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 811-4801
---------------------------------------------
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
--------------------------
Date of reporting period: September 30, 2005
-------------------------
Item 1. Reports to Stockholders
SunAmerica Equity Funds, Annual Report at September 30, 2005.
[GRAPHIC]
SunAmerica
Equity Funds
2005 ANNUAL REPORT
[LOGO]
AIG Sun America
Mutual Funds
September 30, 2005 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............................................................. 3
STATEMENT OF ASSETS AND LIABILITIES......................................... 5
STATEMENT OF OPERATIONS..................................................... 9
STATEMENT OF CHANGES IN NET ASSETS.......................................... 12
FINANCIAL HIGHLIGHTS........................................................ 17
PORTFOLIO OF INVESTMENTS.................................................... 26
NOTES TO FINANCIAL STATEMENTS............................................... 57
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..................... 77
APPROVAL OF ADVISORY AGREEMENTS............................................. 78
TRUSTEE AND OFFICER INFORMATION............................................. 82
SHAREHOLDER TAX INFORMATION................................................. 84
COMPARISONS: FUNDS vs. INDEXES.............................................. 85
Shareholder Letter
Dear Shareholders:
We are pleased to provide you with the Annual Report for the SunAmerica Equity
Funds. The report contains the investment portfolio information and financial
statements of the SunAmerica Equity Funds for the period ending September 30,
2005.
Domestic Market and Economic Review
The annual period was one of conflicting data: solid economic growth and
corporate profits, and continued, if consistent, employment growth were all
offset by concerns over rising short-term interest rates, significant increases
in energy prices, and the specter of higher inflation. Moreover, the
devastation brought by Hurricanes Katrina and Rita and the corresponding
increase in energy prices also created questions regarding the economy's
future. In the face of this uncertainty, the U.S. equity markets still managed
to deliver strong returns during the period. The S&P 500 returned 12.25%, the
NASDAQ Composite Total Return delivered a 14.19% return, and the Russell 2000
returned 17.95%. Value funds outperformed their growth counterparts and
small-cap outperformed large-cap.
International Market and Economic Review
The international markets, though, have been the shining star in equity
investing and continued to show their might as the MSCI EAFE Index returned
25.79% for the one-year period. Companies in Europe and Japan have been
focusing on cost-cutting, profitability, and balance sheet strength. In
addition, Beijing's revaluation of the yuan eased concerns of a major
disruption in U.S.-Sino trade and it now appears that Chinese economic growth
is continuing at a brisk pace--defying earlier predictions of a substantial
deceleration. Commodity-producing nations, both developed and emerging, have
benefited from the increase in use of a wide range of products.
We offer a wide range of equity funds to help investors achieve their financial
objectives. We urge you to work with your financial advisor to develop a
diversified portfolio. We thank you for making the SunAmerica Equity Funds a
part of your financial plan.
Sincerely,
The SunAmerica Equity Funds Investment Professionals
Frank Gannon Steve Neimeth Rich Mercante
Allison Larkin Timothy Pettee Hans Danielsson, AIGGIC
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Past performance is no guarantee of future results.
2
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2005 -- (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. The
Example set forth below is intended to help you understand your ongoing costs
(in dollars) of investing in the Funds and to compare these costs with the
ongoing costs of investing in other mutual funds. The Example is based on an
investment of $1,000 invested at April 1, 2005 and held until September 30,
2005.
Actual Expenses
The "Actual" section of the table provides information about actual account
values and actual expenses. You may use the information in these columns,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the column under the heading entitled "Expenses Paid During The Six
Months Ended September 30, 2005" to estimate the expenses you paid on your
account during this period. For shareholder accounts in classes other than
Class I, Class X, and Class Z the "Expenses Paid During The Six Months Ended
September 30, 2005" column does not include small account fees that may be
charged if your account balance is below $500 ($250 for retirement plan
accounts). In addition, the "Expenses Paid During The Six Months Ended
September 30, 2005" column does not include administrative fees that may apply
to qualified retirement plan accounts. See the Funds' prospectus and/or your
retirement plan documents for full description of these fees. Had these fees
been included, the "Expenses Paid During The Six Months Ended September 30,
2005" column would have been higher and the "Ending Account Value" 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 The Six Months Ended September
30, 2005" column does not include small account fees that may be charged if
your account balance is below $500 ($250 for retirement plan accounts). In
addition, the "Expenses Paid During The Six Months Ended September 30, 2005"
column does not include administrative fees that may apply to qualified
retirement plan accounts. See the Funds' prospectus and/or the retirement plan
document for full description of these fees. Had these fees been included, the
"Expenses Paid During The Six Months Ended September 30, 2005" column would
have been higher and the "Ending Account Value" 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.
3
SunAmerica Equity Funds
EXPENSE EXAMPLE -- September 30, 2005 -- (unaudited) (continued)
Actual Hypothetical
------------------------------------------ ------------------------------------------
Ending Account
Ending Account Expense Paid Value using Expense Paid
Value Using During the a Hypothetical During the Expense
Beginning Actual Period Beginning 5% Assumed Period Ratio
Account Value Return at Ended Account Value Return at Ended as of
at April 1, September 30, September 30, at April 1, September 30, September 30, September 30,
2005 2005 2005 2005 2005 2005 2005*
- - ------------- -------------- ------------- ------------- -------------- ------------- -------------
Blue Chip Growth Fund
Class A................ $1,000.00 $1,046.08 $ 8.21 $1,000.00 $1,017.05 $ 8.09 1.60%
Class B................ $1,000.00 $1,042.91 $11.98 $1,000.00 $1,013.34 $11.81 2.34%
Class C................ $1,000.00 $1,041.57 $13.05 $1,000.00 $1,012.28 $12.86 2.55%
Class I#............... $1,000.00 $1,047.81 $ 6.78 $1,000.00 $1,018.45 $ 6.68 1.32%
Growth Opportunities Fund
Class A................ $1,000.00 $1,084.67 $ 8.73 $1,000.00 $1,016.70 $ 8.44 1.67%
Class B................ $1,000.00 $1,080.36 $12.20 $1,000.00 $1,013.34 $11.81 2.34%
Class C................ $1,000.00 $1,080.48 $12.83 $1,000.00 $1,012.73 $12.41 2.46%
Class I#............... $1,000.00 $1,086.58 $ 6.90 $1,000.00 $1,018.45 $ 6.68 1.32%
New Century Fund
Class A................ $1,000.00 $1,075.27 $ 8.32 $1,000.00 $1,017.05 $ 8.09 1.60%
Class B................ $1,000.00 $1,070.80 $11.99 $1,000.00 $1,013.49 $11.66 2.31%
Class C#............... $1,000.00 $1,072.68 $11.12 $1,000.00 $1,014.34 $10.81 2.14%
Growth and Income Fund
Class A................ $1,000.00 $1,018.40 $ 7.99 $1,000.00 $1,017.15 $ 7.99 1.58%
Class B................ $1,000.00 $1,015.57 $11.22 $1,000.00 $1,013.94 $11.21 2.22%
Class C................ $1,000.00 $1,014.72 $11.06 $1,000.00 $1,014.09 $11.06 2.19%
Class I#............... $1,000.00 $1,020.25 $ 6.63 $1,000.00 $1,018.50 $ 6.63 1.31%
Balanced Assets Fund
Class A................ $1,000.00 $1,025.83 $ 8.43 $1,000.00 $1,016.75 $ 8.39 1.66%
Class B................ $1,000.00 $1,022.55 $11.61 $1,000.00 $1,013.59 $11.56 2.29%
Class C................ $1,000.00 $1,022.51 $11.61 $1,000.00 $1,013.59 $11.56 2.29%
Class I#............... $1,000.00 $1,026.81 $ 6.71 $1,000.00 $1,018.45 $ 6.68 1.32%
International Equity Fund
Class A#............... $1,000.00 $1,106.02 $10.03 $1,000.00 $1,015.54 $ 9.60 1.90%
Class B#............... $1,000.00 $1,103.05 $13.44 $1,000.00 $1,012.28 $12.86 2.55%
Class C#............... $1,000.00 $1,102.24 $13.44 $1,000.00 $1,012.28 $12.86 2.55%
Class I#............... $1,000.00 $1,107.17 $ 9.51 $1,000.00 $1,016.04 $ 9.10 1.80%
Value Fund
Class A#............... $1,000.00 $1,032.68 $ 8.31 $1,000.00 $1,016.90 $ 8.24 1.63%
Class B#............... $1,000.00 $1,029.36 $11.60 $1,000.00 $1,013.64 $11.51 2.28%
Class C#............... $1,000.00 $1,029.36 $11.60 $1,000.00 $1,013.64 $11.51 2.28%
Class I#............... $1,000.00 $1,032.70 $ 7.80 $1,000.00 $1,017.40 $ 7.74 1.53%
Class Z#............... $1,000.00 $1,035.68 $ 5.41 $1,000.00 $1,019.75 $ 5.37 1.06%
Biotech/Health Fund
Class A#............... $1,000.00 $1,137.85 $ 8.31 $1,000.00 $1,017.30 $ 7.84 1.55%
Class B#............... $1,000.00 $1,133.58 $11.77 $1,000.00 $1,014.04 $11.11 2.20%
Class C#............... $1,000.00 $1,133.25 $11.77 $1,000.00 $1,014.04 $11.11 2.20%
Tax Managed Equity Fund
Class A#............... $1,000.00 $1,012.84 $ 7.32 $1,000.00 $1,017.80 $ 7.33 1.45%
Class B#............... $1,000.00 $1,009.75 $10.58 $1,000.00 $1,014.54 $10.61 2.10%
Class C#............... $1,000.00 $1,009.74 $10.58 $1,000.00 $1,014.54 $10.61 2.10%
- --------
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 183 days divided by 365
days. These ratios do not reflect transaction costs, including sales charges
on purchase payments, contingent deferred sales charges, 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 the 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" would have been lower and the
"Actual/Hypothetical Expenses Paid During the Period" and the "Expense
Ratios" would have been higher. If these fees and expenses had not been
recouped, the "Actual/Hypothetical Ending Account Value" would have been
higher and the "Actual/Hypothetical Expenses Paid During the Period Ended
September 30, 2005" and "Expense Ratios" would have been lower.
4
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005
Blue Chip Growth New Growth and
Growth Opportunities Century Income
Fund Fund Fund Fund
------------ ------------- ------------- ------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*.............. $ 85,243,883 $ 80,947,754 $ 92,700,055 $143,394,541
Short-term investment securities, at value*............................ -- -- -- --
Repurchase agreements (cost equals market value)....................... 1,384,000 3,701,000 6,102,000 2,512,000
------------ ------------- ------------- ------------
Total investments.................................................... 86,627,883 84,648,754 98,802,055 145,906,541
------------ ------------- ------------- ------------
Cash................................................................... 625 956 992 199
Foreign cash*.......................................................... -- -- -- --
Receivable for:
Fund shares sold (shares of beneficial interest sold)................ 6,759 6,970 40,749 8,882
Dividends and interest............................................... 66,660 12,499 26,363 218,268
Investments sold..................................................... 564,626 1,906,876 1,482,903 8,647,163
Prepaid expenses and other assets...................................... 994 1,049 969 2,873
Due from investment adviser for expense reimbursements/fee waivers..... 7 74 20 10
------------ ------------- ------------- ------------
Total Assets........................................................ 87,267,554 86,577,178 100,354,051 154,783,936
------------ ------------- ------------- ------------
LIABILITIES:
Payable for:
Fund shares redeemed (shares of beneficial interest redeemed)........ 74,351 142,169 86,661 628,735
Investments purchased................................................ 888,385 -- 365,418 8,764,792
Investment advisory and management fees.............................. 53,373 52,819 61,722 89,877
Distribution and service maintenance fees............................ 39,786 45,685 35,451 84,530
Transfer agent fees and expenses..................................... 41,239 38,475 41,901 62,501
Trustees' fee and expenses........................................... 31,125 26,060 49,620 40,114
Other accrued expenses............................................... 94,212 109,118 91,195 122,433
Due to investment adviser from expense recoupment...................... -- -- -- --
Due to custodian....................................................... -- -- -- --
------------ ------------- ------------- ------------
Total Liabilities................................................... 1,222,471 414,326 731,968 9,792,982
------------ ------------- ------------- ------------
Net Assets.......................................................... $ 86,045,083 $ 86,162,852 $ 99,622,083 $144,990,954
============ ============= ============= ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value.......................... $ 58,750 $ 55,899 $ 56,245 $ 120,545
Paid-in capital........................................................ 158,418,121 292,674,992 194,376,048 197,462,818
------------ ------------- ------------- ------------
158,476,871 292,730,891 194,432,293 197,583,363
Accumulated undistributed net investment income (loss)................. (30,597) (25,993) (49,853) 62,110
Accumulated undistributed net realized gain (loss) on investments,
securities sold short and foreign exchange transactions............... (77,553,269) (218,788,500) (105,391,730) (63,377,871)
Unrealized appreciation (depreciation) on investments.................. 5,152,078 12,246,454 10,631,373 10,723,352
Unrealized foreign exchange gain (loss) on other assets and liabilities -- -- -- --
------------ ------------- ------------- ------------
Net Assets.......................................................... $ 86,045,083 $ 86,162,852 $ 99,622,083 $144,990,954
============ ============= ============= ============
*Cost
Long-term investment securities (unaffiliated)....................... $ 80,091,805 $ 68,701,300 $ 82,068,682 $132,671,189
============ ============= ============= ============
Short-term investment securities..................................... $ -- $ -- $ -- $ --
============ ============= ============= ============
Foreign cash......................................................... $ -- $ -- $ -- $ --
============ ============= ============= ============
Balanced
Assets
Fund
------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*.............. $188,699,413
Short-term investment securities, at value*............................ 268,139
Repurchase agreements (cost equals market value)....................... 5,179,000
------------
Total investments.................................................... 194,146,552
------------
Cash................................................................... --
Foreign cash*.......................................................... --
Receivable for:
Fund shares sold (shares of beneficial interest sold)................ 13,864
Dividends and interest............................................... 811,485
Investments sold..................................................... 4,089,099
Prepaid expenses and other assets...................................... 2,185
Due from investment adviser for expense reimbursements/fee waivers..... 11
------------
Total Assets........................................................ 199,063,196
------------
LIABILITIES:
Payable for:
Fund shares redeemed (shares of beneficial interest redeemed)........ 396,531
Investments purchased................................................ 5,403,754
Investment advisory and management fees.............................. 119,904
Distribution and service maintenance fees............................ 82,759
Transfer agent fees and expenses..................................... 101,166
Trustees' fee and expenses........................................... 86,396
Other accrued expenses............................................... 169,712
Due to investment adviser from expense recoupment...................... --
Due to custodian....................................................... 84,527
------------
Total Liabilities................................................... 6,444,749
------------
Net Assets.......................................................... $192,618,447
============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value.......................... $ 140,539
Paid-in capital........................................................ 271,326,203
------------
271,466,742
Accumulated undistributed net investment income (loss)................. (75,110)
Accumulated undistributed net realized gain (loss) on investments,
securities sold short and foreign exchange transactions............... (84,005,489)
Unrealized appreciation (depreciation) on investments.................. 5,232,304
Unrealized foreign exchange gain (loss) on other assets and liabilities --
------------
Net Assets.......................................................... $192,618,447
============
*Cost
Long-term investment securities (unaffiliated)....................... $183,465,961
============
Short-term investment securities..................................... $ 269,287
============
Foreign cash......................................................... $ --
============
See Notes to Financial Statements
5
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005 -- (continued)
Blue Chip Growth New Growth and Balanced
Growth Opportunities Century Income Assets
Fund Fund Fund Fund Fund
----------- ------------- ----------- ----------- ------------
Class A (unlimited shares authorized):
Net assets.................................................. $56,755,120 $44,640,942 $87,314,432 $65,665,836 $142,573,066
Shares of beneficial interest issued and outstanding........ 3,732,121 2,743,666 4,850,065 5,295,295 10,394,880
Net asset value and redemption price per share.............. $ 15.21 $ 16.27 $ 18.00 $ 12.40 $ 13.72
Maximum sales charge (5.75% of offering price).............. 0.93 0.99 1.10 0.76 0.84
----------- ----------- ----------- ----------- ------------
Maximum offering price to public............................ $ 16.14 $ 17.26 $ 19.10 $ 13.16 $ 14.56
=========== =========== =========== =========== ============
Class B (unlimited shares authorized):
Net assets.................................................. $22,557,729 $27,673,487 $10,343,746 $41,119,585 $ 30,002,153
Shares of beneficial interest issued and outstanding........ 1,657,920 1,905,297 651,184 3,503,218 2,194,992
Net asset value, offering and redemption price per share.... $ 13.61 $ 14.52 $ 15.88 $ 11.74 $ 13.67
=========== =========== =========== =========== ============
Class C (unlimited shares authorized):
Net assets.................................................. $ 5,277,875 $12,088,928 $ 1,963,905 $37,447,715 $ 19,297,647
Shares of beneficial interest issued and outstanding........ 390,130 833,900 123,229 3,195,008 1,409,762
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 13.53 $ 14.50 $ 15.94 $ 11.72 $ 13.69
=========== =========== =========== =========== ============
Class I (unlimited shares authorized):
Net assets.................................................. $ 1,454,359 $ 1,759,495 $ -- $ 757,818 $ 745,581
Shares of beneficial interest issued and outstanding........ 94,828 107,026 -- 60,983 54,285
Net asset value, offering and redemption price per share.... $ 15.34 $ 16.44 $ -- $ 12.43 $ 13.73
=========== =========== =========== =========== ============
Class Z (unlimited shares authorized):
Net assets.................................................. $ -- $ -- $ -- $ -- $ --
Shares of beneficial interest issued and outstanding........ -- -- -- -- --
Net asset value, offering and redemption price per share.... $ -- $ -- $ -- $ -- $ --
=========== =========== =========== =========== ============
See Notes to Financial Statements
6
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005 -- (continued)
International Biotech/ Tax Managed
Equity Value Health Equity
Fund Fund Fund Fund
------------- ------------ ------------ ------------
ASSETS:
Long-term investment securities, at value (unaffiliated)*.............. $ 85,885,490 $246,911,401 $ 31,150,043 $ 39,135,683
Short-term investment securities, at value*............................ -- -- -- 979,000
Repurchase agreements (cost equals market value)....................... 1,355,000 5,783,000 1,858,000 --
------------ ------------ ------------ ------------
Total investments.................................................... 87,240,490 252,694,401 33,008,043 40,114,683
------------ ------------ ------------ ------------
Cash................................................................... 253 669 51 855
Foreign cash*.......................................................... 20,111 -- -- --
