... 305,000 304,053 Kraft Foods, Inc. Senior Notes 6.13% due 02/01/18................... 850,000 849,462 Wornick Co. Sec. Notes 10.88% due 07/15/11+(7)(11).......... 600,000 378,000 ---------- 1,531,515 ---------- Funeral Services & Related Items -- 0.3% Service Corp. International Senior Notes 6.75% due 04/01/16................... 1,225,000 1,185,188 Service Corp. International Senior Notes 7.00% due 06/15/17................... 635,000 612,775 Service Corp. International Senior Notes 7.38% due 10/01/14................... 225,000 225,281 ---------- 2,023,244 ---------- Gambling (Non-Hotel) -- 0.3% Downstream Development Authority of the Quapaw Tribe of Oklahoma Senior Notes 12.00% due 10/15/15*................. 1,000,000 790,000
30 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Gambling (Non-Hotel) (continued) Greektown Holdings LLC Senior Notes 10.75% due 12/01/13*..................... $ 960,000 $ 873,600 Waterford Gaming LLC Senior Notes 8.63% due 09/15/14*...................... 622,000 594,010 ---------- 2,257,610 ---------- Home Decoration Products -- 0.1% Newell Rubbermaid, Inc. Senior Notes 5.50% due 04/15/13....................... 640,000 643,507 ---------- Home Furnishings -- 0.2% Simmons Co. Company Guar. Notes 7.88% due 01/15/14....................... 275,000 225,500 Simmons Co. Senior Notes 10.00% due 12/15/14(8)................... 1,529,000 986,205 ---------- 1,211,705 ---------- Hotels/Motels -- 0.2% Gaylord Entertainment Co. Company Guar. Notes 6.75% due 11/15/14....................... 695,000 604,650 Gaylord Entertainment Co. Company Guar. Notes 8.00% due 11/15/13....................... 700,000 649,250 Starwood Hotels & Resorts Worldwide, Inc. Senior Notes 6.25% due 02/15/13....................... 310,000 309,612 ---------- 1,563,512 ---------- Human Resources -- 0.0% Team Health, Inc. Company Guar. Notes 11.25% due 12/01/13...................... 400,000 384,000 ---------- Independent Power Producers -- 0.4% NRG Energy, Inc. Company Guar. Notes 7.38% due 02/01/16....................... 2,400,000 2,352,000 Orion Power Holdings, Inc. Senior Notes 12.00% due 05/01/10...................... 250,000 273,125 Reliant Energy, Inc. Senior Notes 7.88% due 12/31/17....................... 950,000 945,250 ---------- 3,570,375 ---------- Industrial Automated/Robotic -- 0.1% Rockwell Automation, Inc. Debentures 5.65% due 12/01/17....................... 113,000 118,919 Rockwell Automation, Inc. Debentures 6.25% due 12/01/37....................... 493,000 505,778 ---------- 624,697 ----------
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- Insurance Brokers -- 0.2% Marsh & McLennan Cos., Inc. Senior Notes 5.15% due 09/15/10.................... $ 200,000 $ 199,540 Marsh & McLennan Cos., Inc. Senior Notes 7.13% due 06/15/09.................... 170,000 173,055 USI Holdings Corp. Senior Notes 6.94% due 11/15/14*(3)................ 525,000 379,313 USI Holdings Corp. Senior Sub. Notes 9.75% due 05/15/15*................... 1,275,000 921,187 ---------- 1,673,095 ---------- Insurance-Life/Health -- 0.2% Americo Life, Inc. Notes 7.88% due 05/01/13*................... 38,000 39,642 Cigna Corp. Senior Notes 6.35% due 03/15/18.................... 610,000 619,074 Lincoln National Corp. Senior Notes 5.65% due 08/27/12.................... 391,000 398,667 Monumental Global Funding II Notes 5.65% due 07/14/11*................... 174,000 182,289 ---------- 1,239,672 ---------- Insurance-Property/Casualty -- 0.0% The Travelers Cos., Inc. Senior Notes 6.25% due 06/15/37.................... 114,000 105,667 ---------- Investment Management/Advisor Services -- 0.5% Ameriprise Financial, Inc. Senior Notes 5.35% due 11/15/10.................... 81,000 83,008 LVB Acquisition Merger Sub, Inc. Senior Notes 10.00% due 10/15/17*.................. 625,000 654,688 LVB Acquisition Merger Sub, Inc. Senior Notes 10.38% due 10/15/17*.................. 1,800,000 1,867,500 LVB Acquisition Merger Sub, Inc. Senior Sub. Notes 11.63% due 10/15/17*.................. 1,035,000 1,035,000 ---------- 3,640,196 ---------- Medical Information Systems -- 0.1% Spheris, Inc. Senior Sub. Notes 11.00% due 12/15/12................... 1,325,000 1,106,375 ----------
31 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Medical Products -- 0.5% Baxter International, Inc. Senior Notes 5.90% due 09/01/16................ $1,001,000 $1,056,567 ReAble Therapeutics Finance LLC/ ReAble Therapeutics Finance Corp. Senior Notes 10.88% due 11/15/14*.............. 70,000 65,800 ReAble Therapeutics Finance LLC/ ReAble Therapeutics Finance Corp. Company Guar. Notes 11.75% due 11/15/14............... 1,040,000 910,000 Universal Hospital Services, Inc. Senior Sec. Notes 8.29% due 06/01/15(3)............. 575,000 511,750 Universal Hospital Services, Inc. Sec. Bonds 8.50% due 06/01/15................ 1,575,000 1,575,000 ---------- 4,119,117 ---------- Medical-Drugs -- 0.2% Abbott Laboratories Notes 6.15% due 11/30/37................ 215,000 222,151 American Home Products Corp. Notes 6.95% due 03/15/11................ 361,000 390,214 Schering-Plough Corp. Senior Notes 6.55% due 09/15/37................ 239,000 230,167 Wyeth Bonds 5.50% due 02/01/14................ 1,074,000 1,112,456 ---------- 1,954,988 ---------- Medical-HMO -- 0.2% Multiplan, Inc. Senior Sub. Notes 10.38% due 04/15/16*.............. 1,425,000 1,303,875 UnitedHealth Group, Inc. Senior Notes 6.88% due 02/15/38................ 336,000 321,033 ---------- 1,624,908 ---------- Medical-Hospitals -- 1.7% Community Health Systems, Inc. Senior Notes 8.88% due 07/15/15................ 3,810,000 3,824,287 HCA, Inc. Senior Notes 6.25% due 02/15/13................ 945,000 822,150 HCA, Inc. Senior Notes 8.75% due 09/01/10................ 225,000 225,000 HCA, Inc. Senior Notes 9.13% due 11/15/14................ 965,000 993,950
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------- Medical-Hospitals (continued) HCA, Inc. Senior Notes 9.25% due 11/15/16........................ $4,865,000 $ 5,047,437 HCA, Inc. Senior Notes 9.63% due 11/15/16........................ 1,205,000 1,250,188 IASIS Healthcare LLC / IASIS Capital Corp. Bank Guar. Notes 8.75% due 06/15/14........................ 1,185,000 1,179,075 ----------- 13,342,087 ----------- Medical-Nursing Homes -- 0.1% Sun Healthcare Group, Inc. Senior Notes 9.13% due 04/15/15........................ 750,000 723,750 ----------- Metal Processors & Fabrication -- 0.1% Commercial Metals Co. Senior Notes 6.50% due 07/15/17........................ 515,000 531,956 Timken Co. Notes 5.75% due 02/15/10........................ 162,000 167,727 ----------- 699,683 ----------- Metal-Aluminum -- 0.2% Alcoa, Inc. Notes 6.00% due 01/15/12........................ 612,000 635,397 Alcoa, Inc. Bonds 6.50% due 06/15/18........................ 634,000 661,292 ----------- 1,296,689 ----------- Metal-Diversified -- 0.5% Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.25% due 04/01/15........................ 550,000 580,250 Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.38% due 04/01/17........................ 1,725,000 1,830,656 Noranda Aluminium Acquisition Corp. Senior Notes 8.74% due 05/15/15*(3).................... 1,950,000 1,530,750 Noranda Aluminium Holding Corp. Senior Notes 10.49% due 11/15/14*(3)................... 500,000 370,000 ----------- 4,311,656 ----------- Multimedia -- 0.5% Belo Corp. Senior Notes 6.75% due 05/30/13........................ 145,000 139,300 COX Enterprises, Inc. Notes 7.88% due 09/15/10*....................... 578,000 620,950
32 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Multimedia (continued) Haights Cross Operating Co. Company Guar. Senior Notes 11.75% due 08/15/11................ $ 125,000 $ 122,500 News America, Inc. Company Guar. Bonds 7.30% due 04/30/28................. 1,074,000 1,138,179 Time Warner Cos, Inc. Company Guar. Notes 7.25% due 10/15/17................. 432,000 447,297 Time Warner Entertainment Co. LP Senior Notes 8.38% due 07/15/33................. 411,000 462,450 Viacom, Inc. Senior Notes 6.88% due 04/30/36................. 1,074,000 1,034,215 ---------- 3,964,891 ---------- Networking Products -- 0.0% Cisco Systems, Inc. Senior Notes 5.50% due 02/22/16................. 347,000 359,009 ---------- Non-Ferrous Metals -- 0.0% Renco Metals, Inc. Bonds 11.50% due 07/01/03+(4)(5)(12)(13). 500,000 0 ---------- Non-Hazardous Waste Disposal -- 0.4% Allied Waste North America, Inc. Company Guar. Notes 6.88% due 06/01/17................. 1,825,000 1,788,500 Allied Waste North America, Inc. Senior Notes 7.88% due 04/15/13................. 490,000 504,087 Waste Management, Inc. Company Guar. Notes 6.88% due 05/15/09................. 985,000 1,010,490 Waste Services, Inc. Senior Sub. Notes 9.50% due 04/15/14................. 85,000 81,388 ---------- 3,384,465 ---------- Office Automation & Equipment -- 0.3% IKON Office Solutions, Inc. Senior Notes 7.75% due 09/15/15................. 1,610,000 1,529,500 IKON Office Solutions, Inc. Senior Notes 9.93% due 01/01/12*(3)............. 25,000 24,031 Pitney Bowes, Inc. Notes 5.25% due 01/15/37................. 680,000 673,006 Pitney Bowes, Inc. Notes 5.75% due 09/15/17................. 553,000 562,656 ---------- 2,789,193 ----------
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------------- Oil Companies-Exploration & Production -- 1.7% Atlas Energy Resources LLC Senior Notes 10.75% due 02/01/18*....................... $ 650,000 $ 658,125 Belden & Blake Corp. Company Guar. Sec. Notes 8.75% due 07/15/12......................... 175,000 175,438 Brigham Exploration Co. Company Guar. Notes 9.63% due 05/01/14......................... 950,000 817,000 Chaparral Energy, Inc. Company Guar. Notes 8.50% due 12/01/15......................... 895,000 778,650 Chaparral Energy, Inc. Company Guar. Notes 8.88% due 02/01/17......................... 150,000 130,125 Chesapeake Energy Corp. Senior Notes 6.25% due 01/15/18......................... 300,000 286,500 Chesapeake Energy Corp. Senior Notes 6.63% due 01/15/16......................... 1,650,000 1,617,000 Costilla Energy, Inc. Senior Notes 10.25% due 10/01/06+(4)(5)................. 500,000 0 Dune Energy, Inc. Senior Sec. Notes 10.50% due 06/01/12........................ 1,120,000 974,400 Encore Acquisition Co. Senior Sub. Notes 6.00% due 07/15/15......................... 950,000 855,000 Encore Acquisition Co. Senior Sub. Notes 6.25% due 04/15/14......................... 175,000 162,750 Energy Partners, Ltd. Senior Notes 9.75% due 04/15/14......................... 1,025,000 845,625 Exco Resources, Inc. Company Guar. Notes 7.25% due 01/15/11......................... 1,430,000 1,390,675 Hilcorp Energy I LP/Hilcorp Finance Co. Senior Notes 7.75% due 11/01/15*........................ 1,465,000 1,373,437 Quicksilver Resources, Inc. Company Guar. Notes 7.13% due 04/01/16......................... 275,000 265,375 Sabine Pass LNG LP Company Guar. Senior Notes 7.25% due 11/30/13......................... 400,000 386,000 Sabine Pass LNG LP Sec. Notes 7.50% due 11/30/16......................... 2,950,000 2,846,750 Transmeridian Exploration, Inc. Company Guar. Notes 12.00% due 12/15/10........................ 375,000 292,500 ----------- 13,855,350 -----------
33 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Oil Companies-Integrated -- 0.1% Hess Corp. Bonds 7.88% due 10/01/29................. $ 461,000 $ 547,088 Marathon Oil Corp. Senior Notes 5.90% due 03/15/18................. 290,000 291,508 Phillips Petroleum Co. Debentures 7.00% due 03/30/29................. 286,000 322,469 ---------- 1,161,065 ---------- Oil Refining & Marketing -- 0.1% The Premcor Refining Group, Inc. Company Guar. Notes 6.75% due 05/01/14................. 666,000 699,060 ---------- Oil-Field Services -- 0.2% Allis-Chalmers Energy, Inc. Company Guar. Notes 9.00% due 01/15/14................. 610,000 555,100 Helix Energy Solutions Group, Inc. Senior Notes 9.50% due 01/15/16*................ 600,000 600,000 Key Energy Services, Inc. Senior Notes 8.38% due 12/01/14*................ 425,000 423,937 Oslo Seismic Services, Inc. 1st Mtg. Bonds 8.28% due 06/01/11................. 133,304 141,989 ---------- 1,721,026 ---------- Paper & Related Products -- 0.3% Bowater, Inc. Notes 6.50% due 06/15/13................. 700,000 462,000 Caraustar Industries, Inc. Notes 7.38% due 06/01/09................. 650,000 442,000 Georgia-Pacific Corp. Company Guar. Notes 7.00% due 01/15/15*................ 920,000 862,500 Georgia-Pacific Corp. Company Guar. Notes 7.13% due 01/15/17*................ 350,000 323,750 NewPage Corp. Sec. Notes 10.00% due 05/01/12................ 150,000 152,250 NewPage Corp. Senior Notes 10.00% due 05/01/12*............... 375,000 380,625 ---------- 2,623,125 ---------- Physicians Practice Management -- 0.3% US Oncology, Inc. Senior Sub. Notes 10.75% due 08/15/14................ 2,140,000 2,113,250 ----------
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------- Pipelines -- 1.4% Atlas Pipeline Partners LP Company Guar. Notes 8.13% due 12/15/15................ $ 525,000 $ 534,188 CenterPoint Energy Resources Corp. Notes 7.75% due 02/15/11................ 1,215,000 1,312,601 Copano Energy LLC Company Guar. Notes 8.13% due 03/01/16................ 1,345,000 1,392,075 Duke Energy Field Services LLC Notes 6.88% due 02/01/11................ 747,000 789,124 Dynegy Holdings, Inc. Senior Notes 8.75% due 02/15/12................ 965,000 991,537 Dynegy-Roseton Danskammer Pass Through Certs. Series B 7.67% due 11/08/16................ 1,890,000 1,893,553 El Paso Corp. Senior Sub. Notes 6.88% due 06/15/14................ 925,000 945,812 El Paso Natural Gas Co. Senior Notes 5.95% due 04/15/17................ 575,000 563,989 MarkWest Energy Partners LP Senior Notes 6.88% due 11/01/14................ 255,000 240,975 MarkWest Energy Partners LP Company Guar. Notes 8.50% due 07/15/16................ 550,000 554,125 NGC Corp Capital Trust Guar. Bonds 8.32% due 06/01/27................ 1,045,000 896,088 Panhandle Eastern Pipeline Co. Senior Notes 6.20% due 11/01/17................ 382,000 374,430 Williams Cos., Inc. Senior Notes 7.88% due 09/01/21................ 605,000 655,669 ----------- 11,144,166 ----------- Poultry -- 0.1% Pilgrim's Pride Corp. Senior Sub. Notes 8.38% due 05/01/17................ 649,000 571,120 ----------- Printing-Commercial -- 0.1% Valassis Communications, Inc. Senior Notes 8.25% due 03/01/15................ 790,000 649,775 ----------- Publishing-Newspapers -- 0.0% Knight Ridder, Inc. Debentures 6.88% due 03/15/29................ 205,000 120,171 -----------
34 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Publishing-Periodicals -- 0.4% Dex Media West LLC/Dex Media Finance Co. Senior Notes 8.50% due 08/15/10...................... $ 925,000 $ 899,562 Idearc, Inc. Company Guar. Notes 8.00% due 11/15/16...................... 1,225,000 793,188 R.H. Donnelley Corp. Senior Notes 6.88% due 01/15/13...................... 400,000 244,000 R.H. Donnelley Corp. Senior Notes 8.88% due 10/15/17*..................... 700,000 437,500 The Reader's Digest Association, Inc. Senior Sub. Notes 9.00% due 02/15/17*..................... 1,505,000 1,004,587 ---------- 3,378,837 ---------- Quarrying -- 0.1% Vulcan Materials Senior Notes 5.60% due 11/30/12...................... 550,000 558,735 ---------- Radio -- 0.0% Chancellor Media Corp. Company Guar. Notes 8.00% due 11/01/08...................... 148,000 152,744 ---------- Real Estate Investment Trusts -- 0.4% Health Care Property Investors, Inc. Senior Notes 5.65% due 12/15/13...................... 845,000 753,797 Liberty Property LP Senior Notes 5.63% due 10/01/17...................... 310,000 294,420 Omega Healthcare Investors, Inc. Senior Notes 7.00% due 04/01/14...................... 1,400,000 1,344,000 PPF Funding, Inc. Bonds 5.35% due 04/15/12*..................... 270,000 264,138 Reckson Operating Partnership LP Senior Notes 6.00% due 03/31/16...................... 86,000 73,569 Simon Property Group LP Notes 5.38% due 08/28/08...................... 124,000 124,116 Vornado Realty LP Notes 4.50% due 08/15/09...................... 210,000 205,674 ---------- 3,059,714 ---------- Recycling -- 0.2% Aleris International, Inc. Company Guar. Notes 9.00% due 12/15/14...................... 1,250,000 912,500 Aleris International, Inc. Company Guar. Notes 10.00% due 12/15/16..................... 1,090,000 692,150 ---------- 1,604,650 ---------- Rental Auto/Equipment -- 0.3% Erac USA Finance Co. Company Guar. Notes 7.00% due 10/15/37*..................... 585,000 480,911
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- Rental Auto/Equipment (continued) Erac USA Finance Co. Notes 7.35% due 06/15/08*................... $ 620,000 $ 624,367 Rental Service Corp. Notes 9.50% due 12/01/14.................... 775,000 647,125 United Rentals North America, Inc. Senior Sub. Notes 7.75% due 11/15/13.................... 940,000 766,100 ---------- 2,518,503 ---------- Research & Development -- 0.1% Alion Science and Technology Corp. Company Guar. Notes 10.25% due 02/01/15................... 965,000 545,225 ---------- Retail-Discount -- 0.1% Target Corp. Senior Notes 7.00% due 01/15/38.................... 516,000 530,375 ---------- Retail-Drug Store -- 0.4% CVS Caremark Corp. Senior Notes 6.25% due 06/01/27.................... 274,000 273,062 CVS Caremark Corp. Pass Through Certs. 6.94% due 01/10/30*................... 361,953 382,711 CVS Lease Pass Through Trust Pass Through Certs. 6.04% due 12/10/28*................... 1,039,966 990,724 Rite Aid Corp. Senior Notes 9.25% due 06/01/13.................... 225,000 185,625 Rite Aid Corp. Senior Notes 9.50% due 06/15/17.................... 1,925,000 1,511,125 ---------- 3,343,247 ---------- Retail-Major Department Stores -- 0.0% Saks, Inc. Company Guar. Notes 9.88% due 10/01/11.................... 375,000 375,000 ---------- 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 -- 0.1% Neiman-Marcus Group, Inc. Company Guar. Notes 9.00% due 10/15/15.................... 525,000 525,000 Neiman-Marcus Group, Inc. Senior Sub. Notes 10.38% due 10/15/15................... 55,000 55,000 ---------- 580,000 ---------- Retail-Restaurants -- 0.2% Dave & Buster's, Inc. Company Guar. Notes 11.25% due 03/15/14................... 420,000 382,200
35 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Retail-Restaurants (continued) McDonald's Corp. Senior Notes 6.30% due 03/01/38..................... $ 510,000 $ 521,780 NPC International, Inc. Company Guar. Notes 9.50% due 05/01/14..................... 800,000 724,000 ---------- 1,627,980 ---------- Rubber-Tires -- 0.1% Cooper Standard Automotive, Inc. Company Guar. Notes 8.38% due 12/15/14..................... 800,000 606,000 ---------- Rubber/Plastic Products -- 0.0% Venture Holdings Co. LLC Company Guar. Notes 11.00% due 06/01/07+(4)(5)(12)(13)..... 100,000 10 ---------- Savings & Loans/Thrifts -- 0.2% Independence Community Bank Corp. Sub. Notes 3.50% due 06/20/08(10)................. 172,000 170,970 Sovereign Bancorp, Inc. Senior Notes 4.80% due 09/01/10..................... 405,000 400,670 Washington Mutual Preferred Funding III 6.90% due 06/15/12*(3)(14)............. 600,000 336,000 Washington Mutual, Inc. Senior Notes 5.50% due 08/24/11..................... 380,000 326,800 Western Financial Bank Senior Debentures 9.63% due 05/15/12..................... 333,000 353,144 ---------- 1,587,584 ---------- Soap & Cleaning Preparation -- 0.0% Johnsondiversey Holdings, Inc. Notes 10.67% due 05/15/13(8)................. 75,000 72,000 ---------- Special Purpose Entities -- 1.7% AAC Group Holding Corp. Senior Notes 10.25% due 10/01/12(8)................. 565,000 457,650 AMR HoldCo, Inc./EmCare HoldCo, Inc. Senior Sub. Notes 10.00% due 02/15/15.................... 125,000 132,813 Axcan Intermediate Holdings, Inc. Senior Notes 9.25% due 03/01/15*.................... 675,000 668,250 BAE Systems Holdings, Inc. Notes 5.20% due 08/15/15*.................... 1,065,000 1,079,318 Buffalo Thunder Development Authority Senior Notes 9.38% due 12/15/14*.................... 750,000 562,500 Capital One Capital IV 6.75% due 02/17/32(10)................. 255,000 182,084 CCM Merger, Inc. Notes 8.00% due 08/01/13*.................... 1,000,000 840,000
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ Special Purpose Entities (continued) Chukchansi Economic Development Authority Senior Notes 8.00% due 11/15/13*...................... $2,050,000 $ 1,845,000 Consolidated Communications Illinois/Texas Holdings, Inc. Senior Notes 9.75% due 04/01/12....................... 632,000 662,810 Goldman Sachs Capital III 3.85% due 09/01/12(3)(14)................ 750,000 472,500 Hawker Beechcraft Acquisition Co. LLC / Hawker Beechcraft Notes Co. Senior Notes 8.88% due 04/01/15....................... 200,000 204,500 Hawker Beechcraft Acquisition Co. LLC / Hawker Beechcraft Notes Co. Senior Notes 9.75% due 04/01/17....................... 910,000 905,450 Hexion U.S. Finance Corp. Company Guar. Notes 9.75% due 11/15/14....................... 950,000 1,018,875 ING USA Global Funding Trust Notes 4.50% due 10/01/10....................... 268,000 277,587 KAR Holdings, Inc. Senior Notes 7.24% due 05/01/14(3).................... 425,000 350,625 KAR Holdings, Inc. Senior Notes 8.75% due 05/01/14....................... 305,000 271,450 Local TV Finance LLC Senior Notes 9.25% due 06/15/15*...................... 600,000 480,750 MedCath Holdings Corp. Senior Notes 9.88% due 07/15/12....................... 129,000 134,805 MXEnergy Holdings, Inc. Senior Notes 10.69% due 08/01/11(3)................... 650,000 585,000 Norbord Delaware GP I Company Guar. Notes 6.45% due 02/15/17*...................... 193,000 155,075 PNA Intermediate Holding Corp. Senior Notes 10.07% due 02/15/13(3)................... 350,000 272,125 Pricoa Global Funding I Notes 5.30% due 09/27/13*...................... 320,000 338,449 Principal Life Global Funding I Sec. Notes 5.25% due 01/15/13*...................... 296,000 301,763 Snoqualmie Entertainment Authority Senior Sec. Notes 6.94% due 02/01/14*(3)................... 75,000 61,125 Snoqualmie Entertainment Authority Notes 9.13% due 02/01/15*...................... 1,475,000 1,261,125 Southern Star Central Corp. Senior Notes 6.75% due 03/01/16....................... 400,000 384,000 ----------- 13,905,629 -----------
36 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ CORPORATE BONDS & NOTES (continued) Specified Purpose Acquisitions -- 0.0% ESI Tractebel Acquisition Corp. Company Guar. Bonds 7.99% due 12/30/11................. $ 176,000 $ 179,821 ---------- Steel-Producers -- 0.5% International Steel Group, Inc. Senior Notes 6.50% due 04/15/14................. 540,000 555,970 Reliance Steel & Aluminum Co. Company Guar. Notes 6.85% due 11/15/36................. 1,070,000 1,019,775 Ryerson, Inc. Senior Sec. Notes 10.61% due 11/01/14*(3)............ 875,000 787,500 Ryerson, Inc. Senior Sec. Notes 12.00% due 11/01/15*............... 1,200,000 1,134,000 Steel Dynamics, Inc. Company Guar. Notes 6.75% due 04/01/15................. 15,000 14,700 United States Steel Corp. Senior Notes 7.00% due 02/01/18................. 215,000 210,011 ---------- 3,721,956 ---------- Steel-Specialty -- 0.0% Allegheny Technologies, Inc. Notes 8.38% due 12/15/11................. 75,000 79,688 ---------- Storage/Warehousing -- 0.2% Mobile Mini, Inc. Notes 6.88% due 05/01/15................. 725,000 601,750 Mobile Services Group, Inc. Company Guar. Notes 9.75% due 08/01/14................. 655,000 612,425 ---------- 1,214,175 ---------- Telecom Services -- 0.8% Bellsouth Telecommunications, Inc. Debentures 7.00% due 12/01/95................. 462,000 453,342 Cincinnati Bell Telephone Co. Company Guar. Notes 7.18% due 12/15/23................. 50,000 43,000 Cincinnati Bell Telephone Co. Company Guar. Notes 7.20% due 11/29/23................. 225,000 193,500 Fairpoint Communications, Inc. Senior Notes 13.13% due 04/01/18*............... 1,075,000 1,032,000 MasTec, Inc. Senior Notes 7.63% due 02/01/17................. 356,000 309,720 PAETEC Holding Corp. Company Guar. Notes 9.50% due 07/15/15................. 1,650,000 1,518,000 Qwest Corp. Senior Notes 6.50% due 06/01/17................. 500,000 451,250
