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 811-04801
---------------------------------------------
SunAmerica Equity Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Harborside Financial Center, 3200 Plaza 5 Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Vincent M. Marra
Senior Vice President & Chief Operating Officer
AIG SunAmerica Asset Management Corp.
Harborside Financial Center,
3200 Plaza 5
Jersey City, NJ 07311
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (201) 324-6464
-----------------------------
Date of fiscal year end: September 30, 2004
--------------------------
Date of reporting period: September 30, 2004
-------------------------
Item 1. Reports to Stockholders
SunAmerica Equity Funds, Annual Report at September 30, 2004.
[GRAPHIC]
SunAmerica
THE RETIREMENT SPECIALIST
Equity Funds
2004 ANNUAL REPORT
[LOGO]
AIG Sun America
Mutual Funds
September 30, 2004 ANNUAL REPORT
SUNAMERICA EQUITY FUNDS
SunAmerica Blue Chip Growth Fund (SVLAX)
SunAmerica Growth Opportunities Fund (SGWAX)
SunAmerica New Century Fund (SEGAX)
SunAmerica Growth and Income Fund (SEIAX)
SunAmerica Balanced Assets Fund (SBAAX)
SunAmerica International Equity Fund (SIEAX)
SunAmerica Value Fund (SSVAX)
SunAmerica Biotech/Health Fund (SBHAX)
Tax Managed Equity Fund (TXMAX)
Table of Contents
SHAREHOLDER LETTER.......................................................... 2
EXPENSE EXAMPLE............................................................. 4
STATEMENT OF ASSETS AND LIABILITIES......................................... 7
STATEMENT OF OPERATIONS..................................................... 11
STATEMENT OF CHANGES IN NET ASSETS.......................................... 14
FINANCIAL HIGHLIGHTS........................................................ 19
PORTFOLIO OF INVESTMENTS.................................................... 28
NOTES TO FINANCIAL STATEMENTS............................................... 57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..................... 78
TRUSTEE INFORMATION......................................................... 79
SHAREHOLDER TAX INFORMATION................................................. 80
COMPARISONS: FUNDS VS. INDEXES.............................................. 81
Shareholder Letter
Dear Shareholders,
We are pleased to present you with this annual performance summary of the
SunAmerica Equity Funds. As always, we look forward to this opportunity to
share with you the economic and market conditions that have shaped the
investment environment over the past year. The Funds' most recent annual period
began October 1, 2003 and ended September 30, 2004.
Domestic Market and Economic Review
From an economic perspective, this period was characterized by both moderate
growth and low inflation, creating a positive backdrop for equity markets. As
investors may recall, the outset of the annual period was a bullish time. The
economic recovery that had begun the previous spring still retained
considerable strength, as witnessed by dramatic growth in GDP, surging
corporate earnings and rising stock prices. A new corporate profit cycle, which
began earlier last year, continued in this annual period through expansive
corporate earnings growth. The levels of growth were remarkably strong, over
20% for four consecutive quarters, beginning in mid-2003 and lasting through
mid-2004. During the months from October through most of February, stocks
across all categories reflected this growth, with small-cap, mid-cap and growth
stocks definitively leading the charge.
As the fiscal year progressed, uncertainty regarding numerous important issues
created difficulties for equities. The length and complexity of the war in
Iraq, rapidly escalating oil prices, rising interest rates, terrorism's
continuing threat, uneven jobs growth, a slow return to more normal levels of
capital spending and the uncertainty surrounding the presidential election
caused the U.S. equities markets to become range bound. From March through the
end of September, stocks generally remained within a narrow price range,
consolidating earlier dramatic gains and pausing to ascertain the market's
future direction.
Despite concerns affecting the markets, worries over inflation, which emerged
over the summer, were soon quelled. On August 10, the Federal Open Market
Committee increased the federal funds rate 25 basis points, the second increase
in 2004. The Fed had previously raised rates on June 30, and did so a third
time on September 21, bringing this key interest rate from a multi-decade low
of 1.00% to 1.75% over the course of the year. This shift to higher rates
signaled an important change in the Fed's stance. After several emergency
easings in the wake of the recession of 2001 and the economic shocks issuing
from 9/11 later that year, the Fed's recent tightenings reflected the beginning
of a return to more normal federal funds rate levels.
In Congressional testimony just two days prior to the August 10 rate increase,
Fed Chairman Alan Greenspan noted that despite moderating growth, a slowdown in
the improvement of labor market conditions, and substantial increases in energy
costs, "the economy nevertheless appears poised to resume a stronger pace of
expansion going forward."
Given the current low inflation and moderate economic growth environment, we
share this optimism, though it is tempered with caution. In the past six
months, conditions that have benefited the economy include strength in
corporate profits, housing and construction. Consumer spending has also been
relatively strong. What we have not seen are vigorous enough improvements in
employment and corporate spending. Before we can see the economy grow at a
greater pace than the estimated 3% GDP growth rate, corporations must increase
their capital expenditures. Similarly, to remain abreast of population growth,
we need to see larger gains in job creation. Higher energy prices have also
created a drain on the U.S. economy, acting as a tax increase to the U.S.
consumer. Despite these conditions, the economy continues to expand, although
more slowly than it did at the beginning of the annual period.
International Market and Economic Review
Over the previous year, the world economy continued to grow in the face of
continued political turmoil, fears of rapid interest rate hikes, and concerns
over a hard landing in China. During the annual period's second half, however,
the high price of oil created
2
uncertainties about the pace of economic growth, thereby affecting equity
markets around the world. After rising strongly over the latter part of 2003
and in the first two months of the 2004, the remainder of the year was
characterized by relatively trendless stock markets, which traded sideways and
displayed somewhat of a downward bias. Despite this, corporate restructurings,
productivity increases and better use of balance sheets in Europe and Japan
contributed to good earnings progress throughout the period. China, meanwhile,
showed signs of overheating early in the period, prompting economic policy
makers there to react by introducing selective tightening measures. Short-term,
these measures have had some beneficial impact.
Thank you for your continued investment in our Funds and we encourage you to
visit our website, www.sunamericafunds.com, for more information.
Sincerely,
The AIG SunAmerica Equity Funds Investment Professionals
Brian Clifford Allison Larkin Gregory Parker
Heather Doucette James Monaghan Timothy Pettee
Jeff Easter Steve Neimeth Andrew Sheridan
Francis Gannon Chad Palumbo Hans Danielsson, AIGGIC
- --------
Past performance is no guarantee of future results
3
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2004 -- (unaudited)
Disclosure of Portfolio Expenses in Shareholder Reports
As a shareholder of a Fund in the SunAmerica Equity Funds (the "Trust"), you
may incur two types of costs: (1) transaction costs, including sales charges on
purchase payments, contingent deferred sales charges, redemption fees
(applicable to International Equity Fund only) and (2) ongoing costs, including
management fees; distribution and service fees; and other Fund expenses. This
Example is intended to help you understand your ongoing costs (in dollars) of
investing in the Funds and to compare these costs with the ongoing costs of
investing in other mutual funds. The Example is based on an investment of
$1,000 invested at April 1, 2004 and held until September 30, 2004.
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 Period"
to estimate the expenses you paid on your account during this period. For
shareholder accounts in classes other than Class I, Class X, and Class Z the
"Expenses Paid During Period" 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" column does not include
administrative fees that may apply to qualified retirement plan accounts. See
the Funds' prospectus and/or the retirement plan document for full description
of these fees. Had these fees been included, the "Expenses Paid During the
Period" column and the "Expense Ratio" 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 the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder
reports of other funds. For shareholder accounts in classes other than Class I,
Class X, and Class Z the "Expenses Paid During Period" 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" column
does not include administrative fees that may apply to qualified retirement
plan accounts. See the Funds' prospectus and/or the retirement plan document
for full description of these fees. Had these fees been included, the "Expenses
Paid During the Period" column and the "Expense Ratio" 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, redemption
fees (International Equity Fund only); 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.
4
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2004 -- (unaudited) (continued)
Actual Hypothetical
------------------------------------------ ------------------------------------------
Ending Account
Ending Account Value using
Value Using Expense Paid a Hypothetical Expense Paid Expense
Beginning Actual During the Beginning 5% Assumed During the Ratio
Account Value Return at Period Ended Account Value Return at Period Ended as of
at April 1, September 30, September 30, at April 1, September 30, September 30, September 30,
Fund# 2004 2004 2004 2004 2004 2004 2004*
- ----- ------------- -------------- ------------- ------------- -------------- ------------- -------------
Blue Chip Growth Fund
Class A................ $1,000.00 $ 968.38 $ 8.17 $1,000.00 $1,016.70 $ 8.37 1.66%
Class B................ $1,000.00 $ 965.78 $11.06 $1,000.00 $1,013.75 $11.33 2.25%
Class C................ $1,000.00 $ 964.18 $12.13 $1,000.00 $1,012.65 $12.43 2.47%
Class I#............... $1,000.00 $ 969.22 $ 6.55 $1,000.00 $1,018.35 $ 6.71 1.33%
Growth Opportunities Fund
Class A................ $1,000.00 $ 880.08 $ 7.52 $1,000.00 $1,017.00 $ 8.07 1.60%
Class B................ $1,000.00 $ 877.06 $10.70 $1,000.00 $1,013.60 $11.48 2.28%
Class C................ $1,000.00 $ 876.88 $10.79 $1,000.00 $1,013.50 $11.58 2.30%
Class I#............... $1,000.00 $ 881.41 $ 6.26 $1,000.00 $1,018.35 $ 6.71 1.33%
Class X#............... $1,000.00 $ 883.14 $ 5.23 $1,000.00 $1,019.45 $ 5.60 1.11%
New Century Fund
Class A................ $1,000.00 $ 999.32 $ 7.95 $1,000.00 $1,017.15 $ 8.02 1.59%
Class B................ $1,000.00 $ 996.21 $11.18 $1,000.00 $1,013.80 $11.28 2.24%
Class C#............... $1,000.00 $ 996.21 $10.28 $1,000.00 $1,014.70 $10.38 2.06%
Growth and Income Fund
Class A................ $1,000.00 $ 995.63 $ 7.43 $1,000.00 $1,017.55 $ 7.52 1.49%
Class B................ $1,000.00 $ 992.61 $10.76 $1,000.00 $1,014.20 $10.88 2.16%
Class C................ $1,000.00 $ 992.60 $10.61 $1,000.00 $1,014.35 $10.73 2.13%
Class I#............... $1,000.00 $ 995.64 $ 6.59 $1,000.00 $1,018.40 $ 6.66 1.32%
Balanced Assets Fund
Class A................ $1,000.00 $ 992.09 $ 7.42 $1,000.00 $1,017.55 $ 7.52 1.49%
Class B................ $1,000.00 $ 988.31 $10.84 $1,000.00 $1,014.10 $10.98 2.18%
Class C................ $1,000.00 $ 989.07 $10.89 $1,000.00 $1,014.05 $11.03 2.19%
Class I#............... $1,000.00 $ 993.31 $ 6.18 $1,000.00 $1,018.80 $ 6.26 1.24%
International Equity Fund
Class A#............... $1,000.00 $ 981.71 $ 9.41 $1,000.00 $1,015.50 $ 9.57 1.90%
Class B#............... $1,000.00 $ 978.79 $12.61 $1,000.00 $1,012.25 $12.83 2.55%
Class C#............... $1,000.00 $ 978.77 $12.61 $1,000.00 $1,012.25 $12.83 2.55%
Class I#............... $1,000.00 $ 981.80 $ 8.92 $1,000.00 $1,016.00 $ 9.07 1.80%
Value Fund+
Class A#............... $1,000.00 $1,041.20 $ 8.62 $1,000.00 $1,016.55 $ 8.52 1.69%
Class B#............... $1,000.00 $1,036.67 $12.42 $1,000.00 $1,012.80 $12.28 2.44%
Class C#............... $1,000.00 $1,037.31 $12.22 $1,000.00 $1,013.00 $12.08 2.40%
Class I#............... $1,000.00 $1,043.63 $ 8.48 $1,000.00 $1,016.70 $ 8.37 1.66%
Class Z#............... $1,000.00 $1,041.22 $ 6.02 $1,000.00 $1,019.10 $ 5.96 1.18%
Biotech/Health Fund
Class A#............... $1,000.00 $ 854.30 $ 7.19 $1,000.00 $1,017.25 $ 7.82 1.55%
Class B#............... $1,000.00 $ 850.63 $10.18 $1,000.00 $1,014.00 $11.08 2.20%
Class C#............... $1,000.00 $ 850.92 $10.18 $1,000.00 $1,014.00 $11.08 2.20%
Tax Managed Equity Fund
Class A#............... $1,000.00 $1,000.00 $ 7.25 $1,000.00 $1,017.75 $ 7.31 1.45%
Class B#............... $1,000.00 $ 996.33 $10.48 $1,000.00 $1,014.50 $10.58 2.10%
Class C#............... $1,000.00 $ 996.34 $10.48 $1,000.00 $1,014.50 $10.58 2.10%
- --------
* Expenses are equal to the Portfolio'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, redemption
fees (International Equity Fund only), 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 advisor either waived a portion of
or all of fees and assumed a portion of or all expenses for the Funds or
through recoupment provisions, recovered a portion of or all fees and
expenses waived or reimbursed in the previous two fiscal years. As a result,
if these fees and expenses had not been waived or assumed, the
"Actual/Hypothetical Ending Account Value", the "Actual/Hypothetical
Expenses Paid During the Period" and the "Expense Ratios" would have been
higher for a Fund that reimbursed or waived fees and expenses and lower for
a Fund that has recouped a portion of or all fees previously waived or
assumed.
+ Effective September 1, 2004, the expense caps for the Value Fund changed.
Had the expenses changes been in effect for the entire period, the Expense
Example would have been as shown on page 6.
5
Actual Hypothetical
------------------------------------------ ------------------------------------------
Ending Account
Ending Account Value using
Value Using Expense Paid a Hypothetical Expense Paid Expense
Beginning Actual During the Beginning 5% Assumed During the Ratio
Account Value Return at Period Ended Account Value Return at Period Ended as of
at April 1, September 30, September 30, at April 1, September 30, September 30, September 30,
Fund 2004 2004 2004 2004 2004 2004 2004*
- ---- ------------- -------------- ------------- ------------- -------------- ------------- -------------
Value Fund
Class A. $1,000.00 $1,041.20 $ 8.32 $1,000.00 $1,016.85 $ 8.22 1.63%
Class B. $1,000.00 $1,036.67 $11.61 $1,000.00 $1,013.60 $11.48 2.28%
Class C. $1,000.00 $1,037.31 $11.61 $1,000.00 $1,013.60 $11.48 2.28%
Class I. $1,000.00 $1,041.22 $ 7.81 $1,000.00 $1,017.35 $ 7.72 1.53%
Class Z. $1,000.00 $1,043.63 $ 5.42 $1,000.00 $1,019.70 $ 5.35 1.06%
6
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2004 -- (unaudited) (continued)
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2004
Blue Chip Growth New
Growth Opportunities Century
Fund Fund Fund
------------ ------------- -------------
ASSETS:
Investment securities, at value* (unaffiliated)........................... $ 99,311,430 $ 89,845,396 $ 95,203,053
Investment securities, at value* (affiliated)............................. -- -- --
Short-term securities, at value*.......................................... -- -- --
Repurchase agreements (cost equals market value).......................... 376,000 2,864,000 --
Cash...................................................................... 398 731 --
Receivable for --
Fund shares sold (shares of beneficial interest sold)................... 56,831 18,293 5,617
Dividends and interest.................................................. 60,085 6,706 13,060
Investments sold........................................................ 930,199 7,368,065 463,286
Prepaid expenses and other assets......................................... 1,355 1,549 1,189
Due from investment adviser for expense reimbursements/fee waivers........ 2,969 4,132 --
------------ ------------- -------------
Total assets............................................................ 100,739,267 100,108,872 95,686,205
------------ ------------- -------------
LIABILITIES:
Payable for --
Fund shares redeemed (shares of beneficial interest redeemed)........... 71,210 266,772 80,461
Investments purchased................................................... 1,521,484 76,662 --
Investment advisory and management fees................................. 61,391 61,683 56,752
Distribution and service maintenance fees............................... 46,856 53,019 33,664
Transfer agent fees and expenses........................................ 54,326 38,328 27,027
Trustees' fees and expenses............................................. 31,946 26,034 52,391
Other accrued expenses.................................................. 68,225 71,303 67,251
Line of credit.......................................................... -- -- 902,450
Securities sold short, at value#.......................................... -- -- --
Due to custodian for foreign cash*........................................ -- -- --
------------ ------------- -------------
Total liabilities....................................................... 1,855,438 593,801 1,219,996
------------ ------------- -------------
Net assets............................................................. $ 98,883,829 $ 99,515,071 $ 94,466,209
============ ============= =============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, $.01 par value............................. $ 72,888 $ 76,690 $ 65,114
Paid-in capital........................................................... 178,668,376 323,717,571 209,591,650
------------ ------------- -------------
178,741,264 323,794,261 209,656,764
Accumulated undistributed net investment income (loss).................... (31,761) (26,436) (52,911)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short, and foreign exchange
transactions............................................................. (85,358,363) (220,888,731) (125,398,459)
Unrealized appreciation (depreciation) on investments..................... 5,532,689 (3,364,023) 10,260,815
Unrealized foreign exchange gain (loss) on other assets and liabilities... -- -- --
Unrealized appreciation (depreciation) on securities sold short........... -- -- --
------------ ------------- -------------
$ 98,883,829 $ 99,515,071 $ 94,466,209
============ ============= =============
*Cost
Investment securities (unaffiliated).................................... $ 93,778,741 $ 93,209,419 $ 84,942,238
============ ============= =============
Investment securities (affiliated)...................................... $ -- $ -- $ --
============ ============= =============
Short-term securities................................................... $ -- $ -- $ --
============ ============= =============
Foreign cash............................................................ $ -- $ -- $ --
============ ============= =============
#Proceeds from securities sold short...................................... $ -- $ -- $ --
============ ============= =============
Growth and Balanced
Income Assets
Fund Fund
------------ ------------
ASSETS:
Investment securities, at value* (unaffiliated)........................... $164,365,728 $220,236,222
Investment securities, at value* (affiliated)............................. -- --
Short-term securities, at value*.......................................... -- --
Repurchase agreements (cost equals market value).......................... 4,913,000 3,245,000
Cash...................................................................... 718 154,890
Receivable for --
Fund shares sold (shares of beneficial interest sold)................... 61,257 14,621
Dividends and interest.................................................. 220,318 1,015,328
Investments sold........................................................ 3,058,947 4,709,147
Prepaid expenses and other assets......................................... 3,422 2,791
Due from investment adviser for expense reimbursements/fee waivers........ 994 --
------------ ------------
Total assets............................................................ 172,624,384 229,377,999
------------ ------------
LIABILITIES:
Payable for --
Fund shares redeemed (shares of beneficial interest redeemed)........... 471,110 331,145
Investments purchased................................................... 3,756,312 6,126,206
Investment advisory and management fees................................. 104,637 139,069
Distribution and service maintenance fees............................... 101,539 97,927
Transfer agent fees and expenses........................................ 51,397 46,657
Trustees' fees and expenses............................................. 39,517 89,875
Other accrued expenses.................................................. 70,377 131,557
Line of credit.......................................................... -- --
Securities sold short, at value#.......................................... -- --
Due to custodian for foreign cash*........................................ -- --
------------ ------------
Total liabilities....................................................... 4,594,889 6,962,436
------------ ------------
Net assets............................................................. $168,029,495 $222,415,563
============ ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, $.01 par value............................. $ 152,808 $ 168,777
Paid-in capital........................................................... 235,218,820 309,742,849
------------ ------------
235,371,628 309,911,626
Accumulated undistributed net investment income (loss).................... (39,588) (140,117)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short, and foreign exchange
transactions............................................................. (74,361,339) (96,278,318)
Unrealized appreciation (depreciation) on investments..................... 7,058,794 8,922,372
Unrealized foreign exchange gain (loss) on other assets and liabilities... -- --
Unrealized appreciation (depreciation) on securities sold short........... -- --
------------ ------------
$168,029,495 $222,415,563
============ ============
*Cost
Investment securities (unaffiliated).................................... $157,306,934 $211,313,850
============ ============
Investment securities (affiliated)...................................... $ -- $ --
============ ============
Short-term securities................................................... $ -- $ --
============ ============
Foreign cash............................................................ $ -- $ --
============ ============
#Proceeds from securities sold short...................................... $ -- $ --
============ ============
- --------
See Notes to Financial Statements
7
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2004 -- (continued)
Blue Chip Growth New
Growth Opportunities Century
Fund Fund Fund
----------- ------------- -----------
Class A (unlimited shares authorized):
Net assets........................................................................ $62,316,102 $49,917,684 $80,872,004
Shares of beneficial interest issued and outstanding.............................. 4,424,077 3,656,461 5,476,151
Net asset value and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 14.09 $ 13.65 $ 14.77
Maximum sales charge (5.75% of offering price).................................... 0.86 0.83 0.90
----------- ----------- -----------
Maximum offering price to public.................................................. 14.95 14.48 15.67
=========== =========== ===========
Class B (unlimited shares authorized):
Net assets........................................................................ $27,946,427 $31,429,403 $11,414,622
Shares of beneficial interest issued and outstanding.............................. 2,201,319 2,561,663 869,479
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 12.70 $ 12.27 $ 13.13
=========== =========== ===========
Class C* (unlimited shares authorized):
Net assets........................................................................ $ 6,457,638 $14,599,241 $ 2,179,583
Shares of beneficial interest issued and outstanding.............................. 510,675 1,191,353 165,811
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 12.65 $ 12.25 $ 13.14
=========== =========== ===========
Class I+ (unlimited shares authorized):
Net assets........................................................................ $ 2,163,662 $ 3,492,676 $ --
Shares of beneficial interest issued and outstanding.............................. 152,715 254,045 --
Net asset value, offering and redemption price per share.......................... $ 14.17 $ 13.75 $ --
=========== =========== ===========
Class Z+ (unlimited shares authorized):
Net assets........................................................................ $ -- $ -- $ --
Shares of beneficial interest issued and outstanding.............................. -- -- --
Net asset value, offering and redemption price per share.......................... $ -- $ -- $ --
=========== =========== ===========
Class X (unlimited shares authorized):
Net assets........................................................................ $ -- $ 76,067 $ --
Shares of beneficial interest issued and outstanding.............................. -- 5,500 --
Net asset value, offering and redemption price per share.......................... $ -- $ 13.83 $ --
=========== =========== ===========
Growth and Balanced
Income Assets
Fund Fund
----------- ------------
Class A (unlimited shares authorized):
Net assets........................................................................ $69,068,586 $160,268,829
Shares of beneficial interest issued and outstanding.............................. 6,070,485 12,151,744
Net asset value and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 11.38 $ 13.19
Maximum sales charge (5.75% of offering price).................................... 0.69 0.80
----------- ------------
Maximum offering price to public.................................................. 12.07 13.99
=========== ============
Class B (unlimited shares authorized):
Net assets........................................................................ $54,198,693 $ 38,686,665
Shares of beneficial interest issued and outstanding.............................. 5,042,856 2,943,518
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 10.75 $ 13.14
=========== ============
Class C* (unlimited shares authorized):
Net assets........................................................................ $43,993,487 $ 22,780,833
Shares of beneficial interest issued and outstanding.............................. 4,100,068 1,731,025
Net asset value, offering and redemption price per share (excluding any applicable
contingent deferred sales charge)................................................ $ 10.73 $ 13.16
=========== ============
Class I+ (unlimited shares authorized):
Net assets........................................................................ $ 768,729 $ 679,236
Shares of beneficial interest issued and outstanding.............................. 67,379 51,409
Net asset value, offering and redemption price per share.......................... $ 11.41 $ 13.21
=========== ============
Class Z+ (unlimited shares authorized):
Net assets........................................................................ $ -- $ --
Shares of beneficial interest issued and outstanding.............................. -- --
Net asset value, offering and redemption price per share.......................... $ -- $ --
=========== ============
Class X (unlimited shares authorized):
Net assets........................................................................ $ -- $ --
Shares of beneficial interest issued and outstanding.............................. -- --
Net asset value, offering and redemption price per share.......................... $ -- $ --
=========== ============
- --------
* Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
+ See Note 1
See Notes to Financial Statements
8
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2004 -- (continued)
International Biotech/ Tax Managed
Equity Value Health Equity
Fund Fund+ Fund+ Fund+
------------- ------------ ------------ ------------
ASSETS:
Investment securities, at value* (unaffiliated)........................... $ 72,525,045 $200,437,952 $ 39,601,731 $ 50,265,466
Investment securities, at value* (affiliated)............................. -- -- -- 543,920
Short-term securities, at value*.......................................... -- -- -- 189,000
Repurchase agreements (cost equals market value).......................... -- 6,106,000 1,101,000 --
Cash...................................................................... -- 512 637 799
Receivable for --
Fund shares sold (shares of beneficial interest sold)................... 31,157 481,509 6,173 21,795
Dividends and interest.................................................. 177,549 326,627 48 51,619
Investments sold........................................................ 3,486,299 6,186,066 895,329 674,350
Prepaid expenses and other expenses....................................... 1,059 10,357 24,952 679
Due from investment adviser for expense reimbursements/fee waivers........ -- 73,368 41,612 24,553
------------ ------------ ------------ ------------
Total assets............................................................ 76,221,109 213,622,391 41,671,482 51,772,181
------------ ------------ ------------ ------------
LIABILITIES:
Payable for --
Fund shares redeemed (shares of beneficial interest redeemed)........... 130,524 271,379 51,083 94,861
Investments purchased................................................... 1,136,504 9,542,810 -- --
Investment advisory and management fees................................. 80,483 167,685 24,988 36,751
Distribution and service maintenance fees............................... 42,963 109,859 24,886 35,893
Transfer agent fees and expenses........................................ 27,752 35,659 17,984 14,152
Trustees' fees and expenses............................................. 18,232 29,567 5,214 10,871
Other accrued expenses.................................................. 99,999 100,499 56,360 53,628
Line of credit.......................................................... 214,979 -- -- --
Securities sold short, at value#.......................................... -- -- 850,850 --
Due to custodian for foreign cash*........................................ 1,544,367 -- -- --
------------ ------------ ------------ ------------
Total liabilities....................................................... 3,295,803 10,257,458 1,031,365 246,156
------------ ------------ ------------ ------------
Net assets............................................................. $ 72,925,306 $203,364,933 $ 40,640,117 $ 51,526,025
============ ============ ============ ============
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, $.01 par value............................. $ 73,377 $ 117,260 $ 45,796 $ 46,954
Paid-in capital........................................................... 121,429,139 173,228,162 72,717,260 83,715,248
------------ ------------ ------------ ------------
121,502,516 173,345,422 72,763,056 83,762,202
Accumulated undistributed net investment income (loss).................... (78,300) 2,141,862 (3,910) (8,870)
Accumulated undistributed net realized gain (loss) on investments, futures
contracts, options contracts, securities sold short, and foreign exchange
transactions............................................................. (51,711,229) 20,852,433 (34,551,686) (31,519,915)
Unrealized appreciation (depreciation) on investments..................... 3,202,108 7,025,216 2,388,178 (707,392)
Unrealized foreign exchange gain (loss) on other assets and liabilities... 10,211 -- -- --
Unrealized appreciation (depreciation) on securities sold short........... -- -- 44,479 --
------------ ------------ ------------ ------------
$ 72,925,306 $203,364,933 $ 40,640,117 $ 51,526,025
============ ============ ============ ============
*Cost
Investment securities (unaffiliated).................................... $ 69,322,937 $193,412,736 $ 37,213,553 $ 50,960,170
============ ============ ============ ============
Investment securities (affiliated)...................................... $ -- $ -- $ -- $ 556,608
============ ============ ============ ============
Short-term securities................................................... $ -- $ -- $ -- $ 189,000
============ ============ ============ ============
Foreign cash............................................................ $ (1,524,180) $ -- $ -- $ --
============ ============ ============ ============
#Proceeds from securities sold short...................................... $ -- $ -- $ 895,329 $ --
============ ============ ============ ============
- --------
+ See Note 2
See Notes to Financial Statements
9
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2004 -- (continued)
International
Equity Value
Fund Fund#
------------- -----------
Class A (unlimited shares authorized):
Net assets................................................................................... $32,221,130 $91,769,119
Shares of beneficial interest issued and outstanding......................................... 3,158,497 5,187,965
Net asset value and redemption price per share (excluding any applicable contingent deferred
sales charge)............................................................................... $ 10.20 $ 17.69
Maximum sales charge (5.75% of offering price)............................................... 0.62 1.08
----------- -----------
Maximum offering price to public............................................................. 10.82 18.77
=========== ===========
Class B (unlimited shares authorized):
Net assets................................................................................... $20,673,108 $68,492,296
Shares of beneficial interest issued and outstanding......................................... 2,134,057 4,037,434
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)...................................................................... $ 9.69 $ 16.96
=========== ===========
Class C* (unlimited shares authorized):
Net assets................................................................................... $15,797,760 $30,987,211
Shares of beneficial interest issued and outstanding......................................... 1,632,326 1,826,734
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)...................................................................... $ 9.68 $ 16.96
=========== ===========
Class I+ (unlimited shares authorized):
Net assets................................................................................... $ 4,233,308 $ 4,746,394
Shares of beneficial interest issued and outstanding......................................... 412,865 268,529
Net asset value, offering and redemption price per share..................................... $ 10.25 $ 17.68
=========== ===========
Class Z+ (unlimited shares authorized):
Net assets................................................................................... $ -- $ 7,369,913
Shares of beneficial interest issued and outstanding......................................... -- 405,308
Net asset value, offering and redemption price per share..................................... $ -- $ 18.18
=========== ===========
Class X (unlimited shares authorized):
Net assets................................................................................... $ -- $ --
Shares of beneficial interest issued and outstanding......................................... -- --
Net asset value, offering and redemption price per share..................................... $ -- $ --
=========== ===========
Biotech/ Tax Managed
Health Equity
Fund# Fund#
----------- -----------
Class A (unlimited shares authorized):
Net assets................................................................................... $15,838,958 $13,562,271
Shares of beneficial interest issued and outstanding......................................... 1,754,705 1,203,374
Net asset value and redemption price per share (excluding any applicable contingent deferred
sales charge)............................................................................... $ 9.03 $ 11.27
Maximum sales charge (5.75% of offering price)............................................... 0.55 0.69
----------- -----------
Maximum offering price to public............................................................. 9.58 11.96
=========== ===========
Class B (unlimited shares authorized):
Net assets................................................................................... $14,417,135 $19,669,065
Shares of beneficial interest issued and outstanding......................................... 1,643,228 1,810,430
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)...................................................................... $ 8.77 $ 10.86
=========== ===========
Class C* (unlimited shares authorized):
Net assets................................................................................... $10,384,024 $18,294,689
Shares of beneficial interest issued and outstanding......................................... 1,181,670 1,681,618
Net asset value, offering and redemption price per share (excluding any applicable contingent
deferred sales charge)...................................................................... $ 8.79 $ 10.88
=========== ===========
Class I+ (unlimited shares authorized):
Net assets................................................................................... $ -- $ --
Shares of beneficial interest issued and outstanding......................................... -- --
Net asset value, offering and redemption price per share..................................... $ -- $ --
=========== ===========
Class Z+ (unlimited shares authorized):
Net assets................................................................................... $ -- $ --
Shares of beneficial interest issued and outstanding......................................... -- --
Net asset value, offering and redemption price per share..................................... $ -- $ --
=========== ===========
Class X (unlimited shares authorized):
Net assets................................................................................... $ -- $ --
Shares of beneficial interest issued and outstanding......................................... -- --
Net asset value, offering and redemption price per share..................................... $ -- $ --
=========== ===========
- --------
* Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
+ See Note 1
# See Note 2
See Notes to Financial Statements
10
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2004
Growth Growth and
Blue Chip Opportunities New Century Income
Growth Fund Fund Fund Fund
----------- ------------- ----------- -----------
INVESTMENT INCOME:
Dividends* (unaffiliated)............... $ 1,147,364 $ 540,789 $ 328,461 $ 2,847,711
Dividends* (affiliated)................. -- -- -- --
Interest (unaffiliated)................. 23,385 91,445 57,207 30,780
----------- ------------ ----------- -----------
Total investment income*.............. 1,170,749 632,234 385,668 2,878,491
----------- ------------ ----------- -----------
EXPENSES:
Investment advisory and management fees. 866,361 968,701 771,896 1,433,161
Distribution and service maintenance
fees
Class A............................... 236,916 209,597 297,244 255,866
Class B............................... 310,335 376,112 138,697 625,732
Class C+.............................. 73,858 185,625 21,868 489,283
Class X............................... -- -- -- --
Class Z#.............................. -- -- -- --
Service fees Class I.................... 23,512 12,024 4,840 16,206
Transfer agent fees and expenses
Class A............................... 197,969 163,857 218,775 184,199
Class B............................... 91,611 116,574 40,908 168,460
Class C+.............................. 22,159 57,509 7,374 125,159
Class I#.............................. 23,251 10,841 4,658 15,209
Class X............................... -- 18,348 -- --
Class Z#.............................. -- -- -- --
Registration fees
Class A............................... 12,804 11,848 10,092 12,767
Class B............................... 9,373 9,390 5,420 12,502
Class C+.............................. 10,123 8,512 5,466 1,652
Class I#.............................. 3,255 4,893 3,773 5,735
Class X............................... -- 1,148 -- --
Class Z#.............................. -- -- -- --
Custodian fees.......................... 64,077 62,458 60,561 70,471
Reports to shareholders................. 85,194 114,679 76,107 103,276
Audit and tax fees...................... 34,924 31,297 35,430 31,362
Legal fees.............................. 8,616 9,291 7,429 10,360
Trustees' fees and expenses............. 8,277 8,886 7,351 13,518
Interest expenses....................... 2,100 1,473 7,120 4,859
Dividend expense on securities sold
short................................. -- -- -- --
Insurance expense....................... 2,941 3,088 2,569 5,324
Other expenses.......................... 9,025 11,249 12,074 15,041
----------- ------------ ----------- -----------
Total expenses before fee waivers,
expense reimbursements,
recoupments, custody credits, and
fees paid indirectly................. 2,096,681 2,397,400 1,739,652 3,600,142
Net (fees waived and expenses
reimbursed)/recouped by the
investment adviser (Note 4).......... (12,446) (12,516) (15,806) (8,893)
Custody credits earned on cash
balances............................. (92) (1,699) (644) (307)
Fees paid indirectly.................. -- -- -- --
----------- ------------ ----------- -----------
Net expenses.......................... 2,084,143 2,383,185 1,723,202 3,590,942
----------- ------------ ----------- -----------
Net investment income (loss)............. (913,394) (1,750,951) (1,337,534) (712,451)
----------- ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
unaffiliated investments**.............. 11,475,942 17,256,700 21,087,706 21,332,421
Net realized gain (loss) on securities
sold short.............................. -- -- -- --
Net realized gain (loss) on futures
contracts and options contracts......... -- -- (9,065) --
Net realized foreign exchange gain
(loss) on other assets and liabilities.. -- -- -- --
Net realized gain (loss) on disposal of
investments in violation of
investments restrictions(1)............. -- 77,722 -- --
----------- ------------ ----------- -----------
Net realized gain (loss) on investments
and foreign currencies.................. 11,475,942 17,334,422 21,078,641 21,332,421
----------- ------------ ----------- -----------