Receivable for:
Fund shares sold (shares of beneficial interest sold)................ 201,773 223,019 2,200 735
Dividends and interest............................................... 204,706 402,210 824 55,578
Investments sold..................................................... -- 9,713,862 -- 1,105,809
Prepaid expenses and other assets...................................... 807 10,419 24,789 508
Due from investment adviser for expense reimbursements/fee waivers..... -- -- 3,608 19,167
------------ ------------ ------------ ------------
Total Assets........................................................ 87,668,140 263,044,580 33,039,515 41,297,335
------------ ------------ ------------ ------------
LIABILITIES:
Payable for:
Fund shares redeemed (shares of beneficial interest redeemed)........ 330,595 667,148 82,641 44,603
Investments purchased................................................ -- 11,832,736 -- 745,045
Investment advisory and management fees.............................. 70,624 206,064 20,459 28,448
Distribution and service maintenance fees............................ 43,638 120,245 19,798 27,426
Transfer agent fees and expenses..................................... 33,538 77,590 13,945 12,957
Trustees' fee and expenses........................................... 18,260 30,673 5,500 10,900
Other accrued expenses............................................... 129,814 116,849 63,441 76,568
Due to investment adviser from expense recoupment...................... 11,855 27,848 -- --
------------ ------------ ------------ ------------
Total Liabilities................................................... 638,324 13,079,153 205,784 945,947
------------ ------------ ------------ ------------
Net Assets.......................................................... $ 87,029,816 $249,965,427 $ 32,833,731 $ 40,351,388
============ ============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest, $.01 par value.......................... $ 68,379 $ 141,145 $ 35,619 $ 35,049
Paid-in capital........................................................ 116,011,993 214,943,887 63,453,313 70,115,972
------------ ------------ ------------ ------------
116,080,372 215,085,032 63,488,932 70,151,021
Accumulated undistributed net investment income (loss)................. (85,242) 1,023,670 (4,145) 45,069
Accumulated undistributed net realized gain (loss) on investments,
securities sold short and foreign exchange transactions............... (41,424,038) 15,412,588 (33,089,425) (31,867,433)
Unrealized appreciation (depreciation) on investments.................. 12,461,921 18,444,137 2,438,369 2,022,731
Unrealized foreign exchange gain (loss) on other assets and liabilities (3,197) -- -- --
------------ ------------ ------------ ------------
Net Assets.......................................................... $ 87,029,816 $249,965,427 $ 32,833,731 $ 40,351,388
============ ============ ============ ============
*Cost
Long-term investment securities (unaffiliated)....................... $ 73,423,569 $228,467,264 $ 28,711,674 $ 37,112,952
============ ============ ============ ============
Short-term investment securities..................................... $ -- $ -- $ -- $ 979,000
============ ============ ============ ============
Foreign cash......................................................... $ 20,340 $ -- $ -- $ --
============ ============ ============ ============
See Notes to Financial Statements
7
SunAmerica Equity Funds
STATEMENT OF ASSETS AND LIABILITIES -- September 30, 2005 -- (continued)
International Biotech/ Tax Managed
Equity Value Health Equity
Fund Fund Fund Fund
------------- ------------ ----------- -----------
Class A (unlimited shares authorized):
Net assets.................................................. $43,526,678 $130,753,874 $13,901,781 $11,251,237
Shares of beneficial interest issued and outstanding........ 3,337,280 7,260,524 1,478,089 951,134
Net asset value and redemption price per share.............. $ 13.04 $ 18.01 $ 9.41 $ 11.83
Maximum sales charge (5.75% of offering price).............. 0.80 1.10 0.57 0.72
----------- ------------ ----------- -----------
Maximum offering price to public............................ $ 13.84 $ 19.11 $ 9.98 $ 12.55
=========== ============ =========== ===========
Class B (unlimited shares authorized):
Net assets.................................................. $19,545,574 $ 57,703,534 $11,447,662 $15,117,030
Shares of beneficial interest issued and outstanding........ 1,588,267 3,357,932 1,261,013 1,327,499
Net asset value, offering and redemption price per share.... $ 12.31 $ 17.18 $ 9.08 $ 11.39
=========== ============ =========== ===========
Class C (unlimited shares authorized):
Net assets.................................................. $16,892,464 $ 41,094,826 $ 7,484,288 $13,983,121
Shares of beneficial interest issued and outstanding........ 1,374,056 2,391,849 822,758 1,226,274
Net asset value, offering and redemption price per share
(excluding any applicable contingent deferred sales charge) $ 12.29 $ 17.18 $ 9.10 $ 11.40
=========== ============ =========== ===========
Class I (unlimited shares authorized):
Net assets.................................................. $ 7,065,100 $ 3,106,059 $ -- $ --
Shares of beneficial interest issued and outstanding........ 538,335 172,547 -- --
Net asset value, offering and redemption price per share.... $ 13.12 $ 18.00 $ -- $ --
=========== ============ =========== ===========
Class Z (unlimited shares authorized):
Net assets.................................................. $ -- $ 17,307,134 $ -- $ --
Shares of beneficial interest issued and outstanding........ -- 931,604 -- --
Net asset value, offering and redemption price per share.... $ -- $ 18.58 $ -- $ --
=========== ============ =========== ===========
See Notes to Financial Statements
8
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2005
Blue Chip Growth New
Growth Opportunities Century
Fund Fund Fund
---------- ------------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $1,379,335 $ 314,058 $ 475,861
Dividends (affiliated).............................................................. -- -- --
Interest (unaffiliated)............................................................. 26,068 151,001 208,819
---------- ----------- -----------
Total investment income*........................................................... 1,405,403 465,059 684,680
---------- ----------- -----------
EXPENSES:
Investment advisory and management fees............................................. 700,763 697,039 744,320
Distribution and service maintenance fees:
Class A............................................................................ 209,973 165,734 301,176
Class B............................................................................ 255,019 296,303 110,599
Class C............................................................................ 59,584 133,440 21,324
Service fees -- Class I............................................................. 4,956 6,440 --
Transfer agent fees and expenses:
Class A............................................................................ 172,230 145,687 260,634
Class B............................................................................ 89,921 98,339 34,396
Class C............................................................................ 20,444 42,602 7,149
Class I............................................................................ 4,361 5,810 --
Class X............................................................................ -- 79 --
Class Z............................................................................ -- -- --
Registration fees:
Class A............................................................................ 13,297 19,592 19,840
Class B............................................................................ 10,712 12,129 11,518
Class C............................................................................ 12,954 15,428 11,840
Class I............................................................................ 8,317 10,198 --
Class X............................................................................ -- 240 --
Class Z............................................................................ -- -- --
Custodian fees...................................................................... 51,731 57,387 51,132
Reports to shareholders............................................................. 51,860 63,915 40,569
Audit and tax fees.................................................................. 35,169 35,402 36,069
Legal fees.......................................................................... 7,066 7,804 8,108
Trustees' fees and expenses......................................................... 5,716 6,517 6,269
Interest expense.................................................................... 3,385 81 547
Other expenses...................................................................... 13,026 12,620 12,176
---------- ----------- -----------
Total expenses before fee waivers, expense reimbursements and custody credits...... 1,730,484 1,832,786 1,677,666
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4).. (9,807) (12,692) (14,024)
Custody credits earned on cash balances............................................ (13) (364) (18)
---------- ----------- -----------
Net expenses....................................................................... 1,720,664 1,819,730 1,663,624
---------- ----------- -----------
Net investment income (loss).......................................................... (315,261) (1,354,671) (978,944)
---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 7,805,094 2,100,231 19,818,423
Net realized gain (loss) on investments (affiliated).................................. -- -- --
Net realized gain (loss) on securities sold short..................................... -- -- --
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- -- --
Net increase from payments by affiliates.............................................. -- -- 188,306
---------- ----------- -----------
Net realized gain (loss) on investments and foreign currencies........................ 7,805,094 2,100,231 20,006,729
---------- ----------- -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ (380,611) 15,610,477 370,558
Change in unrealized appreciation (depreciation) on investments (affiliated).......... -- -- --
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- --
Change in unrealized appreciation (depreciation) on securities sold short............. -- -- --
---------- ----------- -----------
Net unrealized gain (loss) on investments and foreign currencies...................... (380,611) 15,610,477 370,558
---------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 7,424,483 17,710,708 20,377,287
---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $7,109,222 $16,356,037 $19,398,343
========== =========== ===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ -- $ -- $ --
========== =========== ===========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ --
========== =========== ===========
See Notes to Financial Statements
9
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2005 --
(continued)
Growth and Balanced International
Income Assets Equity
Fund Fund Fund
----------- ------------ -------------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 3,709,317 $ 2,658,726 $ 1,670,279
Dividends (affiliated).............................................................. -- -- --
Interest (unaffiliated)............................................................. 60,157 4,014,519 10,470
----------- ------------ -----------
Total investment income*........................................................... 3,769,474 6,673,245 1,680,749
----------- ------------ -----------
EXPENSES:
Investment advisory and management fees............................................. 1,205,704 1,575,247 810,740
Distribution and service maintenance fees:
Class A............................................................................ 239,847 536,766 132,150
Class B............................................................................ 496,174 348,791 207,269
Class C............................................................................ 417,704 210,568 167,367
Service fees -- Class I............................................................. 2,112 1,839 14,633
Transfer agent fees and expenses:
Class A............................................................................ 208,261 528,917 109,063
Class B............................................................................ 148,752 114,765 70,828
Class C............................................................................ 116,202 59,762 50,797
Class I............................................................................ 1,859 1,619 12,896
Class X............................................................................ -- -- --
Class Z............................................................................ -- -- --
Registration fees:
Class A............................................................................ 14,349 20,694 12,388
Class B............................................................................ 13,350 12,379 11,509
Class C............................................................................ 11,503 13,474 10,498
Class I............................................................................ 7,866 10,394 8,826
Class X............................................................................ -- -- --
Class Z............................................................................ -- -- --
Custodian fees...................................................................... 61,755 147,305 147,702
Reports to shareholders............................................................. 67,323 95,640 45,166
Audit and tax fees.................................................................. 35,334 39,269 43,381
Legal fees.......................................................................... 9,882 14,369 10,184
Trustees' fees and expenses......................................................... 11,095 14,083 4,733
Interest expense.................................................................... 102 5,852 1,413
Other expenses...................................................................... 18,028 17,983 6,939
----------- ------------ -----------
Total expenses before fee waivers, expense reimbursements and custody credits...... 3,087,202 3,769,716 1,878,482
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4).. (8,140) (10,800) (99,805)
Custody credits earned on cash balances............................................ (122) (835) (619)
----------- ------------ -----------
Net expenses....................................................................... 3,078,940 3,758,081 1,778,058
----------- ------------ -----------
Net investment income (loss).......................................................... 690,534 2,915,164 (97,309)
----------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 10,983,468 12,700,862 10,235,231
Net realized gain (loss) on investments (affiliated).................................. -- -- --
Net realized gain (loss) on securities sold short..................................... -- 410 --
Net realized foreign exchange gain (loss) on other assets and liabilities............. -- -- (73,633)
Net increase from payments by affiliates.............................................. -- -- --
----------- ------------ -----------
Net realized gain (loss) on investments and foreign currencies........................ 10,983,468 12,701,272 10,161,598
----------- ------------ -----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 3,664,558 (3,690,068) 9,259,813
Change in unrealized appreciation (depreciation) on investments (affiliated).......... -- -- --
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- (13,408)
Change in unrealized appreciation (depreciation) on securities sold short............. -- -- --
----------- ------------ -----------
Net unrealized gain (loss) on investments and foreign currencies...................... 3,664,558 (3,690,068) 9,246,405
----------- ------------ -----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 14,648,026 9,011,204 19,408,003
----------- ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $15,338,560 $11,926,368 $19,310,694
=========== ============ ===========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ 5,868 $ 2,840 $ 179,503
=========== ============ ===========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ 51,961
=========== ============ ===========
See Notes to Financial Statements
10
SunAmerica Equity Funds
STATEMENT OF OPERATIONS -- For the period ended September 30, 2005 --
(continued)
Biotech/ Tax Managed
Value Health Equity
Fund Fund Fund
----------- ---------- -----------
INVESTMENT INCOME:
Dividends (unaffiliated)............................................................ $ 6,152,530 $ 69,218 $1,023,284
Dividends (affiliated).............................................................. -- -- 1,028
Interest (unaffiliated)............................................................. 128,703 64,537 7,680
----------- ---------- ----------
Total investment income*........................................................... 6,281,233 133,755 1,031,992
----------- ---------- ----------
EXPENSES:
Investment advisory and management fees............................................. 2,379,557 264,774 400,679
Distribution and service maintenance fees:
Class A............................................................................ 409,114 50,358 43,985
Class B............................................................................ 648,944 123,640 178,335
Class C............................................................................ 377,836 85,511 167,380
Service fees -- Class I............................................................. 13,521 -- --
Transfer agent fees and expenses:
Class A............................................................................ 322,015 42,051 34,235
Class B............................................................................ 202,267 37,403 46,258
Class C............................................................................ 98,968 25,937 42,043
Class I............................................................................ 13,786 -- --
Class X............................................................................ -- -- --
Class Z............................................................................ -- -- --
Registration fees:
Class A............................................................................ 16,641 10,192 9,064
Class B............................................................................ 14,329 10,831 9,090
Class C............................................................................ 8,615 8,605 7,905
Class I............................................................................ 11,570 -- --
Class X............................................................................ -- -- --
Class Z............................................................................ 11,940 -- --
Custodian fees...................................................................... 76,475 43,251 48,746
Reports to shareholders............................................................. 13,765 26,350 22,248
Audit and tax fees.................................................................. 41,518 37,429 37,432
Legal fees.......................................................................... 12,268 4,505 12,230
Trustees' fees and expenses......................................................... 13,948 2,449 3,126
Interest expense.................................................................... 344 771 --
Other expenses...................................................................... 20,873 9,688 11,048
----------- ---------- ----------
Total expenses before fee waivers, expense reimbursements and custody credits...... 4,708,294 783,745 1,073,804
Net (fees waived and expenses reimbursed)/recouped by investment adviser (Note 4).. (241,158) (100,399) (165,514)
Custody credits earned on cash balances............................................ (452) (189) (65)
----------- ---------- ----------
Net expenses....................................................................... 4,466,684 683,157 908,225
----------- ---------- ----------
Net investment income (loss).......................................................... 1,814,549 (549,402) 123,767
----------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES:
Net realized gain (loss) on investments (unaffiliated)**.............................. 16,075,631 1,437,941 (246,496)
Net realized gain (loss) on investments (affiliated).................................. -- -- (101,022)
Net realized gain (loss) on securities sold short..................................... -- 24,320 --
Net realized foreign exchange gain (loss) on other assets and liabilities............. (143) -- --
Net increase from payments by affiliates.............................................. -- -- --
----------- ---------- ----------