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------- Telecom Services (continued) Qwest Corp. Senior Notes 7.50% due 10/01/14...................... $1,440,000 $ 1,404,000 Verizon Global Funding Corp. Senior Notes 6.88% due 06/15/12...................... 750,000 808,549 ----------- 6,213,361 ----------- Telephone-Integrated -- 1.3% AT&T Corp. Senior Notes 7.30% due 11/15/11...................... 1,003,000 1,086,380 BellSouth Corp. Senior Notes 6.00% due 10/15/11...................... 1,300,000 1,360,085 Cincinnati Bell, Inc. Company Guar. Notes 7.00% due 02/15/15...................... 350,000 316,750 Cincinnati Bell, Inc. Senior Notes 7.25% due 06/15/23...................... 25,000 21,500 Cincinnati Bell, Inc. Company Guar. Notes 8.38% due 01/15/14...................... 990,000 928,125 Citizens Communications Co. Senior Notes 7.13% due 03/15/19...................... 300,000 262,500 Citizens Communications Co. Senior Notes 9.00% due 08/15/31...................... 1,102,000 964,250 GTE Northwest, Inc. Debentures 5.55% due 10/15/08...................... 55,000 55,480 Pacific Bell Telephone Co. Company Guar. Notes 7.13% due 03/15/26...................... 570,000 590,030 Qwest Communications International, Inc. Company Guar. Notes 7.50% due 02/15/14...................... 2,725,000 2,561,500 Sprint Capital Corp. Company Guar. Bonds 6.38% due 05/01/09...................... 825,000 812,625 Sprint Capital Corp. Company Guar. Notes 6.90% due 05/01/19...................... 787,000 619,763 Verizon New York, Inc. Debentures 6.88% due 04/01/12...................... 751,000 789,829 ----------- 10,368,817 ----------- Television -- 0.7% Allbritton Communications Co. Senior Sub. Notes 7.75% due 12/15/12...................... 1,175,000 1,151,500 Bonten Media Acquisition Co. Company Guar. Notes 9.00% due 06/01/15*..................... 250,000 192,500 LIN Television Corp. Senior Sub. Notes 6.50% due 05/15/13...................... 960,000 890,400
37 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Television (continued) Paxson Communication Corp. Senior Notes 7.51% due 01/15/12*(3).......... $ 650,000 $ 526,500 Paxson Communication Corp. Sec. Senior Notes 10.51% due 01/15/13*(3)......... 2,300,000 1,725,000 Young Broadcasting, Inc. Senior Sub. Notes 8.75% due 01/15/14.............. 380,000 224,200 Young Broadcasting, Inc. Company Guar. Notes 10.00% due 03/01/11............. 1,035,000 649,462 ---------- 5,359,562 ---------- Theaters -- 0.4% AMC Entertainment, Inc. Senior Sub. Notes 8.00% due 03/01/14.............. 2,195,000 1,860,262 Cinemark, Inc. Senior Notes 9.75% due 03/15/14(8)........... 1,585,000 1,426,500 ---------- 3,286,762 ---------- Transactional Software -- 0.1% Open Solutions, Inc. Senior Sub. Notes 9.75% due 02/01/15*............. 1,345,000 1,042,375 ---------- Transport-Air Freight -- 0.7% Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class A-2 6.88% due 01/02/11.............. 192,193 188,349 Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class A-1 7.20% due 01/02/19.............. 1,415,836 1,394,598 Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class B 7.63% due 01/02/15.............. 1,701,936 1,872,130 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20.............. 310,806 303,035 Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class C 8.77% due 01/02/11.............. 62,428 61,804 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class B 9.06% due 07/02/17.............. 1,346,314 1,602,114 ---------- 5,422,030 ---------- Transport-Rail -- 0.1% BNSF Funding Trust I 6.61% due 01/15/26(10).......... 580,000 526,850
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------- Transport-Rail (continued) CSX Corp. Senior Notes 6.25% due 03/15/18................. $ 603,000 $ 595,086 ------------ 1,121,936 ------------ Transport-Services -- 0.1% Bristow Group, Inc. Senior Notes 7.50% due 09/15/17................. 250,000 251,250 PHI, Inc. Company Guar. Notes 7.13% due 04/15/13................. 300,000 275,250 ------------ 526,500 ------------ Travel Services -- 0.2% Travelport LLC Company Guar. Notes 9.88% due 09/01/14................. 375,000 328,125 Travelport LLC Company Guar. Notes 11.88% due 09/01/16................ 1,510,000 1,283,500 ------------ 1,611,625 ------------ Vitamins & Nutrition Products -- 0.0% General Nutrition Centers, Inc. Company Guar. Notes 7.20% due 03/15/14(3).............. 325,000 271,375 ------------ Total Corporate Bonds & Notes (cost $320,663,224)................ 300,425,556 ------------ FOREIGN CORPORATE BONDS & NOTES -- 6.1% Banks-Commercial -- 0.2% Barclays Bank PLC Jr. Sub. Notes 7.43% due 12/15/17*(3)(14)......... 455,000 411,358 BOI Capital Funding 6.11% due 02/04/16*(3)(14)......... 330,000 251,178 Caisse Nationale des Caisses d'Epargne et de Prevoyance Notes 3.86% due 12/30/09(3)(14).......... 141,000 82,573 Landsbanki Islands HF Jr. Sub. Notes 7.43% due 10/19/17*(3)(14)......... 370,000 309,752 Royal Bank of Scotland Group PLC 6.99% due 10/05/17*(3)(14)......... 660,000 560,274 ------------ 1,615,135 ------------ Banks-Money Center -- 0.0% Mizuho Financial Group Cayman, Ltd. Bank Guar. Bonds 8.38% due 04/27/09(14)............. 175,000 173,989 ------------ Beverages-Wine/Spirits -- 0.2% Diageo Capital PLC Company Guar. Notes 5.75% due 10/23/17................. 650,000 665,688 Diageo Finance BV Company Guar. Notes 3.88% due 04/01/11................. 779,000 781,722 ------------ 1,447,410 ------------
38 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------------ FOREIGN CORPORATE BONDS & NOTES (continued) Broadcast Services/Program -- 0.1% Grupo Televisa SA Senior Notes 6.63% due 03/18/25....................... $ 496,000 $ 495,579 ---------- Building & Construction-Misc. -- 0.0% North American Energy Partners, Inc. Senior Notes 8.75% due 12/01/11....................... 275,000 272,250 ---------- Building Products-Doors & Windows -- 0.0% Masonite International Corp. Company Guar. Notes 11.00% due 04/06/15...................... 117,000 79,560 ---------- Cellular Telecom -- 0.2% Mobile Telesystems Finance SA Company Guar. Senior Notes 8.38% due 10/14/10....................... 1,650,000 1,711,050 ---------- Computers-Memory Devices -- 0.1% Seagate Technology HDD Holdings Company Guar. Notes 6.80% due 10/01/16....................... 435,000 414,337 ---------- Containers-Metal/Glass -- 0.2% Vitro SAB de CV Senior Notes 9.13% due 02/01/17....................... 2,040,000 1,693,200 Vitro SAB de CV Senior Notes 11.75% due 11/01/13...................... 250,000 253,125 ---------- 1,946,325 ---------- Cruise Lines -- 0.1% Royal Caribbean Cruises, Ltd. Senior Notes 7.00% due 06/15/13....................... 400,000 374,049 ---------- Diversified Financial Services -- 0.5% TNK-BP Finance SA Company Guar. Notes 6.13% due 03/20/12....................... 1,380,000 1,301,202 TNK-BP Finance SA Company Guar. Notes 6.88% due 07/18/11....................... 350,000 342,440 TNK-BP Finance SA Company Guar. Notes 7.88% due 03/13/18....................... 1,360,000 1,258,000 TNK-BP Finance SA Company Guar. Notes 7.88% due 03/13/18*...................... 1,300,000 1,200,875 ---------- 4,102,517 ---------- Diversified Manufacturing Operations -- 0.3% Bombardier, Inc. Senior Notes 8.00% due 11/15/14*...................... 1,390,000 1,431,700 Siemens Financieringsmaatschappij NV Notes 6.13% due 08/17/26*...................... 540,000 527,285
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- Diversified Manufacturing Operations (continued) Tyco International Group SA Company Guar. Notes 6.00% due 11/15/13........................... $ 310,000 $ 311,291 ---------- 2,270,276 ---------- Diversified Operations -- 0.0% Hutchison Whampoa Finance, Ltd. Company Guar. Notes 7.50% due 08/01/27*.......................... 150,000 150,235 ---------- Electric-Integrated -- 0.1% Enel Finance International SA Company Guar. Notes 6.25% due 09/15/17*.......................... 748,000 776,051 ---------- Electric-Transmission -- 0.1% EEB International, Ltd. Company Guar. Notes 8.75% due 10/31/14*.......................... 640,000 659,200 ---------- Electronic Components-Misc. -- 0.2% NXP BV / NXP Funding LLC Company Guar. Notes 9.50% due 10/15/15........................... 1,480,000 1,217,300 ---------- Food-Meat Products -- 0.2% JBS SA Company Guar. Notes 9.38% due 02/07/11........................... 850,000 847,875 JBS SA Senior Notes 10.50% due 08/04/16*......................... 650,000 627,250 ---------- 1,475,125 ---------- Food-Retail -- 0.1% Delhaize Group SA Notes 6.50% due 06/15/17........................... 855,000 882,961 ---------- Independent Power Producer -- 0.0% AES Drax Energy, Ltd. Sec. Notes 11.50% due 08/30/10+(5)(7)................... 725,000 725 ---------- Insurance-Multi-line -- 0.1% Aegon NV Sub. Bonds 4.57% due 07/15/14(3)(14).................... 201,000 112,761 AXA SA Sub. Notes 6.38% due 12/14/36*(3)(14)................... 285,000 229,730 ING Groep NV Sub. Notes 5.78% due 12/08/15(3)(14).................... 765,000 651,760 ---------- 994,251 ---------- Investment Companies -- 0.0% Xstrata Finance Canada, Ltd. Notes 6.90% due 11/15/37*.......................... 266,000 257,103 ----------
39 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES (continued) Medical-Drugs -- 0.6% Angiotech Pharmaceuticals, Inc. Company Guar. Notes 6.83% due 12/01/13(3)............. $1,390,000 $1,063,350 Angiotech Pharmaceuticals, Inc. Company Guar. Notes 7.75% due 04/01/14................ 400,000 244,000 AstraZeneca PLC Senior Notes 5.90% due 09/15/17................ 630,000 665,950 Elan Finance PLC Company Guar. Notes 7.07% due 11/15/11(3)............. 2,430,000 2,187,000 Elan Finance PLC Company Guar. Bonds 7.75% due 11/15/11................ 895,000 832,350 ---------- 4,992,650 ---------- Metal-Aluminum -- 0.1% Alcan, Inc. Notes 6.13% due 12/15/33................ 403,000 385,162 ---------- Multimedia -- 0.0% Quebecor Media, Inc. Senior Notes 7.75% due 03/15/16*............... 375,000 342,188 ---------- Oil Companies-Exploration & Production -- 0.4% Compton Petroleum Finance Corp. Company Guar. Notes 7.63% due 12/01/13................ 965,000 923,987 OPTI Canada, Inc. Senior Notes 7.88% due 12/15/14................ 1,800,000 1,759,500 OPTI Canada, Inc. Senior Notes 8.25% due 12/15/14................ 625,000 618,750 ---------- 3,302,237 ---------- Oil-Field Services -- 0.0% Weatherford International, Ltd. Senior Notes 7.00% due 03/15/38................ 218,000 221,302 ---------- Paper & Related Products -- 0.4% Abitibi-Consolidated Co. of Canada Senior Notes 13.75% due 04/01/11*.............. 1,275,000 1,303,687 Abitibi-Consolidated Finance LP Company Guar. Bonds 7.88% due 08/01/09................ 775,000 651,000 Abitibi-Consolidated, Inc. Notes 6.00% due 06/20/13................ 300,000 145,500 Abitibi-Consolidated, Inc. Notes 8.55% due 08/01/10................ 1,655,000 951,625 Bowater Canada Finance Corp. Company Guar. Notes 7.95% due 11/15/11................ 200,000 137,000 ---------- 3,188,812 ----------
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Pipelines -- 0.1% Enbridge, Inc. Bonds 5.80% due 06/15/14...................... $ 931,000 $ 943,955 Kinder Morgan Finance Co. ULC Company Guar. Notes 5.70% due 01/05/16...................... 183,000 173,392 ---------- 1,117,347 ---------- Printing-Commercial -- 0.1% Quebecor World Capital Corp. Senior Notes 8.75% due 03/15/16*+(11)(24)............ 1,580,000 750,500 ---------- Real Estate Operations & Development -- 0.0% Brascan Corp. Notes 8.13% due 12/15/08...................... 76,000 78,039 ---------- Satellite Telecom -- 0.4% Intelsat Bermuda, Ltd. Senior Notes 11.25% due 06/15/16..................... 480,000 486,600 Intelsat Intermediate Holding Co., Ltd. Senior Notes 9.25% due 02/01/15(8)................... 2,930,000 2,490,500 ---------- 2,977,100 ---------- Sovereign -- 0.2% Credit Suisse First Boston International for City of Kiev Ukraine Bonds 8.00% due 11/06/15...................... 1,600,000 1,548,838 ---------- Special Purpose Entities -- 0.2% Hellas Telecommunications Luxembourg II Sub. Notes 10.01% due 01/15/15*(3)................. 1,155,000 825,825 Hybrid Capital Funding I LP Sub. Notes 8.00% due 06/30/11(14).................. 338,000 229,840 Rio Tinto Finance USA, Ltd. Notes 2.63% due 09/30/08...................... 165,000 163,815 SMFG Preferred Capital, Ltd. 6.08% due 01/25/17*(3)(14).............. 373,000 292,432 SovRisc BV Notes 4.63% due 10/31/08*..................... 133,000 135,074 ---------- 1,646,986 ---------- Steel-Producer -- 0.2% Severstal Notes 8.63% due 02/24/09...................... 1,550,000 1,587,153 ----------
40 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------------ FOREIGN CORPORATE BONDS & NOTES (continued) Telecom Services -- 0.1% Global Crossing UK Finance PLC Company Guar. Notes 10.75% due 12/15/14............... $ 525,000 $ 519,750 Wind Acquisition Finance SA Company Guar. Bonds 10.75% due 12/01/15*.............. 175,000 178,500 ----------- 698,250 ----------- Telephone-Integrated -- 0.4% British Telecom PLC Senior Notes 5.15% due 01/15/13................ 750,000 739,087 British Telecommunications PLC Bonds 9.13% due 12/15/30................ 600,000 745,186 Telecom Italia Capital SA Company Guar. Bonds 6.20% due 07/18/11................ 1,000,000 992,050 Telefonica Emisones SAU Company Guar. Notes 6.42% due 06/20/16................ 685,000 702,071 ----------- 3,178,394 ----------- Transport-Marine -- 0.1% Ultrapetrol Bahamas, Ltd. 1st Mtg. Bonds 9.00% due 11/24/14................ 525,000 472,500 ----------- Transport-Rail -- 0.1% Canadian National Railway Co. Notes 6.38% due 10/15/11................ 750,000 809,215 ----------- Total Foreign Corporate Bonds & Notes (cost $53,620,846)................ 48,612,101 ----------- FOREIGN GOVERNMENT AGENCIES -- 23.5% Sovereign -- 23.5% Federal Republic of Brazil Bonds 6.00% due 01/17/17................ 4,720,000 4,812,040 Federal Republic of Brazil Bonds 7.13% due 01/20/37................ 3,020,000 3,255,560 Federal Republic of Brazil Notes 8.00% due 01/15/18................ 3,790,000 4,244,800 Federal Republic of Brazil Bonds 8.25% due 01/20/34................ 2,185,000 2,611,075 Federal Republic of Brazil Notes 8.75% due 02/04/25................ 2,525,000 3,093,125 Federal Republic of Brazil Bonds 8.88% due 10/14/19................ 2,110,000 2,605,850 Federal Republic of Brazil Notes 8.88% due 04/15/24................ 495,000 613,800
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------- Sovereign (continued) Federal Republic of Brazil Notes 11.00% due 08/17/40........ $ 4,870,000 $ 6,520,930 Federal Republic of Germany Bonds 4.00% due 01/04/18......... EUR 2,510,000 3,994,281 Federal Republic of Germany Bonds 4.25% due 07/04/14......... EUR 844,000 1,371,279 Federal Republic of Germany Bonds 4.50% due 01/04/13......... EUR 1,505,000 2,468,563 Federal Republic of Germany Bonds 5.25% due 07/04/10......... EUR 760,000 1,244,831 Federal Republic of Germany Bonds 5.50% due 01/04/31......... EUR 500,000 891,472 Government of Australia Bonds 5.75% due 06/15/11......... AUD 9,180,000 8,295,946 Government of Australia Bonds 7.50% due 09/15/09......... AUD 1,960,000 1,820,883 Government of France Bonds 4.75% due 04/25/35......... EUR 690,000 1,104,642 Government of Japan Bonds 1.40% due 06/20/12......... JPY 175,000,000 1,806,011 Government of Japan Bonds 1.40% due 12/20/15......... JPY 1,080,000,000 11,191,619 Government of Norway Bonds 6.00% due 05/16/11......... NOK 5,620,000 1,149,140 Government of Switzerland Bonds 3.50% due 08/07/10......... CHF 9,800,000 10,092,194 Kingdom of Denmark Bonds 4.00% due 08/15/08......... DKK 9,975,000 2,109,902 Kingdom of Denmark Bonds 5.00% due 11/15/13......... DKK 19,800,000 4,421,733 Kingdom of Norway Bonds 5.50% due 05/15/09......... NOK 20,470,000 4,035,983 Kingdom of Norway Bonds 6.50% due 05/15/13......... NOK 57,750,000 12,436,774 Kingdom of Spain Bonds 5.75% due 07/30/32......... EUR 405,000 731,939 Kingdom of Sweden Bonds 4.00% due 12/01/09......... SEK 8,760,000 1,477,532
41 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ------------------------------------------------------ FOREIGN GOVERNMENT AGENCIES (continued) Sovereign (continued) Kingdom of Sweden Bonds 4.50% due 08/12/15..... SEK6,810,000 $1,188,972 Kingdom of Sweden Bonds 5.00% due 01/28/09..... SEK20,430,000 3,460,328 Poland Government Bond Bonds 4.75% due 04/25/12..... PLN3,100,000 1,322,121 Republic of Argentina Notes 5.25% due 12/31/38(8).. 5,349,761 1,925,914 Republic of Argentina Notes 8.28% due 12/31/33..... 1,037,729 850,938 Republic of Colombia Bonds 7.38% due 09/18/37..... 4,565,000 4,895,962 Republic of Colombia Bonds 12.00% due 10/22/15.... COP 3,760,000,000 2,146,253 Republic of Columbia Bonds 8.13% due 05/21/24..... 710,000 825,730 Republic of Ecuador Bonds 10.00% due 08/15/30(8). 550,000 532,125 Republic of Greece Senior Notes 4.50% due 09/20/37..... EUR1,365,000 1,952,035 Republic of Indonesia Bonds 6.63% due 02/17/37..... 2,980,000 2,775,381 Republic of Indonesia Bonds 6.88% due 01/17/18*.... 1,080,000 1,131,300 Republic of Indonesia Bonds 7.50% due 01/15/16..... 470,000 512,094 Republic of Indonesia Notes 8.50% due 10/12/35..... 1,300,000 1,472,929 Republic of Pakistan Bonds 6.88% due 06/01/17*.... 810,000 696,600 Republic of Peru Notes 7.35% due 07/21/25..... 1,860,000 2,092,500 Republic of Peru Bonds 8.75% due 11/21/33..... 720,000 936,000 Republic of Philippines Bonds 7.75% due 01/14/31..... 2,985,000 3,331,857 Republic of Philippines Notes 8.00% due 01/15/16..... 1,430,000 1,630,200
Market Principal Value Security Description Amount** (Note 2) --------------------------------------------------- Sovereign (continued) Republic of Philippines Notes 8.88% due 03/17/15...... EUR 1,430,000 $1,687,400 Republic of Philippines Senior Notes 9.50% due 02/02/30...... 630,000 822,150 Republic of South Africa Bonds 5.88% due 05/30/22...... 1,880,000 1,768,380 Republic of Turkey Notes 6.88% due 03/17/36...... 1,660,000 1,472,420 Republic of Turkey Notes 7.00% due 06/05/20...... 2,120,000 2,088,200 Republic of Turkey Notes 7.25% due 03/15/15...... 2,680,000 2,820,700 Republic of Turkey Notes 7.25% due 03/05/38...... 1,500,000 1,421,250 Republic of Turkey Notes 7.38% due 02/05/25...... 730,000 724,525 Republic of Turkey Notes 8.00% due 02/14/34...... 740,000 758,500 Republic of Turkey Notes 9.50% due 01/15/14...... 1,840,000 2,141,300 Republic of Turkey Senior Notes 11.88% due 01/15/30..... 1,870,000 2,760,588 Republic of Uruguay Notes 7.63% due 03/21/36...... 1,400,000 1,417,500 Republic of Uruguay Bonds 8.00% due 11/18/22...... 3,120,000 3,338,400 Republic of Uruguay Notes 9.25% due 05/17/17...... 400,000 473,000 Republic of Venezuela Bonds 5.75% due 02/26/16...... 1,170,000 918,450 Republic of Venezuela Bonds 6.00% due 12/09/20...... 540,000 383,400 Republic of Venezuela Bonds 7.00% due 12/01/18...... 700,000 567,000 Republic of Venezuela Notes 8.50% due 10/08/14...... 790,000 732,725 Republic of Venezuela Bonds 9.25% due 09/15/27...... 930,000 883,500
42 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- FOREIGN GOVERNMENT AGENCIES (continued) Sovereign (continued) Republic of Venezuela Bonds 9.38% due 01/13/34................. EUR 1,640,000 $ 1,508,800 Russian Federation Bonds 7.50% due 03/31/30(8).............. 11,711,650 13,485,965 Ukrainian Soviet Socialist Republic Bonds 6.75% due 11/14/17*................ 1,300,000 1,280,500 United Mexican States Notes 5.63% due 01/15/17................. 6,560,000 6,894,560 United Mexican States Notes 6.05% due 01/11/40................. 600,000 598,500 United Mexican States Notes 6.75% due 09/27/34................. 3,190,000 3,558,445 United Mexican States Bonds 7.50% due 04/08/33................. 1,210,000 1,467,125 United Mexican States Bonds 8.30% due 08/15/31................. 650,000 854,750 ------------ Total Foreign Government Agencies (cost $180,468,043)................ 188,909,176 ------------ FOREIGN GOVERNMENT TREASURIES -- 0.9% Sovereign -- 0.9% New South Wales Treasury Corp. Government Guar. Notes 6.00% due 05/01/12 (cost $7,659,385).................. AUD 8,480,000 7,513,111 ------------ LOANS -- 0.2% (5)(6)(17)(18) Leisure Products -- 0.0% AMC Entertainment Holdings, Inc. First Lien 7.80% due 06/15/12................. 432,723 367,815 ------------ Medical-Drugs -- 0.2% Triax Pharmaceuticals LLC 14.70% due 08/30/11(4)(21)(22)..... 1,515,279 1,362,702 ------------ Total Loans (cost $1,804,179).................. 1,730,517 ------------ U.S. GOVERNMENT AGENCIES -- 17.6% Federal Home Loan Bank -- 0.1% 4.50% due 09/08/08.................. 600,000 605,455 ------------ Federal Home Loan Mtg. Corp. -- 9.0% 4.13% due 07/12/10.................. 300,000 311,470 4.35% due 06/02/08.................. 600,000 601,929 4.50% due 02/01/20.................. 185,816 185,065 4.50% due 08/01/20.................. 375,142 373,625 4.50% due 01/15/34.................. 4,055,000 3,950,057 4.75% due 01/18/11.................. 310,000 327,373 5.00% due 09/01/18.................. 425,290 431,585 5.00% due 07/01/20.................. 686,149 694,565 5.00% due 11/15/28.................. 730,000 746,490 5.00% due 09/15/31.................. 935,000 943,628
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- Federal Home Loan Mtg. Corp. (continued) 5.00% due 02/01/34.................... $ 429,819 $ 426,837 5.00% due 05/01/34.................... 273,335 271,251 5.00% due 10/15/34.................... 4,050,000 3,938,250 5.00% due 02/01/35.................... 620,321 615,591 5.00% due 07/01/35.................... 1,046,085 1,037,440 5.00% due 08/01/35.................... 915,355 907,791 5.00% due 10/01/35.................... 5,574,530 5,528,465 5.00% due 04/01/36.................... 534,350 529,934 5.00% due 05/01/36.................... 375,976 372,671 5.00% due 08/01/36.................... 450,585 446,624 5.00% due 11/01/37.................... 4,521,938 4,481,759 5.32% due 12/01/35(3)................. 398,030 403,654 5.47% due 03/01/36(3)................. 267,914 269,335 5.50% due 11/15/25.................... 6,000,000 6,248,005 5.50% due 06/15/31.................... 1,724,000 1,771,277 5.50% due 07/01/35.................... 2,338,777 2,366,135 5.50% due 05/01/37.................... 5,768,794 5,830,825 5.50% due 06/01/37.................... 436,919 441,618 5.50% due 10/01/37.................... 11,167,698 11,287,782 5.50% due 11/01/37.................... 2,004,252 2,025,803 5.50% due 12/01/37.................... 1,425,000 1,440,322 5.79% due 01/01/37(3)................. 762,328 777,264 5.81% due 01/01/37(3)................. 176,616 178,484 5.96% due 10/01/36(3)................. 1,057,574 1,076,998 6.00% due 10/01/37.................... 8,398,599 8,620,152 6.19% due 09/01/36(3)................. 594,752 607,018 6.50% due 05/01/29.................... 6,056 6,346 6.50% due 02/01/35.................... 209,233 217,792 6.88% due 09/15/10.................... 1,156,000 1,275,853 7.00% due 06/01/29.................... 13,510 14,353 Federal Home Loan Mtg. Corp. REMIC Series 41, Class F 10.00% due 05/15/20(1)............... 12,527 13,258 Series 1103, Class N 11.57% due 06/15/21(1)(15)........... 8,528 1,867 ----------- 71,996,541 ----------- Federal National Mtg. Assoc. -- 8.4% 2.50% due 04/09/10.................... 4,000,000 4,015,888 4.47% due 02/01/34(3)................. 429,786 431,673 4.50% due 06/01/19.................... 476,022 475,213 4.68% due 10/01/35(3)................. 207,734 210,270 4.75% due 12/15/10.................... 375,000 396,032 4.86% due 01/01/35(3)................. 853,910 867,183 5.00% due 06/01/19.................... 229,768 232,748 5.00% due 01/01/23.................... 2,490,419 2,516,413 5.00% due 11/25/30.................... 900,000 906,516 5.00% due 03/01/34.................... 280,268 278,010 5.00% due 05/01/35.................... 127,541 126,420 5.00% due 10/01/35.................... 2,609,454 2,586,517 5.00% due 02/01/37.................... 264,747 262,283 5.00% due 04/01/37.................... 1,721,265 1,704,977 5.00% due 05/01/37.................... 2,057,810 2,038,338 5.00% due 06/01/37.................... 781,628 774,233 5.00% due 07/01/37.................... 281,876 279,209 5.25% due 08/01/12.................... 300,000 314,595