Change in unrealized appreciation
(depreciation) on unaffiliated
investments............................. (486,122) (14,638,630) (9,349,183) 1,758,468
Change in unrealized appreciation
(depreciation) on affiliated
investments............................. -- -- -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts................... -- -- -- --
Change in unrealized foreign exchange
gain (loss) on and other assets and
liabilities............................. -- -- -- --
Change in unrealized appreciation
(depreciation) on securities sold short. -- -- -- --
----------- ------------ ----------- -----------
Net unrealized gain (loss) on
investments and foreign currencies...... (486,122) (14,638,630) (9,349,183) 1,758,468
----------- ------------ ----------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies... 10,989,820 2,695,792 11,729,458 23,090,889
----------- ------------ ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $10,076,426 $ 944,841 $10,391,924 $22,378,438
=========== ============ =========== ===========
*Net of foreign withholding taxes on
interest and dividends of............... $ 6,024 $ 2,119 $ 2,046 $ 13,016
=========== ============ =========== ===========
**Net of foreign withholding taxes on
capital gains of........................ $ -- $ -- $ -- $ --
=========== ============ =========== ===========
**Net of foreign unrealized
appreciation (depreciation)
withholding taxes on capital gains of... $ -- $ -- $ -- $ --
=========== ============ =========== ===========
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
# See Note 1
(1)See Note 4
See Notes to Financial Statements
11
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2004 --
(continued)
Balanced International
Assets Equity Value Value
Fund Fund Fund++ Fund@
----------- ------------- ----------- -----------
INVESTMENT INCOME:
Dividends* (unaffiliated)............... $ 2,193,864 $ 1,662,602 $ 6,220,128 $ 5,207,118
Dividends* (affiliated)................. -- -- -- --
Interest (unaffiliated)................. 3,627,849 6,959 637,915 902,965
----------- ----------- ----------- -----------
Total investment income*.............. 5,821,713 1,669,561 6,858,043 6,110,083
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory and management fees. 1,829,681 893,411 1,752,130 1,665,726
Distribution and service maintenance
fees
Class A............................... 598,842 115,434 234,452 194,543
Class B............................... 445,049 260,773 725,940 801,861
Class C+.............................. 250,687 163,145 234,969 206,360
Class X............................... -- -- -- --
Class Z#.............................. -- -- -- --
Service fees Class I.................... 8,240 34,920 17,217 13,837
Transfer agent fees and expenses
Class A............................... 418,849 95,319 154,720 151,672
Class B............................... 119,532 74,972 173,594 219,310
Class C+.............................. 62,238 38,942 57,323 56,264
Class I#.............................. 9,056 39,535 17,961 8,045
Class X............................... -- -- -- --
Class Z#.............................. -- -- 4,469 19,137
Registration fees
Class A............................... 12,994 7,189 5,685 15,541
Class B............................... 8,450 7,618 4,839 7,831
Class C+.............................. 8,338 4,112 11,151 11,590
Class I#.............................. 4,857 7,227 5,747 9,313
Class X............................... -- -- -- --
Class Z#.............................. -- -- 4,246 6,733
Custodian fees.......................... 121,523 181,407 66,558 65,631
Reports to shareholders................. 145,779 51,708 172,734 63,130
Audit and tax fees...................... 35,175 38,361 39,381 33,169
Legal fees.............................. 11,195 7,401 10,735 7,808
Trustees' fees and expenses............. 17,207 6,302 12,014 14,497
Interest expenses....................... 3,677 4,970 248 224
Dividend expense on securities sold
short................................. -- -- -- --
Insurance expense....................... 6,601 2,249 3,482 3,217
Other expenses.......................... 15,557 12,399 11,448 4,692
----------- ----------- ----------- -----------
Total expenses before fee waivers,
expense reimbursements,
recoupments, custody credits, and
fees paid indirectly................. 4,133,527 2,047,394 3,721,043 3,580,131
Net (fees waived and expenses
reimbursed)/recouped by the
investment adviser (Note 4).......... (7,848) (87,975) (75,607) (34,264)
Custody credits earned on cash
balances............................. (684) (360) (709) (745)
Fees paid indirectly.................. -- -- -- (11,394)
----------- ----------- ----------- -----------
Net expenses.......................... 4,124,995 1,959,059 3,644,727 3,533,728
----------- ----------- ----------- -----------
Net investment income (loss)............. 1,696,718 (289,498) 3,213,316 2,576,355
----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
unaffiliated investments**.............. 13,676,958 19,829,007 24,484,481 5,327,763
Net realized gain (loss) on securities
sold short.............................. -- -- -- --
Net realized gain (loss) on futures
contracts and options contracts......... -- 111,247 (35,179) 114,854
Net realized foreign exchange gain
(loss) on other assets and liabilities.. -- (43,361) 11,723 (12,227)
Net realized gain (loss) on disposal of
investments in violation of
investments restrictions(1)............. -- -- -- --
----------- ----------- ----------- -----------
Net realized gain (loss) on investments
and foreign currencies.................. 13,676,958 19,896,893 24,461,025 5,430,390
----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation) on unaffiliated
investments............................. 1,994,840 (4,100,537) (3,706,634) 16,976,963
Change in unrealized appreciation
(depreciation) on affiliated
investments............................. -- -- -- --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts................... -- 92,887 -- (105,897)
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities............................. -- (11,943) (2,084) 2,901
Change in unrealized appreciation
(depreciation) on securities sold short. -- -- -- --
----------- ----------- ----------- -----------
Net unrealized gain (loss) on
investments and foreign currencies...... 1,994,840 (4,019,593) (3,708,718) 16,873,967
----------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies... 15,671,798 15,877,300 20,752,307 22,304,357
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $17,368,516 $15,587,802 $23,965,623 $24,880,712
=========== =========== =========== ===========
*Net of foreign withholding taxes on
interest and dividends of............... $ 3,247 $ 227,685 $ 74,906 $ 53,560
=========== =========== =========== ===========
**Net of foreign withholding taxes on
capital gains of........................ $ -- $ 18,130 $ -- --
=========== =========== =========== ===========
**Net of foreign unrealized
appreciation (depreciation)
withholding taxes on capital gains of... $ -- $ 5,594 $ -- --
=========== =========== =========== ===========
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ For the period November 1, 2003 through September 30, 2004
@ For the period November 1, 2002 through October 31, 2003. See Note 2
# See Note 1
(1)See Note 4
See Notes to Financial Statements
12
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2004 --
(continued)
Biotech/ Biotech/ Tax Managed Tax Managed
Health Health Equity Equity
Fund++ Fund@ Fund++ Fund@
----------- ----------- ----------- -----------
INVESTMENT INCOME:
Dividends* (unaffiliated)............... $ 111,750 $ 26,050 $ 898,509 $ 1,098,402
Dividends* (affiliated)................. -- -- 2,876 --
Interest (unaffiliated)................. 65,685 77,241 387 1,733
----------- ----------- ---------- -----------
Total investment income*.............. 177,435 103,291 901,772 1,100,135
----------- ----------- ---------- -----------
EXPENSES:
Investment advisory and management fees. 334,125 331,090 451,338 519,867
Distribution and service maintenance
fees
Class A............................... 60,712 57,668 47,398 52,568
Class B............................... 158,523 162,390 200,289 230,393
Class C+.............................. 113,513 114,299 195,275 231,020
Class X............................... -- -- -- --
Class Z#.............................. -- -- -- --
Service fees Class I.................... -- -- -- --
Transfer agent fees and expenses
Class A............................... 50,962 50,186 31,376 40,285
Class B............................... 42,768 56,418 47,301 60,631
Class C+.............................. 29,096 42,251 45,080 59,631
Class I#.............................. -- -- -- --
Class X............................... -- -- -- --
Class Z#.............................. -- -- -- --
Registration fees
Class A............................... 796 19,532 354 10,663
Class B............................... 2,394 17,718 1,972 10,873
Class C+.............................. 2,565 17,718 1,027 11,303
Class I#.............................. -- -- -- --
Class X............................... -- -- -- --
Class Z#.............................. -- -- -- --
Custodian fees.......................... 49,393 52,446 49,946 54,232
Reports to shareholders................. 75,984 5,470 17,937 861
Audit and tax fees...................... 41,252 27,525 42,630 27,294
Legal fees.............................. 9,470 6,202 10,882 8,843
Trustees' fees and expenses............. 2,836 3,897 3,546 6,152
Interest expenses....................... 123 -- 95 --
Dividend expense on securities sold
short................................. -- 9,650 -- --
Insurance expense....................... 941 -- 1,308 --
Other expenses.......................... 10,918 7,914 9,500 9,187
----------- ----------- ---------- -----------
Total expenses before fee waivers,
expense reimbursements,
recoupments, custody credits, and
fees paid indirectly................. 986,371 982,374 1,157,254 1,333,803
Net (fees waived and expenses
reimbursed)/recouped by the
investment adviser (Note 4).......... (118,938) (117,176) (130,171) (146,883)
Custody credits earned on cash
balances............................. (83) (1,098) (39) (166)
Fees paid indirectly.................. -- -- -- --
----------- ----------- ---------- -----------
Net expenses.......................... 867,350 864,100 1,027,044 1,186,754
----------- ----------- ---------- -----------
Net investment income (loss)............. (689,915) (760,809) (125,272) (86,619)
----------- ----------- ---------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on
unaffiliated investments**.............. 2,855,021 (637,572) (596,071) (4,260,050)
Net realized gain (loss) on securities
sold short.............................. (1,309,364) (244,929) -- --
Net realized gain (loss) on futures
contracts and options contracts......... -- -- -- --
Net realized foreign exchange gain
(loss) on other assets and liabilities.. -- -- -- --
Net realized gain (loss) on disposal of
investments in violation of
investments restrictions(1)............. -- -- -- --
----------- ----------- ---------- -----------
Net realized gain (loss) on investments
and foreign currencies.................. 1,545,657 (882,501) (596,071) (4,260,050)
----------- ----------- ---------- -----------
Change in unrealized appreciation
(depreciation) on unaffiliated
investments............................. (4,827,064) 12,128,174 4,978,789 13,156,086
Change in unrealized appreciation
(depreciation) on affiliated
investments............................. -- -- (160,491) --
Change in unrealized appreciation
(depreciation) on futures contracts
and options contracts................... -- -- -- --
Change in unrealized foreign exchange
gain (loss) on other assets and
liabilities............................. -- -- -- --
Change in unrealized appreciation
(depreciation) on securities sold short. 125,061 262,100 -- --
----------- ----------- ---------- -----------
Net unrealized gain (loss) on
investments and foreign currencies...... (4,702,003) 12,390,274 4,818,298 13,156,086
----------- ----------- ---------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies... (3,156,346) 11,507,773 4,222,227 8,896,036
----------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............... $(3,846,261) $10,746,964 $4,096,955 $ 8,809,417
=========== =========== ========== ===========
*Net of foreign withholding taxes on
interest and dividends of............... $ -- $ -- $ 150 $ 159
=========== =========== ========== ===========
**Net of foreign withholding taxes on
capital gains of........................ $ -- -- $ -- --
=========== =========== ========== ===========
**Net of foreign unrealized
appreciation (depreciation)
withholding taxes on capital gains of... $ -- -- $ -- --
=========== =========== ========== ===========
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ For the period November 1, 2003 through September 30, 2004
@ For the period November 1, 2002 through October 31, 2003. See Note 2
# See Note 1
(1)See Note 4
See Notes to Financial Statements
13
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS
Blue Chip Growth Fund Growth Opportunities Fund
-------------------------- --------------------------
For the year For the year For the year For the year
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............................... $ (913,394) $ (865,083) $ (1,750,951) $ (1,710,261)
Net realized gain (loss) on investments and foreign
currencies............................................... 11,475,942 (14,883,864) 17,334,422 3,180,340
Net unrealized gain (loss) on investments and foreign
currencies............................................... (486,122) 34,594,963 (14,638,630) 35,797,632
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operation.................................................. 10,076,426 18,846,016 944,841 37,267,711
------------ ------------ ------------ ------------
Dividends and distributions to shareholders from:
Net investment income (Class A)............................ -- -- -- --
Net investment income (Class B)............................ -- -- -- --
Net investment income (Class C)+........................... -- -- -- --
Net investment income (Class I)++.......................... -- -- -- --
Net investment income (Class X)............................ -- -- -- --
Net investment income (Class Z)++.......................... -- -- -- --
Net realized gain on investments (Class A)................. -- -- -- --
Net realized gain on investments (Class B)................. -- -- -- --
Net realized gain on investments (Class C)+................ -- -- -- --
Net realized gain on investments (Class I)++............... -- -- -- --
Net realized gain on investments (Class X)................. -- -- -- --
Net realized gain on investments (Class Z)++............... -- -- -- --
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders........... -- -- -- --
------------ ------------ ------------ ------------
Net increase in net assets resulting from capital share
transactions (Note 7)...................................... (33,190,986) (11,161,768) (37,430,765) (7,535,129)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets..................... (23,114,560) 7,684,248 (36,485,924) 29,732,582
NET ASSETS:
Beginning of period......................................... 121,998,389 114,314,141 $136,000,995 106,268,413
------------ ------------ ------------ ------------
End of period*.............................................. $ 98,883,829 $121,998,389 $ 99,515,071 $136,000,995
============ ============ ============ ============
*Includes accumulated undistributed net investment income
(loss)..................................................... $ (31,761) $ (30,664) $ (26,436) $ (24,692)
============ ============ ============ ============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ See Note 1
See Notes to Financial Statements
14
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
New Century Fund Growth and Income Fund
-------------------------- --------------------------
For the year For the year For the year For the year
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............................... $ (1,337,534) $ (1,261,893) $ (712,451) $ (705,030)
Net realized gain (loss) on investments and foreign
currencies............................................... 21,078,641 (13,973,199) 21,332,421 (35,762,966)
Net unrealized gain (loss) on investments and foreign
currencies............................................... (9,349,183) 33,794,041 1,758,468 64,603,752
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operation.................................................. 10,391,924 18,558,949 22,378,438 28,135,756
------------ ------------ ------------ ------------
Dividends and distributions to shareholders from:
Net investment income (Class A)............................ -- -- -- --
Net investment income (Class B)............................ -- -- -- --
Net investment income (Class C)+........................... -- -- -- --
Net investment income (Class I)++.......................... -- -- -- --
Net investment income (Class X)............................ -- -- -- --
Net investment income (Class Z)++.......................... -- -- -- --
Net realized gain on investments (Class A)................. -- -- -- --
Net realized gain on investments (Class B)................. -- -- -- --
Net realized gain on investments (Class C)+................ -- -- -- --
Net realized gain on investments (Class I)++............... -- -- -- --
Net realized gain on investments (Class X)................. -- -- -- --
Net realized gain on investments (Class Z)++............... -- -- -- --
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders........... -- -- -- --
------------ ------------ ------------ ------------
Net increase in net assets resulting from capital share
transactions (Note 7)...................................... (24,446,387) (15,057,929) (54,045,242) (51,963,968)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets..................... (14,054,463) 3,501,020 (31,666,804) (23,828,212)
NET ASSETS:
Beginning of period......................................... $108,520,672 105,019,652 199,696,299 223,524,511
------------ ------------ ------------ ------------
End of period*.............................................. $ 94,466,209 $108,520,672 $168,029,495 $199,696,299
============ ============ ============ ============
*Includes accumulated undistributed net investment income
(loss)..................................................... $ (52,911) $ (53,640) $ (39,588) $ (36,226)
============ ============ ============ ============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ See Note 1
See Notes to Financial Statements
15
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Balanced Assets Fund International Equity Fund
-------------------------- --------------------------
For the year For the year For the year For the year
ended ended ended ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)............................... $ 1,696,718 $ 1,760,432 $ (289,498) $ 35,865
Net realized gain (loss) on investments and foreign
currencies............................................... 13,676,958 (28,335,555) 19,896,893 (5,299,825)
Net unrealized gain (loss) on investments and foreign
currencies............................................... 1,994,840 42,771,929 (4,019,593) 26,574,387
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operation.................................................. 17,368,516 16,196,806 15,587,802 21,310,427
------------ ------------ ------------ ------------
Dividends and distributions to shareholders from:
Net investment income (Class A)............................ (2,084,942) (1,750,489) (11,064) --
Net investment income (Class B)............................ (228,463) (190,530) -- --
Net investment income (Class C)+........................... (131,080) (97,381) -- --
Net investment income (Class I)++.......................... (41,818) (50,394) (17,397) --
Net investment income (Class X)............................ -- -- -- --
Net investment income (Class Z)++.......................... -- -- -- --
Net realized gain on investments (Class A)................. -- -- -- --
Net realized gain on investments (Class B)................. -- -- -- --
Net realized gain on investments (Class C)+................ -- -- -- --
Net realized gain on investments (Class I)++............... -- -- -- --
Net realized gain on investments (Class X)................. -- -- -- --
Net realized gain on investments (Class Z)++............... -- -- -- --
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders........... (2,486,303) (2,088,794) (28,461) --
------------ ------------ ------------ ------------
Net increase in net assets resulting from capital share
transactions (Note 7)...................................... (45,643,904) (45,385,301) (31,438,220) (19,779,286)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets..................... (30,761,691) (31,277,289) (15,878,879) 1,531,141
NET ASSETS:
Beginning of period......................................... 253,177,254 284,454,543 88,804,185 87,273,044
------------ ------------ ------------ ------------
End of period*.............................................. $222,415,563 $253,177,254 $ 72,925,306 $ 88,804,185
============ ============ ============ ============
*Includes accumulated undistributed net investment income
(loss)..................................................... $ (140,117) $ (12,414) $ (78,300) $ (94,044)
============ ============ ============ ============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ See Note 1
See Notes to Financial Statements
16
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Value Fund
----------------------------------------
For the year For the year For the year
ended ended ended
September 30, October 31, October 31,
2004 2003 2002
------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)................................ $ 3,213,316 $ 2,576,355 $ 1,236,209
Net realized gain (loss) on investments and foreign
currencies................................................. 24,461,025 5,430,390 2,763,265
Net unrealized gain (loss) on investments and foreign
currencies................................................. (3,708,718) 16,873,967 (2,828,314)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operation 23,965,623 24,880,712 1,171,160
------------ ------------ ------------
Dividends and distributions to shareholders from:
Net investment income (Class A)............................. (1,362,535) (640,709) (311,360)
Net investment income (Class B)............................. (1,446,298) (441,621) (41,812)
Net investment income (Class C)+............................ (408,038) (107,249) (10,614)
Net investment income (Class I)++........................... (166,307) (64,209) (26,434)
Net investment income (Class X)............................. -- -- --
Net investment income (Class Z)++........................... (126,802) (6,189) (5,148)
Net realized gain on investments (Class A).................. (1,664,101) (1,668,760) (2,285,016)
Net realized gain on investments (Class B).................. (2,379,441) (2,600,325) (3,767,153)
Net realized gain on investments (Class C)+................. (671,301) (631,495) (956,324)
Net realized gain on investments (Class I)++................ (189,120) (153,195) (189,587)
Net realized gain on investments (Class X).................. -- -- --
Net realized gain on investments (Class Z)++................ (128,732) (11,260) (19,843)
------------ ------------ ------------
Total dividends and distributions to shareholders............. (8,542,675) (6,325,012) (7,613,291)
------------ ------------ ------------
Net increase in net assets resulting from capital share
transactions (Note 7)........................................ 8,936,841 7,300,864 12,481,749
------------ ------------ ------------
Total increase (decrease) in net assets....................... 24,359,789 25,856,564 6,039,618
NET ASSETS:
Beginning of period........................................... 179,005,144 153,148,580 147,108,962
------------ ------------ ------------
End of period*................................................ $203,364,933 $179,005,144 $153,148,580
============ ============ ============
*Includes accumulated undistributed net investment income
(loss)....................................................... $ 2,141,862 $ 2,426,803 $ 1,130,239
============ ============ ============
Biotech/Health Fund
---------------------------------------
For the year For the year For the year
ended ended ended
September 30, October 31, October 31,
2004 2003 2002
------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)................................ $ (689,915) $ (760,809) $ (1,116,235)
Net realized gain (loss) on investments and foreign
currencies................................................. 1,545,657 (882,501) (17,583,650)
Net unrealized gain (loss) on investments and foreign
currencies................................................. (4,702,003) 12,390,274 (4,778,107)
----------- ----------- ------------
Net increase (decrease) in net assets resulting from operation (3,846,261) 10,746,964 (23,477,992)
----------- ----------- ------------
Dividends and distributions to shareholders from:
Net investment income (Class A)............................. -- -- --
Net investment income (Class B)............................. -- -- --
Net investment income (Class C)+............................ -- -- --
Net investment income (Class I)++........................... -- -- --
Net investment income (Class X)............................. -- -- --
Net investment income (Class Z)++........................... -- -- --
Net realized gain on investments (Class A).................. -- -- --
Net realized gain on investments (Class B).................. -- -- --
Net realized gain on investments (Class C)+................. -- -- --
Net realized gain on investments (Class I)++................ -- -- --
Net realized gain on investments (Class X).................. -- -- --
Net realized gain on investments (Class Z)++................ -- -- --
----------- ----------- ------------
Total dividends and distributions to shareholders............. -- -- --
----------- ----------- ------------
Net increase in net assets resulting from capital share
transactions (Note 7)........................................ (4,941,478) (5,616,681) (9,222,459)
----------- ----------- ------------
Total increase (decrease) in net assets....................... (8,787,739) 5,130,283 (32,700,451)
NET ASSETS:
Beginning of period........................................... 49,427,856 44,297,573 76,998,024
----------- ----------- ------------
End of period*................................................ $40,640,117 $49,427,856 $ 44,297,573
=========== =========== ============
*Includes accumulated undistributed net investment income
(loss)....................................................... $ (3,910) $ (3,177) $ (2,629)
=========== =========== ============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ See Note 1
See Notes to Financial Statements
17
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Tax Managed Equity Fund
----------------------------------------
For the year For the year For the year
ended ended ended
September 30, October 31, October 31,
2004 2003 2002
------------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)......... $ (125,272) $ (86,619) $ (393,346)
Net realized gain (loss) on
investments and foreign currencies. (596,071) (4,260,050) (15,675,665)
Net unrealized gain (loss) on
investments and foreign currencies. 4,818,298 13,156,086 (2,347,140)
------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operation............. 4,096,955 8,809,417 (18,416,151)
------------ ------------ ------------
Dividends and distributions to
shareholders from:
Net investment income (Class A)...... -- -- --
Net investment income (Class B)...... -- -- --
Net investment income (Class C)+..... -- -- --
Net investment income (Class I)++.... -- -- --
Net investment income (Class X)...... -- -- --
Net investment income (Class Z)++.... -- -- --
Net realized gain on investments
(Class A).......................... -- -- --
Net realized gain on investments
(Class B).......................... -- -- --
Net realized gain on investments
(Class C)+......................... -- -- --
Net realized gain on investments
(Class I)++........................ -- -- --
Net realized gain on investments
(Class X).......................... -- -- --
Net realized gain on investments
(Class Z)++........................ -- -- --
------------ ------------ ------------
Total dividends and distributions to
shareholders......................... -- -- --
------------ ------------ ------------
Net increase in net assets resulting
from capital share transactions
(Note 7)............................. (13,177,953) (16,922,143) (25,890,226)
------------ ------------ ------------
Total increase (decrease) in net
assets............................... (9,080,998) (8,112,726) (44,306,377)
NET ASSETS:
Beginning of period................... 60,607,023 68,719,749 113,026,126
------------ ------------ ------------
End of period*........................ $ 51,526,025 $ 60,607,023 $ 68,719,749
============ ============ ============
*Includes accumulated undistributed
net investment income (loss)......... $ (8,870) $ (8,076) $ (7,269)
============ ============ ============
- --------
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
++ See Note 1
See Notes to Financial Statements
18
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS
BLUE CHIP GROWTH FUND
---------------------
Net gain
(loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- -------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- --------
Class A
-------
09/30/00 $23.62 $(0.14) $ 8.00 $ 7.86 $-- $(2.46) $(2.46) $29.02 34.66% $152,788
09/30/01 29.02 (0.03) (11.13) (11.16) -- (3.51) (3.51) 14.35 (42.23) 82,523
09/30/02 14.35 (0.07) (3.13) (3.20) -- -- -- 11.15 (22.30) 59,812
09/30/03 11.15 (0.06) 2.03 1.97 -- -- -- 13.12 17.67 64,672
09/30/04 13.12 (0.08) 1.05 0.97 -- -- -- 14.09 7.39 62,316
Class B
-------
09/30/00 $22.43 $(0.31) $ 7.58 $ 7.27 $-- $(2.46) $(2.46) $27.24 33.80% $ 67,586
09/30/01 27.24 (0.16) (10.35) (10.51) -- (3.51) (3.51) 13.22 (42.66) 34,649
09/30/02 13.22 (0.16) (2.86) (3.02) -- -- -- 10.20 (22.84) 31,203
09/30/03 10.20 (0.14) 1.84 1.70 -- -- -- 11.90 16.67 30,263
09/30/04 11.90 (0.16) 0.96 0.80 -- -- -- 12.70 6.72 27,946
Class C+
--------
09/30/00 $22.43 $(0.31) $ 7.53 $ 7.22 $-- $(2.46) $(2.46) $27.19 33.57% $ 8,939
09/30/01 27.19 (0.15) (10.32) (10.47) -- (3.51) (3.51) 13.21 (42.58) 6,127
09/30/02 13.21 (0.16) (2.87) (3.03) -- -- -- 10.18 (22.94) 7,687
09/30/03 10.18 (0.16) 1.85 1.69 -- -- -- 11.87 16.60 7,286
09/30/04 11.87 (0.18) 0.96 0.78 -- -- -- 12.65 6.57 6,458
Class I
-------
11/16/01-09/30/02(3) $16.30 $(0.04) $ (5.10) $ (5.14) $-- $ -- $ -- $11.16 (31.53)% $ 15,612
09/30/03 11.16 (0.04) 2.04 2.00 -- -- -- 13.16 17.92 19,778
09/30/04 13.16 (0.04) 1.05 1.01 -- -- -- 14.17 7.67 2,164
BLUE CHIP GROWTH FUND
---------------------
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets net assets turnover
- -------------------- ---------- ------------- ---------
09/30/00 1.43% (0.49)% 75%
09/30/01 1.45 (0.15) 136
09/30/02 1.47(6) (0.47)(6) 107
09/30/03 1.54 (0.50) 114
09/30/04 1.60 (0.59) 145
09/30/00 2.09% (1.16)% 75%
09/30/01 2.19 (0.89) 136
09/30/02 2.18(6) (1.18)(6) 107
09/30/03 2.32 (1.28) 114
09/30/04 2.26 (1.25) 145
09/30/00 2.17%(5) (1.17)%(5) 75%
09/30/01 2.11(5) (0.81)(5) 136
09/30/02 2.23(5)(6) (1.25)(5)(6) 107
09/30/03 2.44(5) (1.40)(5) 114
09/30/04 2.37(5) (1.37)(5) 145
11/16/01-09/30/02(3) 1.33%(4)(5)(6) (0.32)%(4)(5)(6) 107%
09/30/03 1.33(5) (0.29)(5) 114
09/30/04 1.33(5) (0.26)(5) 145
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of sale of respective class of shares
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
09/30/00 09/30/01 09/30/02(6) 09/30/03 09/30/04
-------- -------- ----------- -------- --------
Blue Chip Growth Class C+............... 0.17% 0.03% -- % -- % -- %
Blue Chip Growth Class I................ -- -- 0.08(4) 0.33 0.13
(6)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by 0.01%.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
19
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
GROWTH OPPORTUNITIES FUND
-------------------------
Net gain
(loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- ------------ --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- --------
Class A
-------
09/30/00 $23.12 $(0.17) $ 21.77 $ 21.60 $-- $(3.93) $(3.93) $40.79 102.04% $206,531
09/30/01 40.79 (0.14) (22.33) (22.47) -- (2.90) (2.90) 15.42 (58.23) 89,935
09/30/02 15.42 (0.17) (5.26) (5.43) -- -- -- 9.99 (35.21) 50,018
09/30/03 9.99 (0.13) 3.88 3.75 -- -- -- 13.74 37.54 62,660
09/30/04 13.74 (0.16) 0.07 (0.09) -- -- -- 13.65 (0.66)(7) 49,918
Class B
-------
09/30/00 $21.88 $(0.37) $ 20.42 $ 20.05 $-- $(3.93) $(3.93) $38.00 100.58% $108,083
09/30/01 38.00 (0.28) (20.66) (20.94) -- (2.90) (2.90) 14.16 (58.50) 54,902
09/30/02 14.16 (0.26) (4.79) (5.05) -- -- -- 9.11 (35.66) 33,221
09/30/03 9.11 (0.20) 3.53 3.33 -- -- -- 12.44 36.55 38,870
09/30/04 12.44 (0.24) 0.07 (0.17) -- -- -- 12.27 (1.37)(7) 31,429
Class C+
--------
09/30/00 $21.88 $(0.33) $ 20.35 $ 20.02 $-- $(3.93) $(3.93) $37.97 100.44% $ 65,322
09/30/01 37.97 (0.28) (20.64) (20.92) -- (2.90) (2.90) 14.15 (58.50) 31,594
09/30/02 14.15 (0.26) (4.79) (5.05) -- -- -- 9.10 (35.69) 17,484
09/30/03 9.10 (0.20) 3.53 3.33 -- -- -- 12.43 36.59 19,808
09/30/04 12.43 (0.24) 0.06 (0.18) -- -- -- 12.25 (1.45)(7) 14,599
Class I
-------
11/16/01-
09/30/02(3) $18.09 $(0.14) $ (7.95) $ (8.09) $-- $ -- $ -- $10.00 (44.72)% $ 3,054
09/30/03 10.00 (0.10) 3.90 3.80 -- -- -- 13.80 38.00 4,404
09/30/04 13.80 (0.13) 0.08 (0.05) -- -- -- 13.75 (0.36)(7) 3,493
Class X
-------
03/19/02-
09/30/02(3) $18.19 $(0.08) $ (8.10) $ (8.18) $-- $ -- $ -- $10.01 (44.97)% $ 2,492
09/30/03 10.01 (0.07) 3.90 3.83 -- -- -- 13.84 38.26 10,258
09/30/04 13.84 (0.09) 0.08 (0.01) -- -- -- 13.83 (0.07)(7) 76
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets net assets turnover
- ------------ ---------- ------------- ---------
09/30/00 1.43% (0.49)% 139%
09/30/01 1.49 (0.57) 207
09/30/02 1.49(6) (1.11)(6) 344
09/30/03 1.63 (1.11) 204
09/30/04 1.58 (1.09) 170
09/30/00 2.10% (1.11)% 139%
09/30/01 2.17 (1.25) 207
09/30/02 2.18(6) (1.80)(6) 344
09/30/03 2.36 (1.85) 204
09/30/04 2.27 (1.78) 170
09/30/00 2.09%(5) (0.99)%(5) 139%
09/30/01 2.16(5) (1.24)(5) 207
09/30/02 2.21(5)(6) (1.82)(5)(6) 344
09/30/03 2.33(5) (1.82)(5) 204
09/30/04 2.29(5) (1.80)(5) 170
11/16/01-
09/30/02(3) 1.33%(4)(5)(6) (0.95)%(4)(5)(6) 344%
09/30/03 1.33(5) (0.82)(5) 204
09/30/04 1.33(5) (0.85)(5) 170
03/19/02-
09/30/02(3) 1.20%(4)(5)(6) (0.83)%(4)(5)(6) 344%
09/30/03 1.17(5) (0.64)(5) 204
09/30/04 1.12(5) (0.60)(5) 170
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of sale of respective class of shares
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
09/30/00 09/30/01 09/30/02(6) 09/30/03 09/30/04
-------- -------- ----------- -------- --------
Growth Opportunities Class C+ 0.01% -- % -- % -- % -- %
Growth Opportunities Class I. -- -- 0.18(4) 0.50 0.18
Growth Opportunities Class X. -- -- 0.38(4) 0.04 0.04
(6)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have remained the same.
(7)The Fund's total return increased from a gain realized on the disposal of
investments in violation of investment restrictions on Class A 0.07%, Class
B 0.10%, Class C 0.10%, Class I 0.08%, and Class X 0.07%, respectively. (See
Note 4)
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
20
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
NEW CENTURY FUND
----------------
Net gain
(loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets Ratio of
Value investment (both Total from from net from Total Value end of expenses
beginning income realized and investment investment capital distri- end of Total period to average
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's) net assets
- ------------ --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- -------- ----------
Class A
-------
09/30/00 $27.38 $(0.31) $ 19.04 $ 18.73 $-- $(4.97) $(4.97) $41.14 72.74% $253,359 1.42%
09/30/01 41.14 (0.05) (19.00) (19.05) -- (8.88) (8.88) 13.21 (54.88) 101,691 1.46
09/30/02 13.21 (0.13) (1.86) (1.99) -- -- -- 11.22 (15.06) 74,710 1.50
09/30/03 11.22 (0.13) 2.35 2.22 -- -- -- 13.44 19.79 85,685 1.57
09/30/04 13.44 (0.17) 1.50 1.33 -- -- -- 14.77 9.90 80,872 1.57
Class B
-------
09/30/00 $26.07 $(0.53) $ 18.04 $ 17.51 $-- $(4.97) $(4.97) $38.61 71.59% $122,004 2.07%
09/30/01 38.61 (0.17) (17.57) (17.74) -- (8.88) (8.88) 11.99 (55.15) 39,577 2.11
09/30/02 11.99 (0.20) (1.68) (1.88) -- -- -- 10.11 (15.68) 23,271 2.18
09/30/03 10.11 (0.20) 2.12 1.92 -- -- -- 12.03 18.99 16,078 2.28
09/30/04 12.03 (0.25) 1.35 1.10 -- -- -- 13.13 9.14 11,415 2.29
Class C+
--------
09/30/00 $26.05 $(0.54) $ 18.01 $ 17.47 $-- $(4.97) $(4.97) $38.55 71.48% $ 10,848 2.14%(3)
09/30/01 38.55 (0.17) (17.54) (17.71) -- (8.88) (8.88) 11.96 (55.16) 4,508 2.13(3)
09/30/02 11.96 (0.20) (1.67) (1.87) -- -- -- 10.09 (15.64) 2,447 2.14(3)
09/30/03 10.09 (0.18) 2.11 1.93 -- -- -- 12.02 19.13 2,183 2.14(3)
09/30/04 12.02 (0.22) 1.34 1.12 -- -- -- 13.14 9.32 2,180 2.10(3)
Ratio of net
investment
income (loss)
to average Portfolio
Period Ended net assets turnover
- ------------ ------------- ---------
09/30/00 (0.80)% 227%
09/30/01 (0.23) 282
09/30/02 (0.92) 199
09/30/03 (1.08) 123
09/30/04 (1.20) 110
09/30/00 (1.46)% 227%
09/30/01 (0.88) 282
09/30/02 (1.60) 199
09/30/03 (1.77) 123
09/30/04 (1.91) 110
09/30/00 (1.47)%(3) 227%
09/30/01 (0.90)(3) 282
09/30/02 (1.56)(3) 199
09/30/03 (1.63)(3) 123
09/30/04 (1.73)(3) 110
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Net of the following expense reimbursements (based on average net assets):
09/30/00 09/30/01 09/30/02 09/30/03 09/30/04
-------- -------- -------- -------- --------
New Century Class C+ 0.05% 0.06% 0.27% 0.66% 0.48%
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
21
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
GROWTH AND INCOME FUND
----------------------
Net gain
(loss) on Distri- Net
Net Asset Net investments Dividends butions Asset Net Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- -------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- ----------
Class A
-------
09/30/00 $16.23 $(0.08) $ 4.51 $ 4.43 $-- $(0.66) $(0.66) $20.00 27.64% $127,168
09/30/01 20.00 (0.03) (7.43) (7.46) -- (1.43) (1.43) 11.11 (39.45) 75,795
09/30/02 11.11 0.00 (2.24) (2.24) -- -- -- 8.87 (20.16) 71,482
09/30/03 8.87 0.01 1.31 1.32 -- -- -- 10.19 14.88 70,826
09/30/04 10.19 0.00 1.19 1.19 -- -- -- 11.38 11.68 69,069
Class B
-------
09/30/00 $15.90 $(0.20) $ 4.40 $ 4.20 $-- $(0.66) $(0.66) $19.44 26.74% $176,395
09/30/01 19.44 (0.12) (7.19) (7.31) -- (1.43) (1.43) 10.70 (39.85) 99,012
09/30/02 10.70 (0.07) (2.14) (2.21) -- -- -- 8.49 (20.65) 81,686
09/30/03 8.49 (0.06) 1.26 1.20 -- -- -- 9.69 14.13 66,378
09/30/04 9.69 (0.07) 1.13 1.06 -- -- -- 10.75 10.94 54,199
Class C+
--------
09/30/00 $15.89 $(0.20) $ 4.39 $ 4.19 $-- $(0.66) $(0.66) $19.42 26.78% $ 39,986
09/30/01 19.42 (0.13) (7.18) (7.31) -- (1.43) (1.43) 10.68 (39.89) 28,283
09/30/02 10.68 (0.07) (2.13) (2.20) -- -- -- 8.48 (20.60) 60,174
09/30/03 8.48 (0.06) 1.25 1.19 -- -- -- 9.67 14.03 49,593
09/30/04 9.67 (0.07) 1.13 1.06 -- -- -- 10.73 10.96 43,993
Class I
-------
11/16/01-09/30/02(3) $12.29 $ 0.02 $(3.43) $(3.41) $-- $ -- $ -- $ 8.88 (27.75)% $ 9,877
09/30/03 8.88 0.02 1.31 1.33 -- -- -- 10.21 14.97 12,899
09/30/04 10.21 0.02 1.18 1.20 -- -- -- 11.41 11.75 769
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets net assets turnover
- -------------------- ---------- ------------- ---------
09/30/00 1.44% (0.43)% 61%
09/30/01 1.45 (0.21) 126
09/30/02 1.50(6) (0.01)(6) 118
09/30/03 1.50 0.06 123
09/30/04 1.50 0.01 139
09/30/00 2.07% (1.07)% 61%
09/30/01 2.09 (0.85) 126
09/30/02 2.13(6) (0.66)(6) 118
09/30/03 2.16 (0.59) 123
09/30/04 2.17 (0.67) 139
09/30/00 2.10%(5) (1.10)%(5) 61%
09/30/01 2.13(5) (0.88)(5) 126
09/30/02 2.17(5)(6) (0.68)(5)(6) 118
09/30/03 2.16(5) (0.60)(5) 123
09/30/04 2.14(5) (0.64)(5) 139
11/16/01-09/30/02(3) 1.32%(4)(5)(6) 0.21%(4)(5)(6) 118%
09/30/03 1.32(5) 0.23(5) 123
09/30/04 1.32(5) 0.19(5) 139
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of sale of respective class of shares
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
09/30/00 09/30/01 09/30/02(6) 09/30/03 09/30/04
-------- -------- ----------- -------- --------
Growth and Income Class C+ 0.01% -- % -- % -- % -- %
Growth and Income Class I. -- -- 0.12(4) 0.37 0.14
(6)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by .02%.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
22
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
BALANCED ASSETS FUND
--------------------
Net gain
(loss) on Distri- Net
Net Asset Net investments Dividends butions Asset Net Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- ----------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- ----------
Class A
-------
09/30/00 $20.12 $0.21 $ 2.83 $ 3.04 $(0.22) $(1.98) $(2.20) $20.96 15.69% $319,598
09/30/01 20.96 0.22 (5.73) (5.51) (0.21) (2.00) (2.21) 13.24 (28.35) 229,609
09/30/02(7) 13.24 0.19 (1.45) (1.26) (0.19) -- (0.19) 11.79 (9.65) 183,652
09/30/03 11.79 0.10 0.68 0.78 (0.12) -- (0.12) 12.45 6.65 175,324
09/30/04 12.45 0.12 0.78 0.90 (0.16) -- (0.16) 13.19 7.27 160,269
Class B
-------
09/30/00 $20.09 $0.08 $ 2.82 $ 2.90 $(0.09) $(1.98) $(2.07) $20.92 14.98% $174,936
09/30/01 20.92 0.11 (5.70) (5.59) (0.13) (2.00) (2.13) 13.20 (28.80) 95,473
09/30/02(7) 13.20 0.10 (1.45) (1.35) (0.11) -- (0.11) 11.74 (10.29) 64,452
09/30/03 11.74 0.03 0.68 0.71 (0.04) -- (0.04) 12.41 6.07 47,496
09/30/04 12.41 0.03 0.77 0.80 (0.07) -- (0.07) 13.14 6.45 38,687
Class C+
--------
09/30/00 $20.11 $0.08 $ 2.82 $ 2.90 $(0.09) $(1.98) $(2.07) $20.94 14.95% $ 29,506
09/30/01 20.94 0.12 (5.72) (5.60) (0.13) (2.00) (2.13) 13.21 (28.83) 24,450
09/30/02(7) 13.21 0.09 (1.43) (1.34) (0.11) -- (0.11) 11.76 (10.21) 31,894
09/30/03 11.76 0.03 0.67 0.70 (0.04) -- (0.04) 12.42 5.97 25,784
09/30/04 12.42 0.03 0.78 0.81 (0.07) -- (0.07) 13.16 6.53 22,781
Class I
-------
11/16/01-09/30/02(3)(7) $14.29 $0.19 $(2.48) $(2.29) $(0.21) $ -- $(0.21) $11.79 (16.18)% $ 4,457
09/30/03 11.79 0.12 0.69 0.81 (0.14) -- (0.14) 12.46 6.89 4,574
09/30/04 12.46 0.16 0.77 0.93 (0.18) -- (0.18) 13.21 7.44 679
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets net assets turnover
- ----------------------- ---------- ------------- ---------
09/30/00 1.44% 1.01% 259%
09/30/01 1.44 1.32 362
09/30/02(7) 1.47(6) 1.39(6) 485
09/30/03 1.49 0.86 409
09/30/04 1.50 0.89 181
09/30/00 2.06% 0.40% 259%
09/30/01 2.08 0.68 362
09/30/02(7) 2.12(6) 0.73(6) 485
09/30/03 2.16 0.22 409
09/30/04 2.18 0.20 181
09/30/00 2.05%(5) 0.38%(5) 259%
09/30/01 2.05(5) 0.71(5) 362
09/30/02(7) 2.13(5)(6) 0.72(5)(6) 485
09/30/03 2.15(5) 0.22(5) 409
09/30/04 2.18(5) 0.21(5) 181
11/16/01-09/30/02(3)(7) 1.33%(4)(5)(6) 1.52%(4)(5)(6) 485%
09/30/03 1.33(5) 1.02(5) 409
09/30/04 1.29(5) 1.10(5) 181
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of sale of respective class of shares
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
09/30/00 09/30/01 09/30/02(6) 09/30/03 09/30/04
-------- -------- ----------- -------- --------
Balanced Assets Class C+ 0.07% 0.06% -- % -- % -- %
Balanced Assets Class I. -- -- 0.19(4) 0.19 0.24
(6)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have remained the same.