Net realized gain (loss) on investments and foreign currencies........................ 16,075,488 1,462,261 (347,518)
----------- ---------- ----------
Change in unrealized appreciation (depreciation) on investments (unaffiliated)........ 11,418,921 50,191 2,717,435
Change in unrealized appreciation (depreciation) on investments (affiliated).......... -- -- 12,688
Change in unrealized foreign exchange gain (loss) on other assets and liabilities..... -- -- --
Change in unrealized appreciation (depreciation) on securities sold short............. -- (44,479) --
----------- ---------- ----------
Net unrealized gain (loss) on investments and foreign currencies...................... 11,418,921 5,712 2,730,123
----------- ---------- ----------
Net realized and unrealized gain (loss) on investments and foreign currencies......... 27,494,409 1,467,973 2,382,605
----------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $29,308,958 $ 918,571 $2,506,372
=========== ========== ==========
- --------
*Net of foreign withholding taxes on interest and dividends of........................ $ 23,788 $ 598 $ --
=========== ========== ==========
**Net of foreign withholding taxes on capital gains of................................ $ -- $ -- $ --
=========== ========== ==========
See Notes to Financial Statements
11
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS
Blue Chip Growth Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ (315,261) $ (913,394)
Net realized gain (loss) on investments and foreign currencies........................ 7,805,094 11,475,942
Net unrealized gain (loss) on investments and foreign currencies...................... (380,611) (486,122)
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 7,109,222 10,076,426
------------ ------------
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 securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (19,947,968) (33,190,986)
------------ ------------
Total increase (decrease) in net assets................................................. (12,838,746) (23,114,560)
NET ASSETS:
Beginning of period..................................................................... 98,883,829 121,998,389
------------ ------------
End of period+.......................................................................... $ 86,045,083 $ 98,883,829
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (30,597) $ (31,761)
============ ============
Growth Opportunities Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ (1,354,671) $ (1,750,951)
Net realized gain (loss) on investments and foreign currencies........................ 2,100,231 17,334,422
Net unrealized gain (loss) on investments and foreign currencies...................... 15,610,477 (14,638,630)
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 16,356,037 944,841
------------ ------------
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 securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (29,708,256) (37,430,765)
------------ ------------
Total increase (decrease) in net assets................................................. (13,352,219) (36,485,924)
NET ASSETS:
Beginning of period..................................................................... $ 99,515,071 136,000,995
------------ ------------
End of period+.......................................................................... $ 86,162,852 $ 99,515,071
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (25,993) $ (26,436)
============ ============
- --------
* Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
# See Note 1
See Notes to Financial Statements
12
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
New Century Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ (978,944) $ (1,337,534)
Net realized gain (loss) on investments and foreign currencies........................ 20,006,729 21,078,641
Net unrealized gain (loss) on investments and foreign currencies...................... 370,558 (9,349,183)
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 19,398,343 10,391,924
------------ ------------
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 securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... -- --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (14,242,469) (24,446,387)
------------ ------------
Total increase (decrease) in net assets................................................. 5,155,874 (14,054,463)
NET ASSETS:
Beginning of period..................................................................... 94,466,209 108,520,672
------------ ------------
End of period+.......................................................................... $ 99,622,083 $ 94,466,209
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (49,853) $ (52,911)
============ ============
Growth and Income Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 690,534 $ (712,451)
Net realized gain (loss) on investments and foreign currencies........................ 10,983,468 21,332,421
Net unrealized gain (loss) on investments and foreign currencies...................... 3,664,558 1,758,468
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 15,338,560 22,378,438
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (579,790) --
Net investment income (Class B)....................................................... -- --
Net investment income (Class C)*...................................................... -- --
Net investment income (Class I)#...................................................... (9,046) --
Net investment income (Class X)#...................................................... -- --
Net investment income (Class Z)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... (588,836) --
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (37,788,265) (54,045,242)
------------ ------------
Total increase (decrease) in net assets................................................. (23,038,541) (31,666,804)
NET ASSETS:
Beginning of period..................................................................... 168,029,495 199,696,299
------------ ------------
End of period+.......................................................................... $144,990,954 $168,029,495
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ 62,110 $ (39,588)
============ ============
- --------
* Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
# See Note 1
See Notes to Financial Statements
13
SunAmerica Equity Funds
STATEMENT OF CHANGES IN NET ASSETS -- (continued)
Balanced Assets Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ 2,915,164 $ 1,696,718
Net realized gain (loss) on investments and foreign currencies........................ 12,701,272 13,676,958
Net unrealized gain (loss) on investments and foreign currencies...................... (3,690,068) 1,994,840
------------ ------------
Net increase (decrease) in net assets resulting from operations......................... 11,926,368 17,368,516
------------ ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... (2,655,391) (2,084,942)
Net investment income (Class B)....................................................... (380,072) (228,463)
Net investment income (Class C)*...................................................... (227,801) (131,080)
Net investment income (Class I)#...................................................... (15,336) (41,818)
Net investment income (Class X)#...................................................... -- --
Net investment income (Class Z)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
------------ ------------
Total distributions to shareholders..................................................... (3,278,600) (2,486,303)
------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (38,444,884) (45,643,904)
------------ ------------
Total increase (decrease) in net assets................................................. (29,797,116) (30,761,691)
NET ASSETS:
Beginning of period..................................................................... 222,415,563 253,177,254
------------ ------------
End of period+.......................................................................... $192,618,447 $222,415,563
============ ============
+Includes accumulated undistributed net investment income (loss)........................ $ (75,110) $ (140,117)
============ ============
International Equity Fund
--------------------------
For the year For the year
ended ended
September 30, September 30,
2005 2004
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).......................................................... $ (97,309) $ (289,498)
Net realized gain (loss) on investments and foreign currencies........................ 10,161,598 19,896,893
Net unrealized gain (loss) on investments and foreign currencies...................... 9,246,405 (4,019,593)
----------- ------------
Net increase (decrease) in net assets resulting from operations......................... 19,310,694 15,587,802
----------- ------------
Distributions to shareholders from:
Net investment income (Class A)....................................................... -- (11,064)
Net investment income (Class B)....................................................... -- --
Net investment income (Class C)*...................................................... -- --
Net investment income (Class I)#...................................................... -- (17,397)
Net investment income (Class X)#...................................................... -- --
Net investment income (Class Z)....................................................... -- --
Net realized gain on securities (Class A)............................................. -- --
Net realized gain on securities (Class B)............................................. -- --
Net realized gain on securities (Class C)*............................................ -- --
Net realized gain on securities (Class I)#............................................ -- --
Net realized gain on securities (Class X)#............................................ -- --
Net realized gain on securities (Class Z)............................................. -- --
----------- ------------
Total distributions to shareholders..................................................... -- (28,461)
----------- ------------
Net increase (decrease) in net assets resulting from capital share transactions (Note 7) (5,206,184) (31,438,220)
----------- ------------
Total increase (decrease) in net assets................................................. 14,104,510 (15,878,879)
NET ASSETS:
Beginning of period..................................................................... 72,925,306 88,804,185
----------- ------------
End of period+.......................................................................... $87,029,816 $ 72,925,306
=========== ============
+Includes accumulated undistributed net investment income (loss)........................ $ (85,242) $ (78,300)
=========== ============
- --------
* 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)
Value Fund
----------------------------------------
For the
For the year eleven months For the year
ended ended ended
September 30, September 30, October 31,
2005 2004 2003
------------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).............................. $ 1,814,549 $ 3,213,316 $ 2,576,355
Net realized gain (loss) on investments and foreign
currencies............................................... 16,075,488 24,461,025 5,430,390
Net unrealized gain (loss) on investments and foreign
currencies............................................... 11,418,921 (3,708,718) 16,873,967
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations................................................. 29,308,958 23,965,623 24,880,712
------------ ------------ ------------
Distributions to shareholders from:
Net investment income (Class A)........................... (1,618,502) (1,362,535) (640,709)
Net investment income (Class B)........................... (693,156) (1,446,298) (441,621)
Net investment income (Class C)*.......................... (345,179) (408,038) (107,249)
Net investment income (Class I)#.......................... (84,084) (166,307) (64,209)
Net investment income (Class X)#.......................... -- -- --
Net investment income (Class Z)........................... (191,677) (126,802) (6,189)
Net realized gain on securities (Class A)................. (9,914,545) (1,664,101) (1,668,760)
Net realized gain on securities (Class B)................. (6,829,375) (2,379,441) (2,600,325)
Net realized gain on securities (Class C)*................ (3,400,905) (671,301) (631,495)
Net realized gain on securities (Class I)#................ (502,260) (189,120) (153,195)
Net realized gain on securities (Class X)#................ -- -- --
Net realized gain on securities (Class Z)................. (868,391) (128,732) (11,260)
------------ ------------ ------------
Total distributions to shareholders......................... (24,448,074) (8,542,675) (6,325,012)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from capital
share transactions (Note 7)................................ 41,739,610 8,936,841 7,300,864
------------ ------------ ------------
Total increase (decrease) in net assets..................... 46,600,494 24,359,789 25,856,564
NET ASSETS:
Beginning of period ........................................ 203,364,933 179,005,144 153,148,580
------------ ------------ ------------
End of period+.............................................. $249,965,427 $203,364,933 $179,005,144
============ ============ ============
+Includes accumulated undistributed net investment income
(loss)..................................................... $ 1,023,670 $ 2,141,862 $ 2,426,803
============ ============ ============
Biotech/Health Fund
---------------------------------------
For the
For the year eleven months For the year
ended ended ended
September 30, September 30, October 31,
2005 2004 2003
------------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss).............................. $ (549,402) $ (689,915) $ (760,809)
Net realized gain (loss) on investments and foreign
currencies............................................... 1,462,261 1,545,657 (882,501)
Net unrealized gain (loss) on investments and foreign
currencies............................................... 5,712 (4,702,003) 12,390,274
----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations................................................. 918,571 (3,846,261) 10,746,964
----------- ----------- -----------
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 securities (Class A)................. -- -- --
Net realized gain on securities (Class B)................. -- -- --
Net realized gain on securities (Class C)*................ -- -- --
Net realized gain on securities (Class I)#................ -- -- --
Net realized gain on securities (Class X)#................ -- -- --
Net realized gain on securities (Class Z)................. -- -- --
----------- ----------- -----------
Total distributions to shareholders......................... -- -- --
----------- ----------- -----------
Net increase (decrease) in net assets resulting from capital
share transactions (Note 7)................................ (8,724,957) (4,941,478) (5,616,681)
----------- ----------- -----------
Total increase (decrease) in net assets..................... (7,806,386) (8,787,739) 5,130,283
NET ASSETS:
Beginning of period ........................................ 40,640,117 49,427,856 44,297,573
----------- ----------- -----------
End of period+.............................................. $32,833,731 $40,640,117 $49,427,856
=========== =========== ===========
+Includes accumulated undistributed net investment income
(loss)..................................................... $ (4,145) $ (3,910) $ (3,177)
=========== =========== ===========
- --------
* 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)
Tax Managed Equity Fund
----------------------------------------
For the
For the year eleven months For the year
ended ended ended
September 30, September 30, October 31,
2005 2004 2003
------------- ------------- ------------
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)................................................... $ 123,767 $ (125,272) $ (86,619)
Net realized gain (loss) on investments and foreign currencies................. (347,518) (596,071) (4,260,050)
Net unrealized gain (loss) on investments and foreign currencies............... 2,730,123 4,818,298 13,156,086
------------ ------------ ------------
Net increase (decrease) in net assets resulting from operations................. 2,506,372 4,096,955 8,809,417
------------ ------------ ------------
Distributions to shareholders from:
Net investment income (Class A)................................................ (69,828) -- --
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 securities (Class A)...................................... -- -- --
Net realized gain on securities (Class B)...................................... -- -- --
Net realized gain on securities (Class C)*..................................... -- -- --
Net realized gain on securities (Class I)#..................................... -- -- --
Net realized gain on securities (Class X)#..................................... -- -- --
Net realized gain on securities (Class Z)...................................... -- -- --
------------ ------------ ------------
Total distributions to shareholders............................................. (69,828) -- --
------------ ------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions
(Note 7)....................................................................... (13,611,181) (13,177,953) (16,922,143)
------------ ------------ ------------
Total increase (decrease) in net assets......................................... (11,174,637) (9,080,998) (8,112,726)
NET ASSETS:
Beginning of period............................................................. 51,526,025 60,607,023 68,719,749
------------ ------------ ------------
End of period+.................................................................. $ 40,351,388 $ 51,526,025 $ 60,607,023
============ ============ ============
+Includes accumulated undistributed net investment income (loss)................ $ 45,069 $ (8,870) $ (8,076)
============ ============ ============
- --------
* 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
FINANCIAL HIGHLIGHTS
BLUE CHIP GROWTH FUND
---------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
09/30/01 $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
09/30/05 14.09 (0.01) 1.13 1.12 -- -- -- 15.21 7.95 56,755
Class B
- -
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
09/30/05 12.70 (0.11) 1.02 0.91 -- -- -- 13.61 7.17 22,558
Class C+
- -
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
09/30/05 12.65 (0.13) 1.01 0.88 -- -- -- 13.53 6.96 5,278
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
09/30/05 14.17 0.03 1.14 1.17 -- -- -- 15.34 8.26 1,454
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets turnover
- ---------- ------------- ---------
1.45% (0.15)% 136%
1.47(6) (0.47)(6) 107
1.54 (0.50) 114
1.60 (0.59) 145
1.59 (0.09) 120
2.19% (0.89)% 136%
2.18(6) (1.18)(6) 107
2.32 (1.28) 114
2.26 (1.25) 145
2.32 (0.80) 120
2.11%(5) (0.81)%(5) 136%
2.23(5)(6) (1.25)(5)(6) 107
2.44(5) (1.40)(5) 114
2.37(5) (1.37)(5) 145
2.49(5) (0.98)(5) 120
1.33%(4)(5)(6) (0.32)%(4)(5)(6) 107%
1.33(5) (0.29)(5) 114
1.33(5) (0.26)(5) 145
1.33(5) 0.22(5) 120
- --------
(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):
09/30/01 09/30/02(6) 09/30/03 09/30/04 09/30/05
-------- ----------- -------- -------- --------
Blue Chip Growth Class C+ 0.03% -- % -- % -- % -- %
Blue Chip Growth Class I. -- 0.08(4) 0.33 0.13 0.49
(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
17
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
GROWTH OPPORTUNITIES FUND
-------------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
09/30/01 $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 62,600
09/30/04 13.74 (0.16) 0.07 (0.09) -- -- -- 13.65 (0.66)(7) 49,918
09/30/05 13.65 (0.17) 2.79 2.62 -- -- -- 16.27 19.19 44,641
Class B
- -
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
09/30/05 12.27 (0.25) 2.50 2.25 -- -- -- 14.52 18.34 27,673
Class C+
- -
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
09/30/05 12.25 (0.26) 2.51 2.25 -- -- -- 14.50 18.37 12,089
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
09/30/05 13.75 (0.13) 2.82 2.69 -- -- -- 16.44 19.56 1,759
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets turnover
- ---------- ------------- ---------
1.49% (0.57)% 207%
1.49(6) (1.11)(6) 344
1.63 (1.11) 204
1.58 (1.09) 170
1.65 (1.15) 86
2.17% (1.25)% 207%
2.18(6) (1.80)(6) 344
2.36 (1.85) 204
2.27 (1.78) 170
2.32 (1.82) 86
2.16% (1.24)% 207%
2.21(6) (1.82)(6) 344
2.33 (1.82) 204
2.29 (1.80) 170
2.39 (1.89) 86
1.33%(4)(5)(6) (0.95)%(4)(5)(6) 344%
1.33(5) (0.82)(5) 204
1.33(5) (0.85)(5) 170
1.33(5) (0.85)(5) 86
- --------
(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):
09/30/01 09/30/02(6) 09/30/03 09/30/04 09/30/05
-------- ----------- -------- -------- --------
Growth Opportunities Class I -- % 0.18%(4) 0.50% 0.18% 0.49%
(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% and Class I 0.08%.
+ Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
See Notes to Financial Statements
18
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
NEW CENTURY FUND
----------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets Ratio of
Value investment realized Total from from net from Total Value end of expenses
beginning income 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
- -
09/30/01 $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
09/30/05 14.77 (0.15) 3.38 3.23 -- -- -- 18.00 21.87 87,314 1.58
Class B
- -
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
09/30/05 13.13 (0.25) 3.00 2.75 -- -- -- 15.88 20.94 10,344 2.32
Class C+
- -
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)
09/30/05 13.14 (0.22) 3.02 2.80 -- -- -- 15.94 21.31 1,964 2.14(3)
Ratio
of net
investment
income (loss)
to average Portfolio
net assets turnover
- ------------- ---------
(0.23)% 282%
(0.92) 199
(1.08) 123
(1.20) 110
(0.89) 80
(0.88)% 282%
(1.60) 199
(1.77) 123
(1.91) 110
(1.64) 80
(0.90)%(3) 282%
(1.56)(3) 199
(1.63)(3) 123
(1.73)(3) 110
(1.45)(3) 80
- --------
(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):
09/30/01 09/30/02 09/30/03 09/30/04 09/30/05
-------- -------- -------- -------- --------
New Century Class C+ 0.06% 0.27% 0.66% 0.48% 0.66%
+ 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 AND INCOME FUND
----------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
09/30/01 $20.00 $(0.03) $(7.43) $(7.46) $ -- $(1.43) $(1.43) $11.11 (39.45)% $75,795
09/30/02 11.11 -- (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
09/30/05 11.38 0.10 1.03 1.13 (0.11) -- (0.11) 12.40 9.89 65,666
Class B
- -
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
09/30/05 10.75 0.02 0.97 0.99 -- -- -- 11.74 9.21 41,120
Class C+
- -
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
09/30/05 10.73 0.02 0.97 0.99 -- -- -- 11.72 9.23 37,448
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 14.98 12,899
09/30/04 10.21 0.02 1.18 1.20 -- -- -- 11.41 11.75 769
09/30/05 11.41 0.12 1.04 1.16 (0.14) -- (0.14) 12.43 10.18 758
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets turnover
- ---------- ------------- ---------
1.45% (0.21)% 126%
1.50(6) (0.01)(6) 118
1.50 0.06 123
1.50 0.01 139
1.55 0.78 79
2.09% (0.85)% 126%
2.13(6) (0.66)(6) 118
2.16 (0.59) 123
2.17 (0.67) 139
2.20 0.16 79
2.13% (0.88)% 126%
2.17(6) (0.68)(6) 118
2.16 (0.60) 123
2.14 (0.64) 139
2.18 0.17 79
1.32%(4)(5)(6) 0.21%(4)(5)(6) 118%
1.32(5) 0.23(5) 123
1.32(5) 0.19(5) 139
1.31(5) 1.00(5) 79
- --------
(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):
09/30/01 09/30/02(6) 09/30/03 09/30/04 09/30/05
-------- ----------- -------- -------- --------
Growth and Income Class I -- % 0.12%(4) 0.37% 0.14% 0.96%
(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 0.02%.
+ 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)
BALANCED ASSETS FUND
--------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
09/30/01 $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
09/30/05 13.19 0.21 0.56 0.77 (0.24) -- (0.24) 13.72 5.84 142,573
Class B
- -
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
09/30/05 13.14 0.13 0.55 0.68 (0.15) -- (0.15) 13.67 5.16 30,002
Class C+
- -
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
09/30/05 13.16 0.13 0.55 0.68 (0.15) -- (0.15) 13.69 5.15 19,298
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
09/30/05 13.21 0.25 0.55 0.80 (0.28) -- (0.28) 13.73 6.10 746
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets net assets turnover
- ---------- ------------- ---------
1.44% 1.32% 362%
1.47(6) 1.39(6) 485
1.49 0.86 409
1.50 0.89 181
1.62 1.56 160
2.08% 0.68% 362%
2.12(6) 0.73(6) 485
2.16 0.22 409
2.18 0.20 181
2.27 0.91 160
2.05%(5) 0.71%(5) 362%
2.13(5)(6) 0.72(5)(6) 485
2.15(5) 0.22(5) 409
2.18(5) 0.21(5) 181
2.26(5) 0.92(5) 160
1.33%(4)(5)(6) 1.52%(4)(5)(6) 485%
1.33(5) 1.02(5) 409
1.29(5) 1.10(5) 181
1.32(5) 1.84(5) 160
- --------
(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):
09/30/01 09/30/02(6) 09/30/03 09/30/04 09/30/05
-------- ----------- -------- -------- --------
Balanced Assets Class C+ 0.06% -- % -- % -- % -- %
Balanced Assets Class I. -- 0.19(4) 0.19 0.24 1.47
(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%.
(7)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
21
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
INTERNATIONAL EQUITY FUND
-------------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
10/31/00 $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
09/30/05 10.20 0.02 2.82 2.84 -- -- -- 13.04 27.84 43,527
Class B
- -
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
09/30/05 9.69 (0.06) 2.68 2.62 -- -- -- 12.31 27.04 19,546
Class C+
- -
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
09/30/05 9.68 (0.06) 2.67 2.61 -- -- -- 12.29 26.96 16,892
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
09/30/05 10.25 0.05 2.82 2.87 -- -- -- 13.12 28.00 7,065
Ratio
Ratio of of net
expenses investment
to average income (loss)
net to average Portfolio
assets(4) net assets(4) turnover
- ---------- ------------- ---------
2.03%(5) (0.72)%(5) 89%
2.03 (0.42) 272
1.93(3)(5)(7) (0.06)(3)(5)(7) 230
1.90 0.35 209
1.90 0.06 202
1.90 0.17 126
2.68%(5) (1.37)%(5) 89%
2.68 (1.14) 272
2.56(3)(5)(7) (0.72)(3)(5)(7) 230
2.55 (0.41) 209
2.55 (0.62) 202
2.55 (0.51) 126
2.68%(5) (1.30)%(5) 89%
2.68 (1.13) 272
2.55(3)(5)(7) (0.72)(3)(5)(7) 230
2.55 (0.38) 209
2.55 (0.60) 202
2.55 (0.49) 126
1.80%(3)(5)(7) 0.16%(3)(5)(7) 230%
1.80 0.43 209
1.80 (0.34) 202
1.80 0.43 126
- --------
(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):
10/31/00 10/31/01 09/30/02(7) 09/30/03 09/30/04 09/30/05
-------- -------- ----------- -------- -------- --------
International Equity Class A. 0.04% 0.03% 0.08% 0.18% 0.10% 0.09%
International Equity Class B. 0.04 0.06 0.14 0.13 0.11 0.17
International Equity Class C+ 0.10 0.14 0.13 0.28 0.06 0.14
International Equity Class I. -- -- 0.11 0.16 0.12 0.14
(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
22
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
VALUE FUND
----------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
- -
10/31/00 $16.82 $0.04 $ 1.68 $ 1.72 $ -- $(0.77) $(0.77) $17.77 10.73% $ 52,062
10/31/01 17.77 0.11 (0.83) (0.72) -- (1.95) (1.95) 15.10 (4.42) 51,150
10/31/02 15.10 0.18 0.07 0.25 (0.09) (0.63) (0.72) 14.63 1.44 50,975
10/31/03 14.63 0.29 2.05 2.34 (0.18) (0.46) (0.64) 16.33 16.59 60,701
11/1/03-09/30/04(8) 16.33 0.32 1.86 2.18 (0.37) (0.45) (0.82) 17.69 13.79 91,769
09/30/05 17.69 0.17 2.22 2.39 (0.29) (1.78) (2.07) 18.01 14.06 130,754
Class B
- -
10/31/00 $16.51 $0.06 $ 1.51 $ 1.57 $ -- $(0.77) $(0.77) $17.31 10.00% $ 79,261
10/31/01 17.31 0.00 (0.80) (0.80) -- (1.95) (1.95) 14.56 (5.06) 77,667
10/31/02 14.56 0.07 0.07 0.14 (0.01) (0.63) (0.64) 14.06 0.74 78,584
10/31/03 14.06 0.19 1.98 2.17 (0.08) (0.46) (0.54) 15.69 15.94 83,935
11/1/03-09/30/04(8) 15.69 0.24 1.75 1.99 (0.27) (0.45) (0.72) 16.96 13.09 68,492
09/30/05 16.96 0.07 2.11 2.18 (0.18) (1.78) (1.96) 17.18 13.34 57,704
Class C+
- -
10/31/00 $16.51 $0.07 $ 1.49 $ 1.56 $ -- $(0.77) $(0.77) $17.30 9.93% $ 14,652
10/31/01 17.30 0.00 (0.79) (0.79) -- (1.95) (1.95) 14.56 (5.01) 17,805
10/31/02 14.56 0.07 0.07 0.14 (0.01) (0.63) (0.64) 14.06 0.74 18,504
10/31/03 14.06 0.18 1.99 2.17 (0.08) (0.46) (0.54) 15.69 15.94 23,208
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 30,985
09/30/05 16.96 0.06 2.12 2.18 (0.18) (1.78) (1.96) 17.18 13.34 41,095
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
10/31/03 14.63 0.30 2.05 2.35 (0.19) (0.46) (0.65) 16.33 16.72 6,629
11/1/03-09/30/04(8) 16.33 0.37 1.83 2.20 (0.40) (0.45) (0.85) 17.68 13.91 4,746
09/30/05 17.68 0.20 2.20 2.40 (0.30) (1.78) (2.08) 18.00 14.12 3,106
Class Z
- -
10/31/00 $16.97 $0.13 $ 1.69 $ 1.82 $ -- $(0.77) $(0.77) $18.02 11.25% $ 353
10/31/01 18.02 0.21 (0.85) (0.64) -- (1.95) (1.95) 15.43 (3.86) 487
10/31/02 15.43 0.27 0.06 0.33 (0.16) (0.63) (0.79) 14.97 1.98 360
10/31/03 14.97 0.36 2.13 2.49 (0.25) (0.46) (0.71) 16.75 17.36 4,532
11/1/03-09/30/04(8) 16.75 0.41 1.92 2.33 (0.45) (0.45) (0.90) 18.18 14.37 7,370
09/30/05 18.18 0.27 2.30 2.57 (0.39) (1.78) (2.17) 18.58 14.77 17,307
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(4) net assets(4) turnover
- ------------- ------------- ---------
1.78%(5) 0.25%(5) 95%
1.78(5) 0.68(5) 146
1.78 1.15 188
1.78(7) 1.94(7) 138
1.73(3) 2.12(3) 204
1.63 1.00 82
2.43%(5) 0.39%(5) 95%
2.43(5) 0.03(5) 146
2.43 0.49 188
2.41(7) 1.32(7) 138
2.40(3) 1.58(3) 204
2.28 0.38 82
2.43%(5) 0.40%(5) 95%
2.43(5) 0.02(5) 146
2.43 0.49 188
2.43(7) 1.28(7) 138
2.41(3) 1.48(3) 204
2.28 0.36 82
1.68%(3) 1.26%(3) 188%
1.68(7) 2.02(7) 138
1.67(3) 2.31(3) 204
1.53 1.11 82
1.21%(5) 0.72%(5) 95%
1.21(5) 1.26(5) 146
1.21 1.69 188
1.21(7) 2.33(7) 138
1.19(3) 2.58(3) 204
1.06 1.54 82
- --------
(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):
10/31/00 10/31/01 10/31/02 10/31/03 09/30/04(3) 09/30/05
-------- -------- -------- -------- ----------- --------
Value Class A. 0.09% 0.00% 0.01% (0.01)% 0.04% 0.08%
Value Class B. 0.07 -- (0.02) (0.01) 0.02 0.14
Value Class C+ 0.11 0.05 0.03 0.02 0.06 0.08
Value Class I. -- -- 0.19(3) -- 0.10 0.25
Value Class Z. 10.14 6.55 5.52 1.00 0.16 0.10
(5)The ratio reflects an expense cap which is net of custody credits of (0.01)%
or waiver/reimbursements if 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 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
23
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
BIOTECH/HEALTH FUND
-------------------
Net gain
(loss) on
Net investments Distri- Net Net
Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
09/30/05 9.03 (0.10) 0.48 0.38 -- -- -- 9.41 4.21 13,902
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
09/30/05 8.77 (0.16) 0.47 0.31 -- -- -- 9.08 3.53 11,448
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
09/30/05 8.79 (0.16) 0.47 0.31 -- -- -- 9.10 3.53 7,484
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(5) net assets(5) turnover
- ------------- ------------- ---------
1.55%(4)(6) (0.28)%(4)(6) 112%
1.55(6) (0.50)(6) 333
1.55 (1.38) 340
1.55 (1.32) 236
1.55(4) (1.15)(4) 149
1.55 (1.17) 171
2.20%(4)(6) (1.08)%(4)(6) 112%
2.20(6) (1.18)(6) 333
2.20 (2.03) 340
2.20 (1.97) 236
2.20(4) (1.80)(4) 149
2.20 (1.82) 171
2.20%(4)(6) (1.07)%(4)(6) 112%
2.20(6) (1.17)(6) 333
2.20 (2.03) 340
2.20 (1.97) 236
2.20(4) (1.80)(4) 149
2.20 (1.83) 171
- --------
(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(4) 09/30/05
----------- -------- -------- -------- ----------- --------
Biotech/Health Class A. 0.49% 0.19% 0.20% 0.23% 0.28% 0.26%
Biotech/Health Class B. 0.96 0.21 0.20 0.26 0.26 0.29
Biotech/Health Class C+ 1.09 0.20 0.21 0.33 0.26 0.31
(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
24
SunAmerica Equity Funds
FINANCIAL HIGHLIGHTS -- (continued)
TAX MANAGED EQUITY FUND
-----------------------
Net Gain
(Loss) on
investments Distri - Net Net
Net Asset Net (both Dividends butions Asset Assets
Value investment realized Total from from net from Total Value end of
beginning income 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
09/30/05 11.27 0.09 0.53 0.62 (0.06) -- (0.06) 11.83 5.51 11,251
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
09/30/05 10.86 0.01 0.52 0.53 -- -- -- 11.39 4.88 15,117
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
09/30/05 10.88 0.01 0.51 0.52 -- -- -- 11.40 4.78 13,983
Ratio
of net
Ratio of investment
expenses income (loss)
to average to average Portfolio
net assets(5) net assets(5) turnover
- ------------- ------------- ---------
1.45%(4)(6) (0.02)%(4)(6) 9%
1.45(6) (0.14)(6) 7
1.45(6) (0.03)(6) 19
1.45 0.09 16
1.45 0.35 13
1.45(4) 0.25(4) 20
1.45 0.74 32
2.10%(4)(6) (0.74)%(4)(6) 9%
2.10(6) (0.79)(6) 7
2.10(6) (0.68)(6) 19
2.10 (0.56) 16
2.10 (0.30) 13
2.10(4) (0.40)(4) 20
2.10 0.09 32
2.10%(4)(6) (0.75)%(4)(6) 9%
2.10(6) (0.79)(6) 7
2.10(6) (0.68)(6) 19
2.10 (0.56) 16
2.10 (0.30) 13
2.10(4) (0.40)(4) 20
2.10 0.09 32
- --------
(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(4) 09/30/05
----------- -------- -------- -------- -------- ----------- --------
Tax Managed Equity Class A. 1.07% 0.23% 0.15% 0.00% 0.26% 0.24% 0.38%
Tax Managed Equity Class B. 0.84 0.22 0.15 0.20 0.23 0.25 0.35
Tax Managed Equity Class C+ 0.83 0.22 0.14 0.21 0.23 0.24 0.33
(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
25
SunAmerica Blue Chip Growth Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Pharmaceuticals................ 10.4%
Telecommunications............. 8.8
Electronics.................... 8.7
Computer Software.............. 7.3
Financial Services............. 6.6
Retail......................... 5.6
Food, Beverage & Tobacco....... 4.9
Apparel & Textiles............. 4.6
Leisure & Tourism.............. 4.5
Medical Products............... 4.4
Manufacturing.................. 4.2
Computers & Business Equipment. 3.7
Health Services................ 3.4
Conglomerate................... 3.3
Aerospace & Military Technology 3.1
Broadcasting & Media........... 2.6
Energy Sources................. 2.3
Energy Services................ 2.1
Internet Software.............. 2.1
Household & Personal Products.. 2.0
Insurance...................... 2.0
Repurchase Agreements.......... 1.6
Machinery...................... 1.5
Internet Content............... 1.0
-----
100.7%
=====
- --------
* Calculated as a percentage of net assets.