43 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount** (Note 2) ----------------------------------------------------------------- U.S. GOVERNMENT AGENCIES (continued) Federal National Mtg. Assoc. (continued) 5.47% due 01/01/37(3)................. $ 3,734,523 $ 3,799,279 5.50% due 11/01/19.................... 1,383,122 1,417,122 5.50% due 08/01/20.................... 317,058 324,540 5.50% due 11/01/22.................... 927,304 947,421 5.50% due 01/01/29.................... 7,845 7,963 5.50% due 02/01/35.................... 512,921 518,820 5.50% due 12/01/35.................... 689,740 697,674 5.50% due 02/01/36(3)................. 320,696 327,321 5.50% due 11/01/36.................... 538,818 544,584 5.50% due 12/01/36.................... 759,480 767,606 5.50% due 04/01/37.................... 451,513 456,213 5.50% TBA due April................... 11,380,000 11,486,687 6.00% due 02/01/32.................... 101,775 105,008 6.00% due 05/01/34.................... 18,398 18,912 6.00% due 10/01/34.................... 484,622 498,164 6.00% due 06/01/35.................... 176,516 181,143 6.00% due 07/01/37.................... 3,298,991 3,382,489 6.00% due 10/01/37.................... 705,342 723,195 6.00% TBA due April................... 4,620,000 4,732,612 6.50% due 04/01/34.................... 213,019 221,335 6.50% due 02/01/35.................... 78,527 81,485 6.50% due 07/01/37.................... 4,153,411 4,305,193 6.50% due 10/01/37.................... 2,767,652 2,868,792 6.50% due 11/01/37.................... 10,350,000 10,728,229 7.50% due 01/01/30.................... 14,488 15,665 7.50% due 09/01/30.................... 3,407 3,677 8.00% due 11/01/28.................... 20,503 22,345 13.00% due 11/01/15................... 4,291 4,952 Federal National Mtg. Assoc. REMIC Series D, Class 10 8.80% due 01/25/19(1)................ 34,179 37,566 Series E, Class 11 10.40% due 04/25/19(1)............... 4,958 5,422 ------------ 67,647,932 ------------ Government National Mtg. Assoc. -- 0.1% 6.00% TBA due April................... 890,000 918,369 7.50% due 07/15/27.................... 16,231 17,512 7.50% due 10/15/27.................... 64,546 69,639 ------------ 1,005,520 ------------ Total U.S. Government Agencies (cost $139,225,476).................. 141,255,448 ------------ U.S. GOVERNMENT TREASURIES -- 3.2% United States Treasury Bonds -- 0.4% 3.63% due 04/15/28 TIPS(23)........... 1,252,656 1,624,343 4.75% due 02/15/37.................... 450,000 483,996 5.00% due 05/15/37.................... 1,192,000 1,333,457 6.25% due 08/15/23.................... 166,000 204,323 ------------ 3,646,119 ------------ United States Treasury Notes -- 2.8% 2.13% due 01/31/10.................... 8,750,000 8,824,515 2.75% due 02/28/13.................... 305,000 309,194 2.88% due 01/31/13.................... 535,000 545,324 3.50% due 02/15/18.................... 264,000 265,526
Principal Market Amount**/ Value Security Description Shares (Note 2) ------------------------------------------------------------------- United States Treasury Notes (continued) 3.88% due 05/15/10......................... $ 175,000 $ 183,230 3.88% due 09/15/10......................... 7,000 7,375 4.00% due 02/15/15......................... 7,000,000 7,527,184 4.25% due 11/15/17......................... 525,000 560,150 4.38% due 12/15/10......................... 101,000 108,141 4.50% due 02/15/16......................... 669,000 736,422 4.50% due 05/15/17......................... 2,150,000 2,336,446 4.63% due 12/31/11......................... 500,000 545,938 4.75% due 05/31/12......................... 300,000 329,063 ----------- 22,278,508 ----------- Total U.S. Government Treasuries (cost $24,664,991)........................ 25,924,627 ----------- COMMON STOCK -- 0.5% Casino Services -- 0.0% Shreveport Gaming Holdings, Inc.+(4)(5)(6). 2,441 55,850 ----------- Cellular Telecom -- 0.2% iPCS, Inc.(4)(5)(6)........................ 60,413 1,410,644 ----------- Independent Power Producers -- 0.1% Calpine Corp.+............................. 32,976 607,418 Mirant Corp.+.............................. 1,929 70,196 ----------- 677,614 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC+(4)(5)(6)(20).... 128,418 53,936 ----------- Medical-Hospitals -- 0.1% MedCath Corp.+............................. 30,367 552,679 ----------- Medical-Outpatient/Home Medical -- 0.0% Critical Care Systems International, Inc.+(4)(5)(6)............................ 4,107 41 ----------- Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc.+........... 5,460 4,914 ----------- Oil-Field Services -- 0.1% Trico Marine Services, Inc.+............... 22,008 857,652 ----------- Total Common Stock (cost $2,301,260)......................... 3,613,330 ----------- PREFERRED STOCK -- 0.6% Banks-Money Center -- 0.1% Santander Finance Preferred SA 4.00%..................................... 32,800 557,600 ----------- Banks-Super Regional -- 0.0% Wachovia Capital Trust IX 6.38%..................................... 12,800 273,152 ----------- Diversified Financial Services -- 0.0% General Electric Capital Corp. 8.00%(8).................................. 16,000 384,480 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC, Class C(4)(5)(6)(20)...................... 39,177 78,353 -----------
44 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------------- PREFERRED STOCK (continued) Medical-Generic Drugs -- 0.1% Mylan, Inc. 6.50%...................................... 800 $ 691,488 ------------ Oil Companies-Exploration & Production -- 0.3% EXCO Resources, Inc. Convertible Series A-1 7.00%(4)(6)(9)............................. 190 2,109,000 Transmeridian Exploration, Inc. Convertible 15.00%(4)(9)............................... 3,852 154,080 ------------ 2,263,080 ------------ Special Purpose Entity -- 0.1% Structured Repackaged Asset-Backed Trust Securities 3.00%(3)................................... 29,200 499,320 ------------ Total Preferred Stock (cost $5,355,702).......................... 4,747,473 ------------ WARRANTS -- 0.0%+ Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc. Expires 12/15/10 (strike price $4.31)(4)... 13,811 1,381 ------------ Telecom Services -- 0.0% Leap Wireless International, Inc. Expires 04/15/10 (strike price $96.80) *(4)(5)............................ 500 0 ------------ Total Warrants (cost $39,260)............................. 1,381 ------------ Total Long-Term Investment Securities (cost $761,279,529)........................ 745,030,719 ------------ SHORT-TERM INVESTMENT SECURITIES -- 3.4% Time Deposits -- 3.4% Euro Time Deposit with State Street Bank & Trust Co. 0.60% due 04/01/08......................... $ 382,000 382,000 Euro Time Deposit with State Street Bank & Trust Co. 1.50% due 04/01/08......................... 26,781,000 26,781,000 ------------ Total Short-Term Investment Securities (cost $27,163,000)......................... 27,163,000 ------------ REPURCHASE AGREEMENTS -- 3.9% State Street Bank & Trust Co. Joint Repurchase Agreement(19)................... 2,471,000 2,471,000
Market Principal Value Security Description Amount** (Note 2) ---------------------------------------------------------------- REPURCHASE AGREEMENTS (continued) UBS Securities, LLC Joint Repurchase Agreement(19).......... $28,650,000 $ 28,650,000 ------------ Total Repurchase Agreements (cost $31,121,000)................ 31,121,000 ------------ TOTAL INVESTMENTS -- (cost $819,563,529)(16)........... 100.1% 803,314,719 Liabilities in excess of other assets (0.1) (1,062,712) ----------- ------------ NET ASSETS -- 100.0% $802,252,007 =========== ============
- -------- * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At March 31, 2008, the aggregate value of these securities was $65,030,167 representing 8.1% 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 March 31, 2008, maturity date reflects the stated maturity 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 March 31, 2008. (4) Fair valued security; see Note 2 (5) Illiquid security (6) 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 March 31, 2008, the Strategic Bond Fund held the following restricted securities:
Market Acquisi- Principal Acquisi- Value % of tion Amount/ tion Market per Net Name Date Shares Cost Value Share Assets ---- ---------- --------- -------- -------- ------ ------ AMC Entertainment Holdings, Inc. 7.80% due 06/15/12............ 06/08/2007 $400,000 $390,000 09/27/2007 11,051 11,051 12/20/2007 11,014 11,014 03/19/2008 10,658 11,918 -------- -------- 432,723 423,983 $367,815 $85.00 0.05% Critical Care Systems International, Inc. Common Stock........ 07/20/2006 4,107 37,181 41 0.01 0.00
45 SunAmerica Strategic Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Acquisi- Principal Acquisi- Value % of tion Amount/ tion Market per Net Name Date Shares Cost Value Share Assets ---- ---------- ---------- ---------- ---------- --------- ------ EXCO Resources, Inc. Convertible Preferred Stock Series A-1, 7.00%..... 03/29/2007 $ 37 $ 370,000 09/20/2007 153 1,530,000 ---------- ---------- 190 1,900,000 $2,109,000 11,100.00 0.26 ICO North America, Inc. 7.50% due 08/15/09....... 08/11/2005 200,000 200,000 04/19/2006 65,000 80,925 03/05/2008 10,000 10,000 ---------- ---------- 275,000 290,925 236,500 86.00 0.03 iPCS, Inc. Common Stock.......... 07/28/2005 1,283 0 07/20/2004 59,130 916,511 ---------- ---------- 60,413 916,511 1,410,644 23.35 0.18 Shreveport Gaming Holdings, Inc. Common Stock.......... 07/29/2005 2,047 47,128 07/21/2005 394 9,073 ---------- ---------- 2,441 56,201 55,850 22.88 0.01 Southern Energy, Inc. 7.90% due 07/15/09....... 01/25/2006 1,125,000 0 06/06/2006 425,000 0 ---------- ---------- 1,550,000 0 0 0.00 0.00 Triax Pharmaceuticals 14.70% due 08/30/11....... 08/31/2007 1,500,000 1,348,961 10/31/2007 3,875 3,875 01/10/2008 11,404 11,404 ---------- ---------- 1,515,279 1,364,240 1,362,702 90.00 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 ========== ==== $5,674,841 0.72% ========== ====
(7) Bond in default (8) "Step-up" security where the rate increases ("steps-up") at a predetermined rate. Rate shown reflects the increased rate. (9) PIK ("Payment-in-Kind") security. Bond or preferred stock that pays interest/dividends in the form of additional bonds or preferred stocks. (10) Variable Rate Security -- the rate reflected is as of March 31, 2008, maturity date reflects next reset date. (11) Company has filed Chapter 11 bankruptcy protection. (12) Bond is in default and did not pay principal at maturity (13) Company has filed Chapter 7 bankruptcy. (14) Perpetual maturity -- maturity date reflects the next call date. (15) Interest Only (16) See Note 5 for cost of investments on a tax basis. (17) 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. (18) 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. (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 11 for details (23) Principal amount of security is adjusted for inflation. (24) Bond is in default in country of issuance. REMIC --Real Estate Mortgage Investment Conduit TIPS --Treasury Inflation Protected Security 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 COP-- Columbian Peso DKK-- Danish Krone EUR-- Euro JPY-- Japanese Yen NOK-- Norwegian Krone PLN-- Polish Zloty SEK-- Swedish Krona See Notes to Financial Statements 46 SunAmerica High Yield Bond Fund PORTFOLIO PROFILE -- March 31, 2008 -- (unaudited) Industry Allocation* Oil Companies-Exploration & Production.. 5.9% Medical-Hospitals....................... 5.7 Special Purpose Entities................ 5.1 Cellular Telecom........................ 4.2 Transport-Air Freight................... 4.0 Casino Hotels........................... 3.1 Telecom Services........................ 2.7 Repurchase Agreements................... 2.6 Paper & Related Products................ 2.5 Chemicals-Specialty..................... 2.5 Pipelines............................... 2.5 Finance-Auto Loans...................... 2.4 Electric-Generation..................... 2.4 Cable TV................................ 2.3 Electric-Integrated..................... 2.3 Oil-Field Services...................... 2.1 Metal-Diversified....................... 1.9 Medical-Drugs........................... 1.9 Television.............................. 1.8 Investment Management/Advisor Services.. 1.5 Diversified Manufacturing Operations.... 1.5 Containers-Metal/Glass.................. 1.4 Independent Power Producers............. 1.3 Auto-Cars/Light Trucks.................. 1.3 Publishing-Periodicals.................. 1.3 Electronic Components-Semiconductors.... 1.2 Telephone-Integrated.................... 1.2 Diversified Financial Services.......... 1.1 Satellite Telecom....................... 1.1 Medical Products........................ 1.0 Agricultural Chemicals.................. 1.0 Physicians Practice Management.......... 0.9 Food-Meat Products...................... 0.9 Gambling (Non-Hotel).................... 0.9 Computer Services....................... 0.9 Casino Services......................... 0.9 Travel Services......................... 0.8 Retail-Drug Store....................... 0.8 Rental Auto/Equipment................... 0.8 Insurance Brokers....................... 0.7 Containers-Paper/Plastic................ 0.7 Recycling............................... 0.7 Direct Marketing........................ 0.7 Printing-Commercial..................... 0.6 Medical-HMO............................. 0.6 Consumer Products-Misc.................. 0.6 Real Estate Investment Trusts........... 0.6 Non-Hazardous Waste Disposal............ 0.6 Steel-Producers......................... 0.6 Theaters................................ 0.5 Storage/Warehousing..................... 0.5 Retail-Restaurants...................... 0.5 Electronic Components-Misc.............. 0.5 Medical Information Systems............. 0.5 Office Automation & Equipment........... 0.5 Airlines................................ 0.4 Electric Products-Misc.................. 0.4 Data Processing/Management.............. 0.4 Hotels/Motels........................... 0.4 Building-Residential/Commercial......... 0.4 Transactional Software.................. 0.4
Human Resources......................... 0.4% Home Furnishings........................ 0.3 Building & Construction Products-Misc... 0.3 Beverages-Non-alcoholic................. 0.3 Medical-Generic Drugs................... 0.3 Auto/Truck Parts & Equipment-Original... 0.3 Medical-Nursing Homes................... 0.3 Multimedia.............................. 0.3 Food-Misc............................... 0.3 Finance-Mortgage Loan/Banker............ 0.3 Research & Development.................. 0.3 Broadcast Services/Program.............. 0.3 Leisure Products........................ 0.3 Rubber-Tires............................ 0.3 Building & Construction-Misc............ 0.3 Energy-Alternate Sources................ 0.3 Decision Support Software............... 0.2 Funeral Services & Related Items........ 0.2 Poultry................................. 0.2 Retail-Petroleum Products............... 0.2 Building Products-Wood.................. 0.2 Applications Software................... 0.2 Transport-Services...................... 0.2 Medical-Biomedical/Gene................. 0.1 Building Products-Doors & Windows....... 0.1 Vitamins & Nutrition Products........... 0.1 ---- 98.1% ====
Credit Quality+# BBB....... 0.5% BB........ 18.5 B......... 48.4 CCC....... 24.0 Below C... 0.5 Not Rated@ 8.1 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Represents debt issues that either have no rating or the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. See Notes to Financial Statements 47 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- CONVERTIBLE BONDS & NOTES -- 0.5% Electronic Components-Semiconductors -- 0.4% Advanced Micro Devices, Inc. Senior Notes 6.00% due 05/01/15*....................... $ 50,000 $ 31,437 Spansion, Inc. Senior Sub. Notes 2.25% due 06/15/16*....................... 1,845,000 827,944 ---------- 859,381 ---------- Medical-Biomedical/Gene -- 0.1% Nektar Therapeutics Sub. Notes 3.25% due 09/28/12........................ 250,000 193,125 ---------- Telecom Services -- 0.0% ICO North America, Inc. Notes 7.50% due 08/15/09(1)(2)(3)............... 78,000 67,080 ---------- Total Convertible Bonds & Notes (cost $1,885,160)......................... 1,119,586 ---------- CORPORATE BONDS & NOTES -- 73.8% Agricultural Chemicals -- 1.0% Mosaic Global Holdings, Inc. Debentures 7.38% due 08/01/18........................ 405,000 413,100 The Mosaic Co. Senior Notes 7.63% due 12/01/16*....................... 1,475,000 1,585,625 ---------- 1,998,725 ---------- Airlines -- 0.5% American Airlines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.82% due 05/23/11........................ 800,000 754,000 United AirLines, Inc. Pass Through Certs. Series 2001-1, Class A-2 6.20% due 09/01/08........................ 176,914 176,471 ---------- 930,471 ---------- Applications Software -- 0.2% SS&C Technologies, Inc. Company Guar. Notes 11.75% due 12/01/13....................... 375,000 372,188 ---------- Auto-Cars/Light Trucks -- 1.3% Ford Motor Co. Debentures 6.38% due 02/01/29........................ 1,615,000 969,000 General Motors Corp. Debentures 8.25% due 07/15/23........................ 2,310,000 1,617,000 ---------- 2,586,000 ---------- Auto/Truck Parts & Equipment-Original -- 0.3% Lear Corp. Senior Notes 8.75% due 12/01/16........................ 735,000 627,506 ----------
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------------- 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 -- 0.1% Cott Beverages USA, Inc. Company Guar. Notes 8.00% due 12/15/11........................... 290,000 234,900 ---------- Broadcast Services/Program -- 0.3% Fisher Communications, Inc. Senior Notes 8.63% due 09/15/14........................... 376,000 379,760 Nexstar Finance, Inc. Senior Notes 11.38% due 04/01/13(4)....................... 200,000 194,250 ---------- 574,010 ---------- Building & Construction Products-Misc. -- 0.3% Interline Brands, Inc. Senior Sub. Notes 8.13% due 06/15/14........................... 250,000 238,750 NTK Holdings, Inc. Senior Notes 10.75% due 03/01/14(4)....................... 875,000 424,375 ---------- 663,125 ---------- Building Products-Wood -- 0.2% Masonite Corp. Company Guar. Notes 11.00% due 04/06/15.......................... 552,000 380,880 ---------- Cable TV -- 2.3% CCH II LLC/CCH II Capital Corp. Senior Notes, Series B 10.25% due 09/15/10.......................... 900,000 816,750 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 10.25% due 10/01/13.......................... 1,597,000 1,369,428 CCH II LLC/CCH II Capital Corp. Company Guar. Notes 11.00% due 10/01/15.......................... 2,861,000 1,966,937 CCO Holdings LLC/CCO Holdings Capital Corp. Senior Notes 8.75% due 11/15/13........................... 295,000 252,225 Charter Communications, Inc. Senior Notes 10.88% due 09/15/14*......................... 400,000 394,000 ---------- 4,799,340 ---------- Casino Hotels -- 3.1% Eldorado Casino Corp. Sec. Bonds 10.00% due 08/01/12(2)(5).................... 1,721,177 1,712,571 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........................... 900,000 769,500
48 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Casino Hotels (continued) MGM Mirage, Inc. Senior Notes 6.63% due 07/15/15.................... $ 250,000 $ 217,500 Turning Stone Resort Casino Enterprise Senior Notes 9.13% due 09/15/14*................... 1,025,000 978,875 ---------- 6,353,446 ---------- Casino Services -- 0.3% Indianapolis Downs LLC Sec. Notes 11.00% due 11/01/12*.................. 830,000 722,100 ---------- Cellular Telecom -- 2.0% Centennial Communications Corp. Senior Notes 10.00% due 01/01/13................... 1,034,000 961,620 Centennial Communications Corp. Senior Notes 10.13% due 06/15/13................... 150,000 148,125 Centennial Communications Corp. Senior Notes 8.45% due 01/01/13(6)................. 785,000 682,950 MetroPCS Wireless, Inc. Senior Notes 9.25% due 11/01/14.................... 1,395,000 1,283,400 Rural Cellular Corp. Senior Sub. Notes 6.08% due 06/01/13(6)................. 1,000,000 1,000,000 ---------- 4,076,095 ---------- Chemicals-Specialty -- 2.5% Huntsman International LLC Company Guar. Notes 7.88% due 11/15/14.................... 1,040,000 1,102,400 Johnsondiversey Holdings, Inc. Company Guar. Notes 9.63% due 05/15/12.................... 150,000 147,750 Momentive Performance Materials, Inc. Senior Sub. Notes 11.50% due 12/01/16................... 2,765,000 2,104,856 Tronox Worldwide LLC Company Guar. Notes 9.50% due 12/01/12.................... 2,100,000 1,795,500 ---------- 5,150,506 ---------- Computer Services -- 0.5% Compucom Systems, Inc. Senior Sub. Notes 12.50% due 10/01/15*.................. 1,000,000 935,000 ---------- Consumer Products-Misc. -- 0.6% American Achievement Corp. Senior Sub. Notes 8.25% due 04/01/12.................... 262,000 233,835
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ Consumer Products-Misc. (continued) Visant Holding Corp. Senior Notes 8.75% due 12/01/13....................... $ 140,000 $ 130,900 Visant Holding Corp. Senior Notes 10.25% due 12/01/13(4)................... 955,000 892,925 ---------- 1,257,660 ---------- Containers-Metal/Glass -- 0.6% Crown Cork & Seal Co., Inc. Debentures 8.00% due 04/15/23....................... 1,000,000 930,000 Owens-Brockway Glass Container, Inc. Company Guar. Notes 8.25% due 05/15/13....................... 305,000 315,675 ---------- 1,245,675 ---------- Containers-Paper/Plastic -- 0.7% Jefferson Smurfit Corp. Company Guar. Notes 8.25% due 10/01/12....................... 545,000 491,181 Smurfit-Stone Container Enterprises, Inc. Senior Notes 8.00% due 03/15/17....................... 1,205,000 1,012,200 ---------- 1,503,381 ---------- Data Processing/Management -- 0.4% Seitel, Inc. Senior Notes 9.75% due 02/15/14....................... 1,075,000 905,688 ---------- Decision Support Software -- 0.2% Vangent, Inc. Senior Sub. Notes 9.63% due 02/15/15....................... 575,000 461,438 ---------- Direct Marketing -- 0.7% Affinity Group, Inc. Senior Sub. Notes 9.00% due 02/15/12....................... 1,500,000 1,385,625 ---------- Diversified Manufacturing Operations -- 1.0% Harland Clarke Holdings Corp. Notes 7.82% due 05/15/15(6).................... 500,000 310,000 Harland Clarke Holdings Corp. Notes 9.50% due 05/15/15....................... 725,000 529,250 Indalex Holding Corp. Sec. Notes 11.50% due 02/01/14...................... 575,000 468,625 Sally Holdings LLC Company Guar. Notes 10.50% due 11/15/16...................... 785,000 726,125 ---------- 2,034,000 ----------
49 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Electric-Generation -- 2.4% Edison Mission Energy Senior Notes 7.20% due 05/15/19......................... $1,420,000 $1,402,250 Edison Mission Energy Senior Notes 7.63% due 05/15/27......................... 590,000 554,600 Reliant Energy Mid-Atlantic Power Holdings LLC Pass Through Certs. Series B 9.24% due 07/02/17......................... 329,676 344,511 The AES Corp. Senior Notes 7.75% due 10/15/15......................... 1,185,000 1,193,888 The AES Corp. Senior Notes 8.00% due 10/15/17......................... 1,345,000 1,361,812 ---------- 4,857,061 ---------- Electric-Integrated -- 2.3% Energy Future Holdings Corp. Company Guar. Notes 10.88% due 11/01/17*....................... 925,000 934,250 Mirant Americas Generation LLC Senior Notes 8.30% due 05/01/11......................... 1,055,000 1,076,100 Mirant Americas Generation LLC Senior Notes 8.50% due 10/01/21......................... 740,000 671,550 Southern Energy, Inc. Notes 7.90% due 07/15/09+(1)(2)(3)............... 3,525,000 0 Texas Competitive Electric Holdings Co. LLC Senior Notes 10.25% due 11/01/15*(2)(3)................. 1,280,000 1,275,200 Texas Competitive Electric Holdings Co. LLC Senior Notes 10.25% due 11/01/15*....................... 215,000 214,194 Texas Competitive Electric Holdings Co. LLC Senior Notes 10.50% due 11/01/16*....................... 595,000 583,100 ---------- 4,754,394 ---------- Electronic Components-Semiconductors -- 0.8% Amkor Technology, Inc. Senior Notes 7.75% due 05/15/13......................... 395,000 360,438 Amkor Technology, Inc. Senior Notes 9.25% due 06/01/16......................... 320,000 308,000 Freescale Semiconductor, Inc. Senior Notes 9.13% due 12/15/14......................... 635,000 463,550 Freescale Semiconductor, Inc. Senior Sub. Notes 10.13% due 12/15/16........................ 545,000 367,875 Spansion, Inc. Senior Notes 11.25% due 01/15/16*....................... 115,000 70,150 ---------- 1,570,013 ----------
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- Energy-Alternate Sources -- 0.3% VeraSun Energy Corp. Senior Notes 9.38% due 06/01/17*.................. $ 265,000 $ 181,525 VeraSun Energy Corp. Sec. Notes 9.88% due 12/15/12................... 370,000 342,250 ---------- 523,775 ---------- Finance-Auto Loans -- 2.4% Ford Motor Credit Co. LLC Senior Notes 7.38% due 10/28/09................... 2,740,000 2,496,504 GMAC LLC Senior Notes 6.88% due 09/15/11................... 3,145,000 2,407,070 ---------- 4,903,574 ---------- Finance-Mortgage Loan/Banker -- 0.3% Residential Capital LLC Company Guar. Notes 6.38% due 06/30/10................... 1,185,000 595,463 ---------- Food-Misc. -- 0.3% Wornick Co. Sec. Notes 10.88% due 07/15/11+(8)(9)........... 950,000 598,500 ---------- Funeral Services & Related Items -- 0.2% Service Corp. International Senior Notes 7.00% due 06/15/17................... 470,000 453,550 ---------- Gambling (Non-Hotel) -- 0.9% Downstream Development Authority Senior Notes 12.00% due 10/15/15*................. 800,000 632,000 Greektown Holdings LLC Senior Notes 10.75% due 12/01/13*................. 600,000 546,000 Waterford Gaming LLC Senior Notes 8.63% due 09/15/14*.................. 691,000 659,905 ---------- 1,837,905 ---------- Home Furnishings -- 0.4% Simmons Co. Company Guar. Notes 7.88% due 01/15/14................... 265,000 217,300 Simmons Co. Senior Notes 10.00% due 12/15/14(4)............... 785,000 506,325 ---------- 723,625 ---------- Hotel/Motel -- 0.4% Gaylord Entertainment Co. Company Guaranteed Notes 8.00% due 11/15/13................... 950,000 881,125 ----------