(7)As disclosed in the Notes to the Financial Statements, the Fund has adopted
the provisions of the AICPA Audit and Accounting Guide of Investment
Companies and began accreting discount and amortizing premium on debt
securities. The per share affect of this change for the period ended
September 30, 2002 on investment income and realized and unrealized gain and
losses was approximately $0.01 per share for all classes of shares. The
effect of this change was to decrease the ratio of net investment income to
average net assets by 0.05% for all classes of shares. Per share data and
ratios for periods prior to September 30, 2002 have not been restated to
reflect this change in accounting policy.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
23
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
INTERNATIONAL EQUITY FUND
-------------------------
Net gain
(loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- ----------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- -------
Class A
-------
10/31/99 $12.22 $(0.03) $ 2.12 $ 2.09 $ -- $(0.05) $(0.05) $14.26 17.15% $29,324
10/31/00 14.26 (0.11) 0.29 0.18 -- -- -- 14.44 1.26 49,085
10/31/01 14.44 (0.05) (4.40) (4.45) -- (1.11) (1.11) 8.88 (33.17) 24,408
11/01/01-09/30/02(8) 8.88 0.00 (1.88) (1.88) -- -- -- 7.00 (21.17) 30,896
09/30/03 7.00 0.03 1.70 1.73 -- -- -- 8.73 24.71 28,720
09/30/04 8.73 0.01 1.46 1.47 0.00 -- 0.00 10.20 16.88 32,221
Class B
-------
10/31/99 $12.07 $(0.12) $ 2.08 $ 1.96 $ -- $(0.05) $(0.05) $13.98 16.29% $47,342
10/31/00 13.98 (0.22) 0.31 0.09 -- -- -- 14.07 0.64 48,901
10/31/01 14.07 (0.13) (4.26) (4.39) -- (1.11) (1.11) 8.57 (33.64) 26,747
11/01/01-09/30/02(8) 8.57 (0.06) (1.78) (1.84) -- -- -- 6.73 (21.47) 25,509
09/30/03 6.73 (0.03) 1.64 1.61 -- -- -- 8.34 23.92 24,799
09/30/04 8.34 (0.06) 1.41 1.35 -- -- -- 9.69 16.19 20,673
Class C+
--------
10/31/99 $12.07 $(0.13) $ 2.10 $ 1.97 $ -- $(0.05) $(0.05) $13.99 16.37% $11,709
10/31/00 13.99 (0.21) 0.30 0.09 -- -- -- 14.08 0.64 20,367
10/31/01 14.08 (0.12) (4.28) (4.40) -- (1.11) (1.11) 8.57 (33.69) 12,949
11/01/01-09/30/02(8) 8.57 (0.06) (1.79) (1.85) -- -- -- 6.72 (21.59) 15,067
09/30/03 6.72 (0.03) 1.64 1.61 -- -- -- 8.33 23.96 14,787
09/30/04 8.33 (0.06) 1.41 1.35 -- -- -- 9.68 16.21 15,798
Class I
-------
11/16/01-09/30/02(6)(8) $ 9.09 $ 0.01 $(2.08) $(2.07) $ -- $ -- $ -- $ 7.02 (22.77)% $15,802
09/30/03 7.02 0.03 1.72 1.75 -- -- -- 8.77 24.93 20,499
09/30/04 8.77 (0.04) 1.53 1.49 (0.01) -- (0.01) 10.25 16.96 4,233
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets(4) net assets(4) turnover
- ----------------------- ------------- ------------- ---------
10/31/99 2.03% (0.23)% 102%
10/31/00 2.03(5) (0.72)(5) 89
10/31/01 2.03 (0.42) 272
11/01/01-09/30/02(8) 1.93(3)(5)(7) (0.06)(3)(5)(7) 230
09/30/03 1.90 0.35 209
09/30/04 1.90 0.06 202
10/31/99 2.68% (0.92)% 102%
10/31/00 2.68(5) (1.37)(5) 89
10/31/01 2.68 (1.14) 272
11/01/01-09/30/02(8) 2.56(3)(5)(7) (0.72)(3)(5)(7) 230
09/30/03 2.55 (0.41) 209
09/30/04 2.55 (0.62) 202
10/31/99 2.68% (0.95)% 102%
10/31/00 2.68(5) (1.30)(5) 89
10/31/01 2.68 (1.13) 272
11/01/01-09/30/02(8) 2.55(3)(5)(7) (0.72)(3)(5)(7) 230
09/30/03 2.55 (0.38) 209
09/30/04 2.55 (0.60) 202
11/16/01-09/30/02(6)(8) 1.80%(3)(5)(7) 0.16%(3)(5)(7) 230%
09/30/03 1.80 0.43 209
09/30/04 1.80 (0.34) 202
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Annualized
(4)Net of the following expense reimbursements (based on average net assets):
10/31/99 10/31/00 10/31/01 09/30/02(7) 09/30/03 09/30/04
-------- -------- -------- ----------- -------- --------
International Equity Class A. 0.25% 0.04% 0.03% 0.08% 0.18% 0.10%
International Equity Class B. 0.24 0.04 0.06 0.14 0.13 0.11
International Equity Class C+ 0.33 0.10 0.14 0.13 0.28 0.06
International Equity Class I. -- -- -- 0.11 0.16 0.12
(5)The ratio reflects an expense cap which is net of custody credits of (0.01)%
or waiver/reimbursement if applicable.
(6)Commencement of sale of respective class of shares
(7)Includes expense reimbursements (recoupments) but excludes expense
reductions. If the expense reductions had been applied, the ratio of
expenses to average net assets would have remained the same.
(8)The Fund changed its fiscal year end from October 31 to September 30.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
24
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
VALUE FUND
----------
Net Gain
(loss) on Distri- Net Net Ratio of
Net Asset Net investments Dividends butions Asset Assets expenses
Value investment (both Total from from net from Total Value end of to average
beginning income realized and investment investment capital distri- end of Total period net
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's) assets(4)
- -------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- ------- ----------
Class A
-------
10/31/99 $14.99 $ 0.07 $ 1.76 $ 1.83 $ -- $ -- $ -- $16.82 12.21% $58,581 1.77%(5)
10/31/00 16.82 0.04 1.68 1.72 -- (0.77) (0.77) 17.77 10.73 52,062 1.78(5)
10/31/01 17.77 0.11 (0.83) (0.72) -- (1.95) (1.95) 15.10 (4.42) 51,150 1.78(5)
10/31/02 15.10 0.18 0.07 0.25 (0.09) (0.63) (0.72) 14.63 1.44 50,975 1.78
10/31/03 14.63 0.29 2.05 2.34 (0.18) (0.46) (0.64) 16.33 16.59 60,701 1.78(7)
11/01/03-09/30/04(8) 16.33 0.32 1.86 2.18 (0.37) (0.45) (0.82) 17.69 13.79 91,769 1.73(3)
Class B
-------
10/31/99 $14.81 $(0.03) $ 1.73 $ 1.70 $ -- $ -- $ -- $16.51 11.48% $95,112 2.40%(5)
10/31/00 16.51 0.06 1.51 1.57 -- (0.77) (0.77) 17.31 10.00 79,261 2.43(5)
10/31/01 17.31 0.00 (0.80) (0.80) -- (1.95) (1.95) 14.56 (5.06) 77,667 2.43(5)
10/31/02 14.56 0.07 0.07 0.14 (0.01) (0.63) (0.64) 14.06 0.74 78,584 2.43
10/31/03 14.06 0.19 1.98 2.17 (0.08) (0.46) (0.54) 15.69 15.94 83,935 2.41(7)
11/01/03-09/30/04(8) 15.69 0.24 1.75 1.99 (0.27) (0.45) (0.72) 16.96 13.09 68,492 2.40(3)
Class C+
--------
10/31/99 $14.81 $(0.03) $ 1.73 $ 1.70 $ -- $ -- $ -- $16.51 11.48% $12,976 2.42%(5)
10/31/00 16.51 0.07 1.49 1.56 -- (0.77) (0.77) 17.30 9.93 14,652 2.43(5)
10/31/01 17.30 0.00 (0.79) (0.79) -- (1.95) (1.95) 14.56 (5.01) 17,805 2.43(5)
10/31/02 14.56 0.07 0.07 0.14 (0.01) (0.63) (0.64) 14.06 0.74 18,504 2.43
10/31/03 14.06 0.18 1.99 2.17 (0.08) (0.46) (0.54) 15.69 15.94 23,208 2.43(7)
11/1/03-09/30/04(8) 15.69 0.22 1.77 1.99 (0.27) (0.45) (0.72) 16.96 13.09 30,987 2.41(3)
Class I
-------
11/16/01-10/31/02(6) $15.93 $ 0.19 $(0.77) $(0.58) $(0.09) $(0.63) $(0.72) $14.63 (3.83)% $ 4,726 1.68%(3)
10/31/03 14.63 0.30 2.05 2.35 (0.19) (0.46) (0.65) 16.33 16.72 6,629 1.68(7)
11/01/03-09/30/04(8) 16.33 0.37 1.83 2.20 (0.40) (0.45) (0.85) 17.68 13.91 4,746 1.67(3)
Class Z
-------
10/31/99 $15.04 $ 0.17 $ 1.76 $ 1.93 $ -- $ -- $ -- $16.97 12.83% $ 74 1.21%(5)
10/31/00 16.97 0.13 1.69 1.82 -- (0.77) (0.77) 18.02 11.25 353 1.21(5)
10/31/01 18.02 0.21 (0.85) (0.64) -- (1.95) (1.95) 15.43 (3.86) 487 1.21(5)
10/31/02 15.43 0.27 0.06 0.33 (0.16) (0.63) (0.79) 14.97 1.98 360 1.21
10/31/03 14.97 0.36 2.13 2.49 (0.25) (0.46) (0.71) 16.75 17.36 4,532 1.21(7)
11/01/03-09/30/04(8) 16.75 0.41 1.92 2.33 (0.45) (0.45) (0.90) 18.18 14.37 7,370 1.19(3)
Ratio of net
investment
income (loss)
to average Portfolio
Period Ended net assets(4) turnover
- -------------------- ------------- ---------
10/31/99 0.43%(5) 118%
10/31/00 0.25(5) 95
10/31/01 0.68(5) 146
10/31/02 1.15 188
10/31/03 1.94(7) 138
11/01/03-09/30/04(8) 2.12(3) 204
10/31/99 (0.19)%(5) 118%
10/31/00 0.39(5) 95
10/31/01 0.03(5) 146
10/31/02 0.49 188
10/31/03 1.32(7) 138
11/01/03-09/30/04(8) 1.58(3) 204
10/31/99 (0.21)%(5) 118%
10/31/00 0.40(5) 95
10/31/01 0.02(5) 146
10/31/02 0.49 188
10/31/03 1.28(7) 138
11/1/03-09/30/04(8) 1.48(3) 204
11/16/01-10/31/02(6) 1.26%(3) 188%
10/31/03 2.02(7) 138
11/01/03-09/30/04(8) 2.31(3) 204
10/31/99 0.98%(5) 118%
10/31/00 0.72(5) 95
10/31/01 1.26(5) 146
10/31/02 1.69 188
10/31/03 2.33(7) 138
11/01/03-09/30/04(8) 2.58(3) 204
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Annualized
(4)Net of the following expense reimbursements (recoupments) (based on average
net assets):
10/31/99 10/31/00 10/31/01 10/31/02 10/31/03 09/30/04
-------- -------- -------- -------- -------- --------
Value Class A. 0.04% 0.09% 0.00% 0.01% (0.01)% 0.04%
Value Class B. 0.02 0.07 -- (0.02) (0.01) 0.02
Value Class C+ 0.13 0.11 0.05 0.03 0.02 0.06
Value Class I. -- -- -- 0.19(3) -- 0.10
Value Class Z. 23.27 10.14 6.55 5.52 1.00 0.16
(5)The ratio reflects an expense cap which is net of custody credits of less
than 0.01% or waiver/reimbursements is applicable.
(6)Commencement of sale of respective class of shares
(7)Includes expense reimbursements, but excludes expense reductions. If the
expense reductions had been applied, the ratio of expenses to average net
assets would have been lower by
10/31/03
--------
Value Class A. 0.01%
Value Class B. 0.01
Value Class C+ 0.01
Value Class I. 0.01
Value Class Z. 0.00
(8)The Fund charged its fiscal year end from October 31 to September 30
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
25
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
BIOTECH/HEALTH FUND
-------------------
Net gain
(loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- -------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- -------
Class A
-------
06/14/00-10/31/00(3) $12.50 $(0.02) $ 3.48 $ 3.46 $-- $ -- $ -- $15.96 27.68% $30,489
10/31/01 15.96 (0.06) (4.32) (4.38) -- (0.55) (0.55) 11.03 (27.92) 27,865
10/31/02 11.03 (0.13) (3.28) (3.41) -- -- -- 7.62 (30.92) 16,092
10/31/03 7.62 (0.11) 2.30 2.19 -- -- -- 9.81 28.74 18,924
11/01/03-09/30/04(7) 9.81 (0.11) (0.67) (0.78) -- -- -- 9.03 (7.95) 15,839
Class B
-------
06/14/00-10/31/00(3) $12.50 $(0.05) $ 3.47 $ 3.42 $-- $ -- $ -- $15.92 27.36% $23,457
10/31/01 15.92 (0.14) (4.31) (4.45) -- (0.55) (0.55) 10.92 (28.45) 25,552
10/31/02 10.92 (0.19) (3.23) (3.42) -- -- -- 7.50 (31.32) 15,757
10/31/03 7.50 (0.16) 2.25 2.09 -- -- -- 9.59 27.87 17,843
11/01/03-09/30/04(7) 9.59 (0.16) (0.66) (0.82) -- -- -- 8.77 (8.55) 14,417
Class C+
--------
06/14/00-10/31/00(3) $12.50 $(0.05) $ 3.48 $ 3.43 $-- $ -- $ -- $15.93 27.44% $20,386
10/31/01 15.93 (0.14) (4.31) (4.45) -- (0.55) (0.55) 10.93 (28.43) 23,581
10/31/02 10.93 (0.19) (3.23) (3.42) -- -- -- 7.51 (31.29) 12,448
10/31/03 7.51 (0.16) 2.26 2.10 -- -- -- 9.61 27.96 12,662
11/01/03-09/30/04(7) 9.61 (0.16) (0.66) (0.82) -- -- -- 8.79 (8.53) 10,384
Ratio of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
Period Ended net assets(5) net assets(5) turnover
- -------------------- ------------- ------------- ---------
06/14/00-10/31/00(3) 1.55%(4)(6) (0.28)%(4)(6) 112%
10/31/01 1.55(6) (0.50)(6) 333
10/31/02 1.55 (1.38) 340
10/31/03 1.55 (1.32) 236
11/01/03-09/30/04(7) 1.55(4) (1.15)(4) 149
06/14/00-10/31/00(3) 2.20%(4)(6) (1.08)%(4)(6) 112%
10/31/01 2.20(6) (1.18)(6) 333
10/31/02 2.20 (2.03) 340
10/31/03 2.20 (1.97) 236
11/01/03-09/30/04(7) 2.20(4) (1.80)(4) 149
06/14/00-10/31/00(3) 2.20%(4)(6) (1.07)%(4)(6) 112%
10/31/01 2.20(6) (1.17)(6) 333
10/31/02 2.20 (2.03) 340
10/31/03 2.20 (1.97) 236
11/01/03-09/30/04(7) 2.20(4) (1.80)(4) 149
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of operations
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
10/31/00(4) 10/31/01 10/31/02 10/31/03 09/30/04
----------- -------- -------- -------- --------
Biotech/Health Fund Class A. 0.49% 0.19% 0.20% 0.23% 0.28%
Biotech/Health Fund Class B. 0.96 0.21 0.20 0.26 0.26
Biotech/Health Fund Class C+ 1.09 0.20 0.21 0.33 0.26
(6)The ratio reflects an expense cap which is net of custody credits of less
than 0.01%
(7)The fund changed its fiscal year end from October 31 to September 30
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
26
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
TAX MANAGED EQUITY FUND
Net Gain
(Loss) on Distri- Net Net
Net Asset Net investments Dividends butions Asset Assets
Value investment (both Total from from net from Total Value end of
beginning income realized and investment investment capital distri- end of Total period
Period Ended of period (loss)(1) unrealized) operations income gains butions period Return(2) (000's)
- -------------------- --------- ---------- ------------ ---------- ---------- ------- ------- ------ --------- -------
Class A
-------
03/01/99-10/31/99(3) $12.50 $ 0.00 $ 1.15 $ 1.15 $-- $-- $-- $13.65 9.20% $25,067
10/31/00 13.65 (0.02) 0.91 0.89 -- -- -- 14.54 6.52 38,802
10/31/01 14.54 0.00 (3.50) (3.50) -- -- -- 11.04 (24.07) 28,739
10/31/02 11.04 0.01 (2.05) (2.04) -- -- -- 9.00 (18.48) 16,587
10/31/03 9.00 0.03 1.46 1.49 -- -- -- 10.49 16.56 14,877
11/01/03-09/30/04(7) 10.49 0.03 0.75 0.78 -- -- -- 11.27 7.44 13,562
Class B
-------
03/01/99-10/31/99(3) $12.50 $(0.06) $ 1.14 $ 1.08 $-- $-- $-- $13.58 8.64% $27,524
10/31/00 13.58 (0.11) 0.91 0.80 -- -- -- 14.38 5.89 47,972
10/31/01 14.38 (0.08) (3.45) (3.53) -- -- -- 10.85 (24.55) 40,677
10/31/02 10.85 (0.06) (2.00) (2.06) -- -- -- 8.79 (18.99) 25,703
10/31/03 8.79 (0.03) 1.41 1.38 -- -- -- 10.17 15.70 22,694
11/01/03-09/30/04(7) 10.17 (0.04) 0.73 0.69 -- -- -- 10.86 6.78 19,669
Class C+
--------
03/01/99-10/31/99(3) $12.50 $(0.06) $ 1.16 $ 1.10 $-- $-- $-- $13.60 8.80% $27,884
10/31/00 13.60 (0.11) 0.91 0.80 -- -- -- 14.40 5.88 51,348
10/31/01 14.40 (0.08) (3.46) (3.54) -- -- -- 10.86 (24.58) 43,610
10/31/02 10.86 (0.06) (2.00) (2.06) -- -- -- 8.80 (18.97) 26,430
10/31/03 8.80 (0.03) 1.42 1.39 -- -- -- 10.19 15.80 23,036
11/01/03-09/30/04(7) 10.19 (0.04) 0.73 0.69 -- -- -- 10.88 6.77 18,295
Ratio of net
Ratio of investment
expenses income loss)
to average to average Portfolio
Period Ended net assets(5) net assets(5) turnover
- -------------------- ------------- ------------- ---------
03/01/99-10/31/99(3) 1.45%(4)(6) (0.02)%(4)(6) 9%
10/31/00 1.45(6) (0.14)(6) 7
10/31/01 1.45(6) (0.03)(6) 19
10/31/02 1.45 0.09 16
10/31/03 1.45 0.35 13
11/01/03-09/30/04(7) 1.45(4) 0.25(4) 20
03/01/99-10/31/99(3) 2.10%(4)(6) (0.74)%(4)(6) 9%
10/31/00 2.10(6) (0.79)(6) 7
10/31/01 2.10(6) (0.68)(6) 19
10/31/02 2.10 (0.56) 16
10/31/03 2.10 (0.30) 13
11/01/03-09/30/04(7) 2.10(4) (0.40)(4) 20
03/01/99-10/31/99(3) 2.10%(4)(6) (0.75)%(4)(6) 9%
10/31/00 2.10(6) (0.79)(6) 7
10/31/01 2.10(6) (0.68)(6) 19
10/31/02 2.10 (0.56) 16
10/31/03 2.10 (0.30) 13
11/01/03-09/30/04(7) 2.10(4) (0.40)(4) 20
- --------
(1)Calculated based upon average shares outstanding
(2)Total return is not annualized and does not reflect sales load. Total return
does include expense reimbursements and expense reductions.
(3)Commencement of operations
(4)Annualized
(5)Net of the following expense reimbursements (based on average net assets):
10/31/99(4) 10/31/00 10/31/01 10/31/02 10/31/03 09/30/04
----------- -------- -------- -------- -------- --------
Tax Managed Equity Fund Class A. 1.07% 0.23% 0.15% 0.21% 0.26% 0.24%
Tax Managed Equity Fund Class B. 0.84 0.22 0.15 0.20 0.23 0.25
Tax Managed Equity Fund Class C+ 0.83 0.22 0.14 0.21 0.23 0.24
(6)The ratio reflects an expense cap which is net of custody credits of less
than 0.01%
(7)The fund changed its fiscal year end from October 31 to September 30
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
27
SunAmerica Blue Chip Growth Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Medical Products............... 9.8%
Financial Services............. 9.7
Pharmaceuticals................ 8.7
Retail......................... 7.6
Telecommunications............. 6.9
Conglomerate................... 5.9
Electronics.................... 5.7
Aerospace & Military Technology 5.4
Computer Software.............. 5.4
Energy Sources................. 3.9
Broadcasting & Media........... 3.8
Computers & Business Equipment. 3.8
Housing & Household Durables... 3.4
Energy Services................ 3.2
Internet Content............... 2.6
Leisure & Tourism.............. 2.5
Internet Software.............. 2.2
Transportation................. 2.0
Apparel & Textiles............. 1.6
Health Services................ 1.5
Food, Beverage, & Tobacco...... 1.4
Machinery...................... 1.3
Banks.......................... 1.3
Chemicals...................... 0.8
Repurchase Agreements.......... 0.4
-----
100.8%
=====
- --------
* Calculated as a percentage of net assets.
28
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 100.4%
Aerospace & Military Technology -- 5.4%
General Dynamics Corp................. 17,500 $ 1,786,750
Honeywell International, Inc.......... 41,900 1,502,534
United Technologies Corp.............. 22,100 2,063,698
-----------
5,352,982
-----------
Apparel & Textiles -- 1.6%
Nike, Inc., Class B................... 20,600 1,623,280
-----------
Banks -- 1.3%
Bank of America Corp.................. 29,000 1,256,570
-----------
Broadcasting & Media -- 3.8%
McGraw-Hill Cos., Inc................. 15,000 1,195,350
Omnicom Group, Inc.................... 10,000 730,600
Time Warner, Inc.+.................... 115,700 1,867,398
-----------
3,793,348
-----------
Chemicals -- 0.8%
Dow Chemical Co....................... 18,000 813,240
-----------
Computer Software -- 5.4%
Adobe Systems, Inc.................... 29,100 1,439,577
Microsoft Corp........................ 141,400 3,909,710
-----------
5,349,287
-----------
Computers & Business Equipment -- 3.8%
Dell, Inc.+........................... 49,900 1,776,440
International Business Machines Corp.. 22,900 1,963,446
-----------
3,739,886
-----------
Conglomerate -- 5.9%
General Electric Co................... 122,100 4,100,118
Tyco International, Ltd............... 56,200 1,723,092
-----------
5,823,210
-----------
Electronics -- 5.7%
Applied Materials, Inc.+.............. 116,400 1,919,436
Intel Corp............................ 99,004 1,986,020
Maxim Integrated Products, Inc........ 15,000 634,350
Texas Instruments, Inc................ 53,800 1,144,864
-----------
5,684,670
-----------
Energy Services -- 3.2%
Baker Hughes, Inc..................... 24,300 1,062,396
BJ Services Co........................ 19,100 1,001,031
Transocean, Inc.+..................... 30,000 1,073,400
-----------
3,136,827
-----------
Energy Sources -- 3.9%
ChevronTexaco Corp.................... 19,200 1,029,888
EOG Resources, Inc.................... 15,300 1,007,505
Exxon Mobil Corp...................... 20,400 985,932
XTO Energy, Inc....................... 24,300 789,264
-----------
3,812,589
-----------
Financial Services -- 9.7%
American Express Co................... 41,300 2,125,298
Capital One Financial Corp............ 24,900 1,840,110
Citigroup, Inc........................ 24,832 1,095,588
Countrywide Financial Corp............ 25,000 984,750
Value
Security Description Shares (Note 3)
---------------------------------------------------------------------
Financial Services (continued)
Goldman Sachs Group, Inc........................ 21,500 $ 2,004,660
Morgan Stanley.................................. 30,250 1,491,325
-----------
9,541,731
-----------
Food, Beverage & Tobacco -- 1.4%
PepsiCo, Inc.................................... 29,100 1,415,715
-----------
Health Services -- 1.5%
Aetna, Inc...................................... 14,600 1,458,978
-----------
Housing & Household Durables -- 3.4%
Estee Lauder Cos., Inc., Class A................ 25,200 1,053,360
Procter & Gamble Co............................. 20,800 1,125,696
Pulte Homes, Inc................................ 20,000 1,227,400
-----------
3,406,456
-----------
Internet Content -- 2.6%
eBay, Inc.+..................................... 27,700 2,546,738
-----------
Internet Software -- 2.2%
Symantec Corp.+................................. 39,800 2,184,224
-----------
Leisure & Tourism -- 2.5%
Carnival Corp................................... 24,600 1,163,334
International Game Technology................... 35,000 1,258,250
-----------
2,421,584
-----------
Machinery -- 1.3%
Danaher Corp.................................... 25,200 1,292,256
-----------
Medical Products -- 9.8%
Abbott Laboratories............................. 20,000 847,200
Becton Dickinson & Co........................... 31,300 1,618,210
Guidant Corp.................................... 20,000 1,320,800
Johnson & Johnson............................... 40,700 2,292,631
Medtronic, Inc.................................. 25,000 1,297,500
St. Jude Medical, Inc.+......................... 17,900 1,347,333
Stryker Corp.................................... 20,000 961,600
-----------
9,685,274
-----------
Pharmaceuticals -- 8.7%
Amgen, Inc.+.................................... 29,100 1,649,388
Biogen Idec, Inc.+.............................. 29,400 1,798,398
Charles River Laboratories International, Inc.+. 25,000 1,145,000
Genentech, Inc.+................................ 11,300 592,346
Gilead Sciences, Inc.+.......................... 30,000 1,121,400
Pfizer, Inc..................................... 75,545 2,311,677
-----------
8,618,209
-----------
Retail -- 7.6%
Home Depot, Inc................................. 30,000 1,176,000
Kohl's Corp.+................................... 38,800 1,869,772
Limited Brands.................................. 77,600 1,729,704
Wal-Mart Stores, Inc............................ 34,000 1,808,800
Williams-Sonoma, Inc.+.......................... 24,600 923,730
-----------
7,508,006
-----------
Telecommunications -- 6.9%
Cisco Systems, Inc.+............................ 114,500 2,072,450
Motorola, Inc................................... 64,000 1,154,560
29
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
COMMON STOCK (continued)
Telecommunications (continued)
Nextel Communications, Inc., Class A+. 38,500 $ 917,840
QUALCOMM, Inc......................... 68,700 2,682,048
-----------
6,826,898
-----------
Transportation -- 2.0%
United Parcel Service, Inc., Class B.. 26,600 2,019,472
-----------
Total Investment Securities -- 100.4%
(cost $93,778,741)................... 99,311,430
-----------
REPURCHASE AGREEMENTS -- 0.4%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $376,000)...................... 376,000 376,000
-----------
TOTAL INVESTMENTS --
(cost $94,154,741)(2)................ 100.8% 99,687,430
Liabilities in excess of other assets... (0.8) (803,601)
------- -----------
NET ASSETS -- 100.0% $98,883,829
======= ===========
- --------
+ Non-income producing securities
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
See Notes to Financial Statements
30
SunAmerica Growth Opportunities Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Energy Services................ 11.9%
Pharmaceuticals................ 11.0
Electronics.................... 9.7
Machinery...................... 8.8
Computer Software.............. 6.6
Internet Software.............. 6.1
Banks.......................... 5.4
Financial Services............. 5.0
Transportation................. 4.2
Internet Content............... 3.7
Medical Products............... 3.3
Repurchase Agreements.......... 2.9
Communication Equipment........ 2.2
Aerospace & Military Technology 2.0
Restaurants.................... 2.0
Telecommunications............. 1.7
Manufacturing.................. 1.6
Computers & Business Equipment. 1.4
Metals & Mining................ 1.4
Health Sciences................ 0.8
Retail......................... 0.7
Food, Beverage, & Tobacco...... 0.6
Insurance...................... 0.2
Energy Sources................. 0.0
----
93.2%
====
- --------
* Calculated as a percentage of net assets.