26
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
----------------------------------------------------------
COMMON STOCK -- 99.1%
Aerospace & Military Technology -- 3.1%
Goodrich Corp........................ 31,000 $1,374,540
United Technologies Corp............. 25,200 1,306,368
----------
2,680,908
----------
Apparel & Textiles -- 4.6%
Coach, Inc.+......................... 55,000 1,724,800
NIKE, Inc., Class B.................. 26,800 2,189,024
----------
3,913,824
----------
Broadcasting & Media -- 1.0%
News Corp., Class A.................. 55,000 857,450
----------
Computer Software -- 8.9%
Adobe Systems, Inc................... 35,000 1,044,750
EMC Corp.+........................... 100,000 1,294,000
Microsoft Corp....................... 105,400 2,711,942
Oracle Corp.+........................ 100,000 1,239,000
Pixar+............................... 30,000 1,335,300
----------
7,624,992
----------
Computers & Business Equipment -- 3.7%
Apple Computer, Inc.+................ 40,000 2,144,400
Dell, Inc.+.......................... 29,900 1,022,580
----------
3,166,980
----------
Conglomerate -- 3.3%
General Electric Co.................. 85,100 2,865,317
----------
Electronics -- 8.7%
AMETEK, Inc.......................... 35,000 1,503,950
Intel Corp........................... 84,004 2,070,699
L-3 Communications Holdings, Inc..... 15,000 1,186,050
National Semiconductor Corp.......... 52,000 1,367,600
Texas Instruments, Inc............... 38,800 1,315,320
----------
7,443,619
----------
Energy Services -- 2.1%
Transocean, Inc.+.................... 30,000 1,839,300
----------
Energy Sources -- 2.3%
Chevron Corp......................... 15,200 983,896
Exxon Mobil Corp..................... 15,000 953,100
----------
1,936,996
----------
Financial Services -- 6.6%
American Express Co.................. 17,300 993,712
Capital One Financial Corp........... 23,900 1,900,528
Goldman Sachs Group, Inc............. 10,500 1,276,590
Merrill Lynch & Co., Inc............. 24,000 1,472,400
----------
5,643,230
----------
Value
Security Description Shares (Note 3)
-------------------------------------------------------
Food, Beverage & Tobacco -- 4.9%
Altria Group, Inc.................. 18,000 $1,326,780
PepsiCo, Inc....................... 30,100 1,706,971
The Coca-Cola Co................... 28,000 1,209,320
----------
4,243,071
----------
Health Services -- 3.4%
Cardinal Health, Inc............... 20,000 1,268,800
UnitedHealth Group, Inc............ 30,000 1,686,000
----------
2,954,800
----------
Household & Personal Products -- 2.0%
Procter & Gamble Co................ 28,800 1,712,448
----------
Insurance -- 2.0%
WellPoint, Inc.+................... 23,000 1,743,860
----------
Internet Content -- 1.0%
Yahoo!, Inc.+...................... 25,000 846,000
----------
Internet Software -- 2.1%
Symantec Corp.+.................... 80,000 1,812,800
----------
Leisure & Tourism -- 4.5%
Carnival Corp...................... 33,600 1,679,328
Harrah's Entertainment, Inc........ 15,000 977,850
Hilton Hotels Corp................. 55,000 1,227,600
----------
3,884,778
----------
Machinery -- 1.5%
IDEX Corp.......................... 30,000 1,276,500
----------
Manufacturing -- 4.2%
Danaher Corp....................... 25,000 1,345,750
Dover Corp......................... 25,000 1,019,750
ITT Industries, Inc................ 11,000 1,249,600
----------
3,615,100
----------
Medical Products -- 4.4%
Johnson & Johnson.................. 31,700 2,005,976
Medtronic, Inc..................... 33,500 1,796,270
----------
3,802,246
----------
Pharmaceuticals -- 10.4%
Abbott Laboratories................ 31,000 1,314,400
Amgen, Inc.+....................... 28,100 2,238,727
Genentech, Inc.+................... 23,000 1,936,830
Genzyme Corp.+..................... 25,000 1,791,000
Schering-Plough Corp............... 80,000 1,684,000
----------
8,964,957
----------
Retail -- 5.6%
Home Depot, Inc.................... 45,000 1,716,300
Urban Outfitters, Inc.+............ 32,000 940,800
Wal-Mart Stores, Inc............... 30,000 1,314,600
Walgreen Co........................ 20,000 869,000
----------
4,840,700
----------
27
SunAmerica Blue Chip Growth Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
COMMON STOCK (continued)
Telecommunications -- 8.8%
Cisco Systems, Inc.+............... 84,500 $ 1,515,085
Corning, Inc.+..................... 60,000 1,159,800
Motorola, Inc...................... 74,000 1,634,660
QUALCOMM, Inc...................... 54,350 2,432,162
Sprint Nextel Corp................. 35,000 832,300
-----------
7,574,007
-----------
Total Long-Term Investment Securities
(cost $80,091,805)................ 85,243,883
-----------
REPURCHASE AGREEMENTS -- 1.6%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $1,384,000)................. $1,384,000 1,384,000
-----------
TOTAL INVESTMENTS --
(cost $81,475,805)(2)............. 100.7% 86,627,883
Liabilities in excess of other assets (0.7) (582,800)
---------- -----------
NET ASSETS -- 100.0% $86,045,083
========== ===========
- --------
+ 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
28
SunAmerica Growth Opportunities Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Pharmaceuticals................ 11.6%
Computer Software.............. 8.1
Telecommunications............. 7.3
Electronics.................... 7.0
Manufacturing.................. 6.8
Medical Products............... 6.1
Banks.......................... 6.1
Energy Services................ 6.0
Health Services................ 5.7
Aerospace & Military Technology 5.0
Repurchase Agreements.......... 4.3
Leisure & Tourism.............. 3.7
Internet Software.............. 3.4
Business Services.............. 3.2
Transportation................. 3.0
Machinery...................... 2.9
Metals & Mining................ 2.4
Financial Services............. 2.3
Apparel & Textiles............. 1.1
Retail......................... 1.1
Internet Content............... 0.7
Restaurants.................... 0.4
----
98.2%
====
- --------
* Calculated as a percentage of net assets.
29
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
------------------------------------------------------------------
COMMON STOCK -- 93.9%
Aerospace & Military Technology -- 5.0%
Alliant Techsystems, Inc.+.................... 39,700 $2,963,605
DRS Technologies, Inc......................... 26,600 1,312,976
----------
4,276,581
----------
Apparel & Textiles -- 1.1%
Quiksilver, Inc.+............................. 63,800 921,910
----------
Banks -- 6.1%
Franklin Bank Corp.+.......................... 94,900 1,532,635
Signature Bank+............................... 137,500 3,711,125
----------
5,243,760
----------
Business Services -- 3.2%
Arbitron, Inc................................. 13,800 549,792
Catalina Marketing Corp....................... 13,800 313,812
FactSet Research Systems, Inc................. 13,000 458,120
Valassis Communications, Inc.+................ 36,100 1,407,178
----------
2,728,902
----------
Computer Software -- 8.1%
Hyperion Solutions Corp.+..................... 22,800 1,109,220
Keane, Inc.+.................................. 78,900 901,827
Lawson Software, Inc.+........................ 316,200 2,194,428
Parametric Technology Corp.+.................. 236,900 1,651,193
SS&C Technologies, Inc........................ 16,000 586,240
Take-Two Interactive Software, Inc.+.......... 22,800 503,652
----------
6,946,560
----------
Electronics -- 7.0%
AMETEK, Inc................................... 87,000 3,738,390
Cypress Semiconductor Corp.+.................. 79,500 1,196,475
PMC-Sierra, Inc.+............................. 102,200 900,382
Vitesse Semiconductor Corp.+.................. 113,600 213,568
----------
6,048,815
----------
Energy Services -- 6.0%
Global Industries, Ltd.+...................... 162,300 2,392,302
Todco, Class A+............................... 67,100 2,798,741
----------
5,191,043
----------
Financial Services -- 2.3%
CapitalSource, Inc.+.......................... 44,000 959,200
International Securities Exchange, Inc.+...... 2,200 51,480
MarketAxess Holdings, Inc.+................... 73,800 1,003,680
----------
2,014,360
----------
Health Services -- 5.7%
Allscripts Healthcare Solutions, Inc.+........ 16,000 288,320
American Healthways, Inc.+.................... 14,900 631,760
Cerner Corp.+................................. 11,400 991,002
LifePoint Hospitals, Inc.+.................... 10,600 463,538
Pediatrix Medical Group, Inc.+................ 9,000 691,380
Sierra Health Services, Inc.+................. 14,900 1,026,163
United Surgical Partners International, Inc.+. 20,400 797,844
----------
4,890,007
----------
Value
Security Description Shares (Note 3)
-------------------------------------------------------------
Internet Content -- 0.7%
Blue Nile, Inc.+........................ 20,600 $ 651,784
-----------
Internet Software -- 3.4%
Openwave Systems, Inc.+................. 26,600 478,268
Symantec Corp.+......................... 107,900 2,445,014
-----------
2,923,282
-----------
Leisure & Tourism -- 3.7%
Boyd Gaming Corp........................ 10,600 457,072
Royal Caribbean Cruises, Ltd............ 44,300 1,913,760
Scientific Games Corp., Class A+........ 26,600 824,600
-----------
3,195,432
-----------
Machinery -- 2.9%
IDEX Corp............................... 58,500 2,489,175
-----------
Manufacturing -- 6.8%
Matthews International Corp., Class A... 13,800 521,502
Roper Industries, Inc................... 135,700 5,331,653
-----------
5,853,155
-----------
Medical Products -- 6.1%
Advanced Neuromodulation Systems, Inc.+. 63,200 2,999,472
Animas Corp.+........................... 28,400 445,880
ID Biomedical Corp.+.................... 36,100 1,084,805
Techne Corp.+........................... 10,600 603,988
Vnus Medical Technologies, Inc.+........ 11,400 118,788
-----------
5,252,933
-----------
Metals & Mining -- 2.4%
Arch Coal, Inc.......................... 21,300 1,437,750
RTI International Metals, Inc.+......... 16,000 629,600
-----------
2,067,350
-----------
Pharmaceuticals -- 11.6%
BioMarin Pharmaceutical, Inc.+.......... 36,100 315,153
CV Therapeutics, Inc.+.................. 21,300 569,775
Cypress Bioscience, Inc.+............... 78,900 426,849
DUSA Pharmaceuticals, Inc.+............. 21,800 231,080
Integra Lifesciences Holdings Corp.+.... 131,100 5,015,886
Medicines Co.+.......................... 78,900 1,815,489
Onyx Pharmaceuticals, Inc.+............. 12,800 319,744
Par Pharmaceutical Cos., Inc.+.......... 36,100 960,982
Renovis, Inc.+.......................... 26,600 359,898
-----------
10,014,856
-----------
Restaurants -- 0.4%
Texas Roadhouse, Inc., Class A+......... 24,000 357,600
-----------
Retail -- 1.1%
Gymboree Corp.+......................... 72,500 988,900
-----------
Telecommunications -- 7.3%
ADTRAN, Inc............................. 21,300 670,950
Arris Group, Inc.+...................... 53,200 630,952
Jamdat Mobile, Inc.+.................... 400 8,400
SafeNet, Inc.+.......................... 90,900 3,300,579
Tekelec+................................ 78,500 1,644,575
-----------
6,255,456
-----------
30
SunAmerica Growth Opportunities Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
COMMON STOCK (continued)
Transportation -- 3.0%
Continental Airlines, Inc., Class B+. 88,200 $ 852,012
Hornbeck Offshore Services, Inc.+.... 48,700 1,783,881
-----------
2,635,893
-----------
Total Long-Term Investment Securities
(cost $68,701,300).................. 80,947,754
-----------
REPURCHASE AGREEMENTS -- 4.3%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)....... $ 701,000 701,000
UBS Securities LLC
Joint Repurchase Agreement(1)....... 3,000,000 3,000,000
-----------
Total Repurchase Agreements
(cost $3,701,000)................... 3,701,000
-----------
TOTAL INVESTMENTS --
(cost $72,402,300)(2)............... 98.2% 84,648,754
Other assets less liabilities.......... 1.8 1,514,098
---------- -----------
NET ASSETS -- 100.0% $86,162,852
========== ===========
- --------
+ 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
31
SunAmerica New Century Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Electronics.................... 12.1%
Manufacturing.................. 10.1
Energy Sources................. 7.8
Aerospace & Military Technology 6.6
Repurchase Agreements.......... 6.1
Banks.......................... 5.9
Telecommunications............. 5.3
Medical Products............... 5.0
Business Services.............. 4.6
Leisure & Tourism.............. 4.0
Financial Services............. 3.6
Pharmaceuticals................ 3.6
Internet Software.............. 3.2
Retail......................... 2.7
Computer Software.............. 2.6
Energy Services................ 2.6
Health Services................ 2.4
Machinery...................... 2.2
Broadcasting & Media........... 1.7
Household & Personal Products.. 1.6
Computers & Business Equipment. 1.4
Apparel & Textiles............. 1.0
Food, Beverage & Tobacco....... 1.0
Entertainment Products......... 0.7
Insurance...................... 0.6
Housing & Household Durables... 0.5
Forest Products................ 0.3
----
99.2%
====
- --------
* Calculated as a percentage of net assets.