50 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Human Resources -- 0.4% Team Health, Inc. Company Guar. Notes 11.25% due 12/01/13........................ $ 800,000 $ 768,000 ---------- Independent Power Producers -- 1.0% NRG Energy, Inc. Company Guar. Notes 7.38% due 02/01/16......................... 1,205,000 1,180,900 Orion Power Holdings, Inc. Senior Notes 12.00% due 05/01/10........................ 300,000 327,750 Reliant Energy, Inc. Senior Notes 7.88% due 12/31/17......................... 570,000 567,150 ---------- 2,075,800 ---------- Insurance Brokers -- 0.7% USI Holdings Corp. Senior Notes 6.94% due 11/15/14*(6)..................... 725,000 523,813 USI Holdings Corp. Senior Sub. Notes 9.75% due 05/15/15*........................ 1,375,000 993,437 ---------- 1,517,250 ---------- Investment Management/Advisor Services -- 1.5% LVB Acquisition Merger Sub, Inc. Senior Notes 10.00% due 10/15/17*....................... 635,000 665,163 LVB Acquisition Merger Sub, Inc. Senior Notes 10.38% due 10/15/17*....................... 1,545,000 1,602,937 LVB Acquisition Merger Sub, Inc. Senior Sub. Notes 11.63% due 10/15/17*....................... 875,000 875,000 ---------- 3,143,100 ---------- Medical Information Systems -- 0.5% Spheris, Inc. Senior Sub. Notes 11.00% due 12/15/12........................ 1,175,000 981,125 ---------- Medical Products -- 1.0% ReAble Therapeutics Finance LLC Senior Notes 10.88% due 11/15/14*....................... 70,000 65,800 ReAble Therapeutics Finance LLC Company Guar. Notes 11.75% due 11/15/14........................ 830,000 726,250 Universal Hospital Services, Inc. Senior Notes 8.29% due 06/01/15(6)...................... 685,000 609,650 Universal Hospital Services, Inc. Senior Bonds 8.50% due 06/01/15......................... 715,000 715,000 ---------- 2,116,700 ----------
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Medical-HMO -- 0.6% Multiplan, Inc. Senior Sub. Notes 10.38% due 04/15/16*.................... $1,375,000 $1,258,125 ---------- Medical-Hospitals -- 4.5% Community Health Systems, Inc. Senior Notes 8.88% due 07/15/15...................... 2,720,000 2,730,200 HCA, Inc. Senior Notes 6.25% due 02/15/13...................... 710,000 617,700 HCA, Inc. Senior Notes 8.75% due 09/01/10...................... 165,000 165,000 HCA, Inc. Senior Notes 9.13% due 11/15/14...................... 545,000 561,350 HCA, Inc. Senior Notes 9.25% due 11/15/16...................... 3,075,000 3,190,312 HCA, Inc. Senior Notes 9.63% due 11/15/16...................... 950,000 985,625 IASIS Healthcare LLC/IASIS Capital Corp. Bank Guar. Notes 8.75% due 06/15/14...................... 965,000 960,175 ---------- 9,210,362 ---------- Medical-Nursing Homes -- 0.3% Sun Healthcare Group, Inc. Senior Notes 9.13% due 04/15/15...................... 650,000 627,250 ---------- Metal Processors & Fabrication -- 0.0% International Utility Structures Senior Sub Notes 10.75% due 02/01/08+(1)(2)(8)(10)....... 2,150,000 43,000 ---------- Metal-Diversified -- 1.9% Freeport-McMoRan Copper & Gold, Inc. Senior Notes 8.38% due 04/01/17...................... 1,830,000 1,942,087 Noranda Aluminium Acquisition Corp. Senior Notes 8.74% due 05/15/15*(6).................. 1,845,000 1,448,325 Noranda Aluminium Holding Corp. Senior Notes 10.49% due 11/15/14*(6)................. 750,000 555,000 ---------- 3,945,412 ---------- Multimedia -- 0.2% Haights Cross Operating Co. Senior Notes 11.75% due 08/15/11..................... 325,000 318,500 ---------- Non-Ferrous Metals -- 0.0% Renco Metals, Inc. Bonds 11.50% due 07/01/03+(1)(2)(11)(12)...... 2,150,000 0 ----------
51 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Non-Hazardous Waste Disposal -- 0.6% Allied Waste North America, Inc. Company Guar. Notes 6.88% due 06/01/17......................... $ 705,000 $ 690,900 Allied Waste North America, Inc. Senior Notes 7.88% due 04/15/13......................... 415,000 426,931 Waste Services, Inc. Senior Sub. Notes 9.50% due 04/15/14......................... 75,000 71,813 ---------- 1,189,644 ---------- Office Automation & Equipment -- 0.5% IKON Office Solutions, Inc. Senior Notes 7.69% due 01/01/12*(6)..................... 1,000,000 961,250 ---------- Oil Companies-Exploration & Production -- 3.3% Atlas Energy Resources LLC Senior Notes 10.75% due 02/01/18*....................... 575,000 582,187 Belden & Blake Corp. Company Guar. Sec. Notes 8.75% due 07/15/12......................... 190,000 190,475 Brigham Exploration Co. Company Guar. Notes 9.63% due 05/01/14......................... 675,000 580,500 Chaparral Energy, Inc. Company Guar. Notes 8.50% due 12/01/15*........................ 760,000 661,200 Chesapeake Energy Corp. Senior Notes 6.63% due 01/15/16......................... 875,000 857,500 Dune Energy, Inc. Senior Sec. Notes 10.50% due 06/01/12........................ 400,000 348,000 Encore Acquisition Co. Senior Sub. Notes 6.00% due 07/15/15......................... 365,000 328,500 Energy Partners, Ltd. Senior Notes 9.75% due 04/15/14......................... 820,000 676,500 Hilcorp Energy I LP Senior Notes 7.75% due 11/01/15*........................ 850,000 796,875 Sabine Pass LNG LP Sec. Notes 7.50% due 11/30/16......................... 1,395,000 1,346,175 Transmeridian Exploration, Inc. Company Guar. Notes 12.00% due 12/15/10........................ 650,000 507,000 ---------- 6,874,912 ---------- Oil-Field Services -- 0.9% Allis-Chalmers Energy, Inc. Company Guar. Notes 9.00% due 01/15/14......................... 580,000 527,800
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------ Oil-Field Services (continued) Helix Energy Solutions Group, Inc. Senior Notes 9.50% due 01/15/16*................ $ 475,000 $ 475,000 Key Energy Services, Inc. Senior Notes 8.38% due 12/01/14*................ 375,000 374,063 Oslo Seismic Services, Inc. 1st Mtg. Bonds 8.28% due 06/01/11................. 457,043 486,818 ---------- 1,863,681 ---------- Paper & Related Products -- 1.1% Bowater, Inc. Notes 6.50% due 06/15/13................. 570,000 376,200 Caraustar Industries, Inc. Notes 7.38% due 06/01/09................. 610,000 414,800 Georgia-Pacific Corp. Company Guar. Notes 7.00% due 01/15/15*................ 685,000 642,187 Georgia-Pacific Corp. Company Guar. Notes 7.13% due 01/15/17*................ 365,000 337,625 NewPage Corp. Sec. Notes 10.00% due 05/01/12................ 125,000 126,875 NewPage Corp. Senior Notes 10.00% due 05/01/12*............... 365,000 370,475 ---------- 2,268,162 ---------- Physicians Practice Management -- 0.9% US Oncology, Inc. Senior Sub. Notes 10.75% due 08/15/14................ 1,900,000 1,876,250 ---------- Pipelines -- 2.5% Atlas Pipeline Partners LP Company Guar. Notes 8.13% due 12/15/15................. 610,000 620,675 Copano Energy LLC Company Guar. Notes 8.13% due 03/01/16................. 925,000 957,375 Dynegy Holdings, Inc. Senior Notes 8.75% due 02/15/12................. 25,000 25,688 Dynegy-Roseton Danskammer Pass Through Certs. Series B 7.67% due 11/08/16................. 1,375,000 1,377,585 El Paso Corp. Senior Sub. Notes 6.88% due 06/15/14................. 685,000 700,412 MarkWest Energy Partners LP Senior Notes 6.88% due 11/01/14................. 570,000 538,650 NGC Corp Capital Trust Bonds 8.32% due 06/01/27................. 1,050,000 900,375 ---------- 5,120,760 ----------
52 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) --------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Poultry -- 0.2% Pilgrim's Pride Corp. Senior Sub. Notes 8.38% due 05/01/17.................... $ 495,000 $ 435,600 ---------- Printing-Commercial -- 0.2% Valassis Communications, Inc. Senior Notes 8.25% due 03/01/15.................... 610,000 501,725 ---------- Publishing-Periodicals -- 0.9% Idearc, Inc. Company Guar. Notes 8.00% due 11/15/16.................... 850,000 550,375 R.H. Donnelley Corp. Senior Notes 8.88% due 10/15/17*................... 545,000 340,625 The Reader's Digest Association, Inc. Senior Sub. Notes 9.00% due 02/15/17*................... 1,320,000 881,100 ---------- 1,772,100 ---------- Real Estate Investment Trusts -- 0.6% Omega Healthcare Investors, Inc. Senior Notes 7.00% due 04/01/14.................... 1,280,000 1,228,800 ---------- Recycling -- 0.7% Aleris International, Inc. Company Guar. Notes 9.00% due 12/15/14.................... 1,245,000 908,850 Aleris International, Inc. Company Guar. Notes 10.00% due 12/15/16................... 835,000 530,225 ---------- 1,439,075 ---------- Rental Auto/Equipment -- 0.6% Rental Service Corp. Notes 9.50% due 12/01/14.................... 760,000 634,600 United Rentals North America, Inc. Senior Sub. Notes 7.75% due 11/15/13.................... 745,000 607,175 ---------- 1,241,775 ---------- Research & Development -- 0.3% Alion Science and Technology Corp. Company Guar. Notes 10.25% due 02/01/15................... 1,030,000 581,950 ---------- Retail-Drug Store -- 0.8% Rite Aid Corp. Senior Notes 9.50% due 06/15/17.................... 2,055,000 1,613,175 ---------- Retail-Petroleum Products -- 0.2% Ferrellgas LP Senior Notes 6.75% due 05/01/14.................... 445,000 433,875 ---------- Retail-Regional Department Stores -- 0.0% Neiman-Marcus Group, Inc. Senior Sub. Notes 10.38% due 10/15/15................... 55,000 55,000 ----------
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------------ Retail-Restaurants -- 0.5% Dave & Buster's, Inc. Company Guar. Notes 11.25% due 03/15/14....................... $ 365,000 $ 332,150 NPC International, Inc. Company Guar. Notes 9.50% due 05/01/14........................ 830,000 751,150 ---------- 1,083,300 ---------- Rubber-Tires -- 0.3% Cooper Standard Automotive, Inc. Company Guar. Notes 8.38% due 12/15/14........................ 710,000 537,825 ---------- Rubber/Plastic Products -- 0.0% Venture Holdings Co. LLC Company Guar. Notes 11.00% due 06/01/07+(1)(2)(11)(12)........ 550,000 55 ---------- Special Purpose Entities -- 4.8% AAC Group Holding Corp. Senior Notes 10.25% due 10/01/12(4).................... 1,100,000 891,000 Axcan Intermediate Holdings, Inc. Senior Notes 9.25% due 03/01/15*....................... 550,000 544,500 Buffalo Thunder Development Authority Senior Notes 9.38% due 12/15/14*....................... 610,000 457,500 CCM Merger, Inc. Notes 8.00% due 08/01/13*....................... 850,000 714,000 Chukchansi Economic Development Authority Senior Notes 8.00% due 11/15/13*....................... 1,100,000 990,000 Consolidated Communications Illinois/Texas Holdings, Inc. Senior Notes 9.75% due 04/01/12........................ 810,000 849,488 Hawker Beechcraft Acquisition Co. LLC/ Hawker Beechcraft Notes Co. Senior Notes 9.75% due 04/01/17........................ 725,000 721,375 Hexion US Fin Corp. Company Guar. Notes 9.75% due 11/15/14........................ 910,000 975,975 KAR Holdings, Inc. Senior Notes 7.24% due 05/01/14(6)..................... 500,000 412,500 KAR Holdings, Inc. Senior Notes 8.75% due 05/01/14........................ 290,000 258,100 Local TV Finance LLC Senior Notes 9.25% due 06/15/15*....................... 545,000 436,681 MedCath Holdings Corp. Senior Notes 9.88% due 07/15/12........................ 646,000 675,070
53 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- CORPORATE BONDS & NOTES (continued) Special Purpose Entities (continued) MXEnergy Holdings, Inc. Senior Notes 10.69% due 08/01/11(6).................. $ 900,000 $ 810,000 PNA Intermediate Holding Corp. Senior Notes 10.07% due 02/15/13(6).................. 300,000 233,250 Snoqualmie Entertainment Authority Notes 9.13% due 02/01/15*..................... 625,000 534,375 Southern Star Central Corp. Senior Notes 6.75% due 03/01/16...................... 300,000 288,000 ---------- 9,791,814 ---------- Steel-Producer -- 0.6% Ryerson, Inc. Senior Sec. Notes 12.00% due 11/01/15*.................... 1,215,000 1,148,175 ---------- Storage/Warehousing -- 0.5% Mobile Mini, Inc. Notes 6.88% due 05/01/15...................... 555,000 460,650 Mobile Services Group, Inc. Company Guar. Notes 9.75% due 08/01/14...................... 685,000 640,475 ---------- 1,101,125 ---------- Telecom Services -- 1.8% Cincinnati Bell Telephone Co. Company Guar. Notes 7.18% due 12/15/23...................... 375,000 322,500 Cincinnati Bell Telephone Co. Company Guar. Notes 7.20% due 11/29/23...................... 1,525,000 1,311,500 Fair point Communications, Inc. Senior Notes 13.13% due 04/01/18*.................... 850,000 816,000 PAETEC Holding Corp. Company Guaranteed Notes 9.50% due 07/15/15...................... 1,370,000 1,260,400 ---------- 3,710,400 ---------- Telephone-Integrated -- 1.2% Cincinnati Bell, Inc. Company Guar. Notes 7.00% due 02/15/15...................... 375,000 339,375 Cincinnati Bell, Inc. Senior Notes 7.25% due 06/15/23...................... 225,000 193,500 Citizens Communications Co. Senior Notes 9.00% due 08/15/31...................... 16,000 14,000 Qwest Communications International, Inc. Company Guar. Notes 7.50% due 02/15/14...................... 1,320,000 1,240,800 Sprint Capital Corp. Company Guar. Bonds 6.38% due 05/01/09...................... 650,000 640,250 ---------- 2,427,925 ----------
Market Principal Value Security Description Amount (Note 2) ------------------------------------------------------------- Television -- 1.8% ION Media Networks, Inc. Senior Notes 5.69% due 01/15/12*(6)............ $ 125,000 $ 101,250 ION Media Networks, Inc. Sec. Senior Notes 10.51% due 01/15/13*(6)........... 2,525,000 1,893,750 LIN Television Corp. Senior Sub. Notes 6.50% due 05/15/13................ 1,025,000 950,687 Young Broadcasting, Inc. Senior Sub. Notes 8.75% due 01/15/14................ 685,000 404,150 Young Broadcasting, Inc. Company Guar. Notes 10.00% due 03/01/11............... 710,000 445,525 ------------ 3,795,362 ------------ Theater -- 0.5% AMC Entertainment, Inc. Senior Sub. Notes 8.00% due 03/01/14................ 1,310,000 1,110,225 ------------ Transactional Software -- 0.4% Open Solutions, Inc. Senior Sub. Notes 9.75% due 02/01/15*............... 1,000,000 775,000 ------------ Transport-Air Freight -- 4.0% Atlas Air, Inc. Pass Through Certs. Series 1991-1, Class B 7.63% due 01/02/15................ 5,437,354 5,981,089 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20*............... 768,209 749,004 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class A 8.71% due 01/02/20................ 19,499 19,012 Atlas Air, Inc. Pass Through Certs. Series 2000-1, Class B 9.06% due 07/02/17................ 1,301,358 1,548,616 ------------ 8,297,721 ------------ Transport-Services -- 0.2% PHI, Inc. Company Guar. Notes 7.13% due 04/15/13................ 365,000 334,888 ------------ Travel Service -- 0.4% Travelport LLC Company Guar. Notes 11.88% due 09/01/16............... 1,025,000 871,250 ------------ Vitamins & Nutrition Products -- 0.1% General Nutrition Centers, Inc. Company Guar. Notes 7.20% due 03/15/14(6)............. 140,000 116,900 ------------ Total Corporate Bonds & Notes (cost $167,203,382)............... 151,461,067 ------------
54 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------------- FOREIGN CORPORATE BONDS & NOTES -- 8.1% Building & Construction-Misc. -- 0.3% North American Energy Partners, Inc. Senior Notes 8.75% due 12/01/11......................... $ 535,000 $ 529,650 ---------- Building Products-Doors & Windows -- 0.1% Masonite International Corp. Company Guar. Notes 11.00% due 04/06/15........................ 223,000 151,640 ---------- Containers-Metal/Glass -- 0.8% Vitro SAB de CV Senior Notes 9.13% due 02/01/17......................... 1,865,000 1,547,950 ---------- Diversified Manufacturing Operations -- 0.5% Bombardier, Inc. Senior Notes 8.00% due 11/15/14*........................ 1,045,000 1,076,350 ---------- Electronic Components-Misc. -- 0.5% NXP BV/NXP Funding LLC Company Guar. Notes 9.50% due 10/15/15......................... 1,305,000 1,073,362 ---------- Food-Meat Products -- 0.9% JBS SA Company Guar. Notes 9.38% due 02/07/11......................... 1,075,000 1,072,312 JBS SA Senior Notes 10.50% due 08/04/16*....................... 825,000 796,125 ---------- 1,868,437 ---------- 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 -- 1.1% Angiotech Pharmaceuticals, Inc. Company Guar. Notes 6.83% due 12/01/13(6)...................... 1,005,000 768,825 Angiotech Pharmaceuticals, Inc. Company Guar. Notes 7.75% due 04/01/14......................... 520,000 317,200 Elan Finance PLC Company Guar. Bonds 7.75% due 11/15/11......................... 1,320,000 1,227,600 ---------- 2,313,625 ---------- Multimedia -- 0.1% Quebecor Media, Inc. Senior Notes 7.75% due 03/15/16*........................ 325,000 296,563 ---------- Oil Companies-Exploration & Production -- 0.7% Compton Petroleum Finance Corp. Company Guar. Notes 7.63% due 12/01/13......................... 825,000 789,937 OPTI Canada, Inc. Senior Notes 7.88% due 12/15/14......................... 685,000 669,588
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------- Oil Companies-Exploration & Production (continued) OPTI Canada, Inc. Senior Notes 8.25% due 12/15/14..................... $ 25,000 $ 24,750 ----------- 1,484,275 ----------- Paper & Related Products -- 0.9% Abitibi-Consolidated Co. of Canada Senior Notes 13.75% due 04/01/11*................... 900,000 920,250 Abitibi-Consolidated Finance LP Company Guar. Bonds 7.88% due 08/01/09..................... 215,000 180,600 Abitibi-Consolidated, Inc. Notes 6.00% due 06/20/13..................... 275,000 133,375 Abitibi-Consolidated, Inc. Notes 8.55% due 08/01/10..................... 1,245,000 715,875 ----------- 1,950,100 ----------- Printing-Commercial -- 0.4% Quebecor World Capital Corp. Senior Notes 8.75% due 03/15/16+(9)(10)............. 1,605,000 762,375 ----------- Satellite Telecom -- 1.1% Intelsat Bermuda, Ltd. Senior Notes 11.25% due 06/15/16.................... 500,000 506,875 Intelsat Intermediate Holding Co., Ltd. Senior Notes 9.25% due 02/01/15(4).................. 2,035,000 1,729,750 ----------- 2,236,625 ----------- Special Purpose Entity -- 0.3% Hellas Telecommunications Luxembourg II Sub. Notes 8.46% due 01/15/15*(6)................. 900,000 643,500 ----------- Telecom Services -- 0.4% Global Crossing UK Finance PLC Company Guar. Notes 10.75% due 12/15/14.................... 635,000 628,650 Wind Acquisition Finance SA Company Guar. Bonds 10.75% due 12/01/15*................... 125,000 127,500 ----------- 756,150 ----------- Total Foreign Corporate Bonds & Notes (cost $21,886,434)..................... 16,695,062 ----------- LOANS(13)(14) -- 7.7% Beverages-Non-alcoholic -- 0.2% Le-Natures, Inc. 9.39% due 03/01/11+(2)(3)(8)(9)........ 1,200,000 426,000 ----------- Building-Residential/Commercial -- 0.4% TOUSA, Inc. 13.13% due 07/31/13(2)(3)(5)........... 1,071,107 816,719 -----------
55 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Principal Value Security Description Amount (Note 2) -------------------------------------------------------------- LOANS (continued) Casino Services -- 0.3% Herbst Gaming, Inc. Strip-Term B 7.13% due 12/02/11(2)(3).............. $ 110,637 $ 79,327 Herbst Gaming, Inc. Delayed Draw-Term B 9.22% due 12/02/11(2)(3).............. 388,103 278,270 Herbst Gaming. Inc. Delayed Draw-Term B-1 9.22% due 12/02/11(2)(3).............. 180,434 129,371 Herbst Gaming, Inc. Tranche 3 9.22% due 12/02/11(2)(3).............. 91,523 65,622 Herbst Gaming, Inc. Tranche 2 9.33% due 12/02/11(2)(3).............. 52,022 37,300 Herbst Gaming, Inc. 9.33% due 12/02/11(2)(3).............. 2,207 1,583 Herbst Gaming, Inc. Tranche1 9.64% due 12/02/11(2)(3).............. 173,813 124,624 ---------- 716,097 ---------- Computer Services -- 0.4% CompuCom Systems, Inc. 6.63% due 08/30/14(2)(3).............. 995,000 870,625 ---------- Diversified Financial Services -- 1.1% Wind Acquisition Holdings Finance S.A. 12.61% due 12/21/11(2)(3)(5).......... 2,625,508 2,287,473 ---------- Electric Products-Misc. -- 0.4% Texas Competitive Electric 6.60% due 10/10/14(2)................. 880,833 804,261 Texas Competitive Electric 6.48% due 10/10/14(2)................. 114,167 103,949 ---------- 908,210 ---------- Leisure Products -- 0.3% AMC Entertainment Holdings, Inc. 7.80% due 06/15/12(2)(3).............. 649,085 551,722 ---------- Medical-Drugs -- 0.7% Triax Pharmaceuticals LLC 14.70% due 08/30/11(1)(2)(3)(15)(16).. 1,515,279 1,362,702 ---------- Medical-Hospitals -- 1.0% Capella Healthcare, Inc. 13.00% due 02/29/16(2)(3)............. 1,000,000 1,000,000 Iasis Healthcare Corp. 8.49% due 06/15/14(2)(3).............. 1,082,746 985,299 ---------- 1,985,299 ---------- Oil-Field Services -- 0.9% Stallion Oilfield Service 7.61% due 07/30/12(2)(3).............. 2,000,000 1,780,000 ---------- Paper & Related Products -- 0.5% Boise Paper Holdings LLC 9.63% due 02/22/15.................... 1,000,000 942,500 ----------
Shares/ Market Principal Value Security Description Amount (Note 2) --------------------------------------------------------------------- Publishing-Periodicals -- 0.4% R.H. Donnelley Corp. 4.58% due 06/30/11(2)(3)................... $1,000,000 $ 932,375 ----------- Rental Auto/Equipment -- 0.2% Neff Corp. 8.40% due 11/30/14(2)(3)................... 500,000 345,834 ----------- Telecom Services -- 0.5% Telesat Canada Senior Sub Bridge Loan 9.00% due 10/31/08(2)...................... 1,000,000 955,000 ----------- Travel Service -- 0.4% Travelport Holdngs Ltd 10.10% due 03/27/12(2)(3)(5)............... 1,120,229 784,160 ----------- Total Loans (cost $17,863,952)......................... 15,664,716 ----------- COMMON STOCK -- 3.2% Casino Services -- 0.2% Capital Gaming International, Inc.+(1)...... 77 0 Shreveport Gaming Holdings, Inc.+(1)(2)(3).. 14,150 323,752 ----------- Cellular Telecom -- 2.2% iPCS, Inc.+(1)(2)(3)........................ 190,810 4,455,414 ----------- Independent Power Producers -- 0.3% Calpine Corp................................ 29,312 539,927 Mirant Corp.+............................... 4,388 159,679 ----------- 699,606 ----------- Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC+(1)(2)(3)(17)..... 128,418 53,936 ----------- Medical-Hospitals -- 0.2% MedCath Corp.+.............................. 27,601 502,338 ----------- Medical-Outpatient/Home Medical -- 0.0% Critical Care Systems International, Inc.+(1)(2)(3)............................. 69,700 697 ----------- Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc.+............ 40 36 ----------- Oil-Field Services -- 0.3% Trico Marine Services, Inc.+................ 15,745 613,583 ----------- Total Common Stock (cost $2,800,677).......................... 6,649,362 ----------- PREFERRED STOCK -- 2.2% Medical-Drugs -- 0.0% Triax Pharmaceuticals LLC, Class C 15.00%(1)(2)(3)(17)........................ 39,177 78,353 ----------- Medical-Generic Drugs -- 0.3% Mylan, Inc. 6.50%...................................... 750 648,270 -----------
56 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Shares/ Market Principal Value Security Description Amount (Note 2) ----------------------------------------------------------------------- PREFERRED STOCK (continued) Oil Companies-Exploration & Production -- 1.9% EXCO Resources, Inc. Convertible Series A-1 7.00%(1)(3)(5)............................. 318 $ 3,529,800 Transmeridian Exploration, Inc. Convertible 15.00%(1)(5)............................... 7,334 293,360 ------------ 3,823,160 ------------ Total Preferred Stock (cost $4,664,067).......................... 4,549,783 ------------ WARRANTS -- 0.0%+ Oil Companies-Exploration & Production -- 0.0% Transmeridian Exploration, Inc. Expires 12/15/10 (strike price $4.31)(1).................... 44,885 4,489 ------------ 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 ------------ Total Warrants (cost $138,277)............................ 4,489 ------------ Total Long-Term Investment Securities (cost $215,740,182)........................ 196,144,065 ------------ REPURCHASE AGREEMENT -- 2.6% State Street Bank & Trust Co. Joint Repurchase Agreement(18) (cost $5,281,000).......................... $5,281,000 5,281,000 ------------ TOTAL INVESTMENTS -- (cost $221,021,182)(7)..................... 98.1% 201,425,065 Other assets less liabilities................. 1.9 3,829,656 ---------- ------------ NET ASSETS -- 100.0% $205,254,721 ========== ============