31
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
------------------------------------------------------------
COMMON STOCK -- 90.3%
Aerospace & Military Technology -- 2.0%
Alliant Techsystems, Inc.+............. 33,000 $ 1,996,500
-----------
Banks -- 5.4%
Dime Community Bancshares.............. 59,200 994,560
Franklin Bank Corp.+................... 79,000 1,346,950
Signature Bank+........................ 114,400 3,060,200
-----------
5,401,710
-----------
Communication Equipment -- 2.2%
Tekelec, Inc.+......................... 131,600 2,195,088
-----------
Computer Software -- 6.6%
Cognos, Inc.+.......................... 85,400 3,033,408
FutureLink Corp.+...................... 11,714 1
Keane, Inc.+........................... 65,700 1,009,152
Lawson Software, Inc.+................. 263,200 1,473,920
Parametric Technology Corp.+........... 197,300 1,041,744
-----------
6,558,225
-----------
Computers & Business Equipment -- 1.4%
Avocent Corp.+......................... 52,600 1,369,178
-----------
Electronics -- 9.7%
AMETEK, Inc............................ 116,700 3,538,344
Cymer, Inc.+........................... 92,100 2,639,586
Lam Research Corp.+.................... 157,800 3,452,664
-----------
9,630,594
-----------
Energy Services -- 11.9%
Atwood Oceanics, Inc.+................. 23,400 1,112,436
Global Industries, Ltd.+............... 295,900 1,828,662
Grant Prideco, Inc.+................... 30,000 614,700
Oceaneering Intl, Inc.+................ 23,400 862,056
Patterson-UTI Energy, Inc.............. 89,300 1,702,951
Rowan Cos., Inc.+...................... 117,100 3,091,440
Tidewater, Inc......................... 30,000 976,500
Todco, Class A+........................ 93,700 1,625,695
-----------
11,814,440
-----------
Energy Sources -- 0.0%
Cross Timbers Royalty Trust............ 369 12,244
-----------
Financial Services -- 5.0%
Nelnet, Inc., Class A+................. 82,900 1,855,302
Piper Jaffray Cos.+.................... 79,000 3,127,610
-----------
4,982,912
-----------
Food, Beverage & Tobacco -- 0.6%
SunOpta, Inc.+......................... 79,000 614,620
-----------
Health Services -- 0.8%
Covance, Inc.+......................... 400 15,988
LCA-Vision, Inc........................ 30,000 773,700
-----------
789,688
-----------
Insurance -- 0.2%
Scottish Annuity & Life Holdings, Ltd.. 9,100 192,647
-----------
Internet Content -- 3.7%
Ask Jeeves Inc.+....................... 30,000 981,300
Blue Nile, Inc.+....................... 17,200 579,296
Value
Security Description Shares (Note 3)
-------------------------------------------------------------
Internet Content (continued)
Cnet Networks, Inc.+.................... 131,600 $ 1,204,140
Digital Insight Corp.+.................. 66,300 903,669
-----------
3,668,405
-----------
Internet Software -- 6.1%
Secure Computing Corp.+................. 263,200 1,997,688
SupportSoft, Inc.+...................... 289,500 2,819,730
Watchguard Technologies, Inc.+.......... 263,200 1,231,776
-----------
6,049,194
-----------
Machinery -- 8.8%
Idex Corp............................... 93,000 3,158,280
Nordson Corp............................ 68,300 2,344,739
Roper Industries, Inc................... 56,500 3,246,490
-----------
8,749,509
-----------
Manufacturing -- 1.6%
HNI Corp................................ 39,500 1,563,410
-----------
Medical Products -- 3.3%
Advanced Neuromodulation Systems, Inc.+. 52,600 1,596,410
Align Technology, Inc.+................. 39,500 603,560
Cypress Bioscience, Inc.+............... 65,700 766,719
Encore Medical Corp.+................... 65,700 327,186
-----------
3,293,875
-----------
Metals & Mining -- 1.4%
Worthington Industries, Inc............. 65,700 1,402,695
-----------
Pharmaceuticals -- 11.0%
Cephalon, Inc.+......................... 45,800 2,193,820
Critical Therapeutics, Inc.+............ 98,600 576,810
Express Scripts, Inc.+.................. 31,400 2,051,676
Integra Lifesciences Holdings Corp.+.... 109,100 3,503,201
Medicines Co.+.......................... 65,700 1,585,998
Par Pharmaceutical Cos. Inc.+........... 30,000 1,077,900
-----------
10,989,405
-----------
Restaurants -- 2.0%
Applebees International, Inc............ 79,000 1,997,120
-----------
Retail -- 0.7%
Sharper Image Corp.+.................... 30,000 643,500
-----------
Telecommunications -- 1.7%
Alvarion, Ltd.+......................... 131,600 1,702,904
Jamdat Mobile, Inc.+.................... 400 9,228
-----------
1,712,132
-----------
Transportation -- 4.2%
C.H. Robinson Worldwide, Inc............ 39,500 1,832,405
Hornbeck Offshore Services, Inc.+....... 144,600 2,385,900
-----------
4,218,305
-----------
Total Investment Securities -- 90.3%
(cost $93,209,419)..................... 89,845,396
-----------
32
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
-------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.9%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $2,864,000)............. 2,864,000 $ 2,864,000
-----------
TOTAL INVESTMENTS --
(cost $96,073,419)(2)......... 93.2% 92,709,396
Other assets less liabilities.... 6.8 6,805,675
--------- -----------
NET ASSETS -- 100.0% $99,515,071
========= ===========
- --------
+ Non-income producing securities
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
See Notes to Financial Statements
33
SunAmerica New Century Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Electronics.................... 12.3%
Business Services.............. 7.5
Telecommunications............. 7.3
Medical Products............... 7.0
Financial Services............. 6.5
Energy Services................ 5.6
Energy Sources................. 5.6
Retail......................... 5.4
Computer Software.............. 5.1
Pharmaceuticals................ 4.9
Banks.......................... 4.7
Aerospace & Military Technology 4.5
Restaurants.................... 3.5
Transportation................. 3.5
Health Services................ 3.4
Machinery...................... 3.0
Metals & Mining................ 2.2
Internet Software.............. 1.9
Housing & Household Durables... 1.8
Leisure & Tourism.............. 1.7
Conglomerate................... 1.2
Internet Content............... 1.0
Broadcasting & Media........... 0.6
Forest Products................ 0.6
-----
100.8%
=====
- --------
* Calculated as a percentage of net assets.
34
SunAmerica New Century Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 100.8%
Aerospace & Military Technology -- 4.5%
Alliant Techsystems, Inc.+........... 34,200 $ 2,069,100
General Dynamics Corp................ 21,800 2,225,780
-----------
4,294,880
-----------
Banks -- 4.7%
Hibernia Corp., Class A.............. 99,400 2,625,154
Signature Bank+...................... 68,300 1,827,025
-----------
4,452,179
-----------
Broadcasting & Media -- 0.6%
Radio One, Inc., Class D+............ 42,200 600,506
-----------
Business Services -- 7.5%
Fastenal Co.......................... 50,300 2,897,280
Stericycle, Inc.+.................... 35,800 1,643,220
Waste Connections, Inc.+............. 79,000 2,502,720
-----------
7,043,220
-----------
Computer Software -- 5.1%
Cognos, Inc.+........................ 76,000 2,699,520
Manhattan Associates, Inc.+.......... 51,900 1,267,398
Siebel Systems, Inc.+................ 112,500 848,250
-----------
4,815,168
-----------
Conglomerate -- 1.2%
Dover Corp........................... 28,100 1,092,247
-----------
Electronics -- 12.3%
Analog Devices, Inc.................. 43,400 1,683,052
Flextronics International, Ltd.+..... 150,300 1,991,475
Lam Research Corp.+.................. 90,000 1,969,200
Marvell Technology Group, Ltd.+...... 96,300 2,516,319
National Semiconductor Corp.+........ 50,600 783,794
Rockwell Automation, Inc............. 68,700 2,658,690
-----------
11,602,530
-----------
Energy Services -- 5.6%
BJ Services Co....................... 28,000 1,467,480
Patterson-UTI Energy, Inc............ 31,900 608,333
Rowan Cos., Inc.+.................... 75,000 1,980,000
Smith International, Inc.+........... 20,100 1,220,673
-----------
5,276,486
-----------
Energy Sources -- 5.6%
Burlington Resources, Inc............ 62,500 2,550,000
EOG Resources, Inc................... 41,500 2,732,775
-----------
5,282,775
-----------
Financial Services -- 6.5%
Ameritrade Holding Corp.+............ 166,800 2,003,268
Knight Trading Group, Inc.+.......... 73,900 682,097
Nelnet, Inc., Class A+............... 54,700 1,224,186
Providian Financial Corp.+........... 146,400 2,275,056
-----------
6,184,607
-----------
Forest Products -- 0.6%
Smurfit-Stone Container Corp.+....... 27,300 528,801
-----------
Health Services -- 3.4%
Centene Corp.+....................... 76,500 3,257,370
-----------
Housing & Household Durables -- 1.8%
Yankee Candle Co., Inc.+............. 58,700 1,699,952
-----------
Value
Security Description Shares (Note 3)
-----------------------------------------------------------------
Internet Content -- 1.0%
Digital Insight Corp.+.................... 66,700 $ 909,121
-----------
Internet Software -- 1.9%
VeriSign, Inc.+........................... 92,600 1,840,888
-----------
Leisure & Tourism -- 1.7%
Orbitz, Inc., Class A+.................... 24,200 658,240
Starwood Hotels & Resorts Worldwide, Inc.. 20,000 928,400
-----------
1,586,640
-----------
Machinery -- 3.0%
Danaher Corp.............................. 54,700 2,805,016
-----------
Medical Products -- 7.0%
Cytyc Corp.+.............................. 90,700 2,190,405
Millennium Pharmaceuticals, Inc.+......... 89,700 1,229,787
Neurocrine Biosciences, Inc.+............. 12,100 570,636
St. Jude Medical, Inc.+................... 34,200 2,574,234
-----------
6,565,062
-----------
Metals & Mining -- 2.2%
Cleveland-Cliffs, Inc.+................... 26,000 2,102,620
-----------
Pharmaceuticals -- 4.9%
Critical Therapeutics, Inc.+.............. 33,700 197,145
Cubist Pharmaceuticals, Inc.+............. 86,500 854,620
Forest Laboratories, Inc.+................ 16,900 760,162
Gilead Sciences, Inc.+.................... 75,600 2,825,928
-----------
4,637,855
-----------
Restaurants -- 3.5%
Applebees International, Inc.............. 61,100 1,544,608
Ruby Tuesday, Inc......................... 62,400 1,739,088
-----------
3,283,696
-----------
Retail -- 5.4%
Urban Outfitters, Inc.+................... 90,000 3,096,000
Williams-Sonoma, Inc.+.................... 54,200 2,035,210
-----------
5,131,210
-----------
Telecommunications -- 7.3%
Andrew Corp.+............................. 136,600 1,671,984
Avaya, Inc.+.............................. 152,700 2,128,638
NII Holdings, Inc.+....................... 75,100 3,094,871
-----------
6,895,493
-----------
Transportation -- 3.5%
C.H. Robinson Worldwide, Inc.............. 34,200 1,586,538
Heartland Express, Inc.................... 93,669 1,728,193
-----------
3,314,731
-----------
TOTAL INVESTMENTS --
(cost $84,942,238)(1).................... 100.8% 95,203,053
Liabilities in excess of other assets....... (0.8) (736,844)
------- -----------
NET ASSETS -- 100.0% $94,466,209
======= ===========
- --------
+ Non-income producing securities
(1) See Note 6 for cost of investments on a tax basis
See Notes to Financial Statements
35
SunAmerica Growth and Income Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Retail......................... 11.8%
Financial Services............. 9.7
Aerospace & Military Technology 7.5
Conglomerate................... 7.3
Energy Sources................. 7.3
Banks.......................... 6.9
Computers & Business Equipment. 6.8
Medical Products............... 6.1
Broadcasting & Media........... 5.3
Food, Beverage, & Tobacco...... 5.1
Computer Software.............. 4.6
Electronics.................... 3.9
Telecommunications............. 3.8
Insurance...................... 3.1
Repurchase Agreements.......... 2.9
Housing & Household Durables... 2.6
Pharmaceuticals................ 2.6
Chemicals...................... 1.5
Transportation................. 1.1
Health Services................ 0.8
-----
100.7%
=====
- --------
* Calculated as a percentage of net assets.
36
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
--------------------------------------------------------------
COMMON STOCK -- 97.8%
Aerospace & Military Technology -- 7.5%
Alliant Techsystems, Inc.+.............. 35,000 $ 2,117,500
General Dynamics Corp................... 25,000 2,552,500
Honeywell International, Inc............ 98,700 3,539,382
United Technologies Corp................ 46,900 4,379,522
------------
12,588,904
------------
Banks -- 6.9%
Bank of America Corp.................... 104,400 4,523,652
Mellon Financial Corp................... 60,300 1,669,707
U.S. Bancorp............................ 103,500 2,991,150
Wells Fargo & Co........................ 39,500 2,355,385
------------
11,539,894
------------
Broadcasting & Media -- 5.3%
Comcast Corp., Class A+................. 58,500 1,652,040
Fox Entertainment Group, Inc., Class A+. 100,000 2,774,000
Time Warner, Inc.+...................... 163,500 2,638,890
Walt Disney Co.......................... 82,700 1,864,885
------------
8,929,815
------------
Chemicals -- 1.5%
du Pont (E.I.) de Nemours & Co.......... 60,000 2,568,000
------------
Computer Software -- 4.6%
Microsoft Corp.......................... 211,400 5,845,210
Oracle Corp.+........................... 170,000 1,917,600
------------
7,762,810
------------
Computers & Business Equipment -- 6.8%
Dell, Inc.+............................. 50,200 1,787,120
Hewlett-Packard Co...................... 200,000 3,750,000
International Business Machines Corp.... 38,000 3,258,120
Lexmark International, Inc., Class A+... 30,900 2,595,909
------------
11,391,149
------------
Conglomerate -- 7.3%
Dover Corp.............................. 65,000 2,526,550
General Electric Co..................... 208,300 6,994,714
Tyco International, Ltd................. 90,600 2,777,796
------------
12,299,060
------------
Electronics -- 3.9%
Analog Devices, Inc..................... 50,000 1,939,000
Applied Materials, Inc.+................ 130,000 2,143,700
Intel Corp.............................. 120,000 2,407,200
------------
6,489,900
------------
Energy Sources -- 7.3%
ChevronTexaco Corp...................... 74,000 3,969,360
Exxon Mobil Corp........................ 112,200 5,422,626
Marathon Oil Corp....................... 69,200 2,856,576
------------
12,248,562
------------
Financial Services -- 9.7%
American Express Co..................... 66,300 3,411,798
Capital One Financial Corp.............. 43,700 3,229,430
Citigroup, Inc.......................... 76,100 3,357,532
Goldman Sachs Group, Inc................ 17,100 1,594,404
Value
Security Description Shares (Note 3)
------------------------------------------------------------
Financial Services (continued)
J.P. Morgan Chase & Co................ 71,800 $ 2,852,614
Morgan Stanley........................ 38,800 1,912,840
------------
16,358,618
------------
Food, Beverage & Tobacco -- 5.1%
Altria Group, Inc..................... 51,400 2,417,856
Anheuser-Busch Cos., Inc.............. 30,000 1,498,500
Coca-Cola Co.......................... 39,800 1,593,990
Diageo, PLC Sponsored ADR............. 61,000 3,076,230
------------
8,586,576
------------
Health Services -- 0.8%
Aetna, Inc............................ 14,000 1,399,020
------------
Housing & Household Durables -- 2.6%
Estee Lauder Cos., Inc., Class A...... 59,300 2,478,740
Procter & Gamble Co................... 33,600 1,818,432
------------
4,297,172
------------
Insurance -- 3.1%
Allstate Corp......................... 35,000 1,679,650
Anthem, Inc.+......................... 20,600 1,797,350
Chubb Corp............................ 25,000 1,757,000
------------
5,234,000
------------
Medical Products -- 6.1%
Becton Dickinson & Co................. 44,000 2,274,800
Boston Scientific Corp.+.............. 50,000 1,986,500
Johnson & Johnson..................... 52,200 2,940,426
Medtronic, Inc........................ 60,000 3,114,000
------------
10,315,726
------------
Pharmaceuticals -- 2.6%
Amgen, Inc.+.......................... 30,300 1,717,404
Pfizer, Inc........................... 87,750 2,685,150
------------
4,402,554
------------
Retail -- 11.8%
Best Buy Co., Inc..................... 50,000 2,712,000
Federated Department Stores, Inc...... 60,000 2,725,800
Home Depot, Inc....................... 66,000 2,587,200
Kohl's Corp.+......................... 55,000 2,650,450
Limited Brands........................ 255,000 5,683,950
Wal-Mart Stores, Inc.................. 63,900 3,399,480
------------
19,758,880
------------
Telecommunications -- 3.8%
Cisco Systems, Inc.+.................. 84,300 1,525,830
Nextel Communications, Inc., Class A+. 67,800 1,616,352
Verizon Communications, Inc........... 80,500 3,170,090
------------
6,312,272
------------
Transportation -- 1.1%
United Parcel Service, Inc., Class B.. 24,800 1,882,816
------------
Total Investment Securities -- 97.8%
(cost $157,306,934).................. 164,365,728
------------
37
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.9%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)..... 913,000 $ 913,000
UBS Securities, LLC
Joint Repurchase Agreement(1)..... 4,000,000 4,000,000
------------
Total Repurchase Agreements
(cost $4,913,000)................. 4,913,000
------------
TOTAL INVESTMENTS --
(cost $162,219,934)(2)............ 100.7% 169,278,728
Liabilities in excess of other assets (0.7) (1,249,233)
--------- ------------
NET ASSETS -- 100.0% $168,029,495
========= ============
- --------
+ Non-income producing security
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
ADR -- AmericanDepository Receipt
See Notes to Financial Statements
38
SunAmerica Balanced Assets Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
U.S. Government Agencies....... 16.1%
Financial Services............. 12.2
Banks.......................... 6.5
Telecommunications............. 6.2
Medical Products............... 5.5
Retail......................... 5.1
Energy Sources................. 4.9
Aerospace & Military Technology 4.7
Broadcasting & Media........... 4.4
Conglomerate................... 3.3
Housing & Household Durables... 3.1
Computer Software.............. 2.9
Pharmaceuticals................ 2.8
Leisure & Tourism.............. 2.4
Computers & Business Equipment. 2.1
Utilities...................... 2.1
Electronics.................... 2.0
Energy Services................ 2.0
Food, Beverage, & Tobacco...... 1.9
Repurchase Agreements.......... 1.5
Insurance...................... 1.2
Transportation................. 1.2
Chemicals...................... 1.1
Machinery...................... 0.9
Health Services................ 0.9
Apparel & Textiles............. 0.7
Foreign Government Agency...... 0.7
Automotive..................... 0.4
Metals & Mining................ 0.4
Forest Products................ 0.4
Business Services.............. 0.3
Communication Equipment........ 0.3
Real Estate & Investment Trusts 0.2
U.S. Government Obligations.... 0.1
-----
100.5%
=====
- --------
* Calculated as a percentage of net assets.
39
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 62.4%
Aerospace & Military Technology -- 4.4%
Boeing Co............................. 23,200 $ 1,197,584
General Dynamics Corp................. 24,300 2,481,030
Honeywell International, Inc.......... 81,400 2,919,004
United Technologies Corp.............. 33,400 3,118,892
-----------
9,716,510
-----------
Apparel & Textiles -- 0.7%
Nike, Inc., Class B................... 19,400 1,528,720
-----------
Banks -- 4.9%
Bank of America Corp.................. 69,400 3,007,102
Comerica, Inc......................... 30,000 1,780,500
Mellon Financial Corp................. 54,600 1,511,874
U.S. Bancorp.......................... 76,700 2,216,630
Wells Fargo & Co...................... 41,700 2,486,571
-----------
11,002,677
-----------
Broadcasting & Media -- 2.6%
McGraw-Hill Cos., Inc................. 20,000 1,593,800
Omnicom Group, Inc.................... 10,000 730,600
Time Warner, Inc.+.................... 134,500 2,170,830
Walt Disney Co........................ 55,500 1,251,525
-----------
5,746,755
-----------
Chemicals -- 0.7%
Dow Chemical Co....................... 36,000 1,626,480
-----------
Computer Software -- 2.9%
Adobe Systems, Inc.................... 38,400 1,899,648
Microsoft Corp........................ 160,200 4,429,530
-----------
6,329,178
-----------
Computers & Business Equipment -- 1.9%
Dell, Inc.+........................... 48,700 1,733,720
International Business Machines Corp.. 30,200 2,589,348
-----------
4,323,068
-----------
Conglomerate -- 3.2%
General Electric Co................... 154,800 5,198,184
Tyco International, Ltd............... 65,600 2,011,296
-----------
7,209,480
-----------
Electronics -- 2.0%
Applied Materials, Inc.+.............. 97,200 1,602,828
Intel Corp............................ 81,500 1,634,890
Texas Instruments, Inc................ 61,200 1,302,336
-----------
4,540,054
-----------
Energy Services -- 1.9%
Baker Hughes, Inc..................... 34,000 1,486,480
BJ Services Co........................ 25,000 1,310,250
Transocean, Inc.+..................... 40,000 1,431,200
-----------
4,227,930
-----------
Energy Sources -- 4.3%
ChevronTexaco Corp.................... 28,800 1,544,832
EOG Resources, Inc.................... 21,400 1,409,190
Exxon Mobil Corp...................... 81,900 3,958,227
Marathon Oil Corp..................... 39,200 1,618,176
XTO Energy, Inc....................... 34,000 1,104,320
-----------
9,634,745
-----------
Value
Security Description Shares (Note 3)
--------------------------------------------------------
Financial Services -- 6.6%
American Express Co............... 55,400 $ 2,850,884
Capital One Financial Corp........ 29,400 2,172,660
Citigroup, Inc.................... 34,500 1,522,140
Countrywide Financial Corp........ 30,000 1,181,700
Goldman Sachs Group, Inc.......... 27,100 2,526,804
J.P. Morgan Chase & Co............ 61,700 2,451,341
Morgan Stanley.................... 39,750 1,959,675
-----------
14,665,204
-----------
Food, Beverage & Tobacco -- 1.7%
Altria Group, Inc................. 41,100 1,933,344
PepsiCo, Inc...................... 39,200 1,907,080
-----------
3,840,424
-----------
Health Services -- 0.7%
Aetna, Inc........................ 14,400 1,438,992
-----------
Housing & Household Durables -- 3.0%
Estee Lauder Cos., Inc., Class A.. 43,400 1,814,120
Masco Corp........................ 44,700 1,543,491
Procter & Gamble Co............... 30,700 1,661,484
Pulte Homes, Inc.................. 25,000 1,534,250
-----------
6,553,345
-----------
Insurance -- 0.7%
Berkshire Hathaway, Inc.+......... 500 1,435,500
-----------
Leisure & Tourism -- 1.4%
Carnival Corp..................... 33,400 1,579,486
International Game Technology..... 45,000 1,617,750
-----------
3,197,236
-----------
Machinery -- 0.8%
Danaher Corp...................... 35,000 1,794,800
-----------
Medical Products -- 5.5%
Abbott Laboratories............... 30,000 1,270,800
Becton Dickinson & Co............. 38,700 2,000,790
Guidant Corp...................... 25,000 1,651,000
Johnson & Johnson................. 40,700 2,292,631
Medtronic, Inc.................... 30,000 1,557,000
St. Jude Medical, Inc.+........... 26,000 1,957,020
Stryker Corp...................... 30,000 1,442,400
-----------
12,171,641
-----------
Pharmaceuticals -- 2.4%
Amgen, Inc.+...................... 29,200 1,655,056
Genentech, Inc.+.................. 13,100 686,702
Pfizer, Inc....................... 99,760 3,052,656
-----------
5,394,414
-----------
Retail -- 4.7%
Home Depot, Inc................... 45,000 1,764,000
Kohl's Corp.+..................... 53,500 2,578,165
Limited Brands.................... 106,900 2,382,801
Wal-Mart Stores, Inc.............. 47,800 2,542,960
Williams-Sonoma, Inc.+............ 33,400 1,254,170
-----------
10,522,096
-----------
40
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
COMMON STOCK (continued)
Telecommunications -- 4.2%
Cisco Systems, Inc.+.................. 94,600 $ 1,712,260
Motorola, Inc......................... 90,100 1,625,404
Nextel Communications, Inc., Class A+. 53,700 1,280,208
QUALCOMM, Inc......................... 65,000 2,537,600
Verizon Communications, Inc........... 57,600 2,268,288
------------
9,423,760
------------
Transportation -- 1.1%
United Parcel Service, Inc., Class B.. 32,600 2,474,992
------------
Total Common Stock
(cost $130,048,034).................. 138,798,001
------------
CORPORATE BONDS -- 17.6%
Aerospace & Military Technology -- 0.3%
Goodrich Corp.
6.45% due 12/15/07................... $238,000 256,950
Northrop Grumman Corp.
4.08% due 11/16/06................... 255,000 259,052
Northrop Grumman Corp.
7.13% due 02/15/11................... 75,000 86,210
Raytheon Co.
4.85% due 01/15/11................... 171,000 175,544
------------
777,756
------------
Automotive -- 0.4%
Ford Motor Co.
7.45% due 07/16/31................... 412,000 403,978
General Motors Corp.
7.20% due 01/15/11................... 276,000 292,303
General Motors Corp.
8.25% due 07/15/23................... 92,000 96,775
Hertz Corp.
4.70% due 10/02/06................... 34,000 34,653
Hertz Corp.
6.35% due 06/15/10................... 105,000 108,791
Hertz Corp.
6.90% due 08/15/14................... 73,000 76,061
------------
1,012,561
------------
Banks -- 1.5%
American Express Centurion Bank
4.38% due 07/30/09................... 124,000 126,695
Bank of America Corp.
4.25% due 10/01/10................... 190,000 190,493
BankBoston Capital Trust IV
2.45% due 12/08/04(1)................ 222,000 213,906
Dresdner Funding Trust I
8.15% due 06/30/31*.................. 232,000 280,388
Emigrant Capital Trust 1
4.43% due 12/10/04*(1)............... 355,000 351,968
First Maryland Capital II
2.54% due 11/01/04(1)................ 196,000 190,244
Huntington National Bank
4.65% due 06/30/09................... 105,000 107,757
Key Bank NA
4.10% due 06/30/05................... 238,000 241,229
Key Bank NA
7.00% due 02/01/11................... 89,000 99,713
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------
Banks (continued)
KeyCorp
2.75% due 02/27/07.................. $ 38,000 $ 37,625
National City Bank
2.50% due 04/17/06.................. 38,000 37,919
PNC Funding Corp.
5.75% due 08/01/06.................. 240,000 251,446
RBS Capital Trust IV
2.78% due 12/30/04(1)............... 116,000 116,809
US Bank NA
3.70% due 08/01/07.................. 209,000 211,134
US Bank NA
3.90% due 08/15/08.................. 38,000 38,300
Wachovia Corp.
7.50% due 04/15/35.................. 141,000 175,802
Washington Mutual Banks FA
5.50% due 01/15/13.................. 238,000 246,619
Washington Mutual Bank FA
5.65% due 08/15/14.................. 34,000 35,245
Wells Fargo & Co.
5.13% due 09/01/12.................. 167,000 171,647
World Savings Bank FSB
4.50% due 06/15/09.................. 126,000 129,098
----------
3,254,037
----------
Broadcasting & Media -- 1.6%
Cablevision Systems Corp.
8.00% due 04/15/12*................. 170,000 177,650
Charter Communications Holdings, LLC
11.13% due 01/15/11................. 510,000 413,100
Clear Channel Communications, Inc.
5.75% due 01/15/13.................. 136,000 139,688
Clear Channel Communications, Inc.
6.00% due 11/01/06.................. 124,000 130,207
Comcast Cable Commerce, Inc.
6.88% due 06/15/09.................. 257,000 285,647
Cox Communications, Inc.
6.85% due 01/15/18.................. 129,000 131,121
Cox Communications, Inc.
7.75% due 08/15/06.................. 137,000 146,960
CSC Holdings, Inc.
7.63% due 04/01/11.................. 25,000 26,344
CSC Holdings, Inc.
7.88% due 02/15/18.................. 125,000 129,062
Insight Communications Co., Inc.
12.25% due 02/15/11(2).............. 700,000 654,500
Liberty Media Corp.
3.38% due 12/15/04(1)............... 223,000 225,388
News America Holdings, Inc.
7.75% due 12/01/45.................. 17,000 20,145
News America, Inc.
7.63% due 11/30/28.................. 272,000 317,893
TCI Communications, Inc.
8.75% due 08/01/15.................. 165,000 205,666
Time Warner, Inc.
6.13% due 04/15/06.................. 276,000 288,555
Young Broadcasting, Inc.
10.00% due 03/01/11................. 225,000 231,750
----------
3,523,676
----------
41
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
------------------------------------------------------------
CORPORATE BONDS (continued)
Business Services -- 0.3%
Allied Waste North America, Inc.
5.75% due 02/15/11................... $175,000 $ 166,250
USA Waste Services, Inc.
7.00% due 07/15/28................... 238,000 263,391
Waste Management, Inc.
7.38% due 05/15/29................... 150,000 172,296
----------
601,937
----------
Chemicals -- 0.4%
du Pont (E.I.) de Nemours & Co.
4.13% due 04/30/10................... 38,000 38,344
Huntsman, LLC
11.63% due 10/15/10.................. 260,000 300,950
Lubrizol Corp.
6.50% due 10/01/34................... 153,000 149,254
Rohm & Haas Co.
7.85% due 07/15/29................... 156,000 198,722
RPM International, Inc.
4.45% due 10/15/09*.................. 118,000 117,323
----------
804,593
----------
Communication Equipment -- 0.3%
Pacific Bell
6.63% due 10/15/34................... 278,000 282,683
Rural Cellular Corp.
9.75% due 01/15/10................... 400,000 348,000
----------
630,683
----------
Computers & Business Equipment -- 0.2%
Computer Sciences Corp.
6.75% due 06/15/06................... 38,000 40,353
International Business Machines Corp.
6.22% due 08/01/27................... 150,000 161,076
Xerox Corp.
6.88% due 08/15/11................... 200,000 209,000
----------
410,429
----------
Energy Services -- 0.1%
Hanover Compressor Co.
zero coupon due 03/31/07............. 200,000 169,000
----------
Energy Sources -- 0.6%
Amerada Hess Corp.
6.65% due 08/15/11................... 238,000 262,776
Chesapeake Energy Corp.
7.75% due 01/15/15................... 225,000 245,250
Conoco, Inc.
6.95% due 04/15/29................... 272,000 313,836
Devon Energy Corp.
2.75% due 08/01/06................... 181,000 179,774
Enterprise Products Operating LP
6.65% due 10/15/34*.................. 153,000 153,391
Pemex Project Funding Master Trust
8.63% due 02/01/22................... 153,000 173,961
----------
1,328,988
----------
Financial Services -- 5.3%
American Express Co.
3.75% due 11/20/07................... 38,000 38,390
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------------
Financial Services (continued)
Athena Neurosciences Finance LLC
7.25% due 02/21/08....................... $ 180,000 $ 182,250
Chukchansi Economic Development Authority
14.50% due 06/15/09*..................... 300,000 375,000
CIT Group, Inc.
5.13% due 09/30/14....................... 163,000 162,805
CIT Group, Inc.
7.75% due 04/02/12....................... 105,000 124,263
Citicorp Capital I
7.93% due 02/15/27....................... 177,000 195,695
Citigroup, Inc.
5.00% due 09/15/14*...................... 121,586 121,737
Consolidated Communications Holdings
9.75% due 04/01/12*...................... 245,000 251,125
Duke Capital LLC
5.67% due 08/15/14....................... 189,000 192,769
Duke Capital LLC Series A
6.25% due 07/15/05....................... 90,000 92,378
Ford Motor Credit Co.
7.38% due 10/28/09....................... 224,000 245,355
FPL Group Capital, Inc.
3.25% due 04/11/06....................... 38,000 38,239
General Electric Capital Corp.
2.80% due 01/15/07....................... 261,000 259,397
General Electric Capital Corp.
4.75% due 09/15/14....................... 293,000 291,237
General Electric Capital Corp.
6.13% due 02/22/11....................... 276,000 304,342
General Motors Acceptance Corp.
4.50% due 07/15/06....................... 238,000 241,728
Goldman Sachs Group, Inc.
6.13% due 02/15/33....................... 269,000 270,191
Household Finance Corp.
3.38% due 02/21/06....................... 38,000 38,314
Household Finance Corp.
4.75% due 05/15/09....................... 117,000 120,757
iPCS Escrow Co.
11.50% due 05/01/12*..................... 475,000 498,750
J.P. Morgan Chase Capital XIII
Series M
2.88% due 12/30/04(1).................... 186,000 184,125
J.P. Morgan Chase & Co.
5.25% due 05/30/07....................... 276,000 290,037
J.P. Morgan Chase & Co.
6.63% due 03/15/12....................... 238,000 267,140
Lehman Brothers Holdings, Inc.
6.63% due 01/18/12....................... 139,000 155,472
Morgan Stanley
3.88% due 01/15/09....................... 16,000 16,002
Morgan Stanley
4.75% due 04/01/14....................... 544,000 526,633
Morgan Stanley Dean Witter Capital I
7.20% due 10/15/33(3).................... 2,500,000 2,862,042
NGC Corp. Capital Trust I
8.32% due 06/01/27....................... 400,000 320,000
NiSource Finance Corp.
7.63% due 11/15/05....................... 62,000 65,149
Pricoa Global Funding I
4.35% due 06/15/08*...................... 130,000 133,217
42
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------
CORPORATE BONDS (continued)
Financial Services (continued)
Qwest Capital Funding, Inc.
7.90% due 08/15/10.................... $ 400,000 $ 369,000
Residential Funding Mtg. Securities II
Series 2004-HI1 A3
3.05% due 07/25/16.................... 1,500,000 1,481,507
Salomon Smith Barney Holdings, Inc.
5.88% due 03/15/06.................... 276,000 288,245
TIAA Global Markets
4.13% due 11/15/07*................... 38,000 38,865
Tyco International Group SA
Participation Certificate Trust
4.44% due 06/15/07*................... 210,000 214,599
Unilever Capital Corp.
5.90% due 11/15/32.................... 272,000 281,855
Washington Mutual Finance Corp.
6.25% due 05/15/06.................... 234,000 246,731
-----------
11,785,341
-----------
Food, Beverage & Tobacco -- 0.2%
Anheuser-Busch Cos., Inc.
5.95% due 01/15/33.................... 272,000 287,006
Coca-Cola Enterprises, Inc.
8.50% due 02/01/22.................... 34,000 44,884
PepsiCo, Inc.
3.20% due 05/15/07.................... 241,000 242,008
-----------
573,898
-----------
Forest Products -- 0.4%
Crown Cork & Seal Co., Inc.
8.00% due 04/15/23.................... 375,000 348,750
Georgia-Pacific Corp.
8.00% due 01/15/24.................... 125,000 142,188
Weyerhaeuser Co.
5.50% due 03/15/05.................... 71,000 71,932
Weyerhaeuser Co.
6.13% due 03/15/07.................... 235,000 250,157
-----------
813,027
-----------
Health Services -- 0.2%
HCA, Inc.
6.95% due 05/01/12.................... 250,000 269,941
IASIS Healthcare Capital Corp.
8.75% due 06/15/14*................... 45,000 47,137
Tenet Healthcare Corp.
6.50% due 06/01/12.................... 150,000 134,250
-----------
451,328
-----------
Housing & Household Durables -- 0.1%
Procter & Gamble Co.
5.80% due 08/15/34.................... 150,000 156,775
-----------
Insurance -- 0.3%
Allstate Corp.
7.20% due 12/01/09.................... 238,000 273,475
Assurant, Inc.
5.63% due 02/15/14.................... 101,000 103,640
Ohio Casualty Corp.
7.30% due 06/15/14.................... 201,000 212,115
Prudential Financial, Inc.
5.10% due 09/20/14.................... 116,000 116,100
-----------
705,330
-----------
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------
Leisure & Tourism -- 1.0%
American Airlines, Inc.
Pass-Thru Certificates,
Series 2001-1 A2
6.82% due 11/23/12.................. $475,000 $ 421,289
Atlas Air, Inc.
Pass-Thru Certificates,
Series 1999-1 A2
6.88% due 01/02/11.................. 274,778 256,480
Atlas Air, Inc.
Pass-Thru Certificates,
Series 1999-1 B
7.63% due 07/02/16.................. 499,529 354,483
Atlas Air, Inc.
Pass-Thru Certificates,
Series 2000-1 A
8.71% due 07/02/21.................. 194,894 191,785
Bally Total Fitness Holding Corp.
10.50% due 07/15/11................. 65,000 61,750
Continental Airlines, Inc.
6.95% due 02/02/11.................. 176,907 134,625
Continental Airlines, Inc.
9.56% due 09/01/19.................. 221,730 220,440
Delta Air Lines, Inc.
10.00% due 08/15/08................. 65,000 19,500
Hilton Hotels Corp.
7.50% due 12/15/17.................. 134,000 153,430
MGM Mirage, Inc.
5.88% due 02/27/14.................. 350,000 336,875
Riviera Holdings Corp.
11.00% due 06/15/10................. 55,000 60,500
Six Flags, Inc.
9.75% due 04/15/13.................. 90,000 85,050
----------
2,296,207
----------
Metals & Mining -- 0.1%
Alcoa, Inc.
6.75% due 01/15/28.................. 106,000 121,586
Owens-Brockway Glass Container, Inc.
8.88% due 02/15/09.................. 150,000 163,125
----------
284,711
----------
Pharmaceuticals -- 0.4%
Merck & Co., Inc.
5.95% due 12/01/28.................. 135,000 141,508
Pfizer, Inc.
2.50% due 03/15/07.................. 276,000 273,115
Schering-Plough Co.
6.50% due 12/01/33.................. 34,000 36,814
Wyeth
6.45% due 02/01/24.................. 238,000 244,079
Wyeth
6.70% due 03/15/11.................. 123,000 136,775
----------
832,291
----------
Real Estate Investment Trusts -- 0.2%
CarrAmerica Realty Corp.
5.13% due 09/01/11.................. 86,000 86,975
Omega Healthcare Investors, Inc.
7.00% due 04/01/14*................. 225,000 228,375
Vornado Realty LP
4.50% due 08/15/09.................. 101,000 101,214
----------
416,564
----------
43
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------
CORPORATE BONDS (continued)
Retail -- 0.3%
May Department Stores Co.
3.95% due 07/15/07*............... $209,000 $ 210,628
Rent-Way, Inc.
11.88% due 06/15/10............... 125,000 136,250
Wal-Mart Stores, Inc.
6.88% due 08/10/09................ 276,000 313,014
----------
659,892
----------
Telecommunications -- 1.4%
American Cellular Corp.
10.00% due 08/01/11............... 400,000 324,000
Bell Atlantic Pennsylvania, Inc.
8.75% due 08/15/31................ 156,000 205,405
Citizens Communications Co.
9.00% due 08/15/31................ 132,000 134,805
Fairpoint Communications, Inc.