32
SunAmerica New Century Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
--------------------------------------------------------------
COMMON STOCK -- 93.1%
Aerospace & Military Technology -- 6.6%
Alliant Techsystems, Inc.+............... 30,900 $ 2,306,685
DRS Technologies, Inc.................... 37,700 1,860,872
General Dynamics Corp.................... 10,000 1,195,500
Goodrich Corp............................ 27,000 1,197,180
-----------
6,560,237
-----------
Apparel & Textiles -- 1.0%
Coach, Inc.+............................. 32,400 1,016,064
-----------
Banks -- 5.9%
Hibernia Corp., Class A.................. 120,200 3,610,808
Signature Bank+.......................... 82,500 2,226,675
-----------
5,837,483
-----------
Broadcasting & Media -- 1.7%
Radio One, Inc., Class D+................ 51,000 670,650
Univision Communications, Inc., Class A+. 38,500 1,021,405
-----------
1,692,055
-----------
Business Services -- 4.6%
Fastenal Co.............................. 33,700 2,058,733
Stericycle, Inc.+........................ 43,200 2,468,880
-----------
4,527,613
-----------
Computer Software -- 2.6%
Adobe Systems, Inc....................... 37,700 1,125,345
Pixar+................................... 33,400 1,486,634
-----------
2,611,979
-----------
Computers & Business Equipment -- 1.4%
Network Appliance, Inc.+................. 59,000 1,400,660
-----------
Electronics -- 12.1%
Analog Devices, Inc...................... 61,600 2,287,824
Broadcom Corp., Class A+................. 25,000 1,172,750
Flextronics International, Ltd.+......... 181,600 2,333,560
L-3 Communications Holdings, Inc......... 17,200 1,360,004
Marvell Technology Group, Ltd.+.......... 59,000 2,720,490
National Semiconductor Corp.............. 61,000 1,604,300
Symbol Technologies, Inc................. 2,078 20,115
Waters Corp.+............................ 13,000 540,800
-----------
12,039,843
-----------
Energy Services -- 2.6%
Cooper Cameron Corp.+.................... 16,100 1,190,273
Patterson-UTI Energy, Inc................ 39,900 1,439,592
-----------
2,629,865
-----------
Energy Sources -- 7.8%
EOG Resources, Inc....................... 54,600 4,089,540
Peabody Energy Corp...................... 28,700 2,420,845
XTO Energy, Inc.......................... 27,000 1,223,640
-----------
7,734,025
-----------
Entertainment Products -- 0.7%
Harman International Industries, Inc..... 6,400 654,528
-----------
Financial Services -- 3.6%
CapitalSource, Inc.+..................... 23,000 501,400
Providian Financial Corp.+............... 176,900 3,127,592
-----------
3,628,992
-----------
Value
Security Description Shares (Note 3)
---------------------------------------------------------------
Food, Beverage & Tobacco -- 1.0%
The Hershey Co............................ 17,400 $ 979,794
-----------
Forest Products -- 0.3%
Smurfit-Stone Container Corp.+............ 33,000 341,880
-----------
Health Services -- 2.4%
Cerner Corp.+............................. 7,000 608,510
Coventry Health Care, Inc.+............... 8,000 688,160
Laboratory Corp. of America Holdings+..... 10,800 526,068
Quest Diagnostics, Inc.................... 11,400 576,156
-----------
2,398,894
-----------
Household & Personal Products -- 1.6%
Clorox Co................................. 9,200 510,968
Fortune Brands, Inc....................... 13,800 1,122,354
-----------
1,633,322
-----------
Housing & Household Durables -- 0.5%
The Stanley Works......................... 10,800 504,144
-----------
Insurance -- 0.6%
Humana, Inc.+............................. 13,000 622,440
-----------
Internet Software -- 3.2%
Symantec Corp.+........................... 140,200 3,176,932
-----------
Leisure & Tourism -- 4.0%
Royal Caribbean Cruises, Ltd.............. 45,900 1,982,880
Scientific Games Corp., Class A+.......... 20,200 626,200
Starwood Hotels & Resorts Worldwide, Inc.. 24,100 1,377,797
-----------
3,986,877
-----------
Machinery -- 2.2%
Rockwell Automation, Inc.................. 41,700 2,205,930
-----------
Manufacturing -- 10.1%
Danaher Corp.............................. 40,200 2,163,966
Dover Corp................................ 64,200 2,618,718
ITT Industries, Inc....................... 26,700 3,033,120
Roper Industries, Inc..................... 57,300 2,251,317
-----------
10,067,121
-----------
Medical Products -- 5.0%
Bausch & Lomb, Inc........................ 6,400 516,352
Biomet, Inc............................... 16,100 558,831
C.R. Bard, Inc............................ 8,600 567,858
Kinetic Concepts, Inc.+................... 27,700 1,573,360
Millennium Pharmaceuticals, Inc.+......... 108,400 1,011,372
Neurocrine Biosciences, Inc.+............. 14,700 723,093
-----------
4,950,866
-----------
Pharmaceuticals -- 3.6%
Allergan, Inc............................. 11,400 1,044,468
Cypress Bioscience, Inc.+................. 114,600 619,986
Genzyme Corp.+............................ 19,500 1,396,980
Sepracor, Inc.+........................... 8,600 507,314
-----------
3,568,748
-----------
Retail -- 2.7%
Bed Bath & Beyond, Inc.+.................. 21,600 867,888
Chico's FAS, Inc.+........................ 14,000 515,200
Williams-Sonoma, Inc.+.................... 33,100 1,269,385
-----------
2,652,473
-----------
33
SunAmerica New Century Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------------
COMMON STOCK (continued)
Telecommunications -- 5.3%
Andrew Corp.+........................... 165,000 $ 1,839,750
EchoStar Communications Corp., Class A+. 34,000 1,005,380
NII Holdings, Inc.+..................... 28,800 2,432,160
-----------
5,277,290
-----------
Total Long-Term Investment Securities
(cost $82,068,682)..................... 92,700,055
-----------
REPURCHASE AGREEMENTS -- 6.1%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $6,102,000)...................... $6,102,000 6,102,000
-----------
TOTAL INVESTMENTS --
(cost $88,170,682)(2).................. 99.2% 98,802,055
Other assets less liabilities............. 0.8 820,028
---------- -----------
NET ASSETS -- 100.0% $99,622,083
========== ===========
- --------
+ 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
34
SunAmerica Growth and Income Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Financial Services............. 9.9%
Energy Sources................. 9.2
Broadcasting & Media........... 6.5
Aerospace & Military Technology 6.2
Banks.......................... 6.2
Computer Software.............. 6.0
Pharmaceuticals................ 5.6
Conglomerate................... 5.5
Food, Beverage & Tobacco....... 5.5
Telecommunications............. 5.1
Electronics.................... 5.0
Medical Products............... 4.0
Health Services................ 3.8
Insurance...................... 3.4
Apparel & Textiles............. 2.6
Retail......................... 2.4
Utilities...................... 2.3
Household & Personal Products.. 2.1
Chemicals...................... 1.9
Internet Software.............. 1.7
Repurchase Agreements.......... 1.7
Computers & Business Equipment. 1.5
Leisure & Tourism.............. 1.5
Energy Services................ 1.0
-----
100.6%
=====
- --------
* Calculated as a percentage of net assets.
35
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 98.9%
Aerospace & Military Technology -- 6.2%
Alliant Techsystems, Inc.+............ 28,900 $ 2,157,385
General Dynamics Corp................. 19,600 2,343,180
Goodrich Corp......................... 36,200 1,605,108
United Technologies Corp.............. 56,900 2,949,696
-----------
9,055,369
-----------
Apparel & Textiles -- 2.6%
NIKE, Inc., Class B................... 45,500 3,716,440
-----------
Banks -- 6.2%
Bank of America Corp.................. 95,000 3,999,500
U.S. Bancorp.......................... 93,500 2,625,480
Wells Fargo & Co...................... 39,500 2,313,515
-----------
8,938,495
-----------
Broadcasting & Media -- 6.5%
Comcast Corp., Class A+............... 72,800 2,138,864
News Corp., Class A................... 186,700 2,910,653
Time Warner, Inc...................... 239,700 4,340,967
-----------
9,390,484
-----------
Chemicals -- 1.9%
du Pont (E.I.) de Nemours & Co........ 71,500 2,800,655
-----------
Computer Software -- 6.0%
Adobe Systems, Inc.................... 53,800 1,605,930
Microsoft Corp........................ 193,900 4,989,047
Oracle Corp.+......................... 175,000 2,168,250
-----------
8,763,227
-----------
Computers & Business Equipment -- 1.5%
International Business Machines Corp.. 27,200 2,181,984
-----------
Conglomerate -- 5.5%
3M Co................................. 30,500 2,237,480
General Electric Co................... 129,100 4,346,797
Tyco International, Ltd............... 52,531 1,462,988
-----------
8,047,265
-----------
Electronics -- 5.0%
Applied Materials, Inc................ 125,300 2,125,088
Intel Corp............................ 112,800 2,780,520
L-3 Communications Holdings, Inc...... 28,800 2,277,216
-----------
7,182,824
-----------
Energy Services -- 1.0%
Schlumberger, Ltd..................... 17,100 1,442,898
-----------
Energy Sources -- 9.2%
Chevron Corp.......................... 74,000 4,790,020
Exxon Mobil Corp...................... 90,100 5,724,954
Marathon Oil Corp..................... 41,100 2,833,023
-----------
13,347,997
-----------
Financial Services -- 9.9%
American Express Co................... 50,300 2,889,232
Bear Stearns Cos., Inc................ 19,300 2,118,175
Capital One Financial Corp............ 27,300 2,170,896
Citigroup, Inc........................ 94,400 4,297,088
J.P. Morgan Chase & Co................ 84,500 2,867,085
-----------
14,342,476
-----------
Value
Security Description Shares (Note 3)
----------------------------------------------------------
Food, Beverage & Tobacco -- 5.5%
Altria Group, Inc.................. 39,300 $ 2,896,803
Diageo PLC Sponsored ADR........... 36,400 2,111,564
The Coca-Cola Co................... 68,200 2,945,558
------------
7,953,925
------------
Health Services -- 3.8%
Aetna, Inc......................... 18,100 1,559,134
UnitedHealth Group, Inc............ 31,100 1,747,820
WellPoint, Inc.+................... 29,700 2,251,854
------------
5,558,808
------------
Household & Personal Products -- 2.1%
Procter & Gamble Co................ 50,600 3,008,676
------------
Insurance -- 3.4%
Allstate Corp...................... 40,200 2,222,658
Chubb Corp......................... 30,000 2,686,500
------------
4,909,158
------------
Internet Software -- 1.7%
Symantec Corp.+.................... 110,000 2,492,600
------------
Leisure & Tourism -- 1.5%
Royal Caribbean Cruises, Ltd....... 50,600 2,185,920
------------
Medical Products -- 4.0%
Johnson & Johnson.................. 58,700 3,714,536
Medtronic, Inc..................... 38,000 2,037,560
------------
5,752,096
------------
Pharmaceuticals -- 5.6%
Abbott Laboratories................ 32,900 1,394,960
Amgen, Inc.+....................... 22,100 1,760,707
Pfizer, Inc........................ 112,650 2,812,871
Wyeth.............................. 47,600 2,202,452
------------
8,170,990
------------
Retail -- 2.4%
Home Depot, Inc.................... 36,800 1,403,552
Wal-Mart Stores, Inc............... 46,400 2,033,248
------------
3,436,800
------------
Telecommunications -- 5.1%
BellSouth Corp..................... 55,500 1,459,650
Cisco Systems, Inc.+............... 84,300 1,511,499
Nokia Oyj Sponsored ADR............ 86,800 1,467,788
QUALCOMM, Inc...................... 34,500 1,543,875
Sprint Nextel Corp................. 58,900 1,400,642
------------
7,383,454
------------
Utilities -- 2.3%
FPL Group, Inc..................... 70,000 3,332,000
------------
Total Long-Term Investment Securities
(cost $132,671,189)............... 143,394,541
------------
36
SunAmerica Growth and Income Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.7%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)..... $ 512,000 $ 512,000
UBS Securities LLC
Joint Repurchase Agreement(1)..... 2,000,000 2,000,000
------------
Total Repurchase Agreements
(cost $2,512,000)................. 2,512,000
------------
TOTAL INVESTMENTS --
(cost $135,183,189)(2)............ 100.6% 145,906,541
Liabilities in excess of other assets (0.6) (915,587)
---------- ------------
NET ASSETS -- 100.0% $144,990,954
========== ============
- --------
+ 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 -- AmericanDepository Receipt
See Notes to Financial Statements
37
SunAmerica Balanced Assets Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
U.S. Government Agencies....... 14.1%
Financial Services............. 13.4
Telecommunications............. 6.1
Banks.......................... 5.7
Energy Sources................. 5.4
Pharmaceuticals................ 5.0
Computer Software.............. 3.8
Food, Beverage, & Tobacco...... 3.6
Electronics.................... 3.5
Utilities...................... 3.5
Broadcasting & Media........... 3.2
Health Services................ 2.7
Repurchase Agreements.......... 2.7
Apparel & Textiles............. 2.4
Conglomerate................... 2.3
Leisure & Tourism.............. 2.3
Aerospace & Military Technology 2.2
Medical Products............... 2.2
Retail......................... 2.2
Manufacturing.................. 1.9
Computers & Business Equipment. 1.8
Insurance...................... 1.8
Foreign Government Agencies.... 1.6
Chemicals...................... 1.2
Energy Services................ 0.9
Internet Software.............. 0.8
Household & Personal Products.. 0.7
U.S. Government Obligations.... 0.6
Automotive..................... 0.5
Machinery...................... 0.5
Transportation................. 0.5
Internet Content............... 0.4
Restaurant..................... 0.3
Business Services.............. 0.2
Forest Products................ 0.2
Metals & Mining................ 0.2
Real Estate Companies.......... 0.2
Building Materials............. 0.1
Communication Equipment........ 0.1
-----
100.8%
=====
- --------
* Calculated as a percentage of net assets.
38
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
------------------------------------------------------------
COMMON STOCK -- 62.9%
Aerospace & Military Technology -- 2.1%
Alliant Techsystems, Inc.+............ 11,000 $ 821,150
Goodrich Corp......................... 25,000 1,108,500
United Technologies Corp.............. 41,600 2,156,544
------------
4,086,194
------------
Apparel & Textiles -- 2.4%
Coach, Inc.+.......................... 43,100 1,351,616
NIKE, Inc., Class B................... 40,700 3,324,376
------------
4,675,992
------------
Banks -- 3.7%
Bank of America Corp.................. 50,088 2,108,706
North Fork Bancorp., Inc.............. 29,700 757,350
U.S. Bancorp.......................... 36,400 1,022,112
Wachovia Corp......................... 33,300 1,584,747
Wells Fargo & Co...................... 27,000 1,581,390
------------
7,054,305
------------
Broadcasting & Media -- 2.0%
News Corp., Class A................... 146,400 2,282,376
Time Warner, Inc...................... 90,444 1,637,941
------------
3,920,317
------------
Chemicals -- 0.7%
du Pont (E.I.) de Nemours & Co........ 34,400 1,347,448
------------
Computer Software -- 3.7%
Adobe Systems, Inc.................... 27,000 805,950
EMC Corp.+............................ 78,300 1,013,202
Microsoft Corp........................ 125,278 3,223,402
Oracle Corp.+......................... 80,300 994,917
Pixar+................................ 24,000 1,068,240
------------
7,105,711
------------
Computers & Business Equipment -- 1.8%
Apple Computer, Inc.+................. 32,000 1,715,520
Dell, Inc.+........................... 25,100 858,420
International Business Machines Corp.. 10,385 833,085
------------
3,407,025
------------
Conglomerate -- 2.1%
3M Co................................. 11,500 843,640
General Electric Co................... 92,700 3,121,209
------------
3,964,849
------------
Electronics -- 3.5%
AMETEK, Inc........................... 28,100 1,207,457
Applied Materials, Inc................ 47,800 810,688
Intel Corp............................ 67,600 1,666,340
L-3 Communications Holdings, Inc...... 12,000 948,840
National Semiconductor Corp........... 42,200 1,109,860
Texas Instruments, Inc................ 31,200 1,057,680
------------
6,800,865
------------
Energy Services -- 0.8%
Transocean, Inc.+..................... 25,900 1,587,929
------------
Energy Sources -- 5.0%
Chevron Corp.......................... 49,100 3,178,243
ConocoPhillips........................ 25,900 1,810,669
Value
Security Description Shares (Note 3)
---------------------------------------------------------
Energy Sources (continued)
Exxon Mobil Corp................... 52,500 $ 3,335,850
Marathon Oil Corp.................. 19,200 1,323,456
------------
9,648,218
------------
Financial Services -- 6.8%
American Express Co................ 36,700 2,108,048
Capital One Financial Corp......... 31,700 2,520,784
Citigroup, Inc..................... 46,888 2,134,342
Goldman Sachs Group, Inc........... 18,600 2,261,388
J.P. Morgan Chase & Co............. 46,300 1,570,959
Merrill Lynch & Co., Inc........... 40,500 2,484,675
------------
13,080,196
------------
Food, Beverage & Tobacco -- 3.0%
Altria Group, Inc.................. 29,900 2,203,929
Diageo PLC Sponsored ADR........... 13,400 777,334
PepsiCo, Inc....................... 24,200 1,372,382
The Coca-Cola Co................... 32,700 1,412,313
------------
5,765,958
------------
Health Services -- 2.5%
Aetna, Inc......................... 6,700 577,138
Cardinal Health, Inc............... 16,000 1,015,040
UnitedHealth Group, Inc............ 22,100 1,242,020
WellPoint, Inc.+................... 25,600 1,940,992
------------
4,775,190
------------
Household & Personal Products -- 0.7%
Procter & Gamble Co................ 22,500 1,337,850
------------
Insurance -- 1.1%
Allstate Corp...................... 14,900 823,821
Chubb Corp......................... 15,300 1,370,115
------------
2,193,936
------------
Internet Content -- 0.4%
Yahoo!, Inc.+...................... 20,100 680,184
------------
Internet Software -- 0.8%
Symantec Corp.+.................... 64,300 1,457,038
------------
Leisure & Tourism -- 2.0%
Carnival Corp...................... 26,000 1,299,480
Harrah's Entertainment, Inc........ 12,800 834,432
Hilton Hotels Corp................. 44,200 986,544
Royal Caribbean Cruises, Ltd....... 18,866 815,011
------------
3,935,467
------------
Machinery -- 0.5%
IDEX Corp.......................... 23,300 991,415
------------
Manufacturing -- 1.9%
Danaher Corp....................... 19,100 1,028,153
Dover Corp......................... 41,600 1,696,864
ITT Industries, Inc................ 8,811 1,000,930
------------
3,725,947
------------
Medical Products -- 1.9%
Johnson & Johnson.................. 36,900 2,335,032
Medtronic, Inc..................... 26,000 1,394,120
------------
3,729,152
------------
39
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Shares/
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------------
COMMON STOCK (continued)
Pharmaceuticals -- 4.8%
Abbott Laboratories.......................... 37,100 $ 1,573,040
Amgen, Inc.+................................. 21,600 1,720,872
Genentech, Inc.+............................. 18,800 1,583,148
Genzyme Corp.+............................... 20,100 1,439,964
Pfizer, Inc.................................. 60,714 1,516,028
Schering-Plough Corp......................... 64,300 1,353,515
------------
9,186,567
------------
Restaurants -- 0.3%
McDonald's Corp.............................. 16,000 535,840
------------
Retail -- 2.0%
Home Depot, Inc.............................. 35,100 1,338,714
Urban Outfitters, Inc.+...................... 26,200 770,280
Wal-Mart Stores, Inc......................... 24,300 1,064,826
Walgreen Co.................................. 16,100 699,545
------------
3,873,365
------------
Telecommunications -- 4.6%
BellSouth Corp............................... 40,400 1,062,520
Cisco Systems, Inc.+......................... 67,900 1,217,447
Corning, Inc.+............................... 48,200 931,706
Motorola, Inc................................ 59,400 1,312,146
QUALCOMM, Inc................................ 42,650 1,908,587
Sprint Nextel Corp........................... 63,800 1,517,164
Verizon Communications, Inc.................. 25,100 820,519
------------
8,770,089
------------
Utilities -- 1.8%
FPL Group, Inc............................... 25,600 1,218,560
The Southern Co.............................. 31,500 1,126,440
TXU Corp..................................... 10,600 1,196,528
------------
3,541,528
------------
Total Common Stock
(cost $115,346,082)......................... 121,178,575
------------
PREFERRED STOCK -- 0.3%
Financial Services -- 0.3%
Fannie Mae,
Series O
7.00%(3).................................... 2,250 124,312
Freddie Mac
5.70%....................................... 2,093 100,778
General Electric Capital Corp.