- -------- * Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The Fund has no right to demand registration of these securities. At March 31, 2008, the aggregate value of these securities was $38,103,190 representing 18.56% 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 March 31, 2008, the High Yield Bond Fund held the following restricted securities:
Market Acquisi- Acquisi- Value % of tion Principal/ tion Market per Net Name Date Shares Cost Value Share Assets ---- ---------- ---------- ---------- ---------- ---------- ------ AMC Entertai nment Holdings 7.80% due 06/15/12 Loan Agreement..... 06/08/2007 $ 600,000 $ 585,000 09/17/2007 16,576 16,576 12/20/2007 16,521 16,521 03/19/2008 15,988 15,988 ---------- ---------- 649,085 634,085 $ 551,722 $ 85.00 0.27% Capella Healthcare, Inc. 13.00% due 02/29/16 Loan Agreement..... 3/3/2008 1,000,000 990,000 1,000,000 100.00 0.49% CompuCom Systems, Inc. 6.63% due 08/30/14 Loan Agreement..... 3/31/2008 995,000 955,193 870,625 88.00 0.42% Critical Care Systems International, Inc. Common Stock......... 07/20/2006 69,700 606,739 697 0.01 0.00% EXCO Resources, Inc. 7.00%, Series A-1 Preferred Stock......... 03/29/2007 318 3,180,000 3,529,800 11,100.00 1.72% Herbst Gaming, Inc. 7.13% due 12/02/11 Loan Agreement..... 2/21/2008 $ 110,637 90,496 79,327 72.00 0.04% Herbst Gaming, Inc. 9.22% due 12/02/11 Delayed Draw Term B Loan Agreement..... 2/21/2008 388,103 318,245 278,270 72.00 0.14%
57 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Acquisi- Acquisi- Value % of tion Principal/ tion Market per Net Name Date Shares Cost Value Share Assets ---- ---------- ---------- ---------- ---------- ------ ------ Herbst Gaming, Inc. 9.22% due 12/02/11 Delayed Draw Term B-1 Loan Agreement...... 3/26/2008 $ 180,434 $ 128,559 $ 129,371 $72.00 0.06% Herbst Gaming, Inc. 9.22% due 12/02/11 Tranche 3 Loan Agreement...... 3/26/2008 91,523 65,210 65,622 72.00 0.03% Herbst Gaming, Inc. 9.33% due 12/02/11 Tranche 2 Loan Agreement...... 3/26/2008 52,022 37,066 37,300 72.00 0.02% Herbst Gaming, Inc. 9.33% due 12/02/11 Loan Agreement...... 3/26/2008 2,207 1,572 1,583 72.00 0.00% Herbst Gaming, Inc. 9.64% due 12/02/11 Tranche 1 Loan Agreement...... 3/26/2008 173,813 123,842 124,624 72.00 0.06% Iasis Healthcare Corp. 8.49% due 06/15/14 Loan Agreement...... 4/13/2007 1,000,000 985,000 7/26/2007 26,516 26,516 10/31/2007 27,834 27,834 1/31/2008 28,396 28,397 ---------- ---------- 1,082,746 1,067,747 985,299 91.00 0.48% ICO North America, Inc. 7.50% due 08/15/09....... 08/11/2005 75,000 75,000 03/05/2008 3,000 3,000 ---------- ---------- 78,000 78,000 67,080 86.00 0.03% iPCS, Inc. Common Stock.......... 07/20/2004 183,497 2,998,963 07/28/2005 7,313 0 ---------- ---------- 190,810 2,998,963 4,455,414 23.35 2.17%
Market Acquisi- Acquisi- Value % of tion Principal/ tion Market per Net Name Date Shares Cost Value Share Assets ---- ---------- ---------- ---------- ---------- ------ ------ Le-Natures, Inc. 9.39% due 03/01/11 Loan Agreement....... 9/26/2006 $1,200,000 $1,200,000 $ 426,000 $36.00 0.21% Neff Corp. 8.40% due 11/30/14 Loan Agreement....... 5/22/2007 500,000 500,000 345,834 69.00 0.17% R.H.Donnelley Corp. 4.58% due 06/30/11 Loan Agreement....... 2/28/2008 1,000,000 92,890 932,375 93.00 0.45% Shreveport Gaming Holdings, Inc. Common Stock........... 07/21/2005 2,321 53,448 07/29/2005 11,829 272,336 ---------- ---------- 14,150 325,784 323,752 22.88 0.16% Southern Energy, Inc. 7.90% due 07/15/09........ 01/10/2006 $3,525,000 0 0 0.00 0.00% Stallion Oilfield Service 7.61% due 07/30/12 Loan Agreement....... 07/18/2007 1,000,000 980,000 12/04/2007 1,000,000 950,000 ---------- ---------- 2,000,000 1,930,000 1,780,000 89.00 0.87% Texas Competitive Electric 10.25% due 11/01/15........ 10/24/2007 1,280,000 1,348,084 1,275,200 99.63 0.62% TOUSA,Inc. 13.13% due 07/31/13 Loan Agreement....... 10/11/2007 1,022,829 920,511 1/16/2008 11,293 11,293 3/6/2008 10,700 10,700 3/31/2008 26,285 26,285 ---------- ---------- 1,071,107 968,789 816,719 76.00 0.40%
58 SunAmerica High Yield Bond Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Market Acquisi- Acquisi- Value % of tion Principal/ tion Market per Net Name Date Shares Cost Value Share Assets - ---- ---------- ---------- ---------- ----------- ------ ------ Travelport Holdings, Ltd. 10.10% due 03/27/12 Loan Agreement........... 03/30/2007 $1,000,000 $ 970,000 06/29/2007 32,390 32,389 09/28/2007 32,255 32,255 12/31/2007 33,909 33,909 02/29/2008 21,675 21,675 ---------- ---------- 1,120,229 1,090,228 $ 784,160 $70.00 0.38% Triax Pharmaceuticals LLC 14.70% due 08/30/11 Class C Loan Agreement........... 08/30/2007 1,500,000 1,348,961 10/31/2007 3,875 3,875 01/10/2008 11,404 11,404 ---------- ---------- 1,515,279 1,364,240 1,362,702 90.00 0.66% Triax Pharmaceuticals LLC Common Stock............... 08/31/2007 128,418 53,936 53,936 0.42 0.03% Triax Pharmaceuticals LLC, Class C 15.00% Preferred Stock............... 08/31/2007 39,177 78,353 78,353 2.00 0.04% Wind Acquisition Holdings Finance S.A.12.61% due 12/21/11 Loan Agreement........... 02/27/2007 206,306 205,512 03/06/2007 206,305 205,020 03/15/2007 515,763 513,799 03/19/2007 309,459 307,530 06/21/2007 412,748 415,000 08/15/2007 16,438 16,438 07/18/2007 6,575 6,575 07/18/2007 6,575 6,575 07/18/2007 9,863 9,863 11/05/2007 54,462 54,462 11/09/2007 800,000 801,854 01/31/2008 81,014 81,014 ---------- ---------- 2,625,508 2,623,642 2,287,473 87.00 1.10% ---------- ---------- ----------- ----- $22,643,238 11.02% =========== =====
(4)"Step-up" security where the rate increases ("steps-up") at a predetermined rate. Rate shown reflects the increased rate. (5)PIK ("Payment-in-Kind") security. Bond or preferred stock that pays interest/dividends in the form of additional bonds or preferred stocks. (6)Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of March 31, 2008. (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)Company has filed bankruptcy in country of issuance. (11)Bond is in default and did not pay principal at maturity. (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)A portion of the interest is paid in the form of additional bonds. (16)Loan is subject to an unfunded loan commitment. See Note 11 for details (17)Consist of more than one class of securities traded together as a unit. (18)See Note 2 for details of Joint Repurchase Agreement. See Notes to Financial Statements 59 SunAmerica Tax Exempt Insured Fund PORTFOLIO PROFILE -- March 31, 2008 -- (unaudited) Allocation by States* Ohio........................... 18.6% New York....................... 14.8 Massachusetts.................. 13.6 Georgia........................ 7.3 Indiana........................ 7.2 New Jersey..................... 5.2 Connecticut.................... 5.1 Alabama........................ 4.9 New Mexico..................... 4.9 South Dakota................... 4.2 North Carolina................. 3.7 South Carolina................. 3.7 Michigan....................... 3.5 California..................... 1.2 Idaho.......................... 0.7 Pennsylvania................... 0.2 Registered Investment Companies 0.1 ---- 98.9% ====
Credit Quality Allocation+# AAA....... 80.3% AA........ 13.4 A......... 4.0 Not Rated@ 2.3 ----- 100.0% =====
- -------- * Calculated as a percentage of net assets. @ Represents debt issues that either have no rating or, the rating is unavailable from the data source. + Source: Standard and Poors # Calculated as a percentage of total debt issues, excluding short-term securities. 60 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------------- MUNICIPAL BONDS & NOTES -- 95.9% Alabama -- 4.9% Auburn University General Fee Revenue, Series A 5.00% due 06/01/33(1)......................... $1,000,000 $ 997,090 State of Alabama Series A 5.00% due 08/01/17(1)......................... 1,500,000 1,655,055 ---------- 2,652,145 ---------- Connecticut -- 5.1% State of Connecticut Refunded, Series B, 5.00% due 06/01/14(1)......................... 2,500,000 2,746,775 ---------- Georgia -- 7.3% Augusta Georgia Water & Sewer Revenue, Refunding 5.00% due 10/01/30(1)......................... 1,500,000 1,512,135 Douglas County Georgia School District, General Obligation 5.00% due 04/01/24(1)......................... 2,240,000 2,318,736 Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/09(1)......................... 60,000 62,075 Georgia Municipal Electric Authority, Power Revenue, Series Y, 6.40% due 01/01/13(1)......................... 85,000 94,185 ---------- 3,987,131 ---------- Indiana -- 7.2% Indiana Transportation Finance Authority Highway Revenue, Series A, 5.25% due 06/01/26(1)......................... 3,500,000 3,896,095 ---------- Massachusetts -- 13.6% Massachusetts State Water Resources Authority, Revenue, Series A, 5.00% due 08/01/24(1)......................... 3,910,000 3,988,317 University Massachusetts Building Authority Project Revenue, Series 04-1, 5.25% due 11/01/27(1)......................... 3,000,000 3,379,170 ---------- 7,367,487 ---------- Michigan -- 3.5% Detroit Michigan Sewer Disposal Revenue, 3.77% due 07/01/32(1)(2)...................... 2,445,000 1,919,325 ---------- New Jersey -- 5.2% Garden State New Jersey Preservation Trust Open Space And Farmland Preservation, Series A, 5.80% due 11/01/17(1)......................... 2,500,000 2,844,100 ----------
Market Principal Value Security Description Amount (Note 2) ---------------------------------------------------------------------- New Mexico -- 4.9% New Mexico Finance Authority Transportation, Series A, 5.25% due 06/15/21(1)......................... $2,500,000 $2,675,600 ---------- New York -- 14.4% City of Niagara Falls New York, General Obligation 7.50% due 03/01/13(1)......................... 410,000 488,490 City of Niagara Falls New York, General Obligation 7.50% due 03/01/13(1)......................... 35,000 42,337 City of Niagara Falls New York, General Obligation 7.50% due 03/01/14(1)......................... 45,000 55,727 City of Niagara Falls New York, General Obligation 7.50% due 03/01/14(1)......................... 510,000 620,186 New York State Thruway Authority, Series H 5.00% due 01/01/19(1)......................... 1,000,000 1,080,820 New York State Thruway Authority, Series G, 5.25% due 01/01/27(1)......................... 1,500,000 1,545,405 Sales Tax Asset Receivables Corp., Series A, 5.25% due 10/15/27(1)......................... 2,000,000 2,066,900 Triborough Bridge & Tunnel Authority, General Purpose 4.75% due 11/15/30............................ 2,000,000 1,940,540 ---------- 7,840,405 ---------- North Carolina -- 3.7% University of North Carolina Revenue, 5.00% due 12/01/31............................ 2,000,000 2,013,580 ---------- Ohio -- 18.2% Cuyahoga County, Ohio Revenue, Series A, 5.75% due 01/01/24............................ 2,000,000 2,077,620 Franklin County, Ohio Hospital Revenue, Series C, 5.25% due 05/15/23............................ 3,000,000 3,056,340 Olentangy Local School District Ohio, Series A, 5.25% due 12/01/27(1)......................... 3,250,000 3,627,422 Woodridge, Ohio, Woodmore Local School District, 6.80% due 12/01/14(1)......................... 1,000,000 1,118,820 ---------- 9,880,202 ---------- South Carolina -- 3.7% South Carolina State Public Service Authority, Series A 5.00% due 01/01/32(1)......................... 2,000,000 2,011,100 ----------
61 SunAmerica Tax Exempt Insured Fund PORTFOLIO OF INVESTMENTS -- March 31, 2008 -- (continued)
Principal Market Amount/ Value Security Description Shares (Note 2) -------------------------------------------------------------------- MUNICIPAL BONDS & NOTES (continued) South Dakota -- 4.2% South Dakota State Health & Educational Facilities Revenue, Refunding, 6.25% due 07/01/10(1)..................... $2,120,000 $ 2,287,545 ----------- Total Long-Term Investment Securities (cost $50,925,833)........................ 52,121,490 ----------- SHORT-TERM INVESTMENT SECURITIES -- 3.0% California -- 1.2% California Housing Finance Agency Revenue, Bonds Series J 3.00% due 08/01/08(1)(3).................. 650,000 650,000 ----------- Idaho -- 0.7% Idaho Health Facilities Authority Revenue, St. Lukes Regional Medical Center Project 1.20% due 04/01/08(1)(3).................. 400,000 400,000 ----------- New York -- 0.4% City of New York NY, General Obligation 1.01% due 04/01/08(3)..................... 200,000 200,000 ----------- Ohio -- 0.4% Ohio Housing Finance Agency Mtg. Revenue, Residential Mtg. 1.95% due 09/01/08(3)..................... 200,000 200,000 ----------- Pennsylvania -- 0.2% Pittsburgh PA Water & Sewer Authority, Series B-2 1.75% due 04/02/08(1)(3).................. 100,000 100,000 ----------- Registered Investment Company -- 0.1% SSgA Tax Free Money Market Fund............ 61,534 61,534 ----------- Total Short-Term Investment Securities (cost $1,611,534)......................... 1,611,534 ----------- TOTAL INVESTMENTS -- (cost $52,537,367)(4)..................... 98.9% 53,733,024 Other assets less liabilities................ 1.1 602,386 ---------- ----------- NET ASSETS -- 100.0% $54,335,410 ========== ===========
- -------- (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 $44,183,410 or 81.3% of Net Assets. (2) Floating rate security where the rate fluctuates. The rate moves up or down at each reset date. The rate reflected is as of March 31, 2008. (3) Variable Rate Security -- the rate reflected is as of March 31, 2008, maturity date reflects next reset date. (4) See Note 5 for cost of investments on a tax basis. See Notes to Financial Statements 62 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 Note 1. Organization The SunAmerica Income Funds 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 net assets plus any 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 net assets plus any borrowing for investment purposes will be invested in such securities. Strategic Bond Fund seeks a high level of total return by the active trading of a broad range of bonds, including both investment grade and non-investment grade U.S. and foreign bonds (which may include "junk bonds"), U.S. Government and agency obligations, and mortgage-backed securities, without regard to the maturities of such securities. Under normal market conditions, at least 80% of the Fund's net assets plus any borrowing for investment purposes will be invested in bonds. 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 net 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 the active trading of municipal bonds and other municipal securities. Under normal market conditions, at least 80% of Fund's net assets plus any borrowing for investment purposes will be invested in municipal bonds and other municipal securities, the income of which is exempt from federal income taxes, and that are insured as to the scheduled payment of principal and interest for as long as such securities are held by the Fund, without regard to the maturities of such securities. Each Fund offers multiple classes of shares. The classes within each Fund are presented in the Statement of Assets and Liabilities. The cost structure for each class is as follows: Class A shares are offered at net asset value per share plus an initial sales charge. Additionally, purchases of Class A shares in amounts of $1,000,000 or more will be purchased at net asset value but will be subject to a contingent deferred sales charge on redemptions made within two years of purchase. Class B shares are offered without an initial sales charge, although a declining contingent deferred sales charge may be imposed on redemptions made within six years of purchase. Class B shares 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 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. 63 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) Each class of shares bears the same voting, dividend, liquidation and other rights and conditions except as may otherwise be provided in the Trust's registration statement. Class A, Class B and Class C shares each makes distribution and account maintenance and service fee payments under the distribution plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act") except that Class B and Class C shares are subject to higher distribution fees. Indemnifications: 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 by using the average of at least two independent quotes obtained from brokers. 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. Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. 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. 64 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (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 March 31, 2008, 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. 1.46% $2,471,000 High Yield Bond 3.12 5,281,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: State Street Bank & Trust Co., dated March 31, 2008, bearing interest at a rate of 0.80% per annum, with a principal amount of $169,381,000, a repurchase price of $169,384,764 and a maturity date of April 1, 2008. The repurchase agreement is collateralized by the following:
Interest Maturity Principal Type of Collateral Rate Date Amount Market Value - ------------------ -------- -------- ----------- ------------ U.S. Treasury Bonds 6.25% 08/15/23 $93,628,724 $95,501,775 U.S. Treasury Bonds 8.00 11/15/21 15,573,722 15,885,196 U.S. Treasury Bonds 8.75 08/15/20 60,178,554 61,382,125
In addition, at March 31, 2008, 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 1.50% $ 1,500,000 GNMA...................... 1.82 1,818,000 Strategic Bond............ 28.65 28,650,000
As of such date, the repurchase agreement in that joint account and the collateral therefore were as follows: UBS Securities LLC, dated March 31, 2008, bearing interest at a rate of 1.40% per annum, with a principal amount of $100,000,000 a repurchase price of $100,003,889, and a maturity date of April 1, 2008. The repurchase agreement is collateralized by the following:
Interest Maturity Principal Type of Collateral Rate Date Amount Market Value - ------------------ -------- -------- ------------ ------------ U.S. Treasury Inflation Index Bonds 3.44% 07/15/14 $100,000,000 $102,000,201
65 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (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. Each Fund files U.S. federal and certain state income tax returns. With few exceptions, each Fund is no longer subject to U.S. federal and state tax examinations by tax authorities for tax returns ending before 2004. 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. The management of the Trust 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 March 31, 2008, 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. 66 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) Investment Securities Loaned: During the year ended March 31, 2008, U.S. Government Securities Fund and GNMA Fund participated in securities lending with qualified brokers. In lending portfolio securities to brokers the Funds receive cash as collateral against the loaned securities, which must be maintained at not less than 102% of the market value of the loaned securities during the period of the loan. The Funds may use the cash collateral received to invest in short-term investments which earn interest income or to cover bank overdrafts. Any interest earned from the investment of the collateral is recorded by the Funds net of the portion of interest that is rebated to the borrowing broker. If the amounts are used to cover bank overdrafts, the broker rebates incurred are reflected as interest expense on the Statement of Operations. As with other extensions of credit, should the borrower of the securities fail financially, the Funds may bear the risk of delay in recovery or may be subject to replacing the loaned securities by purchasing them with the cash collateral held, which may be less than 100% of the market value of such securities at the time of replacement. At March 31, 2008, there were no loaned securities outstanding in the U.S. Government Securities Fund or 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 occurs when a Fund to the extent that it 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 Funds 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 67 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) equal the current value of the security sold short and (ii) the amount deposited in the segregated account plus the amount deposited with the broker as collateral will not be less than the market value of the security at the time it was sold short. Liabilities for securities sold short are reported at market value in the financial statements. Such liabilities are subject to off balance sheet risk to the extent of any future increases in market value of the securities sold short. The ultimate liability for securities sold short could exceed the liabilities recorded in the Statement of Assets and Liabilities. The Fund bears the risk of potential inability of the broker to meet their obligation to perform. Mortgage-Backed Dollar Rolls: 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 year ended March 31, 2008 the U.S. Government Securities Fund and the GNMA Fund entered into 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
68 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) 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
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 year ended March 31, 2008, 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 $652,650 U.S. Government Securities Class B 66,277 U.S. Government Securities Class C 59,589 GNMA Class A...................... 490,764 GNMA Class B...................... 96,691 GNMA Class C...................... 64,068 High Yield Bond Class A........... 301,230 High Yield Bond Class B........... 85,589 High Yield Bond Class C........... 138,647 Tax Exempt Insured Class C........ 11,901
69 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) 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 the Distributor and securities firms for account maintenance activities. Accordingly, for the year ended March 31, 2008, 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 year ended March 31, 2008, 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 $ 61,647 $ 9,810 $ 41,122 $ 4,009 $ 17,041 $12,878 GNMA...................... 74,375 23,110 38,672 930 126,267 1,207 Strategic Bond............ 703,081 101,208 483,952 6,448 137,639 79,709 High Yield Bond........... 301,614 36,407 213,933 11,571 115,700 21,748 Tax Exempt Insured........ 68,027 28,753 25,945 -- 6,014 208
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 year ended March 31, 2008, 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 March 31, 2008 - ---- ---------- -------------- US Government Securities Class A $ 369,295 $35,620 US Government Securities Class B 30,459 2,842 US Government Securities Class C 26,190 3,115 GNMA Class A.................... 700,769 61,218 GNMA Class B.................... 110,183 8,686 GNMA Class C.................... 63,897 6,455 Strategic Bond Class A.......... 1,081,555 90,048 Strategic Bond Class B.......... 117,989 9,711
70 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued)
Payable at Fund Expenses March 31, 2008 - ---- -------- -------------- Strategic Bond Class C.... $546,302 $49,171 High Yield Bond Class A... 396,603 19,940 High Yield Bond Class B... 94,379 6,511 High Yield Bond Class C... 170,231 11,579 Tax Exempt Insured Class A 105,232 8,695 Tax Exempt Insured Class B 9,254 625 Tax Exempt Insured Class C 8,491 725
At March 31, 2008, affiliated funds of the SunAmerica Focused Series, Inc. owned 13%, 56%, 38% and 4% of the outstanding Class A Shares of U.S. Government Securities Fund, GNMA Fund, Strategic Bond Fund and High Yield 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 year ended March 31, 2008 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)........................... $ -- $ -- $980,134,206 $209,245,402 $30,099,409 Sales (excluding U.S. government securities)........................... -- -- 903,160,745 305,307,388 30,794,753 Purchases of U.S. government securities 650,392,168 1,391,487,376 289,307,377 -- -- Sales of U.S. government securities.... 572,579,982 1,411,376,237 239,897,212 -- --
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, treatment of defaulted securities, deferred directors compensation, amortization of premium/discount and derivative transactions.