Series B
9.50% due 05/01/08................ 400,000 400,000
LCI International, Inc.
7.25% due 06/15/07................ 390,000 353,925
Nextel Communications, Inc.
5.95% due 03/15/14................ 75,000 73,500
Nextel Communications, Inc.
7.38% due 08/01/15................ 450,000 483,750
Sprint Capital Corp.
6.13% due 11/15/08................ 179,000 193,209
Telecom Italia Capital SA
6.00% due 09/30/34*............... 269,000 262,747
Qwest Corp.
7.13% due 11/15/43................ 425,000 352,750
Verizon Communications, Inc.
7.90% due 02/01/27................ 262,000 287,543
Verizon New York, Inc.
7.38% due 04/01/32................ 34,000 37,830
----------
3,109,464
----------
Transportation -- 0.1%
Burlington Northern Santa Fe Corp.
8.13% due 04/15/20................ 188,000 235,323
----------
Utilities -- 1.9%
AES Corp.
7.75% due 03/01/14................ 575,000 593,687
Alabama Power Co.
2.80% due 12/01/06................ 238,000 236,708
Appalachian Power Co.
3.60% due 05/15/08................ 147,000 146,037
CenterPoint Energy Resources Corp.
8.90% due 12/15/06................ 223,000 247,749
Connecticut Light & Power Co.
5.75% due 09/15/34................ 161,000 161,889
Duke Energy Co.
5.30% due 10/01/15................ 233,000 239,867
Dynegy Holdings, Inc.
8.75% due 02/15/12................ 400,000 416,000
Edison Mission Energy
9.88% due 04/15/11................ 500,000 582,500
El Paso Production Holding Co.
7.75% due 06/01/13................ 200,000 200,500
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------------
Utilities (continued)
Kinder Morgan Energy Partners, LP
7.75% due 03/15/32....................... $134,000 $ 158,617
Pacific Gas & Electric Co.
6.05% due 03/01/34....................... 114,000 116,029
PNPP II Funding Corp.
9.12% due 05/30/16....................... 136,000 160,526
Progress Energy, Inc.
6.75% due 03/01/06....................... 235,000 246,786
Reliant Resources, Inc.
9.50% due 07/15/13....................... 275,000 298,719
Southern California Edison Co.
8.00% due 02/15/07....................... 101,000 111,796
Virginia Electric & Power Co.
5.75% due 03/31/06....................... 179,000 186,224
Williams Cos, Inc.
7.88% due 09/01/21....................... 175,000 194,250
-----------
4,297,884
-----------
Total Corporate Bonds
(cost $39,097,034)....................... 39,131,696
-----------
FOREIGN BONDS & NOTES -- 2.8%
Banks -- 0.1%
European Investment Bank
4.00% due 03/15/05....................... 180,000 181,721
-----------
Broadcasting & Media -- 0.2%
Telenet Group Holding NV
11.50% due 06/15/14*(2).................. 500,000 367,500
-----------
Conglomerate -- 0.1%
Tyco International Group SA
6.38% due 10/15/11....................... 100,000 110,592
-----------
Financial Services -- 0.3%
Canadian Oil Sands Ltd.
4.80% due 08/10/09*...................... 42,000 42,596
Deutsche Telekom International Finance BV
8.75% due 06/15/30....................... 399,000 515,738
Ford Motor Credit Co.
2.07% due 12/13/04....................... 157,000 154,157
-----------
712,491
-----------
Foreign Government Agencies -- 0.7%
China Development Bank
4.75% due 10/08/14....................... 225,000 218,430
Italy Government International
3.75% due 12/14/07....................... 210,000 212,521
Mexico Government International
6.75% due 09/27/34....................... 256,000 245,888
Mexico Government International
7.50% due 04/08/33....................... 144,000 151,344
Quebec Province Canada
5.00% due 07/17/09....................... 276,000 290,100
Quebec Province Canada
7.50% due 09/15/29....................... 246,000 318,726
Russia Government International
5.00% due 03/31/07*(2)................... 125,000 120,313
-----------
1,557,322
-----------
44
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
Forest Products -- 0.0%
Abitibi-Consolidated, Inc.
8.55% due 08/01/10................ $100,000 $ 107,250
----------
Insurance -- 0.2%
Fairfax Financial Holdings, Ltd.
7.38% due 04/15/18................ 100,000 81,000
Fairfax Financial Holdings, Ltd.
8.25% due 10/01/15................ 275,000 250,250
XL Capital Ltd.
5.25% due 09/15/14................ 171,000 171,639
----------
502,889
----------
Machinery -- 0.0%
Atlas Copco AB
6.50% due 04/01/08*............... 89,000 96,314
----------
Metals & Mining -- 0.3%
Alcan, Inc.
6.13% due 12/15/33................ 272,000 282,383
Noranda, Inc.
6.00% due 10/15/15................ 422,000 450,092
----------
732,475
----------
Retail -- 0.1%
Jean Coutu Group, Inc.
8.50% due 08/01/14*............... 125,000 124,063
----------
Telecommunications -- 0.6%
British Telecommunications PLC
7.88% due 12/15/05................ 38,000 40,250
France Telecom SA
8.50% due 03/01/11................ 272,000 325,606
Koninklijke KPN NV
7.50% due 10/01/05................ 163,000 170,721
Koninklijke KPN NV
8.00% due 10/01/10................ 238,000 283,023
Telus Corp.
7.50% due 06/01/07................ 210,000 230,277
Telus Corp.
8.00% due 06/01/11................ 238,000 278,874
----------
1,328,751
----------
Utilities -- 0.2%
Calpine Canada Energy Finance, ULC
8.50% due 05/01/08................ 525,000 362,250
----------
Total Foreign Bonds & Notes
(cost $6,236,192)................. 6,183,618
----------
U.S. GOVERNMENT OBLIGATIONS -- 0.1%
U.S Treasury Bonds -- 0.0%
5.38% due 02/15/31................. 84,000 89,985
----------
U.S. Treasury Notes -- 0.1%
2.25% due 02/15/07................. 16,000 15,829
2.75% due 06/30/06................. 49,000 49,203
5.00% due 08/15/11................. 53,000 56,961
----------
121,993
----------
Total U.S. Government Obligations
(cost $170,617)................... 211,978
----------
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------------
U.S GOVERNMENT AGENCIES -- 16.1%
Federal Home Loan Bank -- 0.4%
1.88% due 06/15/06......................... $ 495,000 $ 488,532
5.25% due 08/15/06......................... 495,000 516,895
------------
1,005,427
------------
Federal Home Loan Mortgage
Corporation -- 5.9%
2.50% due 12/04/06......................... 375,000 371,829
2.63% due 09/17/07......................... 380,000 374,323
3.38% due 08/23/07......................... 293,000 293,044
4.50% due 01/15/14......................... 495,000 492,553
4.50% due 04/01/19......................... 3,485,789 3,482,543
5.00% due 03/01/34......................... 1,204,190 1,193,784
5.00% due 05/01/34......................... 1,045,230 1,036,196
5.00% due 06/01/34......................... 1,889,390 1,873,061
5.50% due 07/01/34......................... 997,924 1,012,839
6.00% due 12/01/33......................... 1,973,024 2,040,805
6.88% due 09/15/10......................... 495,000 569,405
7.00% due 04/01/32......................... 443,532 470,618
------------
13,211,000
------------
Federal National Mortgage Association -- 8.1%
3.25% due 06/28/06......................... 303,000 303,610
5.00% due 07/01/18......................... 1,183,909 1,205,336
5.00% due 08/01/18......................... 1,267,472 1,290,412
5.00% due 07/01/33......................... 1,892,583 1,877,509
5.50% due 11/01/17......................... 730,577 756,719
5.50% due 06/01/19......................... 724,180 749,354
5.50% due 12/01/33......................... 3,690,827 3,747,787
6.00% due 10/01/04......................... 1,500,000 1,551,093
6.00% due 06/01/17......................... 594,495 623,771
6.00% due 05/01/34......................... 652,900 676,321
6.00% due 07/01/34......................... 986,681 1,021,793
6.50% due 09/01/10......................... 265,336 281,221
6.63% due 11/15/30......................... 995,000 1,159,868
6.50% due 09/01/32......................... 2,213,687 2,323,635
6.50% due 04/01/34......................... 388,222 407,558
------------
17,975,987
------------
Government National Mortgage
Association -- 1.3%
5.50% due 05/15/33......................... 873,262 890,241
5.50% due 09/15/33......................... 541,594 552,125
5.50% due 12/15/33......................... 966,547 985,340
7.50% due 01/15/32......................... 403,036 434,243
7.50% due 04/15/32......................... 2,689 2,897
------------
2,864,846
------------
Other -- 0.4%
Resolution Funding Corp.
Strip zero coupon due 04/15/09............ 1,000,000 853,669
------------
Total U.S. Government Agencies
(cost $35,761,973)........................ 35,910,929
------------
Total Investment Securities -- 99.0%
(cost $211,313,850)....................... 220,236,222
------------
45
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.5%
State Street Bank & Trust Co.
Joint Repurchase Agreement(4)...... 467,000 $ 467,000
UBS Securities, LLC
Joint Repurchase Agreement(4)...... 2,000,000 2,000,000
Agreement with State Street
Bank & Trust Co., bearing
interest at 0.65%, dated
09/30/04, to be repurchased
10/01/04 in the amount of
$778,014 and collateralized
by $745,000 of United
States Treasury Bonds, bearing
interest at 5.25%, due 11/15/28
and having an approximate
aggregate value of
$794,472............................ 778,000 778,000
------------
Total Repurchase Agreements
(cost $3,245,000).................. 3,245,000
------------
TOTAL INVESTMENTS --
(cost $214,753,783)(5)............. 100.5% 223,481,222
Liabilities in excess of other assets. (0.5) (1,066,466)
--------- ------------
NET ASSETS-- 100.0% $222,415,563
========= ============
- --------
+ Non-income producing securities
* 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
rights to demand registration of these securities. At September 30, 2004,
the aggregate value of these securities was $4,213,686 representing 1.9%
of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
(1) The security is a "floating rate" bond where the coupon rate fluctuates.
The rate steps up or down for each rate downgrade or upgrade. The rate
reflected is as of September 30, 2004.
(2) Security is a "Step-up" bond where the coupon rate increases or steps up
at a predetermined rate. Rate shown reflects the increased rate.
(3) Collateralized Mortgage Obligation
(4) See Note 3 for details of Joint Repurchase Agreement
(5) See Note 6 for cost of investments on a tax basis
See Notes to Financial Statements
46
SunAmerica International Equity Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Consumer Discretionary..... 23.2%
Finance.................... 20.6
Information Technology..... 16.2
Healthcare................. 10.0
Energy..................... 9.4
Industrial & Commercial.... 7.7
Utilities.................. 5.7
Real Estate................ 2.4
Materials.................. 2.1
Information & Entertainment 1.2
Consumer Staples........... 0.9
----
99.4%
====
- --------
* Calculated as a percentage of net assets.
Country Allocation*
Japan......... 20.8%
Sweden........ 10.7
France........ 10.3
Germany....... 9.9
United Kingdom 8.2
Norway........ 5.8
Italy......... 5.2
Switzerland... 4.9
Belgium....... 4.8
South Korea... 2.5
Spain......... 2.5
Greece........ 2.1
Australia..... 1.7
Hong Kong..... 1.6
Mexico........ 1.5
Thailand...... 1.4
Russia........ 1.2
Singapore..... 1.2
Malaysia...... 1.0
Brazil........ 0.9
Philippines... 0.6
Turkey........ 0.6
United States. 0.0
----
99.4%
====
47
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-----------------------------------------------------------------------
COMMON STOCK -- 99.4%
Australia -- 1.7%
CSL, Ltd.......................................... 60,960 $ 1,260,101
-----------
Belgium -- 4.8%
Belgacom SA+...................................... 59,000 2,116,060
Mobistar SA+...................................... 19,300 1,380,085
-----------
3,496,145
-----------
Brazil -- 0.9%
Companhia Brasileira De Distribution Group Pao de
Acucar. Sponsored ADR............................ 32,500 649,675
-----------
France -- 10.3%
Axa+.............................................. 136,200 2,759,173
BNP Paribas SA.................................... 33,400 2,159,885
Renault SA........................................ 24,300 1,989,953
Sanofi Synthelabo+................................ 8,300 602,798
-----------
7,511,809
-----------
Germany -- 9.9%
HeidelbergCement AG............................... 34,500 1,606,762
Metro AG+......................................... 51,600 2,305,620
RWE AG+........................................... 48,800 2,335,262
SAP AG+........................................... 6,100 949,004
-----------
7,196,648
-----------
Greece -- 2.1%
National Bank of Greece SA........................ 64,600 1,571,383
-----------
Hong Kong -- 1.6%
Cheung Kong Holdings Ltd.......................... 138,000 1,185,810
Peregrine Investments Holdings, Ltd.+(1).......... 91,000 0
-----------
1,185,810
-----------
Italy -- 5.2%
Capitalia SpA..................................... 305,470 1,124,452
Saipem SpA........................................ 235,900 2,654,956
-----------
3,779,408
-----------
Japan -- 20.8%
Bridgestone Corp.................................. 81,000 1,505,727
Credit Saison Co., Ltd............................ 30,200 930,625
Fast Retailing Co................................. 16,700 1,137,015
Fujitsu, Ltd...................................... 147,000 851,186
Gigas K's Denki Corp.............................. 20,100 489,665
Hirose Electric Co., Ltd.......................... 11,800 1,077,993
KDDI Corp......................................... 126 612,762
Millea Holdings, Inc.............................. 79 1,019,725
Mitsubishi Corp................................... 45,200 489,348
Mitsui O.S.K. Lines, Ltd.......................... 243,000 1,460,076
Obayashi Corp..................................... 156,000 777,093
ONO Pharmaceutical Co., Ltd....................... 24,700 1,097,927
Sumitomo Heavy Industries, Ltd.+.................. 293,000 868,267
Sumitomo Trust and Banking Co., Ltd............... 181,000 1,072,739
Toyota Motor Corp................................. 24,600 943,660
Trend Micro, Inc.................................. 19,000 818,653
-----------
15,152,461
-----------
Value
Security Description Shares (Note 3)
--------------------------------------------------------------
Malaysia -- 1.0%
Telekom Malaysia Berhad................ 255,500 $ 753,053
-----------
Mexico -- 1.5%
Cemex SA de C.V. Sponsored ADR......... 17,500 492,450
Urbi, Desarrollos Urbanos, SA de CV+... 155,623 570,103
-----------
1,062,553
-----------
Norway -- 5.8%
DNB NOR ASA............................ 125,300 994,622
Statoil ASA............................ 227,000 3,265,433
-----------
4,260,055
-----------
Philippines -- 0.6%
Philippine Long Distance Telephone Co.
Sponsored ADR+........................ 16,300 408,152
-----------
Russia -- 1.2%
OAO Gazprom Sponsored ADR.............. 25,100 898,580
-----------
Singapore -- 1.2%
Accord Customer Care Solutions, Ltd.... 1,070,400 447,986
Hi-P International, Ltd................ 407,000 413,161
-----------
861,147
-----------
South Korea -- 2.5%
Samsung Electronics Co., Ltd........... 2,070 823,326
Shinsegae Co., Ltd..................... 3,800 1,011,463
-----------
1,834,789
-----------
Spain -- 2.5%
Iberdrola SA........................... 87,300 1,813,057
-----------
Sweden -- 10.7%
Ericsson LM Telephone Sponsored ADR+... 23,600 737,264
Hennes & Mauritz AB, Class B........... 83,300 2,294,025
Nordea Bank AB......................... 248,900 2,034,139
Volvo AB, Class B...................... 78,300 2,763,972
-----------
7,829,400
-----------
Switzerland -- 4.9%
Roche Holding AG....................... 14,400 1,491,868
UBS AG................................. 13,700 967,137
Synthes, Inc.+......................... 9,900 1,081,315
-----------
3,540,320
-----------
Thailand -- 1.4%
Siam Cement Public Co., Ltd............ 182,800 1,051,514
-----------
Turkey -- 0.6%
Akbank T.A.S. Sponsored ADR............ 45,270 408,947
-----------
United Kingdom -- 8.2%
Amdocs, Ltd.+.......................... 39,500 862,285
AstraZeneca, PLC....................... 42,900 1,760,790
Burberry Group, PLC.................... 161,990 1,093,444
Enterprise Inns, PLC................... 87,100 899,653
Reckitt Benckiser, PLC................. 56,400 1,383,821
-----------
5,999,993
-----------
48
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Value
Security Description Shares (Note 3)
-------------------------------------------------
COMMON STOCK (continued)
United States -- 0%
Softbrands, Inc.+.......... 40 $ 45
-----------
45
-----------
TOTAL INVESTMENTS --
(cost $69,322,937)(2)..... 99.4% 72,525,045
Other assets less liabilities 0.6 400,261
------ -----------
NET ASSETS -- 100.0% $72,925,306
====== ===========
- --------
+ Non-income producing security
(1) Fair valued security. See Note 3
(2) See Note 6 for cost of investments on a tax basis
ADR -- AmericanDepository Receipt
See Notes to Financial Statements
49
SunAmerica Value Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Financial Services............. 16.6%
Energy Sources................. 10.6
Banks.......................... 10.5
Conglomerate................... 7.1
Retail......................... 7.0
Aerospace & Military Technology 6.9
Food, Beverage, & Tobacco...... 6.1
Utilities...................... 5.6
Broadcasting & Media........... 5.1
Insurance...................... 4.0
Chemicals...................... 3.8
Telecommunications............. 3.8
Computers & Business Equipment. 3.5
Repurchase Agreements.......... 3.0
Housing & Household Durables... 1.6
Leisure & Tourism.............. 1.6
Computer Software.............. 1.4
Medical Products............... 1.4
Health Services................ 1.0
Restaurants.................... 1.0
-----
101.6%
=====
- --------
* Calculated as a percentage of net assets.
50
SunAmerica Value Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-------------------------------------------------------------
COMMON STOCK -- 98.6%
Aerospace & Military Technology -- 6.9%
Alliant Techsystems, Inc.+.............. 60,000 $ 3,630,000
General Dynamics Corp................... 30,000 3,063,000
Honeywell International, Inc............ 72,300 2,592,678
United Technologies Corp................ 50,000 4,669,000
-----------
13,954,678
-----------
Banks -- 10.5%
Bank of America Corp.................... 192,400 8,336,692
North Fork Bancorp., Inc................ 70,000 3,111,500
U.S. Bancorp............................ 145,000 4,190,500
Wachovia Corp........................... 60,000 2,817,000
Wells Fargo & Co........................ 50,000 2,981,500
-----------
21,437,192
-----------
Broadcasting & Media -- 5.1%
Fox Entertainment Group, Inc., Class A+. 125,000 3,467,500
Time Warner, Inc.+...................... 250,000 4,035,000
Walt Disney Co.......................... 130,000 2,931,500
-----------
10,434,000
-----------
Chemicals -- 3.8%
du Pont (E.I.) de Nemours & Co.......... 104,400 4,468,320
Praxair, Inc............................ 75,000 3,205,500
-----------
7,673,820
-----------
Computer Software -- 1.4%
Microsoft Corp.......................... 106,400 2,941,960
-----------
Computers & Business Equipment -- 3.5%
Hewlett-Packard Co...................... 200,000 3,750,000
International Business Machines Corp.... 39,400 3,378,156
-----------
7,128,156
-----------
Conglomerate -- 7.1%
General Electric Co..................... 300,000 10,074,000
Tyco International, Ltd................. 145,000 4,445,700
-----------
14,519,700
-----------
Energy Sources -- 10.6%
ChevronTexaco Corp...................... 160,000 8,582,400
Exxon Mobil Corp........................ 172,900 8,356,257
Marathon Oil Corp....................... 110,000 4,540,800
-----------
21,479,457
-----------
Financial Services -- 16.6%
American Express Co..................... 120,000 6,175,200
Capital One Financial Corp.............. 60,000 4,434,000
Citigroup, Inc.......................... 170,000 7,500,400
Goldman Sachs Group, Inc................ 45,000 4,195,800
J.P. Morgan Chase & Co.................. 130,000 5,164,900
Morgan Stanley.......................... 81,000 3,993,300
SLM Corp................................ 50,000 2,230,000
-----------
33,693,600
-----------
Food, Beverage & Tobacco -- 6.1%
Altria Group, Inc....................... 70,000 3,292,800
Diageo, PLC Sponsored ADR............... 60,000 3,025,800
Kraft Foods, Inc., Class A.............. 102,100 3,238,612
Unilever NV............................. 50,900 2,942,020
-----------
12,499,232
-----------
Shares/
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------
Health Services -- 1.0%
Aetna, Inc......................... 20,000 $ 1,998,600
------------
Housing & Household Durables -- 1.6%
Kimberly-Clark Corp................ 49,800 3,216,582
------------
Insurance -- 4.0%
Allstate Corp...................... 80,000 3,839,200
Chubb Corp......................... 60,000 4,216,800
------------
8,056,000
------------
Leisure & Tourism -- 1.6%
Harrah's Entertainment, Inc........ 60,000 3,178,800
------------
Medical Products -- 1.4%
Johnson & Johnson.................. 50,000 2,816,500
------------
Restaurants -- 1.0%
Wendy's International, Inc......... 60,000 2,016,000
------------
Retail -- 7.0%
Best Buy Co., Inc.................. 60,000 3,254,400
Federated Department Stores, Inc... 75,000 3,407,250
Home Depot, Inc.................... 80,000 3,136,000
Limited Brands..................... 201,074 4,481,939
------------
14,279,589
------------
Telecommunications -- 3.8%
BellSouth Corp..................... 140,000 3,796,800
Verizon Communications, Inc........ 99,700 3,926,186
------------
7,722,986
------------
Utilities -- 5.6%
Exelon Corp........................ 110,000 4,035,900
FPL Group, Inc..................... 55,000 3,757,600
Southern Co........................ 120,000 3,597,600
------------
11,391,100
------------
Total Investment Securities -- 98.6%
(cost $193,412,736)............... 200,437,952
------------
REPURCHASE AGREEMENTS -- 3.0%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)..... $ 106,000 106,000
UBS Securities, LLC
Joint Repurchase Agreement(1)..... 6,000,000 6,000,000
------------
Total Repurchase Agreements
(cost $6,106,000)................. 6,106,000
------------
TOTAL INVESTMENTS --
(cost $199,518,736)(2)............. 101.6% 206,543,952
Liabilities in excess of other assets (1.6) (3,179,019)
---------- ------------
NET ASSETS -- 100.0% $203,364,933
========== ============
- --------
+ Non-income producing securities
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
ADR --American Depository Receipt
See Notes to Financial Statements
51
SunAmerica Biotech/Health Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Medical Drugs.................. 24.3%
Pharmaceuticals................ 18.6
Therapeutics................... 16.6
Biomedical..................... 8.9
Medical Devices................ 5.1
Biotechnology.................. 4.9
Genomics....................... 4.3
Distribution................... 4.7
Health Maintenance Organization 3.2
Repurchase Agreements.......... 2.7
Medical Information Systems.... 2.5
Health Services................ 1.7
Medical Products............... 0.6
----
98.1%
====
- --------
* Calculated as a percentage of net assets.
52
SunAmerica Biotech/Health Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 97.5%
Biomedical -- 8.9%
Amgen, Inc.+......................... 35,000 $ 1,983,800
ID Biomedical Corp.+................. 20,000 260,400
Millennium Pharmaceuticals, Inc.+.... 100,000 1,371,000
-----------
3,615,200
-----------
Biotechnology -- 5.9%
Biomarin Pharmaceutical, Inc.+....... 100,000 519,000
Chiron Corp.+........................ 15,000 663,000
Medicines Co.+@...................... 50,000 1,207,000
-----------
2,389,000
-----------
Distribution -- 4.7%
Caremark Rx, Inc.+................... 60,000 1,924,200
-----------
Genomics -- 5.4%
Invitrogen Corp.+.................... 40,000 2,199,600
-----------
Health Maintenance Organization -- 3.2%
Centene Corp.+....................... 30,000 1,277,400
-----------
Health Services -- 1.7%
Medco Health Solutions, Inc.+........ 22,412 692,531
-----------
Medical Devices -- 5.1%
Integra LifeSciences Holdings Corp.+. 65,000 2,087,150
-----------
Medical Drugs -- 24.3%
Celgene Corp.+....................... 50,000 2,911,500
Cephalon, Inc.+...................... 50,000 2,395,000
Forest Laboratories, Inc.+........... 60,000 2,698,800
OSI Pharmaceuticals, Inc.+........... 10,000 614,600
Salix Pharmaceuticals, Ltd.+......... 50,000 1,076,000
Santarus, Inc.+...................... 20,000 181,400
-----------
9,877,300
-----------
Medical Information Systems -- 2.5%
Covance, Inc.+....................... 25,000 999,250
-----------
Medical Products -- 0.6%
Encore Medical Corp.+................ 50,000 249,000
-----------
Pharmaceuticals -- 18.6%
Express Scripts, Inc.+............... 20,000 1,306,800
Onyx Pharmaceuticals, Inc.+.......... 60,000 2,580,600
Pfizer, Inc.......................... 60,000 1,836,000
Shares/
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
Pharmaceuticals (continued)
Praecis Pharmaceuticals, Inc.+...... 60,000 $ 132,000
Tanox, Inc.+........................ 100,000 1,687,000
-----------
7,542,400
-----------
Therapeutics -- 16.6%
Abgenix, Inc.+...................... 100,000 986,000
Connetics Corp.+.................... 20,000 540,400
Critical Therapeutics, Inc.+........ 60,000 351,000
Cypress Bioscience, Inc.+........... 140,000 1,633,800
Dyax Corp.+......................... 125,000 955,000
Gilead Sciences, Inc.+.............. 30,000 1,121,400
Medarex, Inc.+...................... 85,000 627,300
MGI Pharma, Inc.+................... 20,000 533,800
-----------
6,748,700
-----------
Total Investment Securities -- 97.5%
(cost $37,213,553)................. 39,601,731
-----------
REPURCHASE AGREEMENTS -- 2.7%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)@
(cost $1,101,000).................. 1,101,000 1,101,000
-----------
TOTAL INVESTMENTS --
(cost $37,419,224)(2).............. 100.2% 40,702,731
Liabilities in excess of other assets. (0.2) (62,614)
--------- -----------
NET ASSETS -- 100.0% $40,640,117
========= ===========
COMMON STOCK-SHORT POSITIONS -- (2.1%)
Biotechnology -- (1.0%)
Diversa Corp........................ (50,000) $ (417,500)
-----------
Genomics -- (1.1%)
Genencor International, Inc......... (27,000) (433,350)
-----------
Total Common Stock-Short Positions
(proceeds $(895,329)).............. $ (850,850)
-----------
- --------
+ Non-income producing securities
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
@ Collateral for securities sold short
See Notes to Financial Statements
53
SunAmerica Tax Managed Fund
PORTFOLIO PROFILE -- September 30, 2004 -- (unaudited)
Industry Allocation*
Financial Services............. 9.1%
Energy Sources................. 7.2
Pharmaceuticals................ 7.0
Retail......................... 6.5
Conglomerate................... 5.9
Insurance...................... 5.8
Telecommunications............. 5.8
Banks.......................... 5.7
Medical Products............... 4.9
Computer Software.............. 4.5
Broadcasting & Media........... 4.4
Food, Beverage, & Tobacco...... 4.3
Housing & Household Durables... 3.6
Machinery...................... 2.9
Computers & Business Equipment. 2.9
Aerospace & Military Technology 2.7
Electronics.................... 2.6
Utilities...................... 2.1
Automotive..................... 1.6
Energy Services................ 1.4
Forest Products................ 1.3
Business Services.............. 1.2
Transportation................. 1.2
Metals & Mining................ 1.1
Apparel & Textiles............. 0.7
Chemicals...................... 0.7
Restaurants.................... 0.7
Health Services................ 0.5
Time Deposit................... 0.4
Communication Equipment........ 0.3
----
99.0%
====
- --------
* Calculated as a percentage of net assets.
54
Tax Managed Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004
Value
Security Description Shares (Note 3)
---------------------------------------------------------
COMMON STOCK -- 98.6%
Aerospace & Military Technology -- 2.7%
Raytheon Co........................... 13,900 $ 527,922
United Technologies Corp.............. 9,200 859,096
----------
1,387,018
----------
Apparel & Textiles -- 0.7%
Jones Apparel Group, Inc.............. 9,600 343,680
----------
Automotive -- 1.6%
Johnson Controls, Inc................. 14,900 846,469
----------
Banks -- 5.7%
Bank of America Corp.................. 25,206 1,092,176
Bank of New York Co., Inc............. 16,100 469,637
U.S. Bancorp.......................... 13,331 385,266
Wachovia Corp......................... 5,600 262,920
Wells Fargo & Co...................... 12,500 745,375
----------
2,955,374
----------
Broadcasting & Media -- 4.4%
Comcast Corp., Class A+............... 15,400 429,968
E.W. Scripps Co., Class A............. 7,100 339,238
Gannett Co., Inc...................... 5,600 469,056
News Corp., Ltd. Sponsored ADR........ 10,300 338,561
Viacom, Inc., Class B................. 21,000 704,760
----------
2,281,583
----------
Business Services -- 1.2%
Accenture, Ltd., Class A+............. 23,500 635,675
----------
Chemicals -- 0.7%
Air Products & Chemicals, Inc......... 7,000 380,660
----------
Communication Equipment -- 0.3%
Juniper Networks, Inc.+............... 5,500 129,800
----------
Computer Software -- 4.5%
Microsoft Corp........................ 68,600 1,896,790
Oracle Corp.+......................... 37,200 419,616
----------
2,316,406
----------
Computers & Business Equipment -- 2.9%
Dell, Inc.+........................... 20,000 712,000
International Business Machines Corp.. 9,200 788,808
----------
1,500,808
----------
Conglomerate -- 5.9%
General Electric Co................... 57,900 1,944,282
Tyco International, Ltd............... 35,800 1,097,628
----------
3,041,910
----------
Electronics -- 2.6%
Altera Corp.+......................... 21,700 424,669
Analog Devices, Inc................... 9,900 383,922
Intel Corp............................ 26,000 521,560
----------
1,330,151
----------
Energy Services -- 1.4%
Baker Hughes, Inc..................... 17,100 747,612
----------
Energy Sources -- 7.2%
Anadarko Petroleum Corp............... 7,200 477,792
ChevronTexaco Corp.................... 25,200 1,351,728
Value
Security Description Shares (Note 3)
-------------------------------------------------------
Energy Sources (continued)
ConocoPhillips...................... 8,500 $ 704,225
Exxon Mobil Corp.................... 24,420 1,180,219
----------
3,713,964
----------
Financial Services -- 9.1%
Charles Schwab Corp................. 15,300 140,607
CIT Group, Inc...................... 6,300 235,557
Citigroup, Inc...................... 41,766 1,842,716
Freddie Mac......................... 16,900 1,102,556
Goldman Sachs Group, Inc............ 4,102 382,470
Morgan Stanley...................... 11,900 586,670
Washington Mutual, Inc.............. 10,000 390,800
----------
4,681,376
----------
Food, Beverage & Tobacco -- 4.3%
Altria Group, Inc................... 16,600 780,864
Anheuser-Busch Cos., Inc............ 6,700 334,665
Coca-Cola Co........................ 14,400 576,720
PepsiCo, Inc........................ 10,600 515,690
----------
2,207,939
----------
Forest Products -- 1.3%
Temple-Inland, Inc.................. 9,700 651,355
----------
Health Services -- 0.5%
HCA, Inc............................ 6,400 244,160
----------
Housing & Household Durables -- 3.6%
Gillette Co......................... 15,800 659,492
Procter & Gamble Co................. 22,500 1,217,700
----------
1,877,192
----------
Insurance -- 5.8%
Allstate Corp....................... 7,700 369,523
AMBAC Financial Group, Inc.......... 12,600 1,007,370
American International Group, Inc.#. 8,000 543,920
RenaissanceRe Holdings, Ltd......... 9,800 505,484
Torchmark Corp...................... 4,000 212,720
Willis Group Holdings, Ltd.......... 9,000 336,600
----------
2,975,617
----------
Machinery -- 2.9%
Cooper Industries, Ltd., Class A.... 7,400 436,600
Danaher Corp........................ 9,100 466,648
Deere & Co.......................... 9,400 606,770
----------
1,510,018
----------
Medical Products -- 4.9%
Boston Scientific Corp.+............ 7,600 301,948
Guidant Corp........................ 13,900 917,956
Johnson & Johnson................... 22,844 1,286,802
----------
2,506,706
----------
Metals & Mining -- 1.1%
Alcoa, Inc.......................... 16,200 544,158
----------
Pharmaceuticals -- 7.0%
Amgen, Inc.+........................ 8,500 481,780
Eli Lilly and Co.................... 12,700 762,635
55
Tax Managed Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2004 -- (continued)
Value
Security Description Shares (Note 3)
---------------------------------------------------------
COMMON STOCK (continued)
Pharmaceuticals (continued)
Gilead Sciences, Inc.+................ 13,800 $ 515,844
Pfizer, Inc........................... 40,205 1,230,273
Sepracor, Inc.+....................... 5,800 282,924
Wyeth................................. 9,500 355,300
----------
3,628,756
----------
Restaurants -- 0.7%
Yum! Brands, Inc...................... 8,600 349,676
----------
Retail -- 6.5%
Home Depot, Inc....................... 19,000 744,800
Kohl's Corp.+......................... 3,900 187,941
Target Corp........................... 12,300 556,575
TJX Cos., Inc......................... 22,500 495,900
Wal-Mart Stores, Inc.................. 25,300 1,345,960
----------
3,331,176
----------
Telecommunications -- 5.8%
Cisco Systems, Inc.+.................. 57,400 1,038,940
Corning, Inc.+........................ 9,800 108,584
Nextel Communications, Inc., Class A+. 10,500 250,320
QUALCOMM, Inc......................... 10,300 402,112
SBC Communications, Inc............... 11,900 308,805
Verizon Communications, Inc........... 22,052 868,408
----------
2,977,169
----------
Shares/
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------------------
Transportation -- 1.2%
Union Pacific Corp.............................. 6,500 $ 380,900
United Parcel Service, Inc., Class B............ 3,400 258,128
-----------
639,028
-----------
Utilities -- 2.1%
Dominion Resources, Inc......................... 8,000 522,000
Pinnacle West Capital Corp...................... 13,300 551,950
-----------
1,073,950
-----------
Total Investment Securities -- 98.6%
(cost $51,516,778)............................. 50,809,386
-----------
SHORT-TERM INVESTMENTS -- 0.4%
Time Deposit with State Street Bank & Trust Co.
0.35% due 10/01/04
(cost $189,000)................................ 189,000 189,000
-----------
TOTAL INVESTMENTS --
(cost $51,705,778)(1).......................... 99.0% 50,998,386
Other assets less liabilities..................... 1.0 527,639
------- -----------
NET ASSETS -- 100.0% $51,526,025
======= ===========
- --------
+ Non-income producing securities
(1) See Note 6 for cost of investments on a tax basis
# Security represents an investment in an affiliated company -- See Note 10
ADR --American Depository Receipt
See Notes to Financial Statements
56
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004
Note 1. Organization
SunAmerica Equity Funds is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end diversified management
investment company and was organized as a Massachusetts business trust (the
"Trust" or "Equity Funds") on June 16, 1986. It currently consists of nine
different investment funds (each, a "Fund" and collectively, the "Funds").
Each Fund is a separate series of the Trust with a distinct investment
objective and/or strategy. Each Fund is advised and/or managed by AIG
SunAmerica Asset Management Corp. (the "Adviser" or "SAAMCo"), an indirect
wholly-owned subsidiary of American International Group, Inc. An investor
may invest in one or more of the following Funds: SunAmerica Blue Chip
Growth Fund ("Blue Chip Growth Fund"), SunAmerica Growth Opportunities Fund
("Growth Opportunities Fund"), SunAmerica New Century Fund ("New Century
Fund"), SunAmerica Growth and Income Fund ("Growth and Income Fund"),
SunAmerica Balanced Assets Fund ("Balanced Assets Fund"), SunAmerica
International Equity Fund ("International Equity Fund"), SunAmerica Value
Fund ("Value Fund"), SunAmerica Biotech/Health Fund ("Biotech/Health Fund"),
and Tax Managed Equity Fund ("Tax Managed Equity Fund"). The Funds are
considered to be separate entities for financial and tax reporting purposes.