8.00%(4).................................... 14,000 333,900
------------
Total Preferred Stock
(cost $573,093)............................. 558,990
------------
ASSET-BACKED SECURITIES -- 2.6%
Banks -- 0.3%
Wachovia Bank Commercial Mtg. Trust
Series 2005-WL5A Class B
4.00% due 10/15/05*(3)(5)................... $475,000 474,530
------------
Financial Services -- 2.3%
American Express Credit Account Master Trust
Series 2005-7 Class B
4.04% due 10/15/15(3)....................... 600,000 599,833
Banc of America Commercial Mtg., Inc.
Series 2005-5 Class AJ
5.33% due 09/10/15(5)#...................... 275,000 276,386
Shares/
Principal Value
Security Description Amount (Note 3)
----------------------------------------------------------------------
Financial Services (continued)
Citigroup Mtg. Loan Trust, Inc.
Series 2005-WF2 Class AF6B
5.55% due 08/25/35#(4)(7).................... 540,000 $ 540,648
Lehman Brothers Floating Rate Commercial Mtg.
Trust Series 2005-LLFA Class A2
3.93% due 10/15/05*(3)(5).................... 75,000 74,903
Lehman Brothers Floating Rate Commercial Mtg.
Trust Series 2005-LLFA Class B
3.98% due 10/15/05*(3)(5).................... 75,000 74,903
Morgan Stanley Capital I
Series 2005-T19 Class AJ
4.99% due 10/12/05(5)(6)..................... 100,000 98,987
Morgan Stanley Capital I
Series 2005-T19 Class B
5.06% due 10/12/05(5)(6)..................... 50,000 49,371
Morgan Stanley Capital I
Series 2005-T19 Class C
5.16% due 10/12/05(5)(6)..................... 25,000 24,622
Morgan Stanley Capital I
Series 2005-T19 Class D
5.29% due 10/12/05(5)(6)..................... 50,000 49,474
Morgan Stanley Dean Witter Capital I
Series 2000-LIF2 Class A2
7.20% due 10/15/33(5)........................ 2,500,000 2,731,268
------------
4,520,395
------------
Total Asset-Backed Securities
(cost $5,242,372)............................ 4,994,925
------------
CORPORATE BONDS -- 13.4%
Aerospace & Military Technology -- 0.1%
Raytheon Co.
6.75% due 08/15/07........................... 220,000 227,333
------------
Automotive -- 0.5%
Cooper-Standard Automotive, Inc.
8.38% due 12/15/14........................... 25,000 21,000
DaimlerChrysler North America Holding Corp.
4.88% due 06/15/10........................... 75,000 73,501
Dana Corp.
5.85% due 01/15/15........................... 75,000 58,829
Dura Operating Corp.
8.63% due 04/15/12........................... 40,000 35,600
Ford Motor Co.
6.38% due 02/01/29........................... 86,000 61,705
Ford Motor Co.
7.45% due 07/16/31........................... 100,000 78,000
Hertz Corp.
4.70% due 10/02/06........................... 34,000 33,632
Hertz Corp.
6.90% due 08/15/14........................... 137,000 126,891
Hertz Corp.
7.40% due 03/01/11........................... 265,000 256,792
Hertz Corp.
7.63% due 06/01/12........................... 130,000 124,814
Rent-Way, Inc.
11.88% due 06/15/10.......................... 145,000 159,500
Navistar International Corp.
6.25% due 03/01/12........................... 5,000 4,750
------------
1,035,014
------------
40
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
-------------------------------------------------------------
CORPORATE BONDS (continued)
Banks -- 1.4%
American Express Centurion Bank
3.93% due 10/17/05(3).............. $ 129,000 $ 128,309
Bank of America Corp.
7.80% due 09/15/16................. 145,000 176,510
BankBoston Capital Trust IV
4.39% due 12/08/05(3).............. 222,000 214,921
Charter One Bank FSB
6.38% due 05/15/12................. 377,000 408,978
Credit Suisse First Boston New York
6.50% due 05/01/08*................ 129,000 134,506
First Maryland Capital II
4.54% due 11/01/05(3).............. 196,000 191,621
HSBC Bank USA
5.63% due 08/15/35................. 80,000 78,799
Independence Community Bank Corp.
4.90% due 09/23/10................. 65,000 64,452
J.P. Morgan Chase Bank NA
6.13% due 11/01/08................. 136,000 141,541
Key Bank USA NA
7.00% due 02/01/11................. 89,000 97,829
PNC Funding Corp.
5.75% due 08/01/06................. 240,000 242,337
Popular North America, Inc.
4.25% due 04/01/08................. 225,000 222,078
Sovereign Bancorp, Inc.
4.80% due 09/01/10*................ 140,000 139,005
US Bank NA
3.90% due 08/15/08................. 38,000 37,293
Wachovia Corp.
5.50% due 08/01/35................. 160,000 156,094
Washington Mutual Bank FA
5.50% due 01/15/13................. 238,000 243,059
Wells Fargo & Co.
3.97% due 12/15/05(3).............. 75,000 75,113
------------
2,752,445
------------
Broadcasting & Media -- 1.1%
Chancellor Media CCU
8.00% due 11/01/08................. 182,000 195,972
Charter Communications Holdings LLC
11.13% due 01/15/11................ 255,000 196,350
Clear Channel Communications, Inc.
6.88% due 06/15/18................. 150,000 153,775
COX Communications, Inc.
7.63% due 06/15/25................. 88,000 101,367
COX Communications, Inc.
7.75% due 11/01/10................. 376,000 416,070
Historic TW, Inc.
6.63% due 05/15/29................. 173,000 180,959
News America, Inc.
7.30% due 04/30/28................. 80,000 88,810
Nexstar Finance, Inc.
7.00% due 01/15/14................. 135,000 121,500
Paxson Communications Corp.
12.25% due 01/15/09(4)............. 230,000 223,100
Time Warner Entertainment Co. LP
8.38% due 03/15/23................. 221,000 268,070
Young Broadcasting, Inc.
10.00% due 03/01/11................ 125,000 118,125
------------
2,064,098
------------
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
Building Materials -- 0.1%
American Standard, Inc.
7.63% due 02/15/10................. $ 177,000 $ 194,190
------------
Business Services -- 0.2%
Affinity Group, Inc.
9.00% due 02/15/12................. 65,000 65,000
Monitronics International, Inc.
11.75% due 09/01/10................ 85,000 85,850
PHH Corp.
6.00% due 03/01/08................. 216,000 219,706
Service Corp. International
6.75% due 04/01/16................. 60,000 60,300
------------
430,856
------------
Chemicals -- 0.5%
BCI US Finance Corp.
9.10% due 10/15/05*(3)............. 175,000 176,750
Cytec Industries, Inc.
5.50% due 10/01/10................. 65,000 64,720
Cytec Industries, Inc.
6.00% due 10/01/15................. 195,000 194,278
du Pont (E.I.) de Nemours & Co.
4.13% due 04/30/10................. 38,000 37,217
ICI North America
8.88% due 11/15/06................. 141,000 147,117
Lubrizol Corp.
5.88% due 12/01/08................. 80,000 82,115
Lubrizol Corp.
6.50% due 10/01/34................. 80,000 83,877
The Dow Chemical Co.
7.38% due 03/01/23................. 161,000 191,305
------------
977,379
------------
Communication Equipment -- 0.1%
Motorola, Inc.
6.50% due 09/01/25................. 265,000 288,727
------------
Computer Software -- 0.1%
Sungard Data Systems, Inc.
10.25% due 08/15/15*............... 85,000 86,062
Unisys Corp.
8.00% due 10/15/12................. 50,000 49,125
------------
135,187
------------
Computers & Business Equipment -- 0.0%
Activant Solutions, Inc.
9.50% due 10/03/05*(3)............. 30,000 30,600
------------
Energy Services -- 0.1%
Hanover Compressor Co.
9.00% due 06/01/14................. 75,000 83,344
Seitel, Inc.
11.75% due 07/15/11................ 100,000 111,000
------------
194,344
------------
Energy Sources -- 0.3%
Calpine Corp.
8.75% due 07/15/13*................ 75,000 53,063
Encore Acquisition Co.
6.00% due 07/15/15*................ 41,000 39,975
41
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------------
CORPORATE BONDS (continued)
Energy Sources (continued)
Encore Acquisition Co.
6.25% due 04/15/14........................ $ 24,000 $ 23,880
Enterprise Products Operating LP
4.95% due 06/01/10........................ 150,000 147,424
Enterprise Products Operating LP,
Series B
5.00% due 03/01/15........................ 65,000 61,674
Hilcorp Finance Co.
10.50% due 09/01/10*...................... 125,000 137,500
Indiantown Cogeneration LP,
Series A-9
9.26% due 12/15/10........................ 85,396 92,901
------------
556,417
------------
Financial Services -- 3.5%
Associates Corp. of North America
6.95% due 11/01/18........................ 70,000 81,724
BAE Systems Holdings, Inc.
4.75% due 08/15/10*....................... 290,000 286,383
BAE Systems Holdings, Inc.
5.20% due 08/15/15*....................... 216,000 213,028
BAE Systems Holdings, Inc.
6.40% due 12/15/11*....................... 292,000 311,308
Barrick Gold Finance Co.
5.80% due 11/15/34........................ 80,000 78,642
Caterpillar Financial Services Corp.
4.30% due 06/01/10........................ 140,000 137,906
Caterpillar Financial Services Corp.
4.70% due 03/15/12........................ 150,000 149,015
Chukchansi Economic Development Authority
14.50% due 06/15/09*...................... 300,000 361,500
Citigroup Global Markets Holdings, Inc.
5.88% due 03/15/06........................ 276,000 277,962
Consolidated Communications Holdings, Inc.
9.75% due 04/01/12........................ 165,000 175,725
Ford Motor Credit Co.
5.70% due 01/15/10........................ 96,000 87,208
Ford Motor Credit Co.
5.80% due 01/12/09........................ 135,000 125,966
Ford Motor Credit Co.
6.38% due 11/05/08........................ 179,000 172,057
Ford Motor Credit Co.
7.00% due 10/01/13........................ 50,000 46,368
General Electric Capital Corp.
2.80% due 01/15/07........................ 261,000 255,769
General Electric Capital Corp.
Series A
5.38% due 03/15/07........................ 216,000 218,737
General Electric Capital Corp.
Series A
6.75% due 03/15/32........................ 243,000 285,824
General Motors Acceptance Corp.
6.07% due 12/01/05(3)..................... 95,000 79,868
General Motors Acceptance Corp.
8.00% due 11/01/31........................ 450,000 392,926
HSBC Finance Corp.
4.75% due 07/15/13........................ 292,000 285,001
Principal Value
Security Description Amount (Note 3)
----------------------------------------------------------
Financial Services (continued)
ING USA Global Funding Trust
4.50% due 10/01/10.............. $ 130,000 $ 128,230
John Deere Capital Corp.
Series D
4.50% due 08/25/08.............. 344,000 342,659
J.P. Morgan Chase & Co.
5.15% due 10/01/15.............. 156,000 155,039
Lehman Brothers Holdings, Inc.
6.63% due 01/18/12.............. 130,000 141,416
MBNA Corp.
4.63% due 09/15/08.............. 233,000 232,830
Merrill Lynch & Co., Inc.,
Series C
4.79% due 08/04/10.............. 112,000 111,613
Morgan Stanley
4.00% due 01/15/10.............. 16,000 15,485
NGC Corp. Capital Trust,
Series B
8.32% due 06/01/27.............. 200,000 179,500
Nisource Finance Corp.
5.45% due 09/15/20.............. 60,000 58,691
PNC Bank NA
4.88% due 09/21/17.............. 130,000 126,156
Pricoa Global Funding I
4.63% due 06/25/12*............. 70,000 68,632
PX Escrow Corp.
9.63% due 02/01/06(4)........... 75,000 73,219
Residential Capital Corp.
6.38% due 06/30/10*............. 291,000 294,806
Residential Capital Corp.
6.88% due 06/30/15*............. 91,000 95,223
SLM Corp.,
Series A
3.81% due 10/25/05(3)........... 70,000 69,944
Sprint Capital Corp.
6.88% due 11/15/28.............. 182,000 201,051
Transamerica Finance Corp.
6.40% due 09/15/08.............. 75,000 78,637
Washington Mutual, Inc.
5.25% due 09/15/17.............. 65,000 64,038
Xlliac Global Funding
4.80% due 08/10/10*............. 205,000 203,676
------------
6,663,762
------------
Food, Beverage & Tobacco -- 0.5%
Alliance One International, Inc.
12.75% due 11/15/12*............ 225,000 205,875
American Stores Co.
8.00% due 06/01/26.............. 197,000 182,957
Archer-Daniels-Midland Co.
5.38% due 09/15/35.............. 80,000 77,512
Coca-Cola Enterprises, Inc.
8.50% due 02/01/22.............. 34,000 44,760
ConAgra Foods, Inc.
7.13% due 10/01/26.............. 80,000 89,032
Monsanto Co.
5.50% due 08/15/25*............. 348,000 338,966
------------
939,102
------------
42
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------
CORPORATE BONDS (continued)
Forest Products -- 0.2%
Crown Cork & Seal Co., Inc.
8.00% due 04/15/23............... $ 60,000 $ 59,025
Georgia-Pacific Corp.
8.00% due 01/15/14............... 65,000 71,175
Packaging Corp. of America
5.75% due 08/01/13............... 122,000 118,026
Pliant Corp.
11.13% due 09/01/09.............. 92,000 79,120
------------
327,346
------------
Health Services -- 0.2%
HCA, Inc.
6.95% due 05/01/12............... 150,000 154,295
Psychiatric Solutions, Inc.
7.75% due 07/15/15*.............. 100,000 103,250
Tenet Healthcare Corp.
6.50% due 06/01/12............... 25,000 23,313
Tenet Healthcare Corp.
7.38% due 02/01/13............... 125,000 118,437
------------
399,295
------------
Insurance -- 0.6%
Allstate Financial Global Funding
5.25% due 02/01/07*.............. 65,000 65,403
Americo Life, Inc.
7.88% due 05/01/13*.............. 134,000 139,238
Chubb Corp.
6.00% due 11/15/11............... 91,000 96,128
Liberty Mutual Group
6.50% due 03/15/35*.............. 80,000 74,194
Metropolitan Life Global Funding
I 4.25% due 07/30/09*............ 143,000 140,865
Metropolitan Life Global Funding
I 4.63% due 08/19/10*............ 65,000 64,558
MIC Financing Trust I
8.38% due 02/01/27*.............. 67,000 69,259
Ohio Casualty Corp.
7.30% due 06/15/14............... 201,000 216,642
The Allstate Corp.
7.20% due 12/01/09............... 238,000 258,979
------------
1,125,266
------------
Leisure & Tourism -- 0.3%
American Airlines, Inc.
Series 2001-1 Class A-2
6.82% due 05/23/11............... 200,000 183,523
Delta Airlines, Inc.
8.30% due 12/15/29(8)(9)......... 60,000 10,800
Delta Airlines, Inc.
10.00% due 08/15/08(8)(9)........ 75,000 13,500
Harrahs Operating Co., Inc.