Distributable Earnings Tax Distributions For the year ended March 31, 2008 For the year ended March 31, 2008 --------------------------------------- ------------------------------------ Long-term Gains/Capital Unrealized Ordinary Loss Appreciation Ordinary Long-term Fund Income CarryForward (Depreciation) Income Capital Gains Tax Exempt - ---- ---------- ------------- -------------- ----------- ------------- ---------- U.S. Government Securities $ 347,953 $ (3,955,247) $ 6,869,931 $ 7,552,664 $ -- $ -- GNMA...................... 2,547,462 -- 7,480,875 16,873,452 -- -- Strategic Bond............ 9,909,714 (23,200,320) (18,247,085) 45,247,978 -- -- High Yield Bond........... 2,070,302 (90,679,638) (20,106,872) 21,181,473 -- -- Tax Exempt Insured........ 17,597* (110,179) 1,195,869 103,254 360,487 1,811,170
Tax Distributions For the year ended March 31, 2007 ------------------------------------ Ordinary Long-term Fund Income Capital Gains Tax Exempt - ---- ----------- ------------- ---------- U.S. Government Securities $ 7,185,444 $ -- $ -- GNMA...................... 17,110,566 -- -- Strategic Bond............ 26,453,510 -- -- High Yield Bond........... 21,478,406 -- -- Tax Exempt Insured........ -- 436,699 2,040,644
- -------- * Tax exempt distributable earnings. 71 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) 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......................................... $225,796,256 $444,060,136 $821,815,430 $221,531,937 $52,537,155 ============ ============ ============ ============ =========== Appreciation................................. 7,251,290 8,204,327 18,299,956 8,745,528 2,064,013 Depreciation................................. (381,359) (723,452) (36,800,667) (28,852,400) (868,144) ------------ ------------ ------------ ------------ ----------- Unrealized appreciation (depreciation) -- net $ 6,869,931 $ 7,480,875 $(18,500,711) $(20,106,872) $ 1,195,869 ============ ============ ============ ============ ===========
As of March 31, 2008, 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 2009 2010 2011 2012 2013 2014 2015 2016 - ---- ---------- ----------- ----------- ---- ---- -------- ---------- ---------- U.S. Government Securities $ -- $ -- $ -- $ -- $ -- $271,576 $3,683,671 $ -- GNMA...................... -- -- -- -- -- -- -- -- Strategic Bond............ 5,601,470 6,464,175 10,040,945 -- -- -- -- 1,093,730 High Yield Bond........... 5,383,683 32,249,552 48,994,980 -- -- -- -- 4,051,423 Tax Exempt Insured Fund... -- -- -- -- -- -- -- 110,179
The Funds indicated below utilized capital loss carryforwards, which offset net taxable gains realized in the year ended March 31, 2008:
Capital Loss Capital Loss Carryforward Carryforward Fund Utilized Expired - ---- ------------- ------------ U.S. Government Securities Fund $ 651,350 $6,611,899 GNMA Fund...................... 4,166,987.00 -- Strategic Bond Fund............ -- 1,298,736
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, 2008, the Funds elected to defer capital losses as follows:
Deferred Deferred Post-October Post-October Fund Capital Loss Currency Loss - ---- ------------ ------------- U.S. Government Securities $ 61,459 $ -- GNMA...................... 251,195 -- Strategic Bond............ 4,185,371 --
72 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued) For the period ended March 31, 2008, the reclassifications arising from book/tax differences resulted in increases (decreases) that were primarily due to net paydown adjustments, expiration of capital loss carry forward amounts and treatment of foreign currency to the components of net assets as follows:
Accumulated Accumulated Undistributed Undistributed Net Investment Net Realized Capital Income (Loss) Gain (Loss) Paid-in -------------- ------------- ----------- U.S. Government Securities $ 283,270 $ 6,328,561 $(6,611,831) GNMA...................... 767,937 (767,937) -- Strategic Bond............ 12,775,086 (11,476,350) (1,298,736) High Yield Bond........... 436,846 (436,846) -- Tax Exempt Insured........ (52) 52 --
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 For the For the year ended year ended year ended year ended March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 ------------------------ ------------------------ --------------------- --------------------- Shares Amount Shares Amount Shares Amount Shares Amount ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Shares sold(1)(2)(3)... 9,490,829 $ 88,581,997 3,646,252 $ 33,613,249 455,993 $ 4,311,869 282,251 $ 2,588,038 Reinvested shares...... 544,377 5,081,275 526,641 4,833,737 37,519 349,840 49,844 457,468 Shares redeemed(1)(2).. (6,776,630) (63,242,348) (4,206,287) (38,554,728) (500,368) (4,646,557) (842,993) (7,715,872) ---------- ------------ ---------- ------------ -------- ----------- -------- ----------- Net increase (decrease) 3,258,576 $ 30,420,924 (33,394) $ (107,742) (6,856) $ 15,152 (510,898) $(4,670,366) ========== ============ ========== ============ ======== =========== ======== =========== U.S. Government Securities Fund -------------------------------------------------- Class C -------------------------------------------------- For the For the year ended year ended March 31, 2008 March 31, 2007 ------------------------ ------------------------ Shares Amount Shares Amount ---------- ------------ ---------- ------------ Shares sold............ 1,530,061 $ 14,467,476 496,953 $ 4,562,238 Reinvested shares...... 28,676 267,675 27,739 254,466 Shares redeemed(3)..... (871,773) (8,170,746) (358,841) (3,275,190) ---------- ------------ ---------- ------------ Net increase (decrease) 686,964 $ 6,564,405 165,851 $ 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, 2008, includes automatic conversion of 108,807 shares of Class B shares in the amount of $760,717 to 108,851 shares of Class A shares in the amount of $760,717 (3)For the year ended March 31, 2008, includes automatic conversion of 11,097 shares of Class C shares in the amount of $102,964 to 11,090 shares of Class A shares in the amount of $102,964. 73 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued)
GNMA Fund ---------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ -------------------------------------------------- For the For the For the For the year ended year ended year ended year ended March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 -------------------------- -------------------------- ------------------------ ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Shares sold(1)(3)(5)(7) 6,310,957 $ 70,104,250 5,070,934 $ 55,936,052 229,129 $ 2,590,101 202,312 $ 2,228,911 Reinvested shares.......... 1,044,195 11,665,053 1,007,246 11,085,707 125,700 1,405,978 164,211 1,810,798 Shares redeemed(1)(5).. (6,724,233) (75,305,388) (5,652,486) (62,223,827) (1,490,358) (16,623,314) (2,138,731) (23,557,708) ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease)...... 630,919 $ 6,463,915 425,694 $ 4,797,932 (1,135,529) $(12,627,235) (1,772,208) $(19,517,999) =========== ============= =========== ============= ========== ============ ========== ============ GNMA Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the For the year ended year ended March 31, 2008 March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold...... 1,042,164 $ 11,890,901 360,698 $ 3,979,813 Reinvested shares.......... 71,319 799,761 88,961 982,412 Shares redeemed(3)(7).. (787,761) (8,794,849) (1,340,161) (14,773,461) ----------- ------------- ----------- ------------- Net increase (decrease)...... 325,722 $ 3,895,813 (890,502) $ (9,811,236) =========== ============= =========== ============= Strategic Bond Fund ---------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ -------------------------------------------------- For the For the For the For the year ended year ended year ended year ended March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 -------------------------- -------------------------- ------------------------ ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Shares sold(2)(4)(6)(8) 54,454,486 $ 194,890,790 102,882,348 $ 365,610,133 3,096,751 $ 11,052,278 5,637,811 $ 20,072,310 Reinvested shares.......... 6,083,610 21,672,951 4,121,411 14,717,371 501,399 1,784,869 390,832 1,394,386 Shares redeemed(2)(6).. (47,409,808) (168,605,626) (29,208,072) (104,210,772) (3,950,315) (14,098,342) (3,782,125) (13,433,833) ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease)...... 13,128,288 $ 47,958,115 77,795,687 $ 276,116,732 (352,165) $ (1,261,195) 2,246,518 $ 8,032,863 =========== ============= =========== ============= ========== ============ ========== ============ Strategic Bond Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the For the year ended year ended March 31, 2008 March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold...... 29,322,990 $ 105,186,765 38,346,566 $ 137,670,076 Reinvested shares.......... 1,920,377 6,862,329 848,064 3,043,431 Shares redeemed(4)(8).. (15,350,229) (54,784,089) (6,961,530) (24,860,837) ----------- ------------- ----------- ------------- Net increase (decrease)...... 15,893,138 $ 57,265,005 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 year 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 year ended March 31, 2008, includes automatic conversion of 200,853 shares of Class B shares in the amount of $1,902,244 to 201,376 shares of Class A shares in the amount of $1,902,244. (6)For the year ended March 31, 2008, includes automatic conversion of 783,363 shares of Class B shares in the amount of $2,389,267 to 783,205 shares of Class A shares in the amount of $2,389,267. (7)For the year ended March 31, 2008, includes automatic conversion of 4,799 shares of Class C shares in the amount of $54,501 to 4,819 shares of Class A shares in the amount of $54,501. (8)Includes automatic conversion of 5,731 shares of Class C shares in the amount of $20,785 to 8,762 shares of Class A shares in the amount of $20,785. 74 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (continued)
High Yield Bond Fund ---------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ -------------------------------------------------- For the For the For the For the year ended year ended year ended year ended March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 -------------------------- -------------------------- ------------------------ ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Shares sold(1)(4)(6)... 21,291,423 $ 98,716,860 38,615,170 $ 182,039,488 835,493 $ 3,802,244 2,939,699 $ 13,768,068 Reinvested shares.......... 1,906,335 8,688,722 1,677,533 7,908,201 321,980 1,456,523 333,914 1,571,933 Shares redeemed(1)(4).. (47,531,258) (215,847,758) (36,217,526) (168,508,994) (3,540,260) (16,200,779) (3,870,265) (18,168,508) ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease)...... (24,333,500) $(108,442,176) 4,075,177 $ 21,438,695 (2,382,787) $(10,942,012) (596,652) $ (2,828,507) =========== ============= =========== ============= ========== ============ ========== ============ High Yield Bond Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the For the year ended year ended March 31, 2008 March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold............ 3,568,020 $ 16,513,470 8,874,645 $ 41,729,495 Reinvested shares.......... 598,038 2,714,045 542,788 2,569,206 Shares redeemed(6)..... (7,623,260) (34,517,831) (6,505,750) (30,858,084) ----------- ------------- ----------- ------------- Net increase (decrease)...... (3,457,202) $ (15,290,316) 2,911,683 $ 13,440,617 =========== ============= =========== ============= Tax Exempt Insured Fund ---------------------------------------------------------------------------------------------------------- Class A Class B ------------------------------------------------------ -------------------------------------------------- For the For the For the For the year ended year ended year ended year ended March 31, 2008 March 31, 2007 March 31, 2008 March 31, 2007 -------------------------- -------------------------- ------------------------ ------------------------ Shares Amount Shares Amount Shares Amount Shares Amount ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Shares sold(2)(3)(5)(7) 314,629 $ 3,914,692 181,928 $ 2,305,652 42,191 $ 526,453 26,325 $ 335,141 Reinvested shares.......... 101,332 $ 1,260,224 104,191 1,320,929 6,362 79,132 8,813 111,816 Shares redeemed(2)(5).. (545,959) (6,802,151) (846,556) (10,699,293) (177,944) (2,214,363) (163,672) (2,069,946) ----------- ------------- ----------- ------------- ---------- ------------ ---------- ------------ Net increase (decrease)...... (129,998) $ (1,627,235) (560,437) $ (7,072,712) (129,391) $ (1,608,778) (128,534) $ (1,622,989) =========== ============= =========== ============= ========== ============ ========== ============ Tax Exempt Insured Fund ------------------------------------------------------ Class C ------------------------------------------------------ For the For the year ended year ended March 31, 2008 March 31, 2007 -------------------------- -------------------------- Shares Amount Shares Amount ----------- ------------- ----------- ------------- Shares sold............ 155,729 $ 1,935,925 51,686 $ 654,807 Reinvested shares.......... 6,235 77,637 6,918 87,817 Shares redeemed(3)(7).. (139,213) (1,738,389) (100,404) (1,273,870) ----------- ------------- ----------- ------------- Net increase (decrease)...... 22,751 $ 275,173 (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 year ended March 31, 2008, includes automatic conversion of 640,153 shares of Class B shares in the amount of $2,774,734 to 640,228 shares of Class A shares in the amount of $2,774,734. (5)For the year ended March 31, 2008, includes automatic conversion of 81,330 shares of Class B shares in the amount of $836,922 to 81,332 shares of Class A shares in the amount of $836,922. (6)For the year ended March 31, 2008, includes automatic conversion of 48 shares of Class C shares in the amount of $218 to 49 shares of Class A shares in the amount of $218. (7)For the year ended March 31, 2008, includes automatic conversion of 431 shares of Class C shares in the amount of $5,299 to 432 shares of Class A shares in the amount of $5,299. 75 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (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 year ended March 31, 2008, the following Funds had borrowings:
Average Weighted Days Interest Debt Average Fund Outstanding Charges Utilized Interest - ---- ----------- -------- ---------- -------- Strategic Bond. 5 $ 2,121 $2,847,803 4.91% High Yield Bond 77 62,252 5,299,126 5.11
At March 31, 2008, there were no borrowings outstanding. Note 8. Interfund Lending Agreement Pursuant to exemptive relief granted by the Securities and Exchange Commission, the Funds are permitted to participate in an interfund lending program among investment companies advised by 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 year ended March 31, 2008 none of the Funds participated in this program. Note 9. Trustees Retirement Plan The Trustees of the Trust 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%. 76 SunAmerica Income Funds NOTES TO FINANCIAL STATEMENTS -- March 31, 2008 -- (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 March 31, 2008 - ---- ----------------------------------------------- U.S. Government Securities $85,379 $ 3,761 $8,705 GNMA...................... 57,788 7,996 2,640 Strategic Bond............ 39,270 13,868 2,231 High Yield Bond........... 50,303 5,949 3,402 Tax Exempt Insured........ 26,909 1,187 2,468
Note 10. Security Transactions with Affiliated Funds The funds are permitted to transfer securities by purchasing from and/or selling to other affiliated funds under certain conditions approved by the board of directors. The affiliated funds involved in such transaction must have common investment adviser or investment advisers which are affiliated persons of each other, common directors, and/or common officers in compliance with Rule 17a-7 of the 1940 Act. Pursuant to the Act, such transaction must be either a purchase or a sale, for no consideration other than cash payment against prompt delivery of the security at the current market price. No brokerage commission or fee (except for customary transfer fees), or other remuneration is paid in connection with such transaction. For the period ended March 31, 2008, the following fund engaged in securities transactions with affiliated funds:
Cost of Proceeds Realized Fund Purchases from sales Gain/Loss - ---- --------- ---------- --------- High Yield Bond $-- $6,067,272 $(556,774)
Note 11. Unfunded Loan Commitments On March 31, 2008, 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
77 SunAmerica Income Funds REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees and Shareholders of SunAmerica Income Funds: In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of each of the five funds constituting SunAmerica Income Funds (the "Funds") at March 31, 2008, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at March 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Houston, Texas May 27, 2008 78 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- March 31, 2008 -- (unaudited) The following table contains basic information regarding the Trustees and Officers who oversee operations of the Funds and other investment companies within the Fund Complex.
Number of Term of Funds in Position(s) Office and Fund Complex Name, Address Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s) and Date of Birth* the Fund Time Served(4) During Past 5 years Trustee(1) Held by Trustee(2) - -------------------- ----------- -------------- ---------------------------- ------------ -------------------------- Disinterested Trustees Jeffrey S. Burum Trustee 2004- Founder and Chairman of 38 None DOB: February 27, present the Board, National 1963 Community Renaissance (1992-present); Founder, Owner and Partner of Colonies Crossroads, Inc. (2000-present); Owner and Managing Member of Diversified Pacific Development Group, LLC (1998-present). Dr. Judith L. Craven Trustee 2001- Retired. 87 Director, Belo Corporation DOB: October 6, 1945 present (1992-present); Director, Sysco Corporation (1996- present); Director, Luby's Inc. (1998-present). William F. Devin Trustee 2001- Retired. 88 Director, Boston Options DOB: December 30, present Exchange (2001-present). 1938 Samuel M. Eisenstat Chairman 1986- Attorney, solo practitioner. 48 Director, North European DOB: March 7, 1940 of the present Oil Royal Trust. Board Stephen J. Gutman Trustee 1984- Senior Associate, Corcoran 48 None DOB: May 10, 1943 present Group (Real Estate) (2003- present); President and Member of Managing Directors, Beau Brummell Soho LLC (licensing of menswear specialty retailing and other activities) (1988- present). William J. Shea Trustee 2004- Managing Partner, DLB 48 Director, Boston Private DOB: February 9, present Capital, LLC (Private Financial Holdings (2004- 1948 Equity) (2006-present); present). President and CEO, Conseco, Inc. (Financial Services) (2001-2004); Chairman of the Board of Centennial Technologies, Inc. (1998-2001).
79 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- March 31, 2008 -- (unaudited) (continued)
Number of Term of Funds in Position(s) Office and Fund Complex Name, Address Held With Length of Principal Occupation(s) Overseen by Other Trusteeship(s) and Date of Birth* the Fund Time Served(4) During Past 5 years Trustee(1) Held by Trustee(2) - ------------------- ----------- -------------- --------------------------- ------------ -------------------- Interested Trustee Peter A. Harbeck(3) Trustee 1994- President, CEO and 96 None DOB: January 23, present Director, AIG SunAmerica, 1954 (1995-present); Director, AIG SunAmerica Capital Services, Inc. ("AIG SACS") (1993-present); President and CEO, AIG Advisor Group, Inc. (2004- present). Officers John T. Genoy** President December Chief Financial Officer, N/A N/A DOB: November 8, 2007- AIG- SunAmerica (2002- 1968 present present); Senior Vice President, AIG SunAmerica (2003-present); Chief Operating Officer, AIG SunAmerica (2006-present). Donna M. Handel Treasurer 2002- Senior Vice President, AIG N/A N/A DOB: June 25, 1966 present SunAmerica (2004-present); Vice President, AIG SunAmerica (1997-2004). Gregory N. Bressler Secretary 2005- Senior Vice President and N/A N/A DOB: November 17, present General Counsel, AIG 1966 SunAmerica (2005-present); Vice President and Director of U.S. Asset Management Compliance, Goldman Sachs Asset Management L.P. (2004-2005); Deputy General Counsel, Credit Suisse Asset Management (2002-2004); Counsel, Credit Suisse Asset Management (2000-2002).
- -------- ** On December 10, 2007, John T. Genoy was elected President and Chief Executive Officer of the Funds. 80 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- March 31, 2008 -- (unaudited) (continued)
Number of Term of Funds in Position(s) Office and Fund Complex Name, Address Held With the Length of Principal Occupation(s) Overseen by Other Trusteeship(s) and Date of Birth* Fund Time Served(4) During Past 5 years Trustee(1) Held by Trustee(2) - -------------------- ------------- -------------- ---------------------------- ------------ -------------------- Timothy Pettee Vice 2004- Chief Investment Officer, N/A N/A DOB: April 7, 1958 President present AIG SunAmerica (2003- present); Executive Vice President and Global Director of Research, Schroder Investment Management (2000-2003). Michael Cheah Vice 2000- Senior Vice President, AIG N/A N/A DOB: January 4, 1960 President present SunAmerica (1999-present). James Nichols Vice 2006- Director, President and N/A N/A DOB: April 7, 1966 President present CEO, AIG SACS (2006- present); Senior Vice President, AIG SACS (2002-2006); Vice President, AIG SunAmerica (1995-2002). Cynthia Gibbons Chief 2002- Vice President, AIG N/A N/A DOB: December 6, Compliance present SunAmerica (2007- 1967 Officer present); Chief Compliance ("CCO") Officer, AIG SunAmerica (2002-2007); Securities Compliance Manager, American General Corporation (2000-2002). Gregory R. Kingston Vice 2002- Vice President, AIG N/A N/A DOB: January 18, President present SunAmerica (2001- 1966 and present); Vice President, Assistant American General Treasurer Corporation (1999-2001). Nori L. Gabert Vice 2002- Vice President and Deputy N/A N/A DOB: August 15, 1953 President present General Counsel, AIG and SunAmerica (2001- Assistant present); Vice President and Secretary Secretary, AIG Retirement Co. I and AIG Retirement Co. II (2000-present); Associate General Counsel, American General Corporation (1997-2001).
81 SunAmerica Income Funds TRUSTEE AND OFFICER INFORMATION -- March 31, 2008 -- (unaudited) (continued)
Number of Term of Funds in Position(s) Office and Fund Complex Name, Address Held With the Length of Principal Occupation(s) Overseen by Other Trusteeship(s) and Date of Birth* Fund Time Served(4) During Past 5 years Trustee(1) Held by Trustee(2) - -------------------- ------------- -------------- ------------------------- ------------ -------------------- Matthew J. Hackethal Anti- 2006- Senior Compliance N/A N/A DOB: December 31, Money present Manager, AIG SunAmerica 1971 Laundering (2006-present); Vice Compliance President, Credits Suisse Officer Asset Management, LLC (2001-2006); CCO, Credit Suisse Alternative Funds (2005-2006); CCO, Credit Suisse Asset Management Securities, Inc. (2004- 2005).
- -------- * The business address for each Trustee and Officer is Harborside Financial Center, 3200 Plaza 5, Jersey City, NJ 07311-4992. (1) The term "Fund Complex" means two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment services or have a common investment adviser or an investment adviser that is an affiliated person of the investment adviser. The "Fund Complex" includes the Trust (5 funds), SunAmerica Equity Funds (9 funds), SunAmerica Focused Series, Inc. (18 portfolios), SunAmerica Focused Alpha Growth Fund, Inc. (1 fund), SunAmerica Focused Alpha Large-Cap Fund, Inc. (1 fund), SunAmerica Money Market Funds, Inc. (2 funds); Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund), SunAmerica Series Trust (35 portfolios), AIG Retirement Company I (33 portfolios), AIG Retirement Company II (15 portfolios), Seasons Series Trust (24 portfolios) and AIG Series Trust (3 portfolios), AIG Strategic Hedge Fund of Funds (1 fund) and Brazos Mutual Funds (4 funds). (2) Trusteeships of companies required to report to the Commission under the Securities Exchange Act of 1934 (i.e. "public companies") or other investment companies regulated under the 1940 Act. (3) Mr. Harbeck is an "interested person" of the Funds, as defined within the 1940 Act, because he is an officer and a director of the Adviser and a director of the principal underwriter of, the Trust. (4) Trustees serve until their successors are duly elected and qualified, subject to the Trustees' retirement plan as discussed in Note 6 of the financial statements. Each officer will hold office for an indefinite term, until the date he or she resigns or retires or until his/her successor is duly elected and qualifies. Additional information concerning the Trustees and Officers is contained in the Statement of Additional Information and is available without charge by calling (800) 858-8850. 82 SunAmerica Income Funds SHAREHOLDER TAX INFORMATION -- March 31, 2008 -- (unaudited) Certain tax information regarding the SunAmerica Income Funds is required to be provided to shareholders based upon each Fund's income and distributions for the taxable periods ended March 31, 2008. The information and distributions reported herein may differ from the information and distributions taxable to the shareholders for the calendar year ending December 31, 2008. The information necessary to complete your income tax returns will be included with your Form 1099-DIV to be received under separate cover in January 2009. During the year ended March 31, 2008 the Funds paid the following dividends per share along with the percentage of ordinary income dividends that qualified for the 70% dividends received deductions for corporations.