The investment objective for each of the Funds is as follows:
Blue Chip Growth Fund seeks capital appreciation, by primarily investing in
equity securities of Blue Chip companies that demonstrate the potential for
capital appreciation, issued by large-cap companies. At least 80% of the
Fund's net assets plus any borrowing for investment purposes will be
invested in such securities.
Growth Opportunities Fund seeks capital appreciation, by primarily investing
in equity securities that demonstrate the potential for capital
appreciation, issued generally by small-cap companies.
New Century Fund seeks capital appreciation, by investing in equity
securities that demonstrate the potential for capital appreciation, without
regard to market capitalization.
Growth and Income Fund seeks capital appreciation and current income, by
investing in equity securities issued by companies of any size, that pay
dividends, demonstrate the potential for capital appreciation and/or are
believed to be undervalued in the market.
Balanced Assets Fund seeks capital appreciation and conservation of
principal, through active trading partly in equity securities that
demonstrate the potential for capital appreciation issued by companies with
market capitalization of over $1.5 billion, and partly in high-quality bonds.
International Equity Fund seeks capital appreciation, by investing in equity
securities and other securities with equity characteristics of non-U.S.
issuers located in at least three countries other than the U.S. and selected
without regard to market capitalization. At least 80% of the Fund's net
assets plus any borrowing for investment purposes will be invested in such
securities.
Value Fund seeks long-term growth of capital through active trading of
equity securities selected on the basis of value criteria, issued by
companies of any market capitalization.
Biotech/Health Fund seeks long-term growth of capital through active trading
of equity securities of companies principally engaged in biotechnology or
healthcare, without regard to market capitalization. Under normal market
conditions this Fund invests at least 80% of the Fund's net assets plus any
borrowing for investment purposes, in such securities.
Tax Managed Equity Fund seeks high total return while minimizing the impact
of capital gains through active trading of equity securities of large and
medium-sized U.S. companies while attempting to minimize capital gain
distributions to shareholders. Under normal market conditions this Fund
invests at least 80% of the Fund's net assets plus any borrowing for
investment purposes, in equity securities.
Each Fund offers multiple classes of shares. The classes within each Fund
are presented in the Statement of Assets and Liabilities. The cost structure
for each class is as follows:
Class A shares are offered at net asset value per share plus an initial
sales charge. Additionally, any purchases of Class A shares in excess of
$1,000,000 will be purchased at net asset value but will be subject to a
contingent deferred sales charge on redemptions made within two years of
purchase.
57
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Class B shares are offered without an initial sales charge, although a
declining contingent 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, although may be subject to a contingent deferred sales charge
on redemptions made within 12 months of purchase. Effective February 23,
2004 Class II shares were redesignated to Class C shares.
Class I, Class X and Class Z shares are offered at net asset value per
share. These classes are offered exclusively to participants in certain
employee benefit plans and other programs. As of August 1, 2003, Class Z
shares of the New Century Fund and the Growth and Income Fund are no longer
being offered for sale. Effective February 23, 2004, Class I shares of the
New Century Fund are no longer being offered for sale.
Each class of shares bears the same voting, dividend, liquidation and other
rights and conditions. Class A, Class B and Class C shares each make
distribution and account maintenance and service fee payments under the
distribution plans pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act"), except that Class B and Class C shares are subject to
higher distribution fee rates. There are no distribution payments applicable
to Class I, Class X and Class Z.
Indemnifications: Under the Trust's organizational documents, its officers
and trustees are indemnified against certain liability arising out of the
performance of their duties to the Trust. In addition, in the normal course
of business the Trust enters into contracts that contain a variety of
representations and warranties which provide general indemnifications. The
Trust's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Trust that have not yet
occurred. However, the Trust expects the risk of loss to be remote.
Note 2. Fund Mergers
Pursuant to a plan of reorganization, all of the Investment assets and
liabilities of the determined SunAmerica Focused Series, Inc. Portfolios and
the determined SunAmerica Strategic Series, Inc. Funds were transferred in a
tax-free exchange to a determined SunAmerica Equity Fund. The details of the
reorganization transactions, which was consummated on February 23, 2004, are
set forth below.
The SunAmerica Focused Series, Inc. Value Portfolio, the SunAmerica
Strategic Investment Series, Inc. Biotech/Health Fund and the SunAmerica
Strategic Investment Series, Inc. Tax Managed Equity Fund were reorganized
into the newly created SunAmerica Value Fund, Biotech/Health Fund and Tax
Managed Equity Fund in the SunAmerica Equity Funds. In addition, The
SunAmerica Equity Funds Focused Dividend Strategy Portfolio was reorganized
into the newly created Focused Dividend Strategy Portfolio in the SunAmerica
Focused Series, Inc.
Note 3. 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 Trust in the preparation of their financial statements:
Security Valuations: Stocks are generally valued based upon closing sales
prices reported on recognized securities exchanges or, for listed securities
having no sales reported and for unlisted securities, upon last reported bid
price. Securities listed on the NASDAQ Stock Market are valued using the
NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will be the last
sale price unless the reported trade for the securities 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. Nonconvertible bonds, debentures, other
long-term debt securities, and short-term securities with original or
remaining maturities in excess of 60 days are valued at prices obtained for
the day of valuation from a bond pricing service of a major dealer in bonds
when such prices are available; however, in circumstances where the
58
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
investment adviser deems it appropriate to do so, an over-the-counter or
exchange quotation at the mean of representative bid or asked prices may be
used. Securities traded primarily on securities 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 the Fund's shares, and the
Fund may determine that certain closing prices are unreliable. This
determination will be based on review of a number of factors, including
developments in foreign markets, the performance of U.S. securities markets,
and the performance of instruments trading in U.S. markets that represent
foreign securities and baskets of foreign securities. If the Fund determines
that closing prices do not reflect the fair value of the securities, the
Fund will adjust the previous closing prices in accordance with pricing
procedures approved by the Board of Trustees to reflect what it believes to
be the fair value of the securities as of the close of regular trading on
the New York Stock Exchange. A Fund may also fair value securities in other
situations, for example, when a particular foreign market is closed but the
Fund is open. For foreign equity securities, the Fund uses an outside
pricing service to provide it with closing market prices and information
used for adjusting those prices. Futures contracts and options traded on
national securities exchanges are valued as of the close of the exchange on
which they are traded. Short-term securities with 60 days or less to
maturity are amortized to maturity based on their cost to the Trust if
acquired within 60 days of maturity or, if already held by the Trust on the
60th day, are amortized to maturity based on the value determined on the
61st day. Securities for which quotations are not readily available, or if a
development/event occurs that may significantly impact the value of the
securities, then these securities may be fair valued as determined pursuant
to procedures adopted in good faith under the direction of the Trust's
Trustees.
Repurchase Agreements: The Funds, along with other affiliated registered
investment companies, pursuant to exemptive relief granted by the Securities
and Exchange Commission, may transfer uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. For repurchase agreements and joint repurchase agreements, the
Funds' custodian takes possession of the collateral pledged for investments
in such repurchase agreements. The underlying collateral is valued daily on
a mark to market basis to ensure that the value, at the time the agreement
is entered into, is equal to at least 102% of the repurchase price,
including accrued interest. In the event of default of the obligation to
repurchase, a Fund has the right to liquidate the collateral and apply the
proceeds in satisfaction of the obligation. If the seller defaults and the
value of the collateral declines or if bankruptcy proceedings are commenced
with respect to the seller of the security, realization of the collateral by
the Fund may be delayed or limited.
As of September 30, 2004, the following Funds held an undivided interest in
a joint repurchase agreement with State Street Bank & Trust Co.:
Percentage Principal
Fund Interest Amount
- ---- ---------- ----------
Blue Chip Growth.... 0.21% $ 376,000
Growth Opportunities 1.57 2,864,000
Growth and Income... 0.50 913,000
Balanced Assets..... 0.26 467,000
Value............... 0.06 106,000
Biotech/Health...... 0.60 1,101,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 30, 2004, bearing interest at
a rate of 1.58% per annum, with a principal amount of $182,364,000, a
repurchase price of $182,372,004 and a maturity date of October 1, 2004. The
repurchase agreement is collateralized by the following:
Interest Rate/ Maturity Principal Market
Type of Collateral Discount Yield Date Amount Value
- ------------------ -------------- -------- ------------ ------------
U.S. Treasury Notes 4.75% 05/15/14 $ 2,265,000 $ 2,412,225
U.S. Treasury Bonds 7.50 11/15/16 139,230,000 183,631,282
59
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
In addition, at September 30, 2004, the following Funds held an undivided
interest in a joint repurchase agreement with UBS Securities, LLC:
Percentage Principal
Fund Interest Amount
- ---- ---------- ----------
Growth and Income 1.60% $4,000,000
Balanced Assets.. 0.80 2,000,000
Value............ 2.40 6,000,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities, LLC, dated September 30, 2004, bearing interest at a rate of
1.73% per annum, with a principal amount of $250,000,000 a repurchase price
of $250,012,014, and a maturity date of October 1, 2004. The repurchase
agreement is collateralized by the following:
Interest Rate/ Maturity Principal Market
Type of Collateral Discount Yield Date Amount Value
- ------------------ -------------- --------- ----------- -----------
U.S. Treasury Notes 3.00% 7/15/2012 $50,000,000 $58,375,000
U.S. Treasury Notes 1.88 7/15/2013 50,000,000 52,375,000
U.S. Treasury Bonds 2.38 1/15/2025 50,000,000 52,062,500
U.S. Treasury Bonds 3.63 4/15/2028 50,000,000 74,500,000
U.S. Treasury Bonds 3.38 4/15/2032 13,067,000 17,689,451
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. Funds
which earn foreign income and capital gains may be subject to foreign
withholding taxes and capital gains taxes at various rates. Under applicable
foreign law, a withholding of tax may be imposed on interest, dividends, and
capital gains at various rates. India, Thailand, and certain other countries
tax regulations require that taxes be paid on capital gains realized by the
Funds. For financial statements purposes, the Funds amortize all premiums
and accrete all discounts on fixed income securities.
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 of each class
of shares at the beginning of the day (after adjusting for the current
capital shares activity of the respective class).
Expenses common to all Funds, not directly related to individual Funds, are
allocated among the Equity Funds based upon their relative net asset value
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, if any, are paid annually, except for
the Balanced Assets Fund and Growth and Income Fund, which pay quarterly.
Capital gain distributions, if any, are paid at least annually.
The Funds record dividends and distributions to their shareholders on the
ex-dividend date. The amount of dividends and distributions from net
investment income and net realized capital gains are determined and
presented 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.
60
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Each Fund intends to comply with the requirements of the Internal Revenue
Code, as amended, applicable to regulated investment companies and
distribute all of its taxable income, including any net realized gain on
investments to its shareholders. Therefore, no federal tax provisions are
required. Each Fund is considered a separate entity for tax purposes.
Investment Securities Loaned: For the period ended September 30, 2004, the
Balanced Assets Fund participated in securities lending with qualified
brokers. In lending portfolio securities to brokers the Fund receives 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 Fund 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. As with other extensions of credit, should the borrower of
the securities fail financially, the Fund 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. As of September
30, 2004, the Balanced Assets Fund did not have any securities on loan.
Foreign Currency Translation: The books and records of the Funds are
maintained in U.S. dollars. Assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of
such currencies against U.S. dollars on the date of valuation.
The Funds do not isolate that portion of the results of operations arising
as a result of changes in the foreign exchange rates from the changes in the
market prices of securities held at the end of the period. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from
the changes in the market prices of portfolio securities sold during the
period.
Realized foreign exchange gains and losses on other assets and liabilities
and change in unrealized foreign exchange gains and losses on other assets
and liabilities include foreign exchange gains and losses from currency
gains or losses between the trade and settlement dates of securities
transactions, the difference between the amounts of interest, dividends and
foreign withholding taxes recorded on the Funds' books and the U.S. dollar
equivalent amounts actually received or paid and changes in the unrealized
foreign exchange gains and losses relating to other assets and liabilities
arising as a result of changes in the exchange rate.
Forward Foreign Currency Contracts: Certain portfolios may enter into
forward foreign currency contracts ("forward contracts") to attempt to
protect securities and related receivables and payables against changes in
future foreign exchange rates or to enhance return. A forward contract is an
agreement between two parties to buy or sell currency at a set price on a
future date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is marked to market daily using the
forward rate and the change in market value is recorded by the Portfolio as
unrealized gain or loss. On settlement date, the Portfolio records realized
foreign exchange 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 amounts reflected in the Statement of
Assets and Liabilities. The Fund bears the risk of an unfavorable change in
the foreign exchange rate underlying the forward contract.
Futures Contracts: A futures contract is an agreement between two parties to
buy and sell a financial instrument at a set price on a future date. Upon
entering into such a contract the Funds are required to pledge to the broker
an amount of cash or U.S. government securities equal to the minimum
"initial margin" requirements of the exchange on which the futures contract
is traded. The Funds' activities in futures contracts are for hedging
purposes and are conducted through regulated exchanges which do not result
in counterparty credit risks. A Fund's participation in the futures market
involves certain risks, including imperfect correlation between movements in
the price of futures contracts and movements in the price of the securities
hedged or used for cover. Pursuant to a contract the Funds agree to receive
from or pay to the broker an amount of cash equal to the daily fluctuation
in value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the Funds as unrealized appreciation or
depreciation. When a contract is closed, the Funds record a realized gain or
loss 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. Futures contracts
involve elements of risk in excess of the amount reflected in the Statement
of Assets and Liabilities. At September 30, 2004, there were no open futures
contracts.
61
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Options: An option is a contract conveying a right to buy or sell a
financial instrument at a specified price during a stipulated period. The
premium paid by a Fund for the purchase of a call or a put option is
included in the Fund's Statement of Assets and Liabilities as an investment
and subsequently marked to market to reflect the current market value of the
option. As of September 30, 2004, there were no purchased options contracts.
When a Fund writes a call or a put option, an amount equal to the premium
received by the Fund is included in the Fund's Statement of Assets and
Liabilities as a liability and is subsequently marked to market to reflect
the current market value of the option written. If an option which the Fund
has written either expires on its stipulated expiration date, or if the Fund
enters into a closing purchase transaction, the Fund realizes a gain (or
loss if the cost of a closing purchase transaction exceeds the premium
received when the option was written) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such
options is extinguished. If a call option which the Fund has written is
exercised, the Fund realizes a capital gain or loss from the sale of the
underlying security and the proceeds from such sale are increased by the
premium originally received. If a put option which the Fund has written is
exercised, the amount of the premium originally received reduces the cost of
the security which the Fund purchased upon exercise of the option.
Transactions in call and put options written during the period ended
September 30, 2004 for the New Century Fund are summarized as follows:
Written Options
-------------------
Number of Premiums
Contracts Received
--------- ---------
Beginning of period................ -- $ --
Written............................ (1,718) (377,174)
Closed............................. 1,718 404,023
Expired............................ -- --
Exercised.......................... -- --
Net realized gain on options closed -- (26,849)
------ ---------
End of period...................... -- $ --
====== =========
Short Sales: The Biotech/Health Fund, Tax Managed Equity Fund, Value Fund
and International Equity Fund may sell a security it does not own in
anticipation of a decline in the market value of that security (short
sales). To complete such a transaction, the Fund must borrow the security to
make delivery to the buyer. The Fund then is obligated to replace the
security borrowed by purchasing it at market price at the time of
replacement. The price at such time may be more or less than the price at
which the security was sold by the Fund. Until the security is replaced, the
Fund is required to pay to the lender any dividends or interest that accrues
during the period of the loan. To borrow the security, the Fund may be
required to pay a premium, which would increase the cost of the security
sold. The proceeds of the short sale will be retained by the broker, to the
extent necessary to meet margin requirements, until the short position is
closed out. Until the Fund replaces a borrowed security, the Fund will
maintain daily a segregated account, containing cash or liquid securities,
at such a level that (i) the amount deposited in the account plus the amount
deposited with the broker as collateral will equal the current value of the
security sold short and (ii) the amount deposited in the segregated account
plus the amount deposited with the broker as collateral will not be less
than the market value of the security at the time it was sold short.
Liabilities for securities sold short are reported at market value in the
financial statements. Such liabilities are subject to off balance sheet risk
to the extent of any future increases in market value of the securities sold
short. The ultimate liability for securities sold short could exceed the
liabilities recorded in the Statement of Assets and Liabilities. The Fund
bears the risk of potential inability of the broker to meet their obligation
to perform.
Note 4. Investment Advisory and Management Agreement, Distribution Agreement
and Service Agreement
The Trust, on behalf of each Fund, has an Investment Advisory and Management
Agreement (the "Agreement") with SAAMCo. Under the Agreement, SAAMCo
provides continuous supervision of a Fund's portfolio and administers its
corporate affairs, subject to general review by the Trustees. In connection
therewith, SAAMCo furnishes the Funds with office facilities, maintains
certain of the Funds' books and records, and pays the salaries and expenses
of all personnel, including officers of the Funds who are employees of
SAAMCo and its affiliates. The investment advisory and management fee paid
to SAAMCo for Blue Chip Growth Fund, Growth Opportunities Fund, New Century
Fund, Growth and Income Fund and Balanced Assets Fund is computed
62
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
daily and payable monthly, at an annual rate of .75% of a Fund's average
daily net assets up to $350 million, .70% of the next $350 million, and .65%
thereafter. The rate for the International Equity Fund is 1.00% of the
Fund's average daily net assets. The annual rate for the Value Fund is 1.00%
for the first $750 million, 0.95% for the next $750 million, and 0.90% for
any amount exceeding $1.5 billion of the average daily net assets. The
annual rate for the Biotech/Health Fund and the Tax Managed Equity Fund is
0.75% and 0.85%, respectively, of the average daily net assets. For the
period ended September 30, 2004, SAAMCo earned fees in the amounts stated on
the Statement of Operations. The International Equity Fund is subadvised by
AIG Global Investment Corp. ("AIGGIC") pursuant to a subadvisory agreement
with SAAMCo. AIGGIC is an indirect wholly-owned subsidiary of AIG and an
affiliate of SAAMCo. AIGGIC receives an annual fee of 0.47% of the average
daily net assets of the Fund, which is paid by SAAMCo. Effective August 23,
2004, American Century, the subadvisor for the Value Fund, was replaced by
SAAMCo. The Tax Managed Equity Fund is subadvised by J.P. Morgan Fleming
Asset Management, Inc. and receives an annual fee of 0.45% of the average
daily net assets of the Fund, which is paid by SAAMCo.
SAAMCo has contractually agreed to waive fees or reimburse expenses, if
necessary, at or below the following percentages of each Fund's average net
assets.
Fund Percentage
- ---- ----------
Blue Chip Growth Class I..... 1.33%
Growth Opportunities Class I. 1.33
New Century Class I.......... 1.33
Growth and Income Class I.... 1.32
Balanced Assets Class I...... 1.33
International Equity Class A. 1.90
International Equity Class B. 2.55
International Equity Class C+ 2.55
International Equity Class I. 1.80
Value Class A*............... 1.63
Value Class B*............... 2.28
Value Class C+*.............. 2.28
Value Class I*............... 1.53
Value Class Z*............... 1.06
Biotech/Health Class A....... 1.55
Biotech/Health Class B....... 2.20
Biotech/Health Class C+...... 2.20
Tax Managed Class A.......... 1.45
Tax Managed Class B.......... 2.10
Tax Managed Class C+......... 2.10
SAAMCo has voluntarily agreed to waive fees or reimburse expenses, if
necessary, at or below the following percentages of each Fund's average net
assets.
Fund Percentage
- ---- ----------
Growth Opportunities Class X 1.20%
New Century Class C+........ 2.14
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
* Effective September 1, 2004, the expense caps for the Value Fund changed.
Prior to this date, the expense caps were as follows: Class A -- 1.78; Class
B -- 2.43; Class C -- 2.43; Class I -- 1.68; and Class Z -- 1.21.
63
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
For the International Equity Fund, Value Fund, Biotech/Health Fund, and Tax
Managed Fund, any waivers or reimbursements made by SAAMCo are subject to
recoupment from the Funds within the following two years of making such
waivers or reimbursements, provided that the Funds are able to effect such
payment to SAAMCo and remain in compliance with the foregoing expense
limitations.
For the period ending September 30, 2004, SAAMCo has agreed to reimburse
expenses as follows:
Blue Chip Growth Class I..... $12,466
Growth Opportunities Class I. 8,864
Growth Opportunities Class X. 3,652
New Century Class C+......... 10,583
New Century Class I.......... 5,223
Growth & Income Class I...... 8,893
Balanced Assets Class I...... 7,848
International Equity Class A. 33,827
International Equity Class B. 28,171
International Equity Class C+ 9,082
International Equity Class I. 16,894
Value Fund Class A@.......... 43,244
Value Fund Class B@.......... 13,544
Value Fund Class C@+......... 17,836
Value Fund Class I@.......... 7,685
Value Fund Class Z@.......... 19,182
Biotech / Health Class A@.... 48,000
Biotech / Health Class B@.... 41,731
Biotech / Health Class C@+... 29,207
Tax Managed Equity Class A@.. 32,516
Tax Managed Equity Class B@.. 50,423
Tax Managed Equity Class C@+. 47,232
For the period ended September 30, 2004, the amounts repaid to the Advisor
are as follows:
Value Fund Class A@. $11,010
Value Fund Class C@+ 3,625
Value Fund Class Z@. 10,850
Value Fund Class I@. 399
At September 30, 2004, expenses previously waived or reimbursed by SAAMCo
that are subject to recoupment are as follows:
Class
Specific
Expenses
Reimbursed
----------
International Equity Class A. $ 91,595
International Equity Class B. 62,140
International Equity Class C+ 50,870
International Equity Class I. 46,168
Value Fund Class A........... 40,699
Value Fund Class C+.......... 21,065
Value Fund Class I........... 15,481
Value Fund Class Z........... 43,097
Biotech/Health Class A....... 87,726
Biotech/Health Class B....... 88,815
Biotech/Health Class C+...... 71,339
Tax Managed Equity Class A... 75,628
Tax Managed Equity Class B... 110,503
Tax Managed Equity Class C+.. 107,191
@ For the period November 1, 2003 through September 30, 2004
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
64
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
The Trust, on behalf of each Fund, has a Distribution Agreement with AIG
SunAmerica Capital Services, Inc. ("SACS"), an affiliate of the Adviser.
Each Fund has adopted a Distribution Plan (the "Plan") in accordance with
the provisions of Rule 12b-1 under the 1940 Act. Rule 12b-1 permits an
investment company directly or indirectly to pay expenses associated with
the distribution of its shares ("distribution expenses") in accordance with
a plan adopted by the investment company's board of trustees and approved by
its shareholders. Pursuant to such rule, the Trustees and the shareholders
of each class of shares of each Fund have adopted Distribution Plans
hereinafter referred to as the "Class A Plan", "Class B Plan" and "Class C
Plan". In adopting the Distribution Plans, the Trustees determined that
there was a reasonable likelihood that each such Plan would benefit the Fund
and the shareholders of the respective class.
Under the Class A Plan, Class B Plan and Class C Plan, the Distributor
receives payments from a Fund at an annual rate of up to 0.10%, 0.75% and
0.75%, respectively, of average daily net assets of such Fund's Class 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 each Class'
Plan may exceed the Distributor's distribution costs as described above. The
Distribution Plans provide that each class of shares of each Fund may also
pay the Distributor an account maintenance and service fee up to an annual
rate of 0.25% of the aggregate average daily net assets of such class of
shares for payments to broker-dealers for providing continuing account
maintenance. Accordingly, for the period ended September 30, 2004, SACS
received fees (see Statement of Operations) based upon the aforementioned
rates.
In addition, SACS is paid a fee of 0.25% of average daily net assets of
Class I shares in connection with providing additional shareholder services
to Class I shareholders. For the period ended September 30, 2004, SACS
earned fees (see Statement of Operations) based upon the aforementioned
rates.
SACS receives sales charges on each Fund's Class A and Class C shares,
portions of which are reallocated to affiliated brokerdealers and
non-affiliated broker-dealers. Effective February 23, 2004, the front-end
sales charge for Class C is no longer in effect. SACS also receives the
proceeds of contingent deferred sales charges paid by investors in
connection with certain redemptions of each Fund's Class A, Class B and
Class C shares. SACS has advised the Funds that for the period ended
September 30, 2004, the proceeds received from sales (and paid out to
affiliated and non-affiliated broker-dealers) and redemptions are as follows:
Class A Class B
---------------------------------------------------- -------------
Contingent Contingent
Sales Affiliated Non-affiliated Deferred Deferred
Charges Broker-dealers Broker-dealers Sales Charges Sales Charges
-------- -------------- -------------- ------------- -------------
Blue Chip Growth.... $ 70,816 $ 33,247 $ 27,504 $ -- $ 65,307
Growth Opportunities 117,507 44,935 54,946 -- 128,535
New Century......... 73,449 38,762 24,583 -- 23,923
Growth & Income..... 129,099 51,602 43,745 -- 165,735
Balanced Assets..... 352,857 203,366 100,387 -- 124,232
International Equity 41,669 12,210 23,533 -- 44,826
Value@.............. 237,770 87,331 114,006 -- 102,457
Biotech/Health@..... 86,309 25,423 47,548 -- 75,602
Tax Managed Equity@. 13,231 6,085 4,663 -- 74,425
Class C+
----------------------------------------------------
Contingent
Sales Affiliated Non-affiliated Deferred
Charges Broker-dealers Broker-dealers Sales Charges
-------- -------------- -------------- -------------
Blue Chip Growth.... $ 2,711 $ 932 $ 1,779 $ 813
Growth Opportunities 2,933 1,117 1,816 1,214
New Century......... 361 143 218 39
Growth & Income..... 6,487 1,912 4,575 2,976
Balanced Assets..... 7,365 2,758 4,607 4,594
International Equity 4,779 1,476 3,303 1,102
Value@.............. 18,155 3,678 14,477 7,439
Biotech/Health@..... 5,464 2,319 3,145 1,638
Tax Managed Equity@. 5,280 673 4,607 876
@ For the period November 1, 2003 through September 30, 2004
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares
65
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
The Trust has entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. The Service Agreement, which permits the
Funds to compensate SAFS for services rendered based upon an annual rate of
0.22% of average daily net assets, is approved annually by the Trustees. For
the period ended September 30, 2004, the Funds incurred the following
expenses which are included in transfer agent fees payable in the Statement
of Asset and Liabilities and in transfer agent fees and expenses in the
Statement of Operations to compensate SAFS pursuant to the terms of the
Service Agreement.
Expense Payable At September 30, 2004
------------------------------------------ ----------------------------------------
Fund Class A Class B Class C+ Class I Class X Class A Class B Class C+ Class I Class X
- ---- -------- -------- -------- ------- ------- ------- ------- -------- ------- -------
Blue Chip Growth.... $144,509 $ 63,994 $ 15,306 $20,702 $ -- $11,212 $ 5,078 $1,169 $ 550 $ --
Growth Opportunities 128,634 80,721 40,255 10,584 18,247 8,959 5,688 2,643 790 14
New Century......... 178,007 30,522 4,458 4,513 -- 14,217 2,046 384 -- --
Growth and Income... 153,746 134,907 105,991 14,268 -- 12,486 9,885 8,004 319 --
Balanced Assets..... 350,050 93,956 54,499 7,253 -- 28,990 7,090 4,171 543 --
International Equity 72,571 54,184 34,227 30,741 -- 6,074 4,105 2,851 1,483 --
Value@.............. 147,426 159,812 51,716 15,158 -- 16,009 12,639 5,588 1,355 --
Biotech/Health@..... 37,433 33,832 24,555 -- -- 2,854 2,599 1,877 -- --
Tax Managed Equity@. 29,465 43,920 42,864 -- -- 2,486 3,643 3,384 -- --
As of September 30, 2004, there are no shareholders holding more than five
percent of the outstanding shares of the Funds.
On February 10, 2004, the advisor for the Growth Opportunities Fund,
purchased 40,000 shares of iShares Russell 2000 Growth Index Fund
representing 1.70% of the Fund's gross assets, causing the total iShares
Russell 2000 Growth Index Fund investment to exceed 5.00% of gross assets.
The Fund has an investment restriction that states the Fund may not exceed
5.00% of gross assets in a single investment company. The iShares Russell
2000 Growth Index Fund is considered to be an investment company. On April
05, 2004, the advisor sold 25,000 shares to bring the Fund into compliance
resulting in a gain of $77,722 to the Fund which increased the Fund's total
return on Class A 0.07%, Class B 0.10%, Class C 0.10%, Class I 0.08%, and
Class X 0.07%.
Note 5. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales and maturities of long-term
investments during the period ended September 30, 2004 were as follows:
Growth New Growth and
Blue Chip Opportunities Century Income Balanced
Growth Fund Fund Fund Fund Assets Fund
------------- ------------- ------------ ------------ ------------
Purchases (excluding U.S. government securities).. $163,519,956 $202,614,748 $107,763,617 $261,505,519 $318,088,658
Sales and maturities (excluding U.S. government
securities)...................................... 195,563,631 223,780,334 134,626,621 317,953,919 336,819,006
Purchases of U.S. government securities........... -- -- -- -- 121,114,724
Sales and maturities of U.S. government securities -- -- -- -- 139,866,582
Tax
International Managed
Equity Value Biotech/ Equity
Fund Fund@ Health Fund@ Fund@
------------- ------------- ------------ ------------
Purchases (excluding U.S. government securities).. $175,604,701 $394,422,142 $ 73,806,179 $ 11,253,662
Sales and maturities (excluding U.S. government
securities)...................................... 205,597,591 380,240,581 59,733,651 24,647,009
Purchases of U.S. government securities........... -- -- -- --
Sales and maturities of U.S. government securities -- -- -- --
@ For the period November 1, 2003 through September 30, 2004
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares
66
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Note 6. Federal Income Taxes
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:
Blue Chip Growth New Growth and
Growth Opportunities Century Income Balanced
Fund Fund Fund Fund Assets Fund
------------- ------------- ----------- ------------ ------------
Cost (tax basis) . . . . . . . . . . . . . ... $94,582,239 $ 96,266,131 $85,515,273 $162,971,157 $216,256,378
=========== ============ =========== ============ ============
Appreciation . . . . . . . . . . . . . . . ... $ 7,896,466 $ 5,039,054 $14,696,349 $ 10,990,828 $ 12,168,500
Depreciation . . . . . . . . . . . . . . ..... (2,791,275) (8,595,790) (5,008,569) (4,683,257) (4,943,656)
----------- ------------ ----------- ------------ ------------
Net unrealized appreciation (depreciation).... $ 5,105,191 $ (3,556,736) $ 9,687,780 $ 6,307,571 $ 7,224,844
=========== ============ =========== ============ ============
International
Equity Value Biotech/ Tax Managed
Fund Fund Health Fund Equity Fund
------------- ------------- ----------- ------------
Cost (tax basis) . . . . . . . . . . . . . ... $69,412,999 $199,768,929 $38,394,490 $ 51,706,943
=========== ============ =========== ============
Appreciation . . . . . . . . . . . . . . . . . $ 5,469,357 $ 8,168,502 $ 5,856,339 $ 6,513,429
Depreciation . . . . . . . . . . . . . . ..... (2,357,311) (1,393,479) (3,548,098) (7,221,986)
----------- ------------ ----------- ------------
Net unrealized appreciation (depreciation).... $ 3,112,046 $ 6,775,023 $ 2,308,241 $ (708,557)
=========== ============ =========== ============
The tax basis components of distributable earnings differ from the amounts
reflected in the Statement of Assets and Liabilities due to temporary
book/tax differences primarily arising from wash sales, post October losses
and derivative transactions.
Distributable Earnings Tax Distributions
---------------------------------------- --------------------
For the year ended September 30, 2004
--------------------------------------------------------------
Long-term
Gains/Capital Unrealized Long-Term
Ordinary Loss Appreciation Ordinary Capital
Income Carryover (Depreciation) Income Gains
----------- ------------- -------------- ---------- ---------
Blue Chip Growth Fund.... $ -- $ (84,930,865) $ 5,105,191 $ -- $--
Growth Opportunities Fund -- (220,696,018) (3,556,736) -- --
New Century Fund......... -- (124,825,423) 9,687,780 -- --
Growth and Income Fund... -- (73,610,116) 6,307,571 -- --
Balanced Assets Fund..... 144,558 (94,775,722) 7,224,844 2,486,303 --
International Equity Fund -- (51,681,401) 3,122,257 28,461 --
Value Fund............... 15,368,076 7,905,385 6,775,023 8,542,676 --
Biotech/Health Fund...... -- (34,471,749) 2,352,720 -- --
Tax Managed Equity Fund.. -- (31,518,750) (708,557) -- --
Tax Distributions
---------------------
For the year ended
September 30, 2003
---------------------
Long-Term
Ordinary Capital
Income Gains
---------- ----------
Blue Chip Growth Fund .... $ -- $ --
Growth Opportunities Fund. -- --
New Century Fund.......... -- --
Growth and Income Fund.... -- --
Balanced Assets Fund...... 2,088,794 --
International Equity Fund. -- --
Value Fund................ 4,305,100 2,019,911
Biotech/Health Fund....... -- --
Tax Managed Equity Fund... -- --
67
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
For the period ended September 30, 2004, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net investment loss, treatment of foreign currency transactions and
principal paydown adjustments to the components of net assets as follows:
Accumulated Accumulated
Undistributed Undistributed
Net Investment Net Realized Paid-in
Income (Loss) Gain (Loss) Capital
-------------- ------------- -----------
Blue Chip Growth Fund.... $ 912,297 $ -- $ (912,297)
Growth Opportunities Fund 1,749,207 -- (1,749,207)
New Century Fund......... 1,338,263 -- (1,338,263)
Growth and Income Fund... 709,089 -- (709,089)
Balanced Assets Fund..... 661,882 (661,882) --
International Equity Fund 333,703 61,491 (395,194)
Value Fund............... 11,723 (11,723) --
Biotech/Health Fund...... 689,182 -- (689,182)
Tax Managed Equity Fund.. 124,478 -- (124,478)
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2004,
which are available to offset future capital gains, if any:
Fund Capital Loss Carryforward
- ---- ----------------------------------------------------------------------
2007 2008 2009 2010 2011 2012
---------- ----------- ----------- ------------ ----------- ----------
Blue Chip Growth Fund*.... $ -- $29,065,576 $ -- $ 13,804,345 $42,060,944 $ --
Growth Opportunities Fund* -- 11,769,320 151,316 143,462,580 65,312,802 --
New Century Fund.......... -- -- 6,929,458 81,462,574 36,351,156 --
Growth and Income Fund*... 2,391,114 -- 13,448,714 21,417,395 30,630,503 5,722,390
Balanced Assets Fund*..... 2,378,112 7,400,729 536,524 24,904,988 55,685,563 3,869,806
International Equity Fund* 92,698 17,818,885 17,510,699 11,189,965 5,008,920 --
Value Fund................ -- -- -- -- -- --
Biotech/Health Fund....... -- -- 16,342,315 17,583,650 545,784 --
Tax Managed Equity Fund... 910,428 3,887,711 6,189,990 15,675,665 4,260,050 594,906
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the year ended September 30, 2004:
Capital Loss
Carryforward
Fund Utilized
- ---- ------------
Blue Chip Growth Fund.... $ 199,018
Growth Opportunities Fund 12,540,260
New Century Fund......... 9,172,438
Growth and Income Fund... --
Balanced Assets Fund..... --
International Equity Fund 16,178,063
Value Fund............... --
Biotech/Health Fund...... 1,288,832
Tax Managed Equity Fund.. --
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 September 30, 2004, the Funds elected to defer capital
losses as follows:
Deferred Post-October Deferred Post-October
Fund Capital Loss Currency Loss
- ---- --------------------- ---------------------
International Equity Fund $ -- $ 60,234
* The capital loss carryforwards include realized capital losses from the
acquisition of other funds. These losses may be subject to annual
limitations imposed by the Internal Revenue code. Therefore, it is possible
not all of these capital losses will be available for use.