5.75% due 10/01/17*.............. 65,000 63,623
Riviera Holdings Corp.
11.00% due 06/15/10.............. 55,000 59,400
Silver Legacy Capital Corp.
10.13% due 03/01/12.............. 120,000 125,400
Worldspan LP
10.04% due 11/15/05*(3).......... 100,000 88,000
------------
544,246
------------
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------
Medical Products -- 0.3%
CDRV Investors, Inc.
9.63% due 01/01/15(4)............... $ 80,000 $ 45,600
Genetech, Inc.
5.25% due 07/15/35*................. 347,000 334,334
Universal Hospital Services, Inc.
10.13% due 11/01/11................. 135,000 138,375
------------
518,309
------------
Metals & Mining -- 0.0%
Newmont Mining Corp.
8.63% due 05/15/11.................. 65,000 76,456
------------
Pharmaceuticals -- 0.1%
Merck & Co., Inc.
2.50% due 03/30/07.................. 129,000 125,110
Wyeth
6.95% due 03/15/11.................. 123,000 135,114
------------
260,224
------------
Real Estate Companies -- 0.1%
EOP Operating LP
8.38% due 03/15/06.................. 224,000 227,881
------------
Retail -- 0.1%
Wal-Mart Stores, Inc.
5.25% due 09/01/35.................. 192,000 185,805
------------
Telecommunications -- 1.1%
Alltel Corp.
4.66% due 05/17/07.................. 169,000 168,843
American Cellular Corp.,
Series B
10.00% due 08/01/11................. 225,000 245,250
Corning, Inc.
5.90% due 03/15/14.................. 97,000 98,412
Corning, Inc.
6.85% due 03/01/29.................. 76,000 76,702
GTE Corp.
6.94% due 04/15/28.................. 80,000 87,452
GTE Northwest, Inc.
Series D
5.55% due 10/15/08.................. 70,000 71,041
LCI International, Inc.
7.25% due 06/15/07.................. 390,000 380,250
New Cingular Wireless Services, Inc.
7.88% due 03/01/11.................. 445,000 506,631
Suncom Wireless, Inc.
8.50% due 06/01/13.................. 25,000 23,813
Verizon New York, Inc.,
Series A
6.88% due 04/01/12.................. 65,000 69,537
Verizon New York, Inc.,
Series B
7.38% due 04/01/32.................. 297,000 326,860
------------
2,054,791
------------
Transportation -- 0.5%
Atlas Air, Inc.
Series 1999-1 Class B
7.63% due 01/02/15.................. 499,529 415,419
Burlington Northern Santa Fe Corp.
7.29% due 06/01/36.................. 86,000 105,833
43
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
------------------------------------------------------------
CORPORATE BONDS (continued)
Transportation (continued)
Burlington Northern Santa Fe Corp.
8.13% due 04/15/20................ $ 123,000 $ 156,012
Norfolk Southern Corp.
5.59% due 05/17/25................ 195,000 194,928
------------
872,192
------------
Utilities -- 1.4%
AES Corp.
7.75% due 03/01/14................ 150,000 159,000
CenterPoint Energy Resources Corp.
7.75% due 02/15/11................ 130,000 146,009
Consolidated Edison, Inc.
3.63% due 08/01/08................ 146,000 142,156
Consolidated Natural Gas Co.
Series B
5.38% due 11/01/06................ 147,000 148,120
Dominion Resources, Inc.
5.95% due 06/15/35................ 85,000 83,035
El Paso Production Holding Co.
7.75% due 06/01/13................ 315,000 329,175
FirstEnergy Corp.,
Series B
6.45% due 11/15/11................ 80,000 85,181
Florida Power & Light Co.
5.40% due 09/01/35................ 160,000 158,375
Florida Power Corp.
4.50% due 06/01/10................ 75,000 73,932
KeySpan Corp.
4.90% due 05/16/08................ 357,000 358,486
Mirant Corp.
7.90% due 07/15/09+*(8)(9)........ 150,000 182,625
Pepco Holdings, Inc.
5.50% due 08/15/07................ 142,000 143,778
PSEG Power LLC
7.75% due 04/15/11................ 130,000 145,561
PSI Energy, Inc.
7.85% due 10/15/07................ 219,000 231,821
Reliant Energy, Inc.
9.50% due 07/15/13................ 125,000 138,125
Virginia Electric & Power Co.,
Series A
5.75% due 03/31/06................ 179,000 180,100
------------
2,705,479
------------
Total Corporate Bonds
(cost $25,683,304)................ 25,786,744
------------
CONVERTIBLE BONDS -- 0.3%
Leisure & Tourism -- 0.0%
Six Flags, Inc.
4.50% due 05/15/15................ 40,000 50,450
------------
Utilities -- 0.3%
Calpine Corp.
4.75% due 11/15/23................ 1,150,000 626,750
------------
Total Convertible Bonds
(cost $848,465)................... 677,200
------------
Principal Value
Security Description Amount (Note 3)
--------------------------------------------------------------------
FOREIGN BONDS & NOTES -- 2.2%
Banks -- 0.3%
China Development Bank
5.00% due 10/15/15#....................... $ 140,000 $ 138,404
HBOS Treasury Services PLC
3.50% due 11/30/07*....................... 281,000 274,738
NIB Capital Bank NV
5.82% due 12/11/05*(6).................... 140,000 144,497
------------
557,639
------------
Broadcasting & Media -- 0.1%
Grupo Televisa SA
6.63% due 03/18/25........................ 139,000 139,523
------------
Conglomerate -- 0.2%
Tyco International Group SA
6.38% due 10/15/11........................ 65,000 69,282
Tyco International Group SA
6.75% due 02/15/11........................ 300,000 324,032
------------
393,314
------------
Energy Sources -- 0.1%
Nexen, Inc.
5.88% due 03/10/35........................ 92,000 90,179
Petro-Canada
5.95% due 05/15/35........................ 86,000 86,005
PTT Public Co., Ltd
5.88% due 08/03/35*....................... 96,000 92,162
------------
268,346
------------
Financial Services -- 0.5%
Aries Vermogensverwaltungs GmbH
9.60% due 10/25/14........................ 250,000 329,975
FBG Finance, Ltd.
5.88% due 06/15/35*....................... 85,000 83,307
HBOS Capital Funding
6.85% due 03/29/49........................ 200,000 205,760
Nell AF SARL
8.38% due 08/15/15*....................... 150,000 146,625
Resona Preferred Global Securities Cayman,
Ltd.
7.19% due 07/30/06*(6).................... 65,000 67,292
UFJ Finance Aruba AEC
6.75% due 07/15/13........................ 130,000 142,747
------------
975,706
------------
Food, Beverage & Tobacco -- 0.0%
Molson Coors Capital Finance ULC
4.85% due 09/22/10*....................... 65,000 64,490
------------
Forest Products -- 0.0%
Abitibi-Consolidated, Inc.
8.55% due 08/01/10........................ 65,000 66,138
------------
Insurance -- 0.1%
Fairfax Financial Holdings, Ltd.
8.25% due 10/01/15........................ 115,000 109,250
------------
Machinery -- 0.0%
Atlas Copco AB
6.50% due 04/01/08*....................... 89,000 91,905
------------
Metals & Mining -- 0.2%
Falconbridge, Ltd.
8.38% due 02/15/11........................ 137,000 155,889
44
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------
FOREIGN BONDS & NOTES (continued)
Metals & Mining (continued)
Teck Cominco, Ltd.
6.13% due 10/01/35.............. $ 150,000 $ 147,094
------------
302,983
------------
Pharmaceuticals -- 0.1%
Elan Finance Corp. PLC
7.75% due 11/15/11*............. 165,000 145,200
------------
Real Estate Companies -- 0.1%
Brascan Corp.
8.13% due 12/15/08.............. 157,000 172,030
------------
Retail -- 0.1%
Jean Coutu Group (PJC), Inc.
8.50% due 08/01/14.............. 100,000 99,500
------------
Telecommunications -- 0.4%
British Telecommunications PLC
7.88% due 12/15/05.............. 38,000 38,258
Telenet Group Holding NV
11.50% due 06/15/14*(4)......... 300,000 245,250
TELUS Corp.
7.50% due 06/01/07.............. 283,000 295,524
TELUS Corp.
8.00% due 06/01/11.............. 238,000 272,282
------------
851,314
------------
Total Foreign Bonds & Notes
(cost $4,223,112)............... 4,237,338
------------
FOREIGN GOVERNMENT AGENCIES -- 1.6%
Federal Republic of Brazil
8.00% due 01/15/18.............. 200,000 211,800
Federal Republic of Brazil
10.50% due 07/14/14............. 205,000 248,153
Republic of Argentina
4.01% due 08/03/12(3)........... 230,000 184,345
Republic of Turkey
9.00% due 06/30/11.............. 190,000 218,737
Republic of Turkey
11.88% due 01/15/30............. 380,000 557,650
Republic of Venezuela
8.50% due 10/08/14.............. 100,000 111,000
Republic of Venezuela
9.25% due 09/15/27.............. 500,000 591,500
Russian Federation
5.00% due 03/31/30*(4).......... 125,000 143,437
Russian Federation
5.00% due 03/31/07.............. 350,000 402,150
United Mexican States,
Series A
6.63% due 03/03/15.............. 150,000 162,975
United Mexican States,
Series A
6.75% due 09/27/34.............. 112,000 119,280
United Mexican States,
Series A
7.50% due 04/08/33.............. 144,000 167,040
------------
Total Foreign Government Agencies
(cost $2,856,674)............... 3,118,067
------------
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS -- 0.6%
U.S Treasury Bonds -- 0.5%
5.38% due 02/15/31............... $ 505,000 $ 565,758
6.25% due 08/15/23............... 308,000 368,288
------------
934,046
------------
U.S. Treasury Notes -- 0.1%
3.88% due 09/15/10............... 155,000 152,808
------------
Total U.S. Government Obligations
(cost $1,097,188)............... 1,086,854
------------
U.S. GOVERNMENT AGENCIES -- 14.0%
Federal Home Loan Mortgage Corporation -- 5.0%
3.88% due 03/03/08............... 155,000 153,157
4.45% due 03/06/08............... 495,000 494,214
4.50% due 04/01/19............... 3,123,947 3,064,456
5.00% due 05/01/34............... 1,351,583 1,324,761
5.00% due 06/01/34............... 1,749,787 1,715,062
5.50% due 07/01/34............... 786,094 786,555
5.75% due 04/15/08............... 200,000 206,439
6.00% due 12/01/33............... 1,352,971 1,376,817
6.88% due 09/15/10............... 231,000 254,993
7.00% due 04/01/32............... 262,259 274,044
------------
9,650,498
------------
Federal National Mortgage Association -- 7.8%
1.75% due 06/16/06............... 50,000 49,125
3.88% due 05/15/07............... 350,000 347,190
3.88% due 02/01/08............... 295,000 290,573
4.50% due 02/01/35............... 723,624 690,639
5.00% due 07/01/18............... 1,006,585 1,004,629
5.00% due 08/01/18............... 1,045,423 1,043,392
5.00% due 07/01/33............... 1,613,280 1,583,033
5.50% due 10/01/17............... 335,382 340,432
5.50% due 11/01/17............... 594,765 603,721
5.50% due 06/01/19............... 566,019 574,419
5.50% due 12/01/33............... 2,915,241 2,916,593
6.00% due 06/01/17............... 429,616 441,989
6.00% due 12/01/33............... 1,025,541 1,042,849
6.00% due 05/01/34............... 442,623 450,118
6.00% due 07/01/34............... 712,049 724,176
6.00% due 10/01/34............... 320,395 325,820
6.00% due 06/01/35............... 996,741 1,013,623
6.50% due 09/01/10............... 170,998 176,898
6.50% due 09/01/32............... 1,204,613 1,241,191
6.50% due 04/01/34............... 211,033 210,288
------------
15,070,698
------------
Government National Mortgage Association -- 1.1%
5.50% due 05/15/33................. 681,706 688,617
5.50% due 09/15/33................. 343,573 347,056
5.50% due 12/15/33................. 885,336 894,342
7.50% due 01/15/32................. 228,356 242,505
7.50% due 04/15/32................. 1,249 1,326
------------
2,173,846
------------
Tennessee Valley Authority -- 0.1%
4.65% due 06/15/35................. 174,000 165,678
------------
Total U.S. Government Agencies
(cost $27,595,671)................ 27,060,720
------------
Total Long-Term Investment Securities
(cost $183,465,961)............... 188,699,413
------------
45
SunAmerica Balanced Assets Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
-------------------------------------------------------------------------
SHORT-TERM INVESTMENT SECURITIES -- 0.2%
CORPORATE BONDS -- 0.1%
Food, Beverage & Tobacco -- 0.1%
ConAgra Foods, Inc.
6.00% due 09/15/06
(cost $117,470).............................. $ 116,000 $ 117,454
------------
U.S.GOVERNMENT AGENCIES -- 0.1%
Federal Home Loan Bank -- 0.1%
5.13% due 03/06/06
(cost $151,817).............................. 150,000 150,685
------------
Total Short-Term Investment Securities
(cost $269,287).............................. 268,139
------------
REPURCHASE AGREEMENTS -- 2.7%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)................ 1,412,000 1,412,000
UBS Securities LLC
Joint Repurchase Agreement(1)................ 2,000,000 2,000,000
Agreement with State Street Bank & Trust Co.,
bearing interest at 1.75%, dated 09/30/05,
to be repurchased 10/03/05 in the amount
of $1,767,258 and collateralized by
$1,835,000 of United States Treasury Bills,
bearing interest at 3.72%, due 03/02/06 and
having an approximate aggregate value of
$1,806,558................................... 1,767,000 1,767,000
------------
Total Repurchase Agreements
(cost $5,179,000)............................ 5,179,000
------------
TOTAL INVESTMENTS --
(cost $188,914,248)(2)....................... 100.8% 194,146,552
Liabilities in excess of other assets........... (0.8) (1,528,105)
---------- ------------
NET ASSETS -- 100.0% $192,618,447
========== ============
- --------
+ 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. At September 30,
2005, the aggregate value of these securities was $6,625,447 representing
3.4% of net assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
# Fair valued security; see Note 3
(1) See Note 3 for details of Joint Repurchase Agreement
(2) See Note 6 for cost of investments on a tax basis
(3) Floating rate security where the rate fluctuates. The rate moves up or
down at each reset date. The rate reflected is as of September 30, 2005.
(4) "Step-up" security where the rate increases ("steps up") at a
predetermined rate. Rate shown reflects the increased rate.
(5) Commercial mortgage backed security
(6) Variable rate security -- the rate reflected is as of September 30, 2005;
maturity date reflects next reset date.
(7) Collateralized Mortgage Obligation
(8) Bond in default
(9) Company has filed Chapter 11 bankruptcy protection.
ADR -- AmericanDepository Receipt
See Notes to Financial Statements
46
SunAmerica International Equity Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Banks................... 17.9%
Energy Sources.......... 9.3
Retail.................. 8.6
Telecommunications...... 7.8
Pharmaceuticals......... 6.1
Financial Services...... 6.0
Automotive.............. 5.9
Insurance............... 5.0
Electronics............. 3.7
Medical Products........ 3.3
Business Services....... 3.0
Broadcasting & Media.... 3.0
Utilities............... 2.6
Conglomerate............ 2.4
Restaurants............. 2.4
Leisure & Tourism....... 2.3
Apparel & Textiles...... 2.1
Metals & Mining......... 1.7
Chemicals............... 1.6
Repurchase Agreements... 1.5
Metals & Minerals....... 1.3
Food, Beverage & Tobacco 1.1
Real Estate Companies... 0.9
Computer Software....... 0.7
-----
100.2%
=====
Country Allocation*
Japan......... 25.4%
Germany....... 11.9
United Kingdom 11.4
Switzerland... 8.1
Sweden........ 7.2
Norway........ 6.4
Greece........ 6.1
Italy......... 4.9
Belgium....... 2.9
Australia..... 2.5
Finland....... 2.3
France........ 2.0
Ireland....... 1.5
United States. 1.5
Hong Kong..... 0.9
Portugal...... 0.9
Singapore..... 0.9
Austria....... 0.8
Luxembourg.... 0.7
China......... 0.5
Israel........ 0.5
Mexico........ 0.5
South Korea... 0.4
-----
100.2%
=====
- --------
* Calculated as a percentage of net assets.
47
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
-----------------------------------------------------------------
COMMON STOCK -- 98.7%
Australia