Net Net Net Long- Total Investment Short-Term Term Dividends Income Capital Gains Capital Gains --------- ---------- ------------- ------------- U.S. Government Securities Fund Class A . . . . . . . . . . . . ............... $0.37 $0.37 $ -- $ -- U.S. Government Securities Fund Class B . . . . . . . . . . . . ............... 0.31 0.31 -- -- U.S. Government Securities Fund Class C . . . . . . . . . . . . ............... 0.31 0.31 -- -- GNMA Fund Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.49 0.49 -- -- GNMA Fund Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.42 0.42 -- -- GNMA Fund Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 0.42 0.42 -- -- Strategic Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . . ..... 0.21 0.21 -- -- Strategic Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . . ..... 0.19 0.19 -- -- Strategic Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . . ..... 0.19 0.19 -- -- High Yield Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . ...... 0.34 0.34 -- -- High Yield Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . ...... 0.32 0.32 -- -- High Yield Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . ...... 0.32 0.32 -- -- Tax-Exempt Insured Fund Class A . . . . . . . . . . . . . . . . . . ........... 0.52 0.42* 0.02 0.08 Tax-Exempt Insured Fund Class B . . . . . . . . . . . . . . . . . . ........... 0.39 0.29* 0.02 0.08 Tax-Exempt Insured Fund Class C . . . . . . . . . . . . . . . . . . ........... 0.44 0.34* 0.02 0.08
Qualifying % for the 70% Dividends Received Deduction -------------------- U.S. Government Securities Fund Class A . . . . . . . . . . . . ............... -- % U.S. Government Securities Fund Class B . . . . . . . . . . . . ............... -- U.S. Government Securities Fund Class C . . . . . . . . . . . . ............... -- GNMA Fund Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- GNMA Fund Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- GNMA Fund Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... -- Strategic Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . . ..... 0.67 Strategic Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . . ..... 0.67 Strategic Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . . ..... 0.67 High Yield Bond Fund Class A . . . . . . . . . . . . . . . . . . . . . . ...... 2.27 High Yield Bond Fund Class B . . . . . . . . . . . . . . . . . . . . . . ...... 2.27 High Yield Bond Fund Class C . . . . . . . . . . . . . . . . . . . . . . ...... 2.27 Tax-Exempt Insured Fund Class A . . . . . . . . . . . . . . . . . . ........... -- Tax-Exempt Insured Fund Class B . . . . . . . . . . . . . . . . . . ........... -- Tax-Exempt Insured Fund Class C . . . . . . . . . . . . . . . . . . ........... --
- -------- * Tax exempt interest dividends For the year ended March 31, 2008, certain dividends paid by the Strategic Bond Fund and High Yield Bond Fund may be subject to a maximum tax rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, the following represents the maximum amount that may be considered qualified dividend income:
Portfolio Amount --------- -------- Strategic Bond Fund. $386,287 High Yield Bond Fund 519,370
83 (THIS PAGE INTENTIONALLY LEFT BLANK) 84 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) The following graphs compare the performance of a $10,000 investment in the SunAmerica Income Funds' portfolios to a similar investment in an index. Please note that "inception", as used herein, reflects the date on which a specific class of shares commenced operations. It is important to note that the SunAmerica Income Funds are professionally managed mutual funds, while the indices are not available for investment and are unmanaged. The comparison is shown for illustrative purposes only. The graphs present the performance of the largest class of that particular Fund. The performance of the other classes will vary based upon the difference in sales charges and fees assessed to shareholders of that class. 85 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) The SunAmerica U.S. Government Securities Fund The SunAmerica U.S. Government Securities Fund Class A returned 9.03% (before maximum sales charge) for the annual period ended March 31, 2008, underperforming its benchmark, the Lehman Brothers U.S. Government Index*, which returned 11.45% during the same period. Due to events such as the subprime mortgage crisis and housing correction, growing concern about an economic slowdown, and the drying up of liquidity in the credit markets, the Federal Reserve cut interest rates six times during the fiscal period. As a result, the Federal Funds rate finished the fiscal period at 2.25%, down 300 basis points year-over-year. At the same time, the 10-year Treasury note traded within the 5.30% to 3.31% range, and finished the period at 3.41%, down 124 basis points year-over-year. The easing cycle began in September, as the Federal Open Market Committee lowered the Federal Funds target rate from 5.25% to 4.75% as the tightening of credit conditions had the potential to restrict economic growth and intensify the housing correction. Another round of cuts occurred during the third fiscal quarter as subprime mortgage problems deteriorated further and major financial institutions posted massive write-downs; and the damage continued into the first quarter of this year. The Fund continued to benefit from having minimal exposure to Freddie Mac and Fannie Mae securities. This became more beneficial as the market became increasingly concerned with the credit risks of government-sponsored enterprises. In aggregate, the portfolio held less than 1% of its total assets in Freddie Mac and Fannie Mae Securities as of March 31, 2008. The Fund also benefited from its duration, which was longer than the benchmark, and ended the annual period with a duration that was 10-months longer than its benchmark. - -------- Past performance is no guarantee of future results. U.S. Government guarantee applies only to the underlying securities of the Fund's portfolio and not to the Fund shares. * The Lehman Brothers U.S. Government Index is a broad market value-weighted index of U.S. Treasury securities with maturities of one year or more, securities issued by U.S. Government agencies and quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Fund construction. 86 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) Over the past ten years, $10,000 invested in U.S. Government Securities Fund Class A shares would have increased to $16,288. The same amount invested in securities mirroring the performance of the Lehman Brothers U.S. Government Index would be valued at $18,221. [CHART] U.S. Government Lehman Brothers Securities Fund Class A/#/ Government Bond Index** -------------------------- ----------------------- 3/31/1998 $ 9,527 $10,000 4/30/1998 9,559 10,045 5/31/1998 9,647 10,148 6/30/1998 9,711 10,264 7/31/1998 9,715 10,279 8/31/1998 9,888 10,547 9/30/1998 10,061 10,831 10/31/1998 10,020 10,794 11/30/1998 10,073 10,798 12/31/1998 10,098 10,822 1/31/1999 10,120 10,885 2/28/1999 9,979 10,626 3/31/1999 9,994 10,668 4/30/1999 10,023 10,692 5/31/1999 9,937 10,598 6/30/1999 9,860 10,576 7/31/1999 9,841 10,561 8/31/1999 9,882 10,561 9/30/1999 9,968 10,647 10/31/1999 9,996 10,664 11/30/1999 9,990 10,649 12/31/1999 9,978 10,580 1/31/2000 9,902 10,595 2/29/2000 9,981 10,746 3/31/2000 10,083 10,934 4/30/2000 10,091 10,904 5/31/2000 10,097 10,911 6/30/2000 10,250 11,106 7/31/2000 10,320 11,213 8/31/2000 10,450 11,379 9/30/2000 10,532 11,412 10/31/2000 10,657 11,521 11/30/2000 10,845 11,747 12/31/2000 11,132 11,981 1/31/2001 11,202 12,102 2/28/2001 11,302 12,240 3/31/2001 11,402 12,283 4/30/2001 11,290 12,158 5/31/2001 11,310 12,198 6/30/2001 11,391 12,254 7/31/2001 11,670 12,548 8/31/2001 11,794 12,704 9/30/2001 11,994 12,925 10/31/2001 12,222 13,258 11/30/2001 11,931 12,961 12/31/2001 11,778 12,848 1/31/2002 11,892 12,931 2/28/2002 12,045 13,051 3/31/2002 11,794 12,767 4/30/2002 12,091 13,071 5/31/2002 12,191 13,150 6/30/2002 12,371 13,334 7/31/2002 12,607 13,626 8/31/2002 12,857 13,896 9/30/2002 13,162 14,222 10/31/2002 13,141 14,108 11/30/2002 13,062 13,986 12/31/2002 13,347 14,325 1/31/2003 13,323 14,289 2/28/2003 13,499 14,520 3/31/2003 13,460 14,478 4/30/2003 13,511 14,546 5/31/2003 13,845 14,923 6/30/2003 13,756 14,845 7/31/2003 12,997 14,231 8/31/2003 13,124 14,311 9/30/2003 13,591 14,727 10/31/2003 13,392 14,517 11/30/2003 13,405 14,534 12/31/2003 13,528 14,663 1/31/2004 13,648 14,784 2/29/2004 13,798 14,961 3/31/2004 13,903 15,093 4/30/2004 13,451 14,639 5/31/2004 13,396 14,585 6/30/2004 13,481 14,644 7/31/2004 13,610 14,780 8/31/2004 13,868 15,068 9/30/2004 13,891 15,099 10/31/2004 14,002 15,219 11/30/2004 13,891 15,038 12/31/2004 14,003 15,173 1/31/2005 14,115 15,268 2/28/2005 14,048 15,160 3/31/2005 13,988 15,109 4/30/2005 14,244 15,352 5/31/2005 14,366 15,530 6/30/2005 14,408 15,617 7/31/2005 14,253 15,429 8/31/2005 14,462 15,656 9/30/2005 14,279 15,471 10/31/2005 14,124 15,362 11/30/2005 14,189 15,432 12/31/2005 14,380 15,575 1/31/2006 14,370 15,548 2/28/2006 14,403 15,573 3/31/2006 14,223 15,433 4/30/2006 14,117 15,390 5/31/2006 14,089 15,393 6/30/2006 14,124 15,436 7/31/2006 14,317 15,620 8/31/2006 14,543 15,841 9/30/2006 14,673 15,982 10/31/2006 14,757 16,065 11/30/2006 14,920 16,228 12/31/2006 14,798 16,116 1/31/2007 14,754 16,096 2/28/2007 15,012 16,344 3/31/2007 14,969 16,348 4/30/2007 15,038 16,430 5/31/2007 14,880 16,301 6/30/2007 14,801 16,294 7/31/2007 15,003 16,526 8/31/2007 15,189 16,776 9/30/2007 15,271 16,882 10/31/2007 15,396 17,006 11/30/2007 15,797 17,473 12/31/2007 15,797 17,512 1/31/2008 16,115 17,931 2/29/2008 16,209 18,101 3/31/2008 16,288 18,221 U.S. Government Securities Fund
Class A Class B Class C U.S. ------------------ ------------------ ------------------ Government Average Average Average Securities Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ - ---------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return 3.86% 9.03% 4.33% 8.33% 7.34% 8.34% - ------------------------------------------------------------------------- 5 Year Return 2.88% 21.01% 2.86% 17.15% 3.22% 17.15% - ------------------------------------------------------------------------- 10 Year Return 5.00% 70.97% 4.95% 62.19% NA NA - ------------------------------------------------------------------------- Since Inception* 5.25% 120.41% 6.04% 264.80% 5.08% 54.91% - -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would be lower. * Inception Date - Class A: 10/1/93; Class B: 03/3/86; Class C: 06/1/99. # For the purpose of the graph, it has been assumed that the maximum sales charge of 4.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For the 12-month period ending March 31, 2008, the SunAmerica U.S. Government Securities Fund Class A returned 3.86%, compared to 11.45% for the Lehman Brothers U.S. Government Index. (The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) - -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund convert automatically to Class A shares approximately eight years after purchase. The fund's daily net asset values are not guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or any other agency. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be higher or lower than the original cost. Current performance may be higher or lower than that shown. Performance as of the most recent month end is available at www.sunamericafunds.com. ** The Lehman Brothers U.S. Government Index is a broad market value-weighted index of U.S. Treasury securities with maturities of one year or more, securities issued by U.S. Government agencies and quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S. Government. Indicies are not managed and an investor cannot invest directly into an index. 87 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) The SunAmerica GNMA Fund The SunAmerica GNMA Fund Class A returned 8.69% (before maximum sales charge) for the annual period ended March 31, 2008, outperforming the Fund's benchmark, the Citigroup Mortgage GNMA Index*, which returned 8.09% over the same period. This past year was challenging for the economy and the markets given the subprime mortgage crisis and housing correction, the drying up of liquidity in the credit markets, major financial institutions taking write-downs and obtaining capital infusions, and growing concern over the breadth and depth of the economic slowdown. The Federal Reserve responded by cutting interest rates six times, ending the fiscal year with the Federal Funds rate at 2.25%, down 300 basis points year-over-year. During the annual period, the 10-year Treasury note traded within the 5.30% to 3.31% range, and finished the period at 3.41%, down 124 basis points, year-over-year. During the first quarter of the fiscal period, Treasury and mortgage rates rose as the Federal Open Market Committee held the Federal Funds target rate to 5.25% at their meetings for May and June. The easing cycle began in September when the Federal Open Market Committee lowered the Federal Funds target rate from 5.25% to 4.75%, as the tightening of credit conditions had the potential to intensify the housing correction and restrict economic growth. Another round of cuts occurred during the third fiscal quarter as sub-prime mortgage problems deteriorated further and major financial institutions posted massive write-downs. The final quarter of the fiscal year ended March 31, 2008 provided more disappointing reports regarding economic activity, liquidity concerns and the housing market. In response, the Federal Reserve not only dramatically reduced the Federal Funds Rate to 2.25% and utilized the discount window, but activated other innovative mechanisms in an attempt to improve liquidity and increase confidence. The Fund benefited from the duration of its holdings, which was longer than the benchmark, and ended the annual period with a duration that was 10-months longer than its benchmark. The Fund also benefited from taking an overweight position in intermediate-maturity Treasury securities, as compared to the benchmark. - -------- Past performance is no guarantee of future results. U.S. Government guarantee applies only to the underlying securities of the Fund's portfolio and not to the Fund shares. * The Citigroup Mortgage GNMA Index is a market capitalization-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA). Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Fund construction. 88 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) Over the past ten years, $10,000 invested in GNMA Fund Class A shares would have increased to $16,831. The same amount invested in securities mirroring the performance of the Citigroup Mortgage GNMA Index would be valued at $17,908. [CHART] GNMA Fund Class A/#/ Citigroup Mortgage GNMA Index/**/ ------------------ --------------------------------- 3/31/1998 $ 9,525 $10,000 4/30/1998 9,564 10,058 5/31/1998 9,665 10,128 6/30/1998 9,739 10,169 7/31/1998 9,760 10,221 8/31/1998 9,932 10,304 9/30/1998 10,119 10,424 10/31/1998 10,104 10,416 11/30/1998 10,169 10,468 12/31/1998 10,212 10,514 1/31/1999 10,243 10,588 2/28/1999 10,087 10,566 3/31/1999 10,126 10,628 4/30/1999 10,156 10,681 5/31/1999 10,073 10,630 6/30/1999 10,006 10,591 7/31/1999 9,996 10,519 8/31/1999 10,007 10,512 9/30/1999 10,124 10,692 10/31/1999 10,174 10,749 11/30/1999 10,199 10,755 12/31/1999 10,205 10,726 1/31/2000 10,107 10,641 2/29/2000 10,209 10,775 3/31/2000 10,368 10,942 4/30/2000 10,363 10,931 5/31/2000 10,418 10,980 6/30/2000 10,585 11,182 7/31/2000 10,634 11,237 8/31/2000 10,785 11,404 9/30/2000 10,886 11,519 10/31/2000 10,962 11,602 11/30/2000 11,124 11,763 12/31/2000 11,352 11,927 1/31/2001 11,523 12,122 2/28/2001 11,643 12,179 3/31/2001 11,728 12,248 4/30/2001 11,678 12,274 5/31/2001 11,714 12,373 6/30/2001 11,750 12,399 7/31/2001 12,088 12,622 8/31/2001 12,188 12,716 9/30/2001 12,415 12,888 10/31/2001 12,658 13,055 11/30/2001 12,336 12,946 12/31/2001 12,202 12,911 1/31/2002 12,334 13,051 2/28/2002 12,531 13,175 3/31/2002 12,272 13,053 4/30/2002 12,583 13,277 5/31/2002 12,667 13,369 6/30/2002 12,818 13,471 7/31/2002 13,016 13,622 8/31/2002 13,189 13,733 9/30/2002 13,394 13,848 10/31/2002 13,436 13,892 11/30/2002 13,415 13,898 12/31/2002 13,608 14,037 1/31/2003 13,640 14,081 2/28/2003 13,775 14,157 3/31/2003 13,780 14,153 4/30/2003 13,853 14,186 5/31/2003 14,047 14,194 6/30/2003 14,016 14,234 7/31/2003 13,268 14,009 8/31/2003 13,431 14,092 9/30/2003 13,884 14,309 10/31/2003 13,746 14,277 11/30/2003 13,732 14,334 12/31/2003 13,897 14,460 1/31/2004 14,007 14,532 2/29/2004 14,119 14,628 3/31/2004 14,202 14,689 4/30/2004 13,830 14,458 5/31/2004 13,778 14,418 6/30/2004 13,897 14,550 7/31/2004 14,047 14,675 8/31/2004 14,266 14,897 9/30/2004 14,281 14,927 10/31/2004 14,397 15,052 11/30/2004 14,349 15,011 12/31/2004 14,444 15,121 1/31/2005 14,530 15,213 2/28/2005 14,448 15,163 3/31/2005 14,401 15,124 4/30/2005 14,560 15,282 5/31/2005 14,652 15,395 6/30/2005 14,691 15,446 7/31/2005 14,626 15,395 8/31/2005 14,758 15,523 9/30/2005 14,658 15,456 10/31/2005 14,571 15,383 11/30/2005 14,603 15,420 12/31/2005 14,773 15,626 1/31/2006 14,809 15,670 2/28/2006 14,826 15,703 3/31/2006 14,715 15,594 4/30/2006 14,644 15,537 5/31/2006 14,588 15,499 6/30/2006 14,600 15,505 7/31/2006 14,803 15,726 8/31/2006 15,008 15,985 9/30/2006 15,117 16,080 10/31/2006 15,216 16,196 11/30/2006 15,340 16,355 12/31/2006 15,301 16,333 1/31/2007 15,275 16,332 2/28/2007 15,495 16,537 3/31/2007 15,485 16,567 4/30/2007 15,556 16,649 5/31/2007 15,433 16,558 6/30/2007 15,335 16,456 7/31/2007 15,493 16,591 8/31/2007 15,681 16,797 9/30/2007 15,791 16,937 10/31/2007 15,970 17,111 11/30/2007 16,344 17,452 12/31/2007 16,360 17,475 1/31/2008 16,622 17,775 2/29/2008 16,761 17,863 3/31/2008 16,831 17,908 GNMA Fund
Class A Class B Class C ------------------- ------------------- ------------------- Average Average Average GNMA Annual Cummulative Annual Cummulative Annual Cummulative Fund Return Return+ Return Return+ Return Return+ - ---------------- ------- ----------- ------- ----------- ------- ----------- 1 Year Return 3.55% 8.69% 3.98% 7.98% 6.88% 7.88% - ---------------------------------------------------------------------------- 5 Year Return 3.07% 22.14% 3.06% 18.24% 3.41% 18.24% - ---------------------------------------------------------------------------- 10 Year Return 5.34% 76.71% 5.17% 65.52% NA NA - ---------------------------------------------------------------------------- Since Inception* 5.84% 138.73% 7.40% 492.82% 5.33% 58.19% - ----------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would be lower. * Inception Date - Class A: 10/11/93; Class B: 04/25/83; Class C: 06/1/99. # For the purpose of the graph, it has been assumed that the maximum sales charge of 4.75% of offering, was deducted from the initial $10,000 investment in the Fund. For the 12-month period ending March 31, 2008, the SunAmerica GNMA Fund Class A returned 3.55%, compared to 8.09% for the Citigroup Mortgage GNMA Index. (The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) - -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund convert automatically to Class A shares approximately eight years after purchase. The fund's daily net asset values are not guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or any other agency. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be higher or lower than the original cost. Current performance may be higher or lower than that shown. Performance as of the most recent month end is available at www.sunamericafunds.com. **The Citigroup Mortgage GNMA Index is a market capitalization-weighted index of 15 and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA). Indicies are not managed and an investor cannot invest directly into an index. 89 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) The SunAmerica Strategic Bond Fund The SunAmerica Strategic Bond Fund Class A returned 2.29% (before maximum sales charge) for the fiscal year ended March 31, 2008, underperforming its benchmark, the Lehman Brothers U.S. Aggregate Bond Index*, which returned 7.67% in the annual period. In the second half of 2007, the U.S. economy began to show signs of slowing as commodity prices moved higher, the dollar continued to deteriorate, and inflation concerns mounted. At the same time, the credit market deteriorated rapidly due to fallout associated with the private equity binge, the weak housing market and difficulties in the subprime mortgage market. A primary source of the market dislocation was the liquidity crisis that unfolded due to the inability of certain conduits and structured investment vehicles to refinance their outstanding commercial paper. This inability to refinance served to heighten risk aversion and put severe strain on the companies that rely on the short-term market for funding needs, primarily those in the financial sector. Banks were forced to take large write-downs and their credit lending standards became increasingly tight. Economic data continued to trend negative as we moved into 2008, pointing toward a rapidly-deteriorating environment. Liquidity concerns persisted and losses related to the mortgage market continued to mount. In addition, non-farm payrolls shrunk, consumer confidence dropped and manufacturing contracted as the consumer segment of the market, which had kept the economy afloat for the past few years, finally pulled back on spending. All investment classes were impacted by the confluence of negative events that triggered significant leverage concerns in the fixed income markets. The high-grade and high-yield portions of the Fund were severely impacted by the lack of liquidity and deteriorating health of the financial system. Furthermore, earnings reports and large write-downs in the financial sector caused credit spreads to widen. In March 2008, credit spreads, as measured by the option-adjusted spread of the Lehman Brothers U.S. Credit Index**, reached an all-time high. The securitized product market was under pressure because of concern surrounding the commercial real estate sector, credit market instability, and weak economic data. A relative bright spot for the Fund was its exposure to emerging markets and non-dollar high-grade securities. Emerging markets benefited from a steady flow of investment funds and improved credit fundamentals. The non-dollar segment benefited from a succession of rate cuts by the Federal Open Market Committee which served to further depress the value of the dollar. However, as March came to a close, the term-lending facility established by the Federal Reserve Bank and the effective bail-out of Bear Stearns combined to dramatically improve market sentiment. In the high-grade market, the Fund's exposure to the financial sector detracted from performance as did an allocation to lower-rated credits. Exposure to high-quality, non-dollar denominated credits also contributed to performance. Exposure to Venezuela and Argentina, through government bonds, had a negative impact on the Fund's returns. However, positions held in higher-yielding currencies such as the Canadian and Australian dollar benefited the Fund. Government bonds issued by Canada, Japan and Norway were the best performing bonds in the portfolio during the period. - -------- Past performance is no guarantee of future results. Interest rates and bond prices typically move inversely to each other; therefore, as with any bond fund, the value of an investment in this Fund may go up or down in response to changes in interest rates. * The Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Indices are not managed and an investor cannot invest directly into an index. ** The Lehman Brothers U.S. Credit Index is a broad-based index composed of government and corporate debt issues that are investment grade (rated Baa/BBB or higher). Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Fund construction. 90 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Strategic Bond Fund Class A shares would have increased to $17,523. The same amount invested in securities mirroring the performance of the Lehman Brothers U.S. Aggregate Bond Index would be valued at $17,968. [CHART] Lehman Brothers U.S. Strategic Bond Fund Class A/#/ Aggregate Bond Index /+/ ------------------------------ ------------------------ 3/31/1998 $ 9,523 $10,000 4/30/1998 9,546 10,052 5/31/1998 9,541 10,147 6/30/1998 9,519 10,234 7/31/1998 9,555 10,255 8/31/1998 8,902 10,422 9/30/1998 9,169 10,666 10/31/1998 9,114 10,610 11/30/1998 9,351 10,670 12/31/1998 9,367 10,702 1/31/1999 9,332 10,778 2/28/1999 9,275 10,590 3/31/1999 9,417 10,648 4/30/1999 9,595 10,682 5/31/1999 9,385 10,588 6/30/1999 9,355 10,554 7/31/1999 9,304 10,510 8/31/1999 9,199 10,504 9/30/1999 9,290 10,626 10/31/1999 9,305 10,666 11/30/1999 9,419 10,665 12/31/1999 9,495 10,613 1/31/2000 9,488 10,578 2/29/2000 9,560 10,706 3/31/2000 9,621 10,848 4/30/2000 9,484 10,816 5/31/2000 9,417 10,811 6/30/2000 9,641 11,036 7/31/2000 9,778 11,136 8/31/2000 9,952 11,298 9/30/2000 9,904 11,369 10/31/2000 9,686 11,444 11/30/2000 9,539 11,631 12/31/2000 9,798 11,848 1/31/2001 10,188 12,041 2/28/2001 10,254 12,146 3/31/2001 10,118 12,206 4/30/2001 9,991 12,155 5/31/2001 10,095 12,228 6/30/2001 10,084 12,275 7/31/2001 10,151 12,549 8/31/2001 10,324 12,694 9/30/2001 10,074 12,841 10/31/2001 10,314 13,109 11/30/2001 10,471 12,929 12/31/2001 10,431 12,846 1/31/2002 10,509 12,950 2/28/2002 10,571 13,076 3/31/2002 10,567 12,858 4/30/2002 10,767 13,108 5/31/2002 10,720 13,219 6/30/2002 10,456 13,333 7/31/2002 10,257 13,494 8/31/2002 10,524 13,722 9/30/2002 10,499 13,944 10/31/2002 10,584 13,881 11/30/2002 10,816 13,877 12/31/2002 11,060 14,164 1/31/2003 11,232 14,176 2/28/2003 11,428 14,372 3/31/2003 11,525 14,361 4/30/2003 11,965 14,479 5/31/2003 12,335 14,749 6/30/2003 12,439 14,720 7/31/2003 12,126 14,225 8/31/2003 12,307 14,320 9/30/2003 12,721 14,699 10/31/2003 12,791 14,562 11/30/2003 12,976 14,597 12/31/2003 13,317 14,745 1/31/2004 13,544 14,864 2/29/2004 13,530 15,025 3/31/2004 13,604 15,137 4/30/2004 13,313 14,743 5/31/2004 13,140 14,684 6/30/2004 13,374 14,767 7/31/2004 13,531 14,914 8/31/2004 13,812 15,198 9/30/2004 14,019 15,239 10/31/2004 14,269 15,367 11/30/2004 14,559 15,245 12/31/2004 14,961 15,385 1/31/2005 14,994 15,481 2/28/2005 15,120 15,390 3/31/2005 14,836 15,311 4/30/2005 14,902 15,518 5/31/2005 15,055 15,686 6/30/2005 15,247 15,772 7/31/2005 15,311 15,628 8/31/2005 15,547 15,828 9/30/2005 15,525 15,665 10/31/2005 15,328 15,541 11/30/2005 15,437 15,610 12/31/2005 15,645 15,758 1/31/2006 15,857 15,759 2/28/2006 15,962 15,812 3/31/2006 15,851 15,657 4/30/2006 15,964 15,628 5/31/2006 15,762 15,611 6/30/2006 15,738 15,645 7/31/2006 16,081 15,856 8/31/2006 16,335 16,099 9/30/2006 16,403 16,240 10/31/2006 16,608 16,348 11/30/2006 16,859 16,537 12/31/2006 16,884 16,441 1/31/2007 16,858 16,435 2/28/2007 17,061 16,688 3/31/2007 17,130 16,689 4/30/2007 17,292 16,779 5/31/2007 17,268 16,651 6/30/2007 17,099 16,602 7/31/2007 16,884 16,741 8/31/2007 16,957 16,946 9/30/2007 17,360 17,074 10/31/2007 17,641 17,228 11/30/2007 17,472 17,538 12/31/2007 17,544 17,587 1/31/2008 17,523 17,882 2/29/2008 17,495 17,907 3/31/2008 17,523 17,968 Strategic Bond Fund