68
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Note 7. Capital Share Transactions
Transactions in capital shares of each class of each fund were as follows:
Blue Chip Growth Fund
------------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 698,970* $ 9,864,564* 667,646** $ 8,164,351** 307,120 $ 4,008,403 546,397 $ 6,073,302
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (1,204,891) (17,272,160) (1,100,613) (13,344,907) (648,520)* (8,397,097)* (1,063,759)** (11,736,666)**
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (505,921) $ (7,407,596) (432,967) $ (5,180,556) (341,400) $ (4,388,694) (517,362) $ (5,663,364)
========== ============ ========== ============ ========== ============ ========== ============
Blue Chip Growth Fund
------------------------------------------------------------------------------------------------------------
Class C(1) Class I
--------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 75,814 $ 976,052 212,883 $ 2,355,419 139,129 $ 2,085,799 624,237 $ 7,468,473
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (178,943) (2,317,761) (354,083) (3,888,325) (1,489,029) (22,138,786) (519,967) (6,253,415)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (103,129) $ (1,341,709) (141,200) $ (1,532,906) (1,349,900) $(20,052,987) 104,270 $ 1,215,058
========== ============ ========== ============ ========== ============ ========== ============
Growth Opportunities Fund
------------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 569,253+ $ 8,371,293+ 1,789,798++ $ 20,911,843++ 233,369 $ 3,089,899 1,129,240 $ 12,028,932
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (1,471,961) (21,425,290) (2,237,193) (25,721,737) (796,959)+ (10,510,340)+ (1,652,186)++ (17,373,362)++
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (902,708) $(13,053,997) (447,395) $ (4,809,894) (563,590) $ (7,420,441) (522,946) $ (5,344,430)
========== ============ ========== ============ ========== ============ ========== ============
* Includes automatic conversion of 139,168 shares of Class B shares in the
amount of $1,760,890 to 124,674 shares of Class A shares in the amount of
$1,760,890.
** Includes automatic conversion of 246,929 shares of Class B shares in the
amount of $2,761,911 to 224,890 shares of Class A shares in the amount of
$2,761,911.
+ Includes automatic conversion of 64,460 shares of Class B shares in the
amount of $842,173 to 58,108 shares of Class A shares in the amount of
$842,173.
++ Includes automatic conversion of 162,597 shares of Class B shares in the
amount of $1,733,132 to 147,591 shares of Class A shares in the amount of
$1,733,132.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
69
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Growth Opportunities Fund
---------------------------------------------------------------------------------------------------------
Class C(1) Class I
--------------------------------------------------- ---------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold.... 93,978 $ 1,244,073 468,787 $ 4,976,058 46,491 $ 685,347 46,134 $ 542,776
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (496,600) (6,453,697) (796,853) (8,347,567) (111,633) (1,566,530) (32,299) (371,452)
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase
(decrease).... (402,622) $ (5,209,624) (328,066) $ (3,371,509) (65,142) $ (881,183) 13,835 $ 171,324
========== ============ ========== ============ ======== =========== ========== ============
Growth Opportunities Fund
---------------------------------------------------
Class X
---------------------------------------------------
For the For the
year ended year ended
September 30, 2004 September 30, 2003
------------------------ -------------------------
Shares Amount Shares Amount
---------- ------------ ---------- ------------
Shares sold.... 311,431 $ 4,704,596 527,450 $ 6,247,340
Reinvested
dividends..... -- -- -- --
Shares redeemed (1,046,968) (15,570,116) (35,347) (427,960)
---------- ------------ ---------- ------------
Net increase
(decrease).... (735,537) $(10,865,520) 492,103 $ 5,819,380
========== ============ ========== ============
New Century Fund
---------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- ---------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold.... 545,178* $ 7,877,009* 1,352,573** $ 16,310,269** 114,707 $ 1,471,759 343,848 $ 3,680,626
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (1,445,548) (20,947,928) (1,636,627) (19,570,318) (581,815)* (7,492,365)* (1,308,484)** (14,067,218)**
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase
(decrease).... (900,370) $(13,070,919) (284,054) $ (3,260,049) (467,108) $(6,020,606) (964,636) $(10,386,592)
========== ============ ========== ============ ======== =========== ========== ============
New Century Fund
---------------------------------------------------------------------------------------------------------
Class C(1) Class I
--------------------------------------------------- ---------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ---------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold.... 27,155 $ 338,876 52,648 $ 567,386 23,471 $ 366,941 146,603 $ 1,709,295
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (42,881) (555,109) (113,537) (1,196,408) (362,040) (5,505,570) (108,317) (1,267,459)
---------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase
(decrease).... (15,726) $ (216,233) (60,889) $ (629,022) (338,569) $(5,138,629) 38,286 $ 441,836
========== ============ ========== ============ ======== =========== ========== ============
* Includes automatic conversion of 310,347 shares of Class B shares in the
amount of 4,006,706 to 276,932 shares of Class A shares in the amount of
$4,006,706.
** Includes automatic conversion of 703,950 shares of Class B shares in the
amount of $7,667,059 to 630,746 shares of Class A shares in the amount of
$7,667,059.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
70
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
New Century Fund
------------------------
Class Z#
------------------------
For the
year ended
September 30, 2003
------------------------
Shares Amount
---------- ------------
Shares sold.... 7,199 $ 86,274
Reinvested
dividends..... -- --
Shares redeemed (110,192) (1,310,376)
---------- ------------
Net increase
(decrease).... (102,993) $ (1,224,102)
========== ============
Growth and Income Fund
------------------------------------------------------------------------------------------------------------
Class A Class B
--------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 1,045,004* $ 11,688,438* 1,683,730** $ 16,391,477** 436,582 $ 4,667,708 604,185 $ 5,578,360
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (1,927,723) (21,643,098) (2,785,695) (26,551,456) (2,246,309)* (23,862,612)* (3,370,139)** (30,761,446)**
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (882,719) $ (9,954,660) (1,101,965) $(10,159,979) (1,809,727) $(19,194,904) (2,765,954) $(25,183,086)
========== ============ ========== ============ ========== ============ ========== ============
Growth and Income Fund
------------------------------------------------------------------------------------------------------------
Class C(1) Class I
--------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ ------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 183,472 $ 1,937,831 363,022 $ 3,318,644 123,017 $ 1,442,050 533,327 $ 5,022,032
Reinvested
dividends..... -- -- -- -- -- -- -- --
Shares redeemed (1,213,371) (12,873,624) (2,331,541) (21,041,757) (1,319,421) (15,401,935) (382,061) (3,601,108)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (1,029,899) $(10,935,793) (1,968,519) $(17,723,113) (1,196,404) $(13,959,885) 151,266 $ 1,420,924
========== ============ ========== ============ ========== ============ ========== ============
Growth and Income Fund
------------------------
Class Z#
------------------------
For the
year ended
September 30, 2003
------------------------
Shares Amount
---------- ------------
Shares sold.... 6,055 $ 58,677
Reinvested
dividends..... -- --
Shares redeemed (39,596) (377,391)
---------- ------------
Net increase
(decrease).... (33,541) $ (318,714)
========== ============
# See Note 1
* Includes automatic conversion of 587,030 shares of Class B shares in the
amount of $6,214,968 to 556,118 shares of Class A shares in the amount of
$6,214,968.
** Includes automatic conversion of 972,591 shares of Class B shares in the
amount of $9,107,456 to 926,892 shares of Class A shares in the amount of
$9,107,456.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
71
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Balanced Assets Fund
--------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 1,207,170* $ 15,877,253* 2,020,442** $ 24,213,183** 361,540 $ 4,742,697 582,863 $ 6,983,307
Reinvested
dividends..... 149,834 1,981,459 137,761 1,658,350 16,011 211,106 14,987 176,868
Shares redeemed (3,283,862) (43,275,829) (3,661,431) (43,869,345) (1,262,126)* (16,530,680)* (2,257,809)** (26,844,252)**
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... (1,926,858) $(25,417,117) (1,503,228) $ (17,997,812) (884,575) $(11,576,877) (1,659,959) $(19,684,077)
========== ============ =========== ============= ========== ============ ========== ============
Balanced Assets Fund
--------------------------------------------------------------------------------------------------------------
Class C(1) Class I
----------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 196,419 $ 2,583,488 193,805 $ 2,323,311 133,077 $ 1,726,494 38,539 $ 464,642
Reinvested
dividends..... 9,054 119,529 7,634 90,206 2,491 33,022 4,178 50,394
Shares redeemed (549,958) (7,216,970) (838,430) (9,991,677) (451,196) (5,895,473) (53,657) (640,288)
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... (344,485) $ (4,513,953) (636,991) $ (7,578,160) (315,628) $ (4,135,957) (10,940) $ (125,252)
========== ============ =========== ============= ========== ============ ========== ============
International Equity Fund
--------------------------------------------------------------------------------------------------------------
Class A Class B
----------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 1,003,369+ $ 9,993,370+ 30,503,819++ $ 227,514,952++ 463,405 $ 4,317,209 389,373 $ 2,904,734
Reinvested
dividends..... 1,103 10,629 -- -- -- -- -- --
Shares redeemed (1,135,026) (11,344,294) (31,630,035) (238,270,504) (1,302,084)+ (12,437,630)+ (1,208,986)++ (8,867,590)++
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... (130,554) $ (1,340,295) (1,126,216) $ (10,755,552) (838,679) $ (8,120,421) (819,613) $ (5,962,856)
========== ============ =========== ============= ========== ============ ========== ============
International Equity Fund
--------------------------------------------------------------------------------------------------------------
Class C(1) Class I
----------------------------------------------------- ------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------------ --------------------------- ------------------------- --------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Shares sold.... 244,213 $ 2,307,252 1,468,920 $ 10,367,805 526,358 $ 5,224,935 2,122,992 $ 16,282,171
Reinvested
dividends..... -- -- -- -- 1,799 17,397 -- --
Shares redeemed (386,123) (3,682,438) (1,938,357) (13,930,858) (2,451,685) (25,844,650) (2,036,526) (15,779,996)
---------- ------------ ----------- ------------- ---------- ------------ ---------- ------------
Net increase
(decrease).... (141,910) $ (1,375,186) (469,437) $ (3,563,053) (1,923,528) $(20,602,318) 86,466 $ 502,175
========== ============ =========== ============= ========== ============ ========== ============
* Includes automatic conversion of 271,594 shares of Class B shares in the
amount of $3,557,965 to 270,307 shares of Class A shares in the amount of
$3,557,965.
** Includes automatic conversion of 843,098 shares of Class B shares in the
amount of $10,050,519 to 839,286 shares of Class A shares in the amount of
$10,050,519.
+ Includes automatic conversion of 386,073 shares of Class B shares in the
amount of $3,709,614 to 367,493 shares of Class A shares in the amount of
$3,709,614.
++ Includes automatic conversion of 262,760 shares of Class B shares in the
amount of $1,918,130 to 250,009 shares of Class A shares in the amount of
$1,918,130.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
72
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Value Fund#
----------------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
------------------------- -------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold............... 2,512,260* $ 42,830,376* 1,250,958** $ 18,840,328** 1,281,563 $ 19,781,901
Shares issued by merger ## -- -- -- -- 222,667 3,547,219
Reinvested dividends...... 165,970 2,706,977 148,209 2,134,200 159,249 2,431,740
Shares redeemed........... (1,208,150) (20,534,683) (1,166,737) (17,494,094) (1,566,274) (24,197,581)
---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease)... 1,470,080 $ 25,002,670 232,430 $ 3,480,434 97,205 $ 1,563,279
========== ============ ========== ============ ========== ============
Value Fund#
----------------------------------------------------------------------------------
Class B
----------------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
------------------------- -------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold............... 602,789 $ 9,867,154 790,880 $ 11,373,716 854,532 $ 12,737,305
Shares issued by merger ## -- -- -- -- 679,054 10,431,946
Reinvested dividends...... 211,580 3,326,044 190,506 2,649,945 225,310 3,327,829
Shares redeemed........... (2,126,505)* (34,796,505)* (1,219,512)** (17,398,128)** (1,504,713) (22,144,087)
---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease)... (1,312,136) $(21,603,307) (238,126) $ (3,374,467) 254,183 $ 4,352,993
========== ============ ========== ============ ========== ============
Value Fund#
----------------------------------------------------------------------------------
Class C(1)
----------------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
------------------------- -------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold............... 673,127 $ 11,022,116 543,767 $ 7,827,633 335,996 $ 5,021,580
Shares issued by merger ## -- -- -- -- 278,658 4,280,036
Reinvested dividends...... 58,785 924,693 46,488 646,641 58,720 867,290
Shares redeemed........... (384,036) (6,289,709) (427,255) (6,130,918) (580,375) (8,574,128)
---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease)... 347,876 $ 5,657,100 163,000 $ 2,343,356 92,999 $ 1,594,778
========== ============ ========== ============ ========== ============
Value Fund#
----------------------------------------------------------------------------------
Class I
----------------------------------------------------------------------------------
For the For the For the period
eleven months ended year ended November 16, 2001+
September 30, 2004 October 31, 2003 through October 31, 2002
------------------------- -------------------------- ------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold............... 89,529 $ 1,520,604 94,391 $ 1,425,043 65,902 $ 1,018,521
Shares issued by merger ## -- -- -- -- 753,772 12,008,384
Reinvested dividends...... 21,805 355,230 15,108 217,403 14,156 216,021
Shares redeemed........... (248,738) (4,344,445) (26,620) (405,802) (510,776) (8,153,349)
---------- ------------ ---------- ------------ ---------- ------------
Net increase (decrease)... (137,404) $ (2,468,611) 82,879 $ 1,236,644 323,054 $ 5,089,577
========== ============ ========== ============ ========== ============
# See Note 1
## See Note 2
* Includes automatic conversion of 1,197,366 shares of Class B shares in the
amount of $19,615,894 to 1,151,426 shares of Class A shares in the amount of
$19,615,894.
** Includes automatic conversion of 56,417 shares of Class B shares in the
amount of $794,436 to 54,465 shares of Class A shares in the amount of
$794,436.
+ Inception of the class
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
73
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Value Fund
---------------------------------------------------------------------------
Class Z
---------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- -----------
Shares sold............... 175,918 $ 3,072,631 268,453 $ 3,953,345 28,434 $ 466,899
Shares issued by merger ## -- -- -- -- -- --
Reinvested dividends...... 15,301 255,534 1,192 17,449 1,606 24,991
Shares redeemed........... (56,424) (979,176) (23,150) (355,897) (37,566) (610,768)
-------- ----------- -------- ----------- ---------- -----------
Net increase (decrease)... 134,795 $ 2,348,989 246,495 $ 3,614,897 (7,526) $ (118,878)
======== =========== ======== =========== ========== ===========
Biotech/Health Fund
---------------------------------------------------------------------------
Class A
---------------------------------------------------------------------------
For the For the For the
eleven months ended year ended period ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- -----------
Shares sold............... 453,977* $ 4,634,336* 456,700** $ 3,940,808** 646,970 $ 6,336,427
Reinvested dividends...... -- -- -- -- -- --
Shares redeemed........... (627,513) (6,279,531) (639,968) (5,253,782) (1,062,148) (9,526,931)
-------- ----------- -------- ----------- ---------- -----------
Net increase (decrease)... (173,536) $(1,645,195) (183,268) $(1,312,974) (415,178) $(3,190,504)
======== =========== ======== =========== ========== ===========
Biotech/Health Fund
---------------------------------------------------------------------------
Class B
---------------------------------------------------------------------------
For the For the For the
eleven months ended year ended period ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- -----------
Shares sold............... 198,059 $ 1,981,347 504,910 $ 4,524,190 572,460 $ 5,712,976
Reinvested dividends...... -- -- -- -- -- --
Shares redeemed........... (414,457)* (4,021,201)* (746,314)** (6,389,961)** (810,536) (7,339,560)
-------- ----------- -------- ----------- ---------- -----------
Net increase (decrease)... (216,398) $(2,039,854) (241,404) $(1,865,771) (238,076) $(1,626,584)
======== =========== ======== =========== ========== ===========
Biotech/Health Fund
---------------------------------------------------------------------------
Class C(1)
---------------------------------------------------------------------------
For the For the For the
eleven months ended year ended period ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- -----------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- -----------
Shares sold............... 143,510 $ 1,438,774 211,434 $ 1,825,147 339,378 $ 3,284,100
Reinvested dividends...... -- -- -- -- -- --
Shares redeemed........... (279,256) (2,695,203) (551,787) (4,263,083) (838,133) (7,689,471)
-------- ----------- -------- ----------- ---------- -----------
Net increase (decrease)... (135,746) $(1,256,429) (340,353) $(2,437,936) (498,755) $(4,405,371)
======== =========== ======== =========== ========== ===========
* Includes automatic conversion of 29,963 shares of Class B shares in the
amount of $294,679 to 29,231 shares of Class A shares in the amount of
$294,679.
** Includes automatic conversion of 21,973 shares of Class B shares in the
amount of $178,278 to 21,668 shares of Class A shares in the amount of
$178,278.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
74
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Tax Managed Equity Fund
----------------------------------------------------------------------------
Class A
----------------------------------------------------------------------------
For the For the For the
eleven months ended year ended period ended
September 30, 2004 October 31, 2003 October 31, 2003
---------------------- ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- ------------
Shares sold............ 84,726* $ 934,523* 70,444** $ 672,205** 255,825 $ 2,796,384
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (299,486) (3,349,507) (494,385) (4,600,304) (1,016,375) (10,481,262)
-------- ----------- -------- ----------- ---------- ------------
Net increase (decrease) (214,760) $(2,414,984) (423,941) $(3,928,099) (760,550) $ (7,684,878)
======== =========== ======== =========== ========== ============
Class B
----------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- ------------
Shares sold............ 75,226 $ 808,880 74,626 $ 688,358 341,922 $ 3,766,020
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (495,633)* (5,346,758)* (768,187)** (6,967,422)** (1,167,526) (11,638,648)
-------- ----------- -------- ----------- ---------- ------------
Net increase (decrease) (420,407) $(4,537,878) (693,561) $(6,279,064) (825,604) $ (7,872,628)
======== =========== ======== =========== ========== ============
Tax Managed Equity Fund
----------------------------------------------------------------------------
Class C(1)
----------------------------------------------------------------------------
For the For the For the
eleven months ended year ended year ended
September 30, 2004 October 31, 2003 October 31, 2002
---------------------- ----------------------- ------------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- ---------- ------------
Shares sold............ 68,670 $ 736,427 168,595 $ 1,555,227 319,412 $ 3,458,869
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (648,369) (6,961,518) (910,268) (8,270,207) (1,331,221) (13,791,589)
-------- ----------- -------- ----------- ---------- ------------
Net increase (decrease) (579,699) $(6,225,091) (741,673) $(6,714,980) (1,011,809) $(10,332,720)
======== =========== ======== =========== ========== ============
* Includes automatic conversion of 11,528 shares of Class B shares in the
amount of $120,142 to 11,144 shares of Class A shares in the amount of
$120,142.
** Includes automatic conversion of 5,175 shares of Class B shares in the
amount of $49,538 to 5,051 shares of Class A shares in the amount of $49,538.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
75
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Note 8. Line of Credit
The SunAmerica Family of Mutual Funds has established a $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 Bank and Trust Company'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 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 respective Fund's cash shortfall
exceeds $100,000. For the period ended September 30, 2004, the following
Funds had borrowings:
Weighted
Average
Days Interest Average Debt Interest
Fund Outstanding Charges Utilized Rate
- ---- ----------- -------- ------------ --------
Blue Chip Growth. . . . . . . . . . . . . . . . . . . . . . . . . ........... 23 $2,100 $2,009,841 1.78%
Growth Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1,473 4,993,600 1.52%
New Century. . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 71 7,120 2,356,143 1.55%
Growth and Income. . . . . . . . . . . . . . . . . . . . . . . . ............ 52 4,859 2,212,984 1.52%
Balanced Assets. . . . . . . . . . . . . . . . . . . . . . . . . ............ 80 3,677 1,016,145 1.61%
International Equity. . . . . . . . . . . . . . . . . . . . . . . . ......... 51 4,970 2,154,785 1.62%
Value@. . . . . . . . . . . . . . . . . . . . . . . . ....................... 9 248 532,793 1.65%
Biotech/Health@. . . . . . . . . . . . . . . . . . . . . . . . .............. 1 123 2,145,683 2.06%
Tax Managed Equity@. . . . . . . . . . . . . . . . . . . . . . . . .......... 9 95 178,892 2.15%
@ For the period November 1, 2003 through September 30, 2004.
For the period ended September 30, 2004, the New Century Fund and
International Equity Fund had $902,450 and $214,979 in borrowings
outstanding at both an interest rate of 2.44%.
Note 9. Interfund Lending
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 SAAMCo or an affiliate. The
interfund lending program allows the participating Funds to borrow money
from and loan money to each other for temporary or emergency purposes. An
interfund loan will be made under this facility only if the participating
Funds receive a more favorable interest rate than would otherwise be
available from a typical bank for a comparable transaction. For the period
ended September 30, 2004, none of the Funds participated in this program.
Note 10. Transactions with Affiliates
As disclosed in the portfolio of investments, certain Funds own common stock
issued by American International Group, Inc. "AIG") or an affiliate thereof.
SAAMCo, the Investment Adviser, is a wholly-owned subsidiary of AIG. During
the period ended September 30, 2004, the following Funds recorded realized
gains (losses) and income on security transactions of AIG and subsidiaries
of AIG as follows:
Market Market Value
Value at Change in at
October 31, Cost of Cost of Realized Unrealized September 30,
Fund Security Income 2003 Purchases Sales Gain (Loss) Gain (Loss) 2004
- ---- ------------- ------ ----------- --------- ------- ----------- ----------- -------------
American
International
Tax Managed Equity Group Inc. $2,876 $704,411 $-- $-- $-- $(160,491) $543,920
76
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2004 -- (continued)
Note 11. Trustees Retirement Plan
The Trustees of the SunAmerica Equity Funds have adopted the AIG SunAmerica
Disinterested Trustees' and Directors' Retirement Plan (the "Retirement
Plan") effective January 1, 1993 for the unaffiliated Trustees. The
Retirement Plan provides generally that if an unaffiliated Trustee who has
at least 10 years of consecutive service as a Disinterested Trustee of any
of the AIG SunAmerica mutual funds (an "Eligible Trustee") retires after
reaching age 60 but before age 70, or who has at least 5 years of
consecutive service after reaching age 65 but before 70, or dies while a
Trustee, such person will be eligible to receive a retirement or death
benefit from each SunAmerica mutual fund with respect to which he or she is
an Eligible Trustee. As of each birthday, prior to the 70th birthday, but in
no event for a period greater than 10 years, each Eligible Trustee will be
credited with an amount equal to 50% of his or her regular fees (excluding
committee fees) for services as a Disinterested Trustee of each AIG
SunAmerica mutual fund for the calendar year in which such birthday occurs.
In addition, an amount equal to 8.5% of any amounts credited under the
preceding clause during prior years is added to each Eligible Trustee's
account until such Eligible Trustee reaches his or her 70th birthday. An
Eligible Trustee may receive any benefits payable under the Retirement Plan,
at his or her election, either in one lump sum or in up to fifteen annual
installments. Any undistributed amounts shall continue to accrue interest at
8.50%.
The following amounts for the Retirement Plan Liabilities are included in
the Trustee fees and expenses payable line on the Statement of Assets and
Liabilities and the Amounts for the Retirement Plan Expenses are included in
the Trustees' fees on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan
Fund Liability Expense Payments
---- --------------- --------------- ---------------
As of September 30, 2004
- -----------------------------------------------
Blue Chip Growth.... $31,711 $2,973 $1,876
Growth Opportunities 25,892 3,086 1,342
New Century......... 52,129 2,613 3,342
Growth and Income... 39,486 5,240 1,878
Balanced Assets..... 89,579 6,462 5,564
International Equity 18,066 2,338 959
Value@.............. 28,973 3,453 1,433
Biotech/Health@..... 5,009 918 185
Tax Managed Equity@. 10,551 1,239 445
Note 12. Investment Concentration
Some of the Portfolios may invest internationally, including in "emerging
market" countries. These securities may be denominated in currencies other
than U.S. dollars. While investing internationally may reduce your risk by
increasing the diversification of your investment, the value of your
investment may be affected by fluctuating currency values, changing local
and regional economic, political and social conditions, and greater market
volatility. In addition, foreign securities may not be as liquid as domestic
securities. These risks are primary risks of the International Equity Fund.
At September 30, 2004, the International Equity Fund had approximately 21%
of its net assets invested in equity securities of companies domiciled in
Japan.
@ For the period November 1, 2003 through September 30, 2004.
77
SunAmerica Equity Funds
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of SunAmerica Equity Funds
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of SunAmerica Balanced Assets Fund,
SunAmerica Blue Chip Growth Fund, SunAmerica Growth and Income Fund, SunAmerica
Growth Opportunities Fund, and SunAmerica New Century Fund as of September 30,
2004, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. Additionally, we have audited the accompanying statement of
assets and liabilities, including the portfolio of investments, of the
SunAmerica International Equity Fund as of September 30, 2004, and the related
statement of operations, the statements of changes in net assets for each of
the two years in the period then ended, and the financial highlights for each
of the three years in the period then ended. Additionally, we have audited the
accompanying statements of assets and liabilities, including the portfolios of
investments, of SunAmerica Biotech/Health Fund, SunAmerica Value Fund, and
Tax-Managed Equity Fund as of September 30, 2004, and the related statements of
operations, the statements of changes in net assets, and financial highlights
for the period then ended. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for each of the periods presented
through October 31, 2001 for the SunAmerica International Equity Fund were
audited by other auditors whose report dated December 14, 2001, expressed an
unqualified opinion on those financial highlights. The statements of
operations, the statements of changes in net assets, and the financial
highlights for the periods presented through October 31, 2003 for the
SunAmerica Biotech/Health Fund, SunAmerica Value Fund, and Tax-Managed Equity
Fund were audited by other auditors whose report dated December 17, 2003,
expressed an unqualified opinion on those statements and financial highlights.
We conducted our audits 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 and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and financial
highlights. Our procedures included confirmation of securities owned as of
September 30, 2004, by correspondence with the custodian and brokers or by
other appropriate auditing procedures where replies from brokers were not
received. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
SunAmerica Balanced Assets Fund, SunAmerica Blue Chip Growth Fund, SunAmerica
Growth and Income Fund, SunAmerica Growth Opportunities Fund, and SunAmerica
New Century Fund, as of September 30, 2004, the results of their operations for
the year then ended, the changes in their net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles. Also in our opinion, the financial statements and
financial highlights referred to above present fairly, in all material
respects, the financial position of the SunAmerica International Equity Fund as
of September 30, 2004, the results of its operations, and the changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, in conformity
with U.S. generally accepted accounting principles. Also in our opinion, the
financial statements and financial highlights referred to above present fairly,
in all material respects, the financial position of the SunAmerica
Biotech/Health Fund, SunAmerica Value Fund, and Tax-Managed Equity Fund, as of
September 30, 2004, the results of their operations, changes in net assets, and
financial highlights for the period then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Houston, Texas
November 19, 2004
78
SunAmerica Equity Funds
TRUSTEE INFORMATION -- September 30, 2004 -- (unaudited)
The following table contains basic information regarding the Trustees that
oversee operations of the Portfolios and other investment companies within the
Fund complex.
Number of
Portfolios in
Position Held Term of Office Fund Other
Name, With and Length of Complex Directorships
Address and SunAmerica Time Principal Occupations Overseen by Held by
Date of Birth* Complex Served(4) During Past 5 Years Trustee(1) Trustee(2)
- -------------- ------------- -------------- ---------------------------------- ------------- -------------------------
Jeffrey S. Burum Trustee 2004-Present Founder and CEO of National 36 None
DOB: February 27, 1963 Housing Development Corp.
Dr. Judith L. Craven Trustee 2001-Present Retired. 73 Director, A.G. Belo
DOB: October 6, 1945 Corporation (1992 to
present); Director, Sysco
Corporation (1996 to
present); Director,
Luby's, Inc. (1998 to
present): Director,
University of Texas
Board of Regents
(2001-Present).
William F. Devin Trustee 2001-Present Retired. 73 Member of the Board of
DOB: December 30, 1938 Governors, Boston Stock
Exchange (1985-Present).
Samuel M. Eisenstat Chairman of 1986-Present Attorney, solo practitioner. 46 Director, North European
DOB: March 7, 1940 the Board Oil Royalty Trust.
Stephen J. Gutman Trustee 1986-Present Partner and Member of Managing 46 None
DOB: May 10, 1943 Directors, Beau Brummel-Soho
LLC (Licensing of menswear
specialty retailing and other
activities) (June 1988 to present)
Peter A. Harbeck(3) Trustee 1995-Present President, CEO and Director, 82 None
DOB: January 23, 1954 SAAMCo. (August 1995 to
present); Director, AIG
SunAmerica Capital Services, Inc.
("SACS") (August 1993 to
present)
- --------
* The business address for each Trustee is the Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which SAAMCo serves as investment adviser or business manager. The
"Fund Complex" includes the SunAmerica Money Market Funds (2 funds),
SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds),
SunAmerica Focused Series, Inc. (15 portfolios), Anchor Series Trust (9
portfolios), SunAmerica Senior Floating Rate Fund, Inc. (1 fund),
SunAmerica Series Trust (32 portfolios), VALIC Company I (21 portfolios),
VALIC Company II (15 funds), Seasons Series Trust (19 portfolios) and AIG
Series Trust (4 portfolios).
(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (i.e. "public
companies") or other investment companies registered under the Investment
Company Act of 1940.
(3) Interested Trustee, as defined within the Investment Company Act of 1940,
because he is an officer and a director of the advisor and a director of
the principal underwriter of, the Trust.
(4) Trustees serve until their successors are duly elected and qualified,
subject to the Trustee's retirement plan as discussed in Note 11 of the
financial statements.
Additional information concerning the Trustees is contained in the Statement of
Additional Information and is available without charge by calling (800)
858-8850.
79
SunAmerica Equity Funds
SHAREHOLDER TAX INFORMATION -- (unaudited)
Certain tax information regarding the SunAmerica Equity Funds is required to be
provided to shareholders based upon each Fund's income and distributions for
the taxable year ended September 30, 2004. The information and distributions
reported herein may differ from the information and distributions taxable to
the shareholders for the calendar year ending December 31, 2004. 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 2005.
During the year ended September 30,2004 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- Qualifying % for the
Total Investment Short-Term Term 70% Dividends
Dividends Income Capital Gains Capital Gains Received Reduction
--------- ---------- ------------- ------------- --------------------
Blue Chip Growth Class A..... -- -- -- -- -- %
Blue Chip Growth Class B..... -- -- -- -- --
Blue Chip Growth Class C+.... -- -- -- -- --
Blue Chip Growth Class I..... -- -- -- -- --
Growth Opportunities Class A. -- -- -- -- --
Growth Opportunities Class B. -- -- -- -- --
Growth Opportunities Class C+ -- -- -- -- --
Growth Opportunities Class I. -- -- -- -- --
Growth Opportunities Class X. -- -- -- -- --
New Century Fund Class A..... -- -- -- -- --
New Century Fund Class B..... -- -- -- -- --
New Century Fund Class C+.... -- -- -- -- --
New Century Fund Class I..... -- -- -- -- --
Growth & Income Class A...... -- -- -- -- --
Growth & Income Class B...... -- -- -- -- --
Growth & Income Class C+..... -- -- -- -- --
Growth & Income Class I...... -- -- -- -- --
Balanced Assets Class A...... 0.17 0.17 -- -- 84.40
Balanced Assets Class B...... 0.07 0.07 -- -- 84.40
Balanced Assets Class C+..... 0.07 0.07 -- -- 84.40
Balanced Assets Class I...... 0.18 0.18 -- -- 84.40
International Equity Class A. 0.00 0.00 -- -- --
International Equity Class B. -- -- -- -- --
International Equity Class C+ -- -- -- -- --
International Equity Class I. 0.01 0.01 -- -- --
Value Fund Class A........... 0.82 0.37 0.45 -- 85.23
Value Fund Class B........... 0.72 0.27 0.45 -- 85.23
Value Fund Class C+.......... 0.72 0.27 0.45 -- 85.23
Value Fund Class I........... 0.85 0.40 0.45 -- 85.23
Value Fund Class Z........... 0.90 0.45 0.45 -- 85.23
Biotech / Health Class A..... -- -- -- -- --
Biotech / Health Class B..... -- -- -- -- --
Biotech / Health Class C+.... -- -- -- -- --
Tax Managed Equity Class A... -- -- -- -- --
Tax Managed Equity Class B... -- -- -- -- --
Tax Managed Equity Class C+.. -- -- -- -- --
The International Equity Fund makes an election under Internal Revenue Code
Section 853 to pass through foreign taxes paid by the Fund to its shareholders.
The total amount of foreign taxes passed through to the shareholders for the
fiscal year ended September 30, 2004 was $245,815. The gross foreign source
income for the information reporting is $1,895,475.
For the year ended September 30, 2004, certain dividends paid by the Balanced
Assets Fund and Value 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:
Fund Amount
---- ----------
Balanced Assets..... $2,486,303
International Equity 28,461
Value............... 8,542,676
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
80
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES
As required by the Securities and Exchange Commission, the following graphs
compare the performance of a $10,000 investment in the SunAmerica Equity Funds'
portfolios to a similar investment in an index or indices. Please note that
"inception" as used herein reflects the date on which a specific class of Fund
shares commenced operations. It is important to note that the SunAmerica Equity
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 class of
that particular Fund which has been in existence the longest. The performance
of the other classes will vary based upon the difference in sales charges and
fees assessed to shareholders of that class.
81
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Blue Chip Growth Fund
For the annual period ended September 30, 2004, the SunAmerica Blue Chip Growth
Fund Class B returned 6.72% at NAV, trailing its benchmarks, the Russell 1000
Growth Index and the S&P 500 Index, which returned 7.51% and 13.86% for the
same period respectively.
Over the course of the annual period, market conditions played a role in the
Fund's performance relative to that of its benchmark. A chief factor in this
respect was the trendless nature of the market itself. After rising strongly in
2003 and early 2004, the market entered a period of consolidation in the spring
of 2004, during which it traded within a narrow range through the close of the
Fund's annual period. At that time, value stocks began outperforming growth
stocks, with investors taking a more conservative stance as uncertainties
weighted on the market. Price appreciation of value stocks boosted the
performance of the S&P 500 Index. Growth stock prices, however, even those of
Blue Chip caliber, such as those comprising this Fund, primarily remained flat
or displayed a downward bias. The circumstances driving this trend were
manifold. The rising price of oil, which reached a new high of $50 per barrel
on September 28, 2004, dampened activity in the equity markets. Uncertainty
over the result of a close presidential election further clouded the view of
the market's direction, with many important matters relating to foreign,
domestic and economic policy tied to the outcome. Over the annual period, the
Fed also tightened interest rates, increasing the federal funds rate from 1% to
1.75%. This increase did not impact the Fund's performance significantly, since
only 9.7% of its holdings are in financial stocks, none of which have
significant exposure to interest rate changes.
With respect to stock selection by industrial sector, the Fund benefited
relative to its benchmark by being overweight in energy, one of the best
performing sectors of the overall market for several previous quarters. In
taking an overweight position in this sector, the Fund manager sought full
participation in the diverse areas of this market, including natural gas
companies, energy and power companies, oil service companies, as well major oil
companies Exxon Mobil Corp. and Chevron Texaco Corp. The Fund maintained an
overweight position in industrials relative to its benchmark, which provided
further benefit to the portfolio as the result of strong organic growth in that
sector. Underweight positions in healthcare and pharmaceuticals also aided
performance, whereas an overweight position in the tech sector, relative to the
Fund's benchmark, hurt performance, chiefly through ownership in semiconductor
stocks. A large holding in Microsoft Corp. neither helped nor hurt performance
much, while software security stock Symantec Corp. delivered good returns.
Leading contributors for the annual period included eBay, Inc., Aetna Inc.,
General Electric Co., QUALCOMM Inc., Carnival Corp. and Coach Inc. Intel Corp.,
Checkpoint Software Technologies, Ltd., Solectron Corp., Amgen, Inc. and
Sharper Image Corp. were the greatest detractors to performance.
82
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past ten years, $10,000 invested in Blue Chip Growth Fund Class B
shares would have increased to $18,932. The same amount invested in securities
mirroring the performance of the S&P 500 Index and the Russell 1000 Growth
Index would be valued at $28,612 and $23,060, respectively.
[CHART]
Blue Chip Growth Class B Russell 1000 Growth Index S&P 500 Index
------------------------ -------------------------- -------------
9/94 $10,000 $10,000 $10,000
9/95 12,051 12,974 13,215
9/96 13,638 15,612 16,043
9/97 18,006 21,928 21,867
9/98 18,790 23,916 24,295
9/99 25,463 30,563 32,763
9/00 34,055 34,623 40,439
9/04 19,529 25,406 21,983
9/04 15,067 20,201 17,035
9/04 17,629 25,128 21,450
9/04 18,932 28,612 23,060
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
SEC SEC SEC SEC
Average Average Average Average
Blue Chip Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Growth Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return 1.22% 7.39% 2.72% 6.72% 5.57% 6.57% 7.67% 7.67%
- --------------------------------------------------------------------------------------------
5 year return -6.36% -23.61% -6.22% -26.32% -5.98% -26.55% N/A N/A
- --------------------------------------------------------------------------------------------
10 year return 6.59% 100.93% 6.59% 89.32% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 5.89% 98.81% 8.25% 370.68% -4.82% -24.39% -4.75% -13.01%
- --------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A 10/08/93; Class B 03/13/85; Class C 02/02/99; Class I
11/16/01.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Blue Chip
Growth Class B returned 2.72% compared to 7.51% for the Russell 1000 Growth
Index and 13.86% for the S&P 500 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
83
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Growth Opportunities Fund
For the annual period ended September 30, 2004, the SunAmerica Growth
Opportunities Fund Class A returned -0.66% at NAV. The Fund's benchmark, the
Russell Mid-Cap Growth Index returned 13.68% for the same period.