Class A Class B Class C ------------------ ------------------ ------------------ Strategic Average Average Average Bond Annual Cumulative Annual Cumulative Annual Cumulative Fund Return Return+ Return Return+ Return Return+ - ---------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -2.54% 2.29% -2.24% 1.61% 0.67% 1.64% - ------------------------------------------------------------------------- 5 Year Return 7.71% 52.04% 7.73% 47.13% 8.06% 47.35% - ------------------------------------------------------------------------- 10 Year Return 5.77% 84.00% 5.71% 74.27% 5.62% 72.73% - ------------------------------------------------------------------------- Since Inception* 6.72% 168.02% 7.24% 166.00% 6.97% 156.93% - -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would be lower. * Inception Date - Class A: 11/1/93; Class B: 04/1/94; Class C: 04/1/94. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 4.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For the 12-month period ending March 31, 2008, the SunAmerica Strategic Bond Fund Class A returned -2.54%, compared to 7.67% for the Lehman Brothers U.S. Aggregate Bond Index. (The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) - -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund convert automatically to Class A shares approximately eight years after purchase. The fund's daily net asset values are not guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or any other agency. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be higher or lower than the original cost. Current performance may be higher or lower than that shown. Performance as of the most recent month end is available at www.sunamericafunds.com. + The Lehman Brothers U.S. Aggregate Bond Index represents securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment-grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Indices are not managed and an investor cannot invest directly into an index. 91 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) The SunAmerica High Yield Bond Fund The SunAmerica High Yield Bond Fund Class A returned -5.92% (before maximum sales charge) for the annual period ended March 31, 2008, underperforming its benchmark, the Citigroup High Yield Market Index*, which returned -3.58%. The high-yield market finished the year down as option-adjusted spreads widened 537 basis points to close out the fiscal year at 830 basis points off of Treasuries. A deteriorating economic backdrop and subprime concerns triggered one of the deepest and longest sell-offs in five years. Treasury spreads tightened 123 basis points in the period as investors' appetite for risk dwindled. The primary market was exceptionally light over the second half of the year as the credit crunch forced a number of companies to rework or cancel their deals. The investment banks continue to work down the approximately $180 billion of bridge financings, a method of financing used by companies prior to their initial public offering, to obtain cash from operations. The Federal Reserve cut the discount rate 300 basis points during the fiscal year in an effort to shore up the financial markets which were plagued with subprime mortgage issues, asset backed market problems and overall economic concerns. For the fiscal year ended March 31, 2008, sector selection was the primary positive contributor to the Fund's performance. Notable contributors were our underweight positions within the publishing and finance groups, as these sectors underperformed relative to the index. Our overweight position within healthcare was also a positive contributor as the sector outperformed the index. Security selection was the primary negative contributor to the Fund's performance for the period. The primary detractor was our holding in iPCS, Inc. within the wireless sector. To a lesser extent, Aleris International Inc. and Travelport LLC, within the metals and mining and services sectors, respectively, were negative contributors to performance for the period. On the positive side, Eldorado Resorts, Atlas Air Inc. and Calpine Corp within the gaming, transportation and utilities sectors, respectively, were the primary contributors to performance for the period. - -------- Past performance is no guarantee of future results. High-yield bonds tend to have lower interest-rate risk than higher-quality bonds of similar maturity but carry greater credit and default risk. Interest rates and bond prices typically move inversely to each other: therefore, as with any bond fund, the value of an investment in this Fund may go up or down in response to changes in interest rates. * The Citigroup High Yield Market Index is a broad-based, unmanaged index of high-yield securities. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Fund construction. 92 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) Since inception*, $10,000 invested in High Yield Bond Fund Class A shares would have increased to $15,733. The same amount invested in securities mirroring the performance of the Citigroup High Yield Market Index would be valued at $17,072. [CHART] High Yield Bond Citigroup High Fund Class A/#/ Yield Market Index ------------- ------------------ 11/2/1998 $ 9,524 $10,000 11/30/1998 9,666 10,502 12/31/1998 9,625 10,494 1/31/1999 9,774 10,652 2/28/1999 9,814 10,562 3/31/1999 9,999 10,651 4/30/1999 10,279 10,874 5/31/1999 10,043 10,703 6/30/1999 10,018 10,680 7/31/1999 10,063 10,703 8/31/1999 9,928 10,575 9/30/1999 9,866 10,495 10/31/1999 9,741 10,424 11/30/1999 9,909 10,587 12/31/1999 10,015 10,676 1/31/2000 9,923 10,588 2/29/2000 9,925 10,613 3/31/2000 9,710 10,397 4/30/2000 9,785 10,439 5/31/2000 9,725 10,293 6/30/2000 9,900 10,524 7/31/2000 9,945 10,639 8/31/2000 10,139 10,718 9/30/2000 10,044 10,603 10/31/2000 9,745 10,289 11/30/2000 9,224 9,868 12/31/2000 9,356 10,070 1/31/2001 10,021 10,748 2/28/2001 10,155 10,877 3/31/2001 9,877 10,679 4/30/2001 9,679 10,522 5/31/2001 9,817 10,691 6/30/2001 9,591 10,397 7/31/2001 9,631 10,593 8/31/2001 9,756 10,737 9/30/2001 9,345 9,964 10/31/2001 9,533 10,295 11/30/2001 9,752 10,687 12/31/2001 9,689 10,618 1/31/2002 9,678 10,663 2/28/2002 9,497 10,547 3/31/2002 9,692 10,828 4/30/2002 9,784 11,006 5/31/2002 9,620 10,869 6/30/2002 8,904 9,912 7/31/2002 8,521 9,464 8/31/2002 8,568 9,824 9/30/2002 8,464 9,631 10/31/2002 8,384 9,598 11/30/2002 8,849 10,330 12/31/2002 8,953 10,456 1/31/2003 9,207 10,845 2/28/2003 9,274 10,990 3/31/2003 9,454 11,361 4/30/2003 10,016 12,066 5/31/2003 10,195 12,146 6/30/2003 10,533 12,524 7/31/2003 10,479 12,339 8/31/2003 10,610 12,465 9/30/2003 10,983 12,835 10/31/2003 11,174 13,133 11/30/2003 11,364 13,316 12/31/2003 11,743 13,657 1/31/2004 12,142 13,894 2/29/2004 11,988 13,818 3/31/2004 11,917 13,904 4/30/2004 11,939 13,857 5/31/2004 11,737 13,617 6/30/2004 12,058 13,820 7/31/2004 12,145 13,997 8/31/2004 12,286 14,253 9/30/2004 12,456 14,447 10/31/2004 12,747 14,747 11/30/2004 13,201 14,916 12/31/2004 13,596 15,131 1/31/2005 13,675 15,110 2/28/2005 13,914 15,337 3/31/2005 13,497 14,906 4/30/2005 13,275 14,701 5/31/2005 13,538 15,003 6/30/2005 13,871 15,255 7/31/2005 14,236 15,475 8/31/2005 14,535 15,540 9/30/2005 14,430 15,384 10/31/2005 14,241 15,270 11/30/2005 14,401 15,309 12/31/2005 14,597 15,445 1/31/2006 14,914 15,687 2/28/2006 14,952 15,766 3/31/2006 15,064 15,879 4/30/2006 15,276 15,966 5/31/2006 15,262 15,955 6/30/2006 15,212 15,886 7/31/2006 15,398 16,058 8/31/2006 15,721 16,326 9/30/2006 15,907 16,552 10/31/2006 16,132 16,790 11/30/2006 16,253 17,069 12/31/2006 16,445 17,274 1/31/2007 16,529 17,437 2/28/2007 16,709 17,679 3/31/2007 16,723 17,705 4/30/2007 16,947 17,945 5/31/2007 16,998 18,080 6/30/2007 16,763 17,735 7/31/2007 16,172 17,154 8/31/2007 16,330 17,362 9/30/2007 16,731 17,821 10/31/2007 16,867 17,935 11/30/2007 16,554 17,539 12/31/2007 16,594 17,592 1/31/2008 15,973 17,370 2/29/2008 15,682 17,145 3/31/2008 15,733 17,072 High Yield Bond Fund
Class A Class B Class C ------------------ ------------------ ------------------ Average Average Average Annual Cumulative Annual Cumulative Annual Cumulative High Yield Bond Return Return+ Return Return+ Return Return+ - ---------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -10.43% -5.92% -9.99% -6.50% -7.54% -6.67% - ------------------------------------------------------------------------- 5 Year Return 9.66% 66.41% 9.80% 61.59% 9.99% 61.01% - ------------------------------------------------------------------------- 10 Year Return NA NA NA NA NA NA - ------------------------------------------------------------------------- Since Inception* 4.93% 65.19% 5.67% 67.97% 5.37% 48.89% - -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, the return would be lower. * Inception Date - Class A: 11/2/98; Class B: 11/2/98; Class C: 08/21/00. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 4.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For the 12-month period ending March 31, 2008, the SunAmerica High Yield Bond Fund Class A returned -10.43%, compared to -3.58% for the Citigroup High Yield Market Index. (The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) - -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund convert automatically to Class A shares approximately eight years after purchase. The fund's daily net asset values are not guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or any other agency. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be higher or lower than the original cost. Current performance may be higher or lower than that shown. Performance as of the most recent month end is available at www.sunamericafunds.com. + The Citigroup High Yield Market Index is a broad-based, unmanaged index of high-yield securities. Indices are not managed and an investor cannot invest directly into an index. 93 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) The SunAmerica Tax Exempt Insured Fund The SunAmerica Tax Exempt Insured Fund Class A returned 0.91% (before maximum sales charge) for the annual period ended March 31, 2008. The Fund's benchmark, the Lehman Brothers Municipal Bond Index*, returned 1.90% over the same period. The economy slowed dramatically in the last quarter of 2007 and the first quarter of 2008 as a result of uncertainty surrounding the credit crisis and continued concerns about the housing market. Beginning in September 2007, the Federal Reserve aggressively reduced the Federal Funds rate by 300 basis points to 2.25% during the year ended March 31, 2008, with the outlook toward lower growth. As of March 31, 2008, the municipal market underperformed taxable alternatives as several of the monoline bond insurers were downgraded, which caused forced selling. As a result, yields on municipal bonds rose and prices fell. Specifically, the 10-year AAA municipal yield, as a percentage of the 10-year Treasury note, ended the annual period at over 108%, as compared to a one-year average of 87%. The municipal yield curve steepened significantly, ending the year at a 267 basis point spread between the 2- and 30-year yields. The steepening was caused by shorter-maturity yields declining as the yield of longer-maturity bonds rose. By comparison, the 2- to 30-year municipal yield curve slope was 58 basis points at the beginning of the annual period. In addition, credit spreads generally widened as the bond insurers' participation rate declined in the new issue market. The Fund's performance was helped by security selection in the 15-year and shorter maturity ranges; these yields declined as the yield curve steepened, which resulted in outperformance. Conversely, bonds maturing beyond 15-years detracted from performance. Nevertheless, pre-refunded holdings helped to offset some of the losses because of narrowing spreads that resulted from increased investor demand for U.S. Treasury-escrowed securities. State of Alabama and State of New York Thruway Authority bonds in the 10-year maturity range, which have outperformed since the time of purchase, also had a positive impact on Fund performance. Conversely, the Fund's performance was hurt by the purchase of Douglas County, Georgia and Augusta, Georgia Water and Sewer bonds in the 15- to 20-year maturity range, which have underperformed since the time of purchase as municipal yields rose in this maturity range. - -------- Past performance is no guarantee of future results. Interest rates and bond prices typically move inversely to each other, therefore, as with any bond fund, the value of an investment in this Fund may go up or down in response to changes in interest rates. * The Lehman Brothers Municipal Bond Index is a market value-weighted index for the tax-exempt bond market. Indices are not managed and an investor cannot invest directly into an index. Securities listed may or may not be a part of current Fund construction. 94 SunAmerica Income Funds COMPARISONS: PORTFOLIOS vs. INDICES -- (unaudited) (continued) Over the past ten years, $10,000 invested in Tax Exempt Insured Fund Class A shares would have increased to $13,897. The same amount invested in securities mirroring the performance of the Lehman Brothers Municipal Bond Index would be valued at $16,276. [CHART] Tax Exempt Lehman Brothers Insured Fund Municipal Bond Class A/#/ Index/+/ --------------- --------------- 3/31/1998 $ 9,525 $10,000 4/30/1998 9,449 9,955 5/31/1998 9,631 10,112 6/30/1998 9,650 10,152 7/31/1998 9,661 10,178 8/31/1998 9,815 10,335 9/30/1998 9,953 10,464 10/31/1998 9,903 10,464 11/30/1998 9,921 10,500 12/31/1998 9,970 10,527 1/31/1999 10,086 10,652 2/28/1999 9,993 10,605 3/31/1999 9,958 10,620 4/30/1999 9,977 10,647 5/31/1999 9,882 10,585 6/30/1999 9,709 10,433 7/31/1999 9,750 10,470 8/31/1999 9,661 10,387 9/30/1999 9,648 10,391 10/31/1999 9,534 10,278 11/30/1999 9,647 10,388 12/31/1999 9,612 10,310 1/31/2000 9,519 10,265 2/29/2000 9,651 10,385 3/31/2000 9,838 10,612 4/30/2000 9,773 10,549 5/31/2000 9,690 10,494 6/30/2000 9,944 10,772 7/31/2000 10,087 10,922 8/31/2000 10,221 11,090 9/30/2000 10,160 11,033 10/31/2000 10,264 11,153 11/30/2000 10,334 11,237 12/31/2000 10,634 11,515 1/31/2001 10,717 11,629 2/28/2001 10,757 11,666 3/31/2001 10,831 11,771 4/30/2001 10,635 11,643 5/31/2001 10,765 11,768 6/30/2001 10,863 11,847 7/31/2001 11,028 12,023 8/31/2001 11,203 12,221 9/30/2001 11,155 12,180 10/31/2001 11,286 12,325 11/30/2001 11,132 12,221 12/31/2001 10,993 12,105 1/31/2002 11,152 12,315 2/28/2002 11,314 12,464 3/31/2002 11,034 12,219 4/30/2002 11,258 12,458 5/31/2002 11,322 12,534 6/30/2002 11,431 12,666 7/31/2002 11,611 12,829 8/31/2002 11,766 12,983 9/30/2002 12,071 13,268 10/31/2002 11,742 13,048 11/30/2002 11,648 12,994 12/31/2002 11,915 13,268 1/31/2003 11,841 13,234 2/28/2003 12,040 13,419 3/31/2003 12,036 13,427 4/30/2003 12,135 13,516 5/31/2003 12,407 13,833 6/30/2003 12,326 13,774 7/31/2003 11,872 13,292 8/31/2003 12,009 13,391 9/30/2003 12,356 13,785 10/31/2003 12,265 13,715 11/30/2003 12,376 13,858 12/31/2003 12,481 13,973 1/31/2004 12,530 14,053 2/29/2004 12,731 14,264 3/31/2004 12,630 14,215 4/30/2004 12,333 13,878 5/31/2004 12,268 13,828 6/30/2004 12,300 13,878 7/31/2004 12,441 14,061 8/31/2004 12,679 14,342 9/30/2004 12,732 14,419 10/31/2004 12,835 14,543 11/30/2004 12,713 14,423 12/31/2004 12,878 14,599 1/31/2005 13,014 14,735 2/28/2005 12,967 14,686 3/31/2005 12,851 14,594 4/30/2005 13,045 14,824 5/31/2005 13,148 14,929 6/30/2005 13,211 15,021 7/31/2005 13,113 14,953 8/31/2005 13,247 15,104 9/30/2005 13,137 15,002 10/31/2005 13,037 14,911 11/30/2005 13,070 14,983 12/31/2005 13,180 15,112 1/31/2006 13,187 15,153 2/28/2006 13,281 15,254 3/31/2006 13,163 15,149 4/30/2006 13,146 15,144 5/31/2006 13,184 15,212 6/30/2006 13,125 15,154 7/31/2006 13,267 15,335 8/31/2006 13,463 15,562 9/30/2006 13,553 15,670 10/31/2006 13,645 15,768 11/30/2006 13,768 15,900 12/31/2006 13,701 15,844 1/31/2007 13,653 15,803 2/28/2007 13,819 16,011 3/31/2007 13,771 15,972 4/30/2007 13,788 16,019 5/31/2007 13,707 15,948 6/30/2007 13,636 15,866 7/31/2007 13,731 15,989 8/31/2007 13,704 15,920 9/30/2007 13,850 16,155 10/31/2007 13,883 16,227 11/30/2007 13,987 16,331 12/31/2007 14,032 16,376 1/31/2008 14,094 16,583 2/29/2008 13,531 15,823 3/31/2008 13,897 16,276 Tax Exempt Insured Fund
Class A Class B Class C ------------------ ------------------ ------------------ Average Average Average Tax Exempt Annual Cumulative Annual Cumulative Annual Cumulative Insured Fund Return Return+ Return Return+ Return Return+ - ---------------- ------- ---------- ------- ---------- ------- ---------- 1 Year Return -3.87% 0.91% -3.81% 0.06% -0.68% 0.29% - ------------------------------------------------------------------------- 5 Year Return 1.91% 15.47% 1.79% 11.09% 2.26% 11.80% - ------------------------------------------------------------------------- 10 Year Return 3.35% 45.91% 3.27% 38.02% NA NA - ------------------------------------------------------------------------- Since Inception* 5.29% 232.33% 3.89% 73.84% 3.27% 32.84% - -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been included, return would be lower. * Inception Date - Class A: 11/22/85; Class B: 10/4/93; Class C: 06/1/99. # For the purposes of the graph, it has been assumed that the maximum sales charge, of 4.75% of offering price, was deducted from the initial $10,000 investment in the Fund. For the 12-month period ending March 31, 2008, SunAmerica Tax Exempt Insured Fund Class A returned -3.87%, compared to 1.90% for the Lehman Brothers Municipal Bond Index. (The performance data and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.) - -------- Performance data quoted represents past performance and is no guarantee of future results. Maximum Sales Charge: Class A: 4.75%, Class B: 4.00% Contingent Deferred Sales Charge (CDSC), Class C: 1.00% CDSC. Class B shares of the Fund convert automatically to Class A shares approximately eight years after purchase. The fund's daily net asset values are not guaranteed and shares are not insured by the FDIC, the Federal Reserve Board or any other agency. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be higher or lower than the original cost. Current performance may be higher or lower than that shown. Performance as of the most recent month end is available at www.sunamericafunds.com. + The Lehman Brothers Municipal Bond Index is a market value-weighted index for the tax-exempt bond market. Indices are not managed and an investor cannot invest directly into an index. 95 [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 and third fiscal quarters Officers is available in the on Form N-Q. The Trust's John T. Genoy, President Trust's Statement of Forms N-Q are available Donna M. Handel, Additional Information, on the U.S. Securities Treasurer may be ob-tained without and Exchange Commis-sion James Nichols, Vice charge upon request, by website at www.sec.gov. President calling (800) 858-8850. You can also review and Timothy Pettee, Vice The in-formation is also obtain copies of the President available from the EDGAR Forms N-Q at the U.S. Michael Cheah, Vice database on the U.S. Securities and Exchange President Secu-rities and Exchange Commission Public Cynthia Gibbons, Vice Commission's website at Refer-ence Room in President and Chief http://www.sec.gov. Washington DC Compliance Officer (information on the Gregory N. Bressler, DELIVERY OF SHAREHOLDER operation of the Public Chief Legal Officer DOCUMENTS Reference Room may be and Secretary The Funds have adopted a ob-tained by calling Nori L. Gabert, Vice policy that allows them 1-800-SEC-0330). President and to send only one copy of Assistant Secretary a Fund's prospectus, PROXY VOTING RECORD ON Kathleen Fuentes, proxy material, annual SUNAMERICA INCOME FUNDS Assistant Secretary report and semi-annual Information regarding how John E. McLean, report (the "shareholder the Funds voted proxies Assistant Secretary documents") to relating to securities Richard J. Barton, shareholders with held in the Funds during Assistant Secretary multiple accounts the most recent twelve Gregory R. Kingston, residing at the same month period ended June Vice President and "household." This 30 is available, once Assistant Treasurer practice is called filed with the U.S. Christopher A. Okeke, householding and reduces Securities and Exchange Assistant Treasurer Fund expenses, which Commission, without Matthew J. Hackethal, benefits you and other charge, upon request, by Anti-Money Laundering shareholders. Unless the calling (800) 858-8850 or Compliance Officer Funds receive on the U.S. Securities instructions to the and Exchange Commission's Investment Adviser con-trary, you will only website at receive one copy of the http://www.sec.gov. AIG SunAmerica Asset Management Corp. shareholder documents. Harborside Financial The Funds will continue This report is submitted Center to household the solely for the general 3200 Plaza 5 share-holder documents information of Jersey City, NJ indefinitely, until we shareholders of the 07311-4992 are instructed otherwise. Funds. Distribution of If you do not wish to this report to persons Distributor participate in other than shareholders AIG SunAmerica Capital householding please of the Funds is Services, Inc. contact Shareholder authorized only in Harborside Financial Services at (800) con-nection with a Center 858-8850 ext. 6010 or currently effective 3200 Plaza 5 send a written request pro-spectus, setting Jersey City, NJ with your name, the name forth details of the 07311-4992 of your fund(s) and your Funds, which must precede account number(s) to AIG or accom-pany this report. Shareholder Servicing SunAmerica Mutual Funds Agent c/o BFDS, P.O. Box AIG SunAmerica Fund 219186, Kansas City MO, Services, Inc. 64121-9186. We will Harborside Financial resume individual Center mailings for your account 3200 Plaza 5 within thirty (30) days Jersey City, NJ of receipt of your 07311-4992 request. Custodian and Transfer Agent State Street Bank and Trust Company P.O. Box 419572 Kansas City, MO 64141-6572
96 Distributed by: AIG SunAmerica Capital Services, Inc. Investors should carefully consider a Fund's investment objectives, risks, charges and expenses before investing. The prospectus, containing this and other important information, can be obtained from your financial adviser, the AIG SunAmerica Sales Desk at 800-858-8850, ext. 6003, or at www.sunamericafunds.com. Read the prospectus carefully before investing. www.sunamericafunds.com INANN - 3/08 [LOGO] AIG Sun America Mutual Funds live longer retire stronger/sm/ Item 2. Code of Ethics. The SunAmerica Income Funds (the "registrant") has adopted a Code of Ethics applicable to its Principal Executive and Principal Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. Item 3. Audit Committee Financial Expert. The registrant's Board of Trustees has determined that William J. Shea, the Chairman of the registrant's Audit Committee, qualifies as an audit committee financial expert, as defined in the instructions to Item 3(b) of Form N-CSR. Mr. Shea is considered to be "independent" for purposes of Item 3(a)(2) of Form N-CSR. Item 4. Principal Accountant Fees and Services. (a)--(d) Aggregate fees billed to the registrant for the last two fiscal years for services rendered by the registrant's principal accountant were as follows: 2008 2007 (a) Audit Fees ....................$ 144,643 $ 135,755 (b) Audit-Related Fees ............$ 0 $ 0 (c) Tax Fees ......................$ 54,874 $ 54,670 (d) All Other Fees ................$ 0 $ 0 Audit Fees include amounts related to the audit of the registrant's annual financial statements and services normally provided by the principal accountant in connection with statutory and regulatory filings. Tax Fees principally include tax compliance, tax advice, tax planning and preparation of tax returns. Aggregate fees billed to the investment adviser and Adviser Affiliates (as defined below in Item 4(e)) that are required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X for the last two fiscal years for services rendered by the Registrant's principal accountant were as follows: 2008 2007 (b) Audit-Related Fees ............$ 0 $ 0 (c) Tax Fees ......................$ 0 $ 0 (d) All Other Fees ................$ 0 $ 0 (e) (1) The registrant's audit committee pre-approves all audit services provided by the registrant's principal accountant for the registrant and all non-audit services provided by the registrant's principal accountant for the registrant, its investment adviser and any entity controlling, controlled by, or under common control with the investment adviser ("Adviser Affiliates") that provides ongoing services to the registrant, if the engagement by the investment adviser or Adviser Affiliates relates directly to the operations and financial reporting of the registrant. The audit committee has not presently established any pre-approval policies and procedures that permit the pre-approval of the above services other than by the full audit committee. Certain de minimis exceptions are allowed for non- audit services in accordance with Rule 2-01(c)(7)(i)(C) of Regulation S-X as set forth in the Registrant's audit committee charter. (2) No services included in (b)-(d) above in connection with fees billed to the registrant or the investment adviser or Adviser Affiliates were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2- 01 of Regulation S-X. (f) Not Applicable. (g) The aggregate fees billed for the most recent fiscal year and the preceding fiscal year by the registrant's principal accountant for non-audit services rendered to the registrant, its investment adviser, and Adviser Affiliates that provides ongoing services to the registrant for 2008 and 2007 were $521,528 and $537,120, respectively. (h) Non-audit services rendered to the registrant's investment adviser and any Adviser Affiliate that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X were considered by the registrant's audit committee as to whether they were compatible with maintaining the principal accountant's independence. 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) Code of Ethics applicable to its Principal Executive and Principle Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406. Code of Ethics. (2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT. (3) Not applicable. (b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) and Section 906 of the Sarbanes- Oxley Act of 2002 attached hereto as Exhibit 99.906.CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SunAmerica Income Funds By: /s/ John T. Genoy ------------------- John T. Genoy President Date: June 6, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ John T. Genoy ------------------- John T. Genoy President Date: June 6, 2008 By: /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer Date: June 6, 2008 EX-99.CODE 2 dex99code.txt CODE OF ETHICS Exhibit 99.406 ANCHOR SERIES TRUST AIG SERIES TRUST SUNAMERICA EQUITY FUNDS SUNAMERICA FOCUSED SERIES, INC. SUNAMERICA INCOME FUNDS SUNAMERICA MONEY MARKET FUNDS, INC. SUNAMERICA SENIOR FLOATING RATE FUND, INC. SUNAMERICA FOCUSED ALPHA GROWTH FUND, INC. SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC. (COLLECTIVELY, THE "FUNDS") CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND PRINCIPAL ACCOUNTING OFFICERS I. INTRODUCTION The Boards of Directors/Trustees of the Funds (the "Boards") have adopted this Code of Ethics (this "Code") pursuant to Section 406 of the Sarbanes-Oxley Act applicable to the Funds' Principal Executive Officer and Principal Accounting Officer (the "Covered Officers" each of whom is set forth in Exhibit A) for the purpose of promoting: . Honest and ethical conduct, including the ethical handling of conflicts of interest between personal and professional relationships; . Full, fair, accurate, timely and understandable disclosure; . Compliance with applicable laws and governmental rules and regulations; . The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and . Accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST A "conflict of interest" occurs when a Covered Officer's private interest improperly interferes with the interests of, or his or her service to, a Trust. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of his or her position with the Trust. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the "Investment Company Act") and the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as "affiliated persons" of the Funds. The compliance programs and procedures of the Funds and the Funds' investment adviser, AIG SunAmerica Asset Management Corp. ("SAAMCo"), are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between, the Funds and SAAMCo, of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Funds or for SAAMCo, or for both), be involved in establishing policies and implementing decisions that will have different effects on the Funds and SAAMCo. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and SAAMCo and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Boards that the Covered Officers may also be officers or employees of other investment companies advised by SAAMCo. In particular, each Covered Officer must: . Not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by a Trust whereby the Covered Officer would benefit personally to the detriment of the Trust; . Not cause a Trust to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Trust; and . Report at least annually to the Ethics Committee any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest. There are certain potential conflict of interest situations that should be discussed with the Ethics Committee if material. Examples of these include: . Service as a director on the board of any company; . The receipt of any non-nominal gifts; . The receipt of any entertainment from any company with which a Trust has current or prospective business dealings unless such entertainment is business- 2 related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; . Any ownership interest in, or any consulting or employment relationship with, any of the Funds' service providers, other than SAAMCo, the Funds' principal underwriter or any affiliated person thereof; . A direct or indirect financial interest in commissions, transaction charges or spreads paid by a Trust for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. III. DISCLOSURE AND COMPLIANCE . Each Covered Officer should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; . Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Boards and auditors, or to governmental regulators and self-regulatory organizations; . Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and SAAMCo with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents that the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and . It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. IV. REPORTING AND ACCOUNTABILITY Each Covered Officer must: . Upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Boards that he or she has received, read and understands the Code; . Annually thereafter affirm to the Boards that he or she has complied with the requirements of the Code; . Not retaliate against any other Covered Officer or affiliated person of the Funds for reports of potential violations of this Code that are made in good faith; and 3 . Notify the Ethics Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Ethics Committee is responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret this Code in any particular situation. The Ethics Committee will also consider waivers sought by the Covered Officers. The Funds will act according to the following procedures in investigating and enforcing this Code: . The Ethics Committee will take all appropriate action to investigate any potential violations reported to it; . If, after such investigation, the Ethics Committee believes that no violation has occurred, the Ethics Committee is not required to take any further action; . If the Ethics Committee determines that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of SAAMCo or its board; or a recommendation to dismiss the Covered Officer; . The Ethics Committee will be responsible for granting waivers, as appropriate; . The Ethics Committee will inform the Boards of violations or waivers of this Code; and . Any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. V. OTHER POLICIES AND PROCEDURES This Code shall be the sole Code of Ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to investment companies thereunder. Insofar as other policies or procedures of the Funds, SAAMCo, the Funds' principal underwriter or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Code of Ethics of the Funds, SAAMCo and the Funds' principal underwriter, under Rule 17j-1 of the Investment Company Act, and SAAMCo's more detailed policies and procedures set forth in the SAAMCo Compliance Procedures Manual are separate requirements applying to Covered Officers and others, and are not part of this Code. VI. AMENDMENTS 4 Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Boards. VII. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Funds, the Ethics Committee, SAAMCo and the Boards and their independent counsel. VIII. INTERNAL USE The Code is intended solely for internal use by the Funds and does not constitute an admission, by or on behalf of the Funds, as to any fact, circumstance or legal conclusion. Date: August 7, 2003 5 EXHIBIT A John T Genoy, as President of the Funds Donna M. Handel, as Treasurer of the Funds 6 EX-99.CERT 3 dex99cert.txt CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT Exhibit 99.CERT CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT I, John T. Genoy, 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: May 19, 2008 /s/ John T. Genoy ------------------- John T. Genoy 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: May 19, 2008 /s/ Donna M. Handel ------------------- Donna M. Handel Treasurer EX-99.906CERT 4 dex99906cert.txt CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT Exhibit 99.906.CERT CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT John T. Genoy, 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: May 19, 2008 /s/ John T. Genoy --------------- John T. Genoy President /s/ Donna M. Handel --------------- Donna M. Handel Treasurer -----END PRIVACY-ENHANCED MESSAGE-----