In October 2003, the first month of the Fund's annual period, market conditions
were characterized by considerable buoyancy, with dramatic growth in GDP,
strong earnings and rising stock prices. Those trends continued into the first
calendar quarter of 2004, then moderated in the second calendar quarter as the
rate of growth decelerated. On an earnings basis, S&P 500 stocks went from 20%
year-over-year earnings growth to a more normalized rate in the low to
mid-teens. The summer months that followed ushered in a "soft patch," during
which consumer spending slowed and gains in employment softened due to a steep
rise in energy prices, according to Fed Chairman Alan Greenspan.
A factor affecting Fund performance versus that of its benchmark was the Fund's
migration from mid-cap to small-cap growth stocks, a change that occurred over
the annual period. The Fund's median market cap for stocks in the portfolio,
previously valued at approximately $3 to $4 billion, now is approximately $900
million. During the second half of the annual period, small-cap growth stocks
such as those held by the Fund struggled.
With respect to stock selection by industry sector relative to the Fund's
benchmark, the SunAmerica Growth Opportunities Fund was well served by strong
stock selection in the consumer discretionary, industrials and material
sectors. A high cash position combined with an overweight in technology and an
underweight in healthcare detracted from the Fund's performance, particularly
in view of the technology sector's overall poor performance during the annual
period.
The portfolio's leading contributors during the annual period included Fastenal
Co., Symantec Corp., Providian Financial Corp., Teradyne, Inc. and Toro Co.
Detractors included Secure Computing Corp., Digital Insight Corp., Accredo
Health, Inc., Vitesse Semiconductor Corp. and FileNet Corp.
84
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past ten years, $10,000 invested in Growth Opportunities Fund Class A
shares would have increased to $18,277. The same amount invested in securities
mirroring the performance of the Russell Mid-Cap Growth Index would be valued
at $25,093.
[CHART]
Growth Opportunities Class A# Russell MidCap Growth Index
----------------------------- ---------------------------
9/94 $ 9,426 $10,000
9/95 12,198 12,967
9/96 13,775 15,084
9/97 16,743 19,556
9/98 16,039 17,724
9/99 24,447 24,315
9/00 49,394 38,994
9/04 20,632 18,808
9/04 13,353 15,893
9/04 18,384 22,074
9/04 18,277 25,093
Class A Class B Class C++ Class I Class X
------------------ ------------------ ------------------ ------------------ ------------------
SEC SEC SEC SEC SEC
Growth Average Average Average Average Average
Opportunities Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return -6.38% -0.66% -5.31% -1.37% -2.43% -1.45% -0.36% -0.36% -0.07% -0.07%
- ---------------------------------------------------------------------------------------------------------------
5 year return -6.76% -25.24% -6.60% -27.82% -6.34% -27.92% N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
10 year return 6.22% 93.90% 6.25% 83.33% N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Since Inception* 8.16% 324.12% 4.65% 64.85% -3.99% -20.59% -9.11% -23.94% -10.19% -23.86%
- ---------------------------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A 01/28/87; Class B 10/04/96; Class C 02/02/99; Class I
11/16/01; Class X 03/19/02.
# For the purposes of the graph and the accompanying table, it has been assumed
that the maximum sales charge, of 5.75% of offering price, was deducted from
the initial $10,000 investment in the Fund.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Growth
Opportunities Class A returned (6.38%) compared to 13.68% for the Russell
MidCap Growth 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
85
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
New Century Fund
For the annual period ended September 30, 2004, the SunAmerica New Century Fund
Class A returned 9.90% at NAV, outperforming its benchmark, the Russell 3000
Growth Index, which returned 7.82% over the same period.
At the period's outset in October 2003, a bullish stock market was underway,
having begun several months prior. The buoyant market lasted until late
February 2004, at which point the market began trading sideways, a trend that
persisted through the end of the annual period. Several factors contributed to
the market's slowdown: escalating energy costs, with oil reaching a new high of
$50 per barrel during the annual period, rising interest rates, the terrorist
attacks in Spain and Russia, the ongoing difficulties posed by the war in Iraq
and the uncertainty posed by a close presidential election. Despite these
circumstances, market conditions had a negligible adverse impact on the Fund's
performance relative to that of its benchmark over the annual period.
With respect to the Fund's performance in terms of sector selection relative to
that of its benchmark, the portfolio benefited considerably from an overweight
position in energy stocks. Both energy and material stocks outperformed all
other industry sectors during the annual period, boosting the portfolio's
value. Good stock selection in consumer discretionary, financial and
industrials stocks also brought gains to the portfolio. Conversely, stock
selection in the healthcare and technology sectors performed poorly during the
annual period, detracting from performance.
Individual stock selection affected the Fund's performance both positively and
negatively. Leading contributors for the annual period included internet
products and service provider Yahoo!, Inc.; iron ore producer Cleveland-Cliffs,
Inc.; industrial automation and information services provider Rockwell
Automation Inc.; apparel, accessories and home wares merchant Urban Outfitters,
Inc. and oil exploration and production company Burlington Resources, Inc.
Stocks which detracted from the portfolio's performance over the annual period
did so for a variety of reasons. Low fare airline JetBlue Airways Corp.
suffered from increasing competition posed by major airlines and rapidly rising
fuel costs. Internet networking and routing solutions provider Foundry
Networks, Inc. saw business deteriorate. Online banking, cash management and
consumer loan provider Digital Insight Corp. lost customers due to
consolidation in the banking industry. Stock for wireless communications
systems and products supplier Andrew Corp. declined due to a slowdown in
spending for their products, and pharmaceutical developer and manufacturer Taro
Pharmaceutical Industrial, Ltd. saw its stock drop after the company failed to
attain FDA approval for two of its major products under development.
86
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past ten years, $10,000 invested in the New Century Fund Class A would
be valued at $20,384. The same amount invested in securities mirroring the
performance of the Russell 3000 Growth Index would be valued at $22,324.
[CHART]
New Century Class A# Russell 3000 Growth Index
-------------------- -------------------------
9/94 $ 9,423 $10,000
9/95 14,140 13,180
9/96 16,869 15,878
9/97 20,384 21,452
9/98 15,287 23,010
9/99 23,390 30,987
9/00 40,405 38,384
9/04 18,231 20,970
9/04 15,485 16,310
9/04 18,549 20,704
9/04 20,384 22,324
Class A Class B Class C++
------------------ ------------------ ------------------
SEC SEC SEC
New Average Average Average
Century Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ----------
1 year return 3.58% 9.90% 5.14% 9.14% 8.32% 9.32%
- -------------------------------------------------------------------------
5 year return -3.86% -12.85% -3.60% -15.73% -3.30% -15.46%
- -------------------------------------------------------------------------
10 year return 7.38% 116.33% 7.47% 105.51% N/A N/A
- -------------------------------------------------------------------------
Since Inception* 9.04% 389.71% 6.04% 90.81% 1.67% 11.67%
- -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A 01/28/87; Class B 09/24/93; Class C 02/02/98.
# For the purposes of the graph and the accompanying table, it has been assumed
that the maximum sales charge, of 5.75% of offering price, was deducted from
the initial $10,000 investment in the Fund.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica New Century
Class A returned 3.58% compared to 7.82% for the Russell 3000 Growth 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
87
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Growth and Income Fund
For the annual period ended September 30, 2004, the SunAmerica Growth and
Income Fund Class A returned 11.68% at NAV. The Fund's primary benchmark, the
S&P 500 Index, returned 13.86% for the same period.
From October 2003 through most of February 2004, relative to the Fund's
benchmark, market conditions affecting the Fund were favorable. Buoyed by
strong GDP growth and robust corporate earnings, equities markets rose, with
small-cap stocks, in particular, benefiting from the economic expansion then
present. During the annual period's last half, beneficial market conditions
waned as uncertainties tied to concerns over terrorism, interest rates, a close
presidential election and rapidly rising oil prices caused the equities markets
to become range bound. During this interval, investors favored the relative
safety afforded by large-cap stocks over their small-cap counterparts.
With respect to stock sector weightings versus the Fund's benchmark, a slight
overweight position in energy, the top performing industry group over the
annual period, definitely assisted the portfolio's performance. An overweight
position in industrials also added gains, as that sector outperformed the
broader market in anticipation of a recovery later this year. Companies held by
the portfolio invested in this sector were characterized by strong earnings
growth, good cash flow and healthy balance sheets. An overweight position in
information technology hurt performance as did an underweight position in
utilities.
The leading contributors to the Fund's performance were Aetna, Inc., Exxon
Mobil Corp., Tyco International, Ltd., Coach, Inc. and Capital One Financial
Corp. Aetna, Inc., the frontrunner of that group, reaped gains as a
well-positioned health care company which succeeded in restructuring its
operations. Exxon Mobil Corp., one of the world's largest oil companies,
benefited the portfolio due to oil price increases. Capital goods company Tyco
International, Ltd. contributed to the portfolio based on improvements in the
economy and a restructuring of its own balance sheet, while high quality luxury
retailer Coach, Inc. increased in value because of accelerating product sales.
Shares of credit card issuer Capital One Financial Corp. rose based on
continued consumer spending and the expansion of consumer credit.
Stocks which detracted from the Fund's performance included Guidant Corp.,
Intel Corp., Solectron Corp., Hewlett-Packard Co. and Nortel Networks Corp.
Guidant Corp., a medical device company, suffered from manufacturing problems
that depressed its price over the annual period. Technology stocks Intel Corp.,
Solectron Corp., Hewlett-Packard Co. and Nortel Networks Corp. were all
negatively impacted by a slowdown in information technology spending.
88
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past ten years, $10,000 invested in Growth and Income Fund Class A
shares would have increased to $21,957. The same amount invested in securities
mirroring the performance of the S&P 500(R) Index since the Fund's inception
would be valued at $28,612.
[CHART]
Growth & Income
Class A# S&P 500
---------------- ---------
9/94 $ 9,422 $10,000
9/94 9,642 10,439
9/95 11,525 13,544
9/96 15,281 16,298
9/97 20,504 22,892
9/98 21,638 24,967
9/99 28,362 31,906
9/00 36,202 36,144
9/01 21,919 26,522
9/02 17,500 21,089
9/03 20,104 26,357
9/04 21,957 28,612
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
Growth SEC SEC SEC SEC
and Average Average Average Average
Income Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return 5.27% 11.68% 6.94% 10.94% 9.96% 10.96% 11.75% 11.75%
- --------------------------------------------------------------------------------------------
5 year return -5.69% -20.84% -5.53% -23.40% -5.20% -23.43% N/A N/A
- --------------------------------------------------------------------------------------------
10 year return 8.18% 132.85% 8.31% 122.10% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 8.21% 138.30% 8.34% 127.13% -0.24% -1.60% -2.53% -7.08%
- --------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A 07/01/94; Class B 07/06/94; Class C 02/02/98; Class I
11/16/01.
# For the purposes of the graph and the accompanying table, it has been assumed
that the maximum sales charge, of 5.75% of offering price, was deducted from
the initial $10,000 investment in the Fund.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Growth and
Income Class A returned 5.27% compared to 13.86% for the S&P 500 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
89
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Balanced Assets Fund
For the annual period ended September 30, 2004, the SunAmerica Balanced Fund
Class B returned 6.45% at NAV. The Fund invests approximately 65% of its total
portfolio in equities and 35% in fixed-income instruments. The Fund's equity
benchmark, the S&P 500, returned 13.86%, whereas its fixed-income benchmark,
the Lehman Bros. Aggregate Bond Index, returned 3.68% for the same period.
During the annual period, the stock market continued to rise, reaching a high
in February of 2004, after which it entered a period of consolidation. From
March through September 2004, stock prices overall traded within a narrow
range, with little movement either upward or downward. Uncertainty contributed
to the market's holding pattern during these months, influenced by three key
factors. The surge in oil prices, a close race for the U.S. presidency and the
Fed's three interest rate increases created a wait-and-see atmosphere among
equities buyers. In the fixed-income markets, issuance of investment grade
fixed-income instruments declined markedly this past year, whetting demand both
domestically and abroad, which resulted in strong price increases for these
securities. Fixed-rate mortgage backed securities experienced a similar decline
in issuance, driving up price gains in that market as well. Of further benefit
to the bond markets, inflation tapered off after increasing in the first half
of 2004, enabling the Fed to increase interest rates in small incremental
steps. This fortuitously paved the way for bond markets to make a slow and
orderly transition to a higher interest rate environment.
Security selection in stocks and fixed-income instruments played a key role in
the Fund's performance relative to that of its benchmark indices. Among
equities, stocks in the energy sector contributed the biggest gains to the
portfolio. Integrated oil companies Exxon Mobil Corp. and ChevronTexaco Corp.,
as well as oil service companies BJ Services Co., Transocean, Inc., EOG
Resources, Inc., Burlington Resources, Inc. and Marathon Oil Corp. increased
the portfolio's value. Although underweight in healthcare, HMO St. Jude
Medical, Inc. and medical device company Beckton Dickinson & Co. brought gains.
Similarly, although underweight the materials sector, Dow Chemical Co. proved a
beneficial holding. Stocks detracting from performance were tied to an
overweight position in technology. With the expectation that the equities
market would break out of its range bound trading levels earlier than it did,
tech investments, in retrospect, were probably overly aggressive. Chip makers
Intel Corp. and Texas Instruments, Inc. weighed on the portfolio. At market
weight to the equities benchmark, financials also generated losses,
particularly brokerage stocks and financial services holding company Citigroup,
Inc. Among fixed-income holdings, an overweight position in investment grade
corporate bonds contributed to the outperformance of the Fund's fixed-income
benchmark, as did holdings in mortgage-backed securities and an off-index
position in high yield bonds.
Stock performance contributors during the annual period included Exxon Mobil
Corp., Aetna, Inc., QUALCOMM Inc., Capital One Financial Corp. and Alcoa, Inc.
Stock performance detractors included Intel Corp., Cisco Systems, Inc., Agilent
Technologies, Inc. and Interpublic Group Cos., Inc.
90
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past 10 years $10,000 invested in the Balanced Asset Fund Class B
shares, would be valued at $18,045. The same amount invested in securities
mirroring the performance of the Lehman Brothers Aggregate Bond Index and the
S&P 500(R) Index would be valued at $20,915 and $28,612, respectively.
[CHART]
Balanced Assets Lehman Bros.
Class B S&P 500 Index Aggregate Bond Index
--------------- ------------- --------------------
9/93 $10,000 $10,000 $10,000
9/94 9,993 10,369 9,677
9/95 11,979 13,453 11,038
9/96 13,169 16,187 11,577
9/97 16,341 22,737 12,705
9/98 17,749 24,797 14,165
9/99 21,543 31,689 14,112
9/00 24,769 35,899 15,098
9/01 17,635 26,342 17,054
9/02 15,874 20,946 18,519
9/03 16,929 26,054 19,521
9/04 18,045 28,612 20,915
Class A Class B Class C ++ Class I
------------------ ------------------ ------------------ ------------------
SEC SEC SEC SEC
Balanced Average Average Average Average
Assets Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return 1.10% 7.27% 2.45% 6.45% 5.53% 6.53% 7.44% 7.44%
- --------------------------------------------------------------------------------------------
5 year return -4.19% -14.32% -3.98% -17.09% -3.67% -17.07% N/A N/A
- --------------------------------------------------------------------------------------------
10 year return 6.04% 90.63% 6.08% 80.45% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 5.55% 92.35% 8.79% 424.85% -3.09% -16.28% -1.32% -3.74%
- --------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A 09/24/93; Class B 01/29/85; Class C 02/02/99; Class I
11/16/01.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Balanced
Assets Class B returned 2.45% compared to 13.86% for the S&P 500 Index and
3.68% for the Lehman Bros. 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
91
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
International Equity Fund
For the annual period ended September 30, 2004, the SunAmerica International
Equity Fund Class B returned 16.19% at NAV. The Fund's benchmark, the MSCI EAFE
Index, returned 22.08% for the same period.
Over the annual period, the Fund's management maintained the position that the
most likely trajectory of the global economy was one of continued and
broad-based growth, correctly anticipating strong corporate profits in the
international arena. While this was indeed the case, stocks did not appreciate
commensurately with their earnings growth as markets were thrown into turmoil
by a series of unexpected geopolitical events, including but not limited to
continued insurgency in Iraq, the Madrid bombing, and fears of a hard landing
in China. Record high oil prices combined with heightened geopolitical risks
introduced a great deal of uncertainty into the market. The Fund's management
attributes the Fund's underperformance to an overly optimistic view of the
markets' ability to withstand these shocks during that time frame.
From a sector selection perspective, the International Equity Fund relative to
its benchmark benefited from an overweight position in energy, the strongest
performing industry sector during the annual period. Additionally, the Fund
benefited from an underweight position in healthcare, the poorest performing
sector over the annual period. The Fund's large underweight position in
materials, however, detracted strongly from performance as this sector posted
strong gains over the period.
Country selection also affected the Fund's performance over the past year. The
portfolio's overweight position in Norway and underweight position in Finland
benefited the Fund. Norway benefited greatly from its vast oil reserves amidst
a period of dramatic price hikes for that commodity. On the other hand,
overweight positions in China and Korea and stock selection in Japan detracted
from performance, with China's unsustainably high growth rate slowing and
Korea's economy cooling due to a slowdown in consumer spending.
Several individual stocks assisted the Fund's performance. Anglo Irish Bank
Corp., PLC contributed strongly due to growth of the Irish economy. Alpha Bank
A.E. brought gains, reflecting Greece's growing banking presence and increased
access to consumer and corporate credit. Truck maker Volvo AB contributed to
the portfolio due to an unfolding trucking boom in Europe, and Samsung
Electronics Co., Ltd. of South Korea also brought gains because of its
dominance in phone handsets and LCD TVs.
Consumer electronics companies Hirose Electric Co., Ltd., Sharp Corp. and Sony
Corp. detracted from performance as technology stocks came under pressure
throughout Asia. German insurer Allianz AG Holding underperformed due to recent
poor overall performance of the German stock market. Lastly, despite
unexceptional performance, the portfolio continues to hold U.K. based household
products company Reckitt Benckiser, PLC, based on the Fund management's
perception that this company may surprise the market with strong earnings.
92
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Since the Fund's inception on November 19, 1996, $10,000 invested in
International Equity Class B shares would be valued at $8,639. The same amount,
invested in securities mirroring the performance of the MSCI EAFE Index would
be valued at $12,537.
[CHART]
International
Equity Class B MSCI EAFE Index
-------------- ---------------
11/96 $10,000 $10,000
9/97 10,792 10,900
9/98 9,219 9,992
9/99 11,007 13,084
9/00 12,160 13,500
9/01 7,506 9,648
9/02 6,000 8,150
9/03 7,435 10,270
9/04 8,639 12,537
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
SEC SEC SEC SEC
International Average Average Average Average
Equity Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return 10.19% 16.88% 12.19% 16.19% 15.21% 16.21% 16.96% 16.96%
- --------------------------------------------------------------------------------------------
5 year return -5.29% -19.12% -5.08% -21.51% -4.75% -21.59% N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* -1.97% -9.27% -1.84% -13.61% -2.03% -14.39% 4.31% 12.85%
- --------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A and Class B 11/19/96; Class C 03/06/97; Class I
11/16/01.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica International
Equity Class B returned 12.19% compared to 22.08% for the MSCI EAFE 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
93
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Value Fund
For the annual period ended September 30, 2004, the SunAmerica Value Fund Class
B returned 16.51% at NAV. The Fund's benchmark, the Russell 3000 Value Index,
returned 20.89% for the same period.
The period opened with a market rally during the 4th quarter of 2003, as the
S&P 500, Dow Industrials and the NASDAQ Composite all posted double-digit
increases for the three months. The momentum carried into January of the new
year, but fizzled during the first quarter as terrorism concerns resurfaced and
energy prices flared up. Stocks continued to contend with headwinds during the
spring and summer, including continuing violence in Iraq, surging energy
prices, concerns about corporate earnings, and a lackluster job market.
Financial holdings, which represented the portfolio's largest sector
concentration on average, contributed the most to performance at the sector
level. Commercial banks led the group, with insurance and real estate companies
also making meaningful contributions. Insurance giant Allstate Corp. made the
portfolio's list of top-five contributing securities.
Industrials were another source of strength, with aerospace and defense firms
and electrical equipment companies carrying the sector. Names that added value
included defense company Rockwell Collins, Inc. and electrical equipment
providers Emerson Electric Co. and Hubbell, Inc.
With oil prices reaching record levels, energy companies also contributed
significantly. The portfolio's mix of oil and gas companies included Exxon
Mobil Corp., BP, PLC and Royal Dutch Petroleum Co., all top-10 contributors to
results.
On the down side, only the information technology sector failed to contribute
positively to results, and the damage was slight. Communications equipment
provider Nokia Corp. and computer and peripheral maker Seagate Technology were
both down for the period.
On August 23, 2004, the Fund underwent a management change, with seasoned value
fund manager Steve Neimeth of AIG SunAmerica Asset Management taking the lead
in providing oversight for the Fund. At that time, the Fund was repositioned
out of lower cap stocks valued at $10 to $15 billion in favor of larger, more
highly capitalized companies averaging values in the $80 billion range.
94
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Since the Fund's inception at November 19, 1996, $10,000 invested in the Value
Fund Class B would have grown to $18,911. The same amount, invested in
securities mirroring the Russell 3000 Value index, would be valued at $20,108.
[CHART]
JUBGB Russell 3000
Date Value Class B Value Index
---------- ---------------- ------------
11/96 $10,000 $10,000
09/97 13,360 13,119
09/98 11,219 13,376
09/99 13,203 15,736
09/00 14,871 17,206
09/01 14,327 15,834
09/02 13,695 13,318
09/03 16,722 17,676
09/04 18,911 20,108
Class A Class B Class C++ Class Z Class I
------------------ ------------------ ------------------ ------------------ ------------------
SEC SEC SEC SEC SEC
Average Average Average Average Average
Value Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 year return 10.54% 17.31% 12.51% 16.51% 15.50% 16.50% 17.96% 17.96% 17.44% 17.44%
- ---------------------------------------------------------------------------------------------------------------
5 year return 6.88% 47.98% 7.15% 43.23% 7.46% 43.32% 8.77% 52.23% N/A N/A
- ---------------------------------------------------------------------------------------------------------------
Since Inception* 8.32% 98.90% 8.44% 89.11% 7.62% 74.33% 5.43% 41.00% 8.96% 27.87%
- ---------------------------------------------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date: Class A and Class B 11/19/96; Class C 03/06/97; Class Z
04/03/98; Class I 11/16/01.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Value Class B
returned 12.51% compared to 20.89% for the Russell 3000 Value 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
95
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Biotech/Health Fund
For the annual period ended September 30, 2004, the SunAmerica Biotech/Health
Fund Class A returned -7.86% at NAV. The Fund's benchmark, the AMEX Biotech
Index returned 15.62% for the same period.
Market conditions played a substantive role in the performance of the Fund
versus that of its benchmark over the annual period. This Fund's portfolio
primarily consists of smaller cap early stage biotechnology and health stocks
with strong growth characteristics. The Fund's benchmark, conversely, primarily
consists of larger more established stocks in the biotechnology industry. Over
the annual period, particularly amid summer's "soft patch" during which the Fed
observed a slump in economic activity, investor's appetite for risk declined.
At this juncture, value stocks began to outperform growth stocks, and anti-risk
sentiment sparked an exodus from small-cap stocks into large-cap stocks. This
shift resulted in a broad decline among smaller cap stocks, particularly so
among the biotech and health sectors' small-cap arena, where even the most
promising stocks typically possess a highly pronounced risk/reward profile.
Despite the Fund's overall negative performance, several stocks assisted the
portfolio over the annual period. Oncology and anticancer biotech company
Celgene Corp. lead performance. With several approved products already on the
market and exciting compounds in the company's product pipeline, Celgene Corp.
has established an important presence in oncology therapies, and continues to
execute successfully on a revenue and earnings basis. MGI Pharma, Inc. another
company waging the fight against cancer, is benefiting from strong acceptance
of its product Aloxi, by reducing the side effects of chemotherapy. Centene
Corp., a stock long held in this portfolio, proved a big winner over the annual
period. Centene Corp. improves access to medicaid healthcare coverage by
partnering with states to help low income individuals meet high healthcare
costs. Integra Life Sciences Holdings Corp., a leading provider of
neurosurgical products also increased the portfolio's value, as did
pharmaceutical benefits manager Caremark RX, Inc. This company consolidates the
purchasing power of health care recipients, enabling Caremark RX, Inc. to
negotiate with pharmaceutical manufacturers to lower their prices.
Forrest Laboratories, Inc. stock detracted from the portfolio's performance due
to several company specific issues that impacted the company this year.
Management continues to hold the stock based on the belief that it retains
unique upside potential long-term. Abgenix, Inc. and Dyax Corp., two
development stage biotech companies owned by the Fund, declined as investors
became more risk-averse. Life sciences and genetics research tool and product
manufacturer Invitrogen Corp. suffered from missed earnings, while
Praecis Pharmaceuticals, Inc.'s revenues proved disappointing, causing these
stocks to decline.
96
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Since the Fund's inception, $10,000 were invested in the Biotech/Health Fund
Class A, it would be valued at $7,102. The same amount, invested in securities
mirroring the AMEX Biotech Index, would be valued at $8,972.
[CHART]
AMX
Biotech/Health Biotech
Date Class A# Index
------------ -------------- -------------
6/00 $ 9,427 $10,000
9/00 12,451 13,172
9/01 8,235 7,708
9/02 5,742 5,476
9/03 7,716 7,991
9/04 7,102 8,972
Class A Class B Class C++
------------------ ------------------ ------------------
SEC SEC SEC
Average Average Average
Biotech/Health Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ----------
1 year return -13.17% -7.86% -12.21% -8.55% -9.45% -8.53%
- -------------------------------------------------------------------------
Since Inception* -7.66% -24.66% -7.43% -26.82% -6.96% -26.65%
- -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date Class A, Class B and Class C 06/14/00
# For the purposes of the graph and the accompanying table, it has been assumed
that the maximum sales charge, of 5.75% of offering price, was deducted from
the initial $10,000 investment in the Fund.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Biotech/Health
Class A returned (13.17%) compared to 15.62% for the AMEX Biotech 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
97
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Tax Managed Equity Fund
For the annual period ended September 30, 2004, the Tax Managed Equity Fund
Class A returned 13.49% at NAV. The Fund's performance benchmark, the S&P 500
Index, returned 13.86% over the same period.
Most of the market's gain came in the fourth quarter of 2003 as the index
remained relatively flat in 2004. In late 2003, the economic data consistently
surprised positively. That period was marked by a strong improvement in the
labor market, stronger than expected GDP growth and robust manufacturing sector
growth. In 2004 equity markets traded in a fairly narrow range, as bulls
pointed to favorable economic data and gains in corporate profitability,
whereas bears cited concerns about an unanticipated rise in inflation, the
start of Fed tightening, and the troubling situation in Iraq.
Relative to its benchmark, the Fund's performance was affected by market
conditions. This was primarily due to the fact that the market's strong rally
early in the period was dominated by the more aggressive, high beta stocks. The
portfolio's emphasis on quality and value resulted in a lack of exposure to the
more speculative elements of the market, which hindered relative performance.
However, 2004 brought with it a lack of conviction in the sustainability of the
economic recovery, and market leadership shifted to higher quality names in
February. This development helped the Fund's performance, as the Fund's
overriding focus was and continues to be on quality and value.
Specific securities selection also benefited the Fund, with a number of bright
spots in the portfolio's performance during the period, particularly in the
pharmaceuticals/medical technology sector. Shares of Sepracor, Inc. advanced on
news that the company had won conditional U.S. approval for Estorra, an
anti-insomnia drug. By granting approval status, the Food and Drug
Administration appears to be opening the way for the drug to reach the U.S.
market later this year. Within the sector a lack of exposure to Merck & Co.,
Inc. which saw its share price plunge after the withdrawal of its arthritis
drug Vioxx, and the continued resurgence of Guidant Corp., which announced
positive test results for its experimental drug-coated arterial stent, were the
main contributors to the portfolio's relative performance.
The primary detractors from the Fund's relative performance were its media
holdings. In particular, a lack of exposure to Yahoo!, Inc. and our holding of
Comcast Corp. and Viacom, Inc. hindered results.
98
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Since the Fund's inception on March 1, 1999, $10,000 invested in Tax Managed
Equity Class A shares would be valued at $8,499. The same amount invested in
securities mirroring the performance of the S&P 500 Index would be valued at
$9,772.
[CHART]
Tax Managed
Equity Class A# S&P 500 Index
--------------- -------------
3/99 $ 9,427 $10,000
9/99 9,759 10,439
9/00 10,965 11,825
9/01 8,183 8,677
9/02 6,282 6,900
9/03 7,489 8,582
9/04 8,499 9,772
Class A Class B Class C++
------------------ ------------------ ------------------
Tax SEC SEC SEC
Managed Average Average Average
Equity Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ----------
1 year return 6.93% 13.49% 8.77% 12.77% 11.75% 12.75%
- -------------------------------------------------------------------------
5 year return -3.87% -12.91% -3.74% -15.68% -3.35% -15.66%
- -------------------------------------------------------------------------
Since Inception* -2.87% -9.84% -2.66% -13.12% -2.46% -12.96%
- -------------------------------------------------------------------------
+ Cumulative returns do not include sales load. If sales load had been
included, the return would have been lower.
* Inception date Class A, Class B and Class C 03/01/99
# For the purposes of the graph and the accompanying table, it has been assumed
that the maximum sales charge, of 5.75% of offering price, was deducted from
the initial $10,000 investment in the Fund.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2004, the SunAmerica Tax Managed
Equity Class A returned 6.93% compared to 13.86% for the S&P 500 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 5.75%, Class B 4.00% Contingent
Deferred Sales Charge (CDSC), Class C 1.00% CDSC. The fund's daily net asset
values are not guaranteed and shares are not insured by the FDIC, the Federal
Reserve Board or any other agency. The investment return and principal value of
an investment will fluctuate so that an investor's shares, when redeemed, may
be higher or lower than the original cost. Current performance may be higher or
lower than that shown. Performance as of the most recent month end is available
at www.sunamericafunds.com.
99
[LOGO] AIG Sun America
Mutual Funds
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311-4992
Directors/Trustees Investment Adviser DISCLOSURE OF QUARTERLY
Samuel M. Eisenstat AIG SunAmerica Asset PORTFOLIO HOLDINGS
Peter A. Harbeck Management Corp. The Trust is required to
Dr. Judith L. Craven Harborside Financial file its complete
William F. Devin Center schedule of portfolio
Stephen J. Gutman 3200 Plaza 5 holdings with the SEC for
Jeffrey S. Burum Jersey City, NJ its first and third
07311-4992 fiscal quarters on Form
Officers N-Q for fiscal quarters
Robert M. Zakem, Distributor ending after July 9,
President AIG SunAmerica Capital 2004. Once filed, the
Donna M. Handel, Services, Inc. Trust's Form N-Q will be
Treasurer Harborside Financial available without charge
Brian P. Clifford, Vice Center on the Securities and
President 3200 Plaza 5 Exchange Commission's
Francis Gannon, Vice Jersey City, NJ website at www.sec.gov.
President 07311-4992 You can also obtain
J. Steven Neamtz, Vice copies of Form N-Q by (i)
President Shareholder Servicing visiting the Securities
Abbe P. Stein, Vice Agent and Exchange Commission's
President AIG SunAmerica Fund Public Reference Room in
and Assistant Secretary Services, Inc. Washington, DC
Joseph P. Kelly, Harborside Financial (information on the
Secretary Center operation of the Public
Stacey V. Morrison, 3200 Plaza 5 Reference Room may be
Assistant Secretary Jersey City, NJ obtained by calling
Gregory R. Kingston, 07311-4992 1-800-SEC-0330); (ii)
Vice President and sending your request and
Assistant Treasurer Custodian and Transfer a duplicating fee to the
Donald H. Guire, Agent Securities and Exchange
Assistant Treasurer State Street Bank and Commission's Public
Trust Company Reference Room,
P.O. Box 419572 Washington, DC 20549-0102
Kansas City, MO or (iii) sending your
64141-6572 request electronically to
publicinfo.sec.gov.
VOTING PROXIES ON FUND
PORTFOLIO SECURITIES This report is submitted
A description of the solely for the general
policies and procedures information of
that the Trust uses to shareholders of the Fund.
determine how to vote Distribution of this
proxies relating to report to persons other
securities held in the than shareholders of
Fund's portfolio which is the Fund is authorized
available in the Trust's only in connection with a
Statement of Additional currently effective
Information, may be prospectus, setting forth
obtained without charge details of the Fund,
upon request, by calling which must precede or
(800) 858-8850. This accompany this report.
information is also
available from the EDGAR
database on the
Securities and Exchange
Commission's website at
http://www.sec.gov.
PROXY VOTING RECORD ON
SUNAMERICA EQUITY FUNDS
Information regarding how
SunAmerica Equity Funds
voted proxies relating to
securities held in
SunAmerica Equity Funds
during the twelve month
period ended June 30,
2004 is available without
charge, upon request, by
calling (800)858-8850 or
(i) on the Securities and
Exchange Commission's
website at
http://www.sec.gov.
100
[LOGO]
AIG Sun America
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
EQANN-9/04
Item 2. Code of Ethics.
The SunAmerica Equity 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. Effective December 2, 2004,
the Code of Ethics has been amended to reflect Vincent M. Marra as President,
replacing Robert M. Zakem.
Item 3. Audit Committee Financial Expert.
Currently, the SunAmerica Equity Funds do not have an Audit Committee member who
possesses all of the attributes required to be an "audit committee financial
expert" as defined in instruction 2(b)of Item 3 of Form N-CSR. However, the
Board of Directors believes that each member of the Audit Committee has
substantial experience relating to the review of financial statements and the
operations of audit committees. Accordingly, the Board believes that the members
are qualified to evaluate the registrant's financial statements, supervise the
registrant's preparation of its financial statements, and oversee the work of
the registrant's independent auditors.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two fiscal years
for professional services rendered by the registrant's principal
accountant were as follows:
2003 2004
---- ----
Audit Fees ................... $123,200 $172,800
Audit-Related Fees ........... $ 51,100 $ 69,680
Tax Fees ..................... $ 52,600 $ 58,100
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. Audit-Related Fees
principally include a SAS No. 100 review of the registrant's Semiannual
Shareholder Report. Tax Fees principally include tax compliance, tax advice, tax
planning and preparation of tax returns.
(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 Affiliate") that provides ongoing
services to the registrant, if the engagement by the investment
adviser or Adviser Affiliate relates directly to the operations and
financial reporting of the registrant.
(2) No services included in (b) - (d) above 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 Affiliate
that provides ongoing services to the registrant for 2004 and 2003 were
$990,020 and $460,575, respectively.
(h) Non-audit services rendered to the registrant's investment adviser and any
Adviser Affiliate 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 Appplicable.
Item 6. Schedule of Investments.
Not Applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not Applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 10. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this report,
under the supervision and with the participation of the registrant's
management, including the President and Treasurer, of the effectiveness of
the design and operation of the registrant's disclosure controls and
procedures. Based on that evaluation, the registrant's management,
including the President and Treasurer, concluded that the registrant's
disclosure controls and procedures are effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the registrant's second fiscal half-year that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 11. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and Principal
Accounting Officers pursuant to Section 406 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.406.Code of Ethics.
(2) Certification pursuant to Rule 30a-2 under the Investment Company Act
of 1940 (17 CFR 270.30a-2) attached hereto as Exhibit 99.CERT.
(3) Not applicable
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ Vincent M. Marra
Vincent M. Marra
President
Date: December 9, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Vincent M. Marra
Vincent M. Marra
President
Date: December 9, 2004
By: /s/ Donna M. Handel
Donna M. Handel
Treasurer
Date: December 9, 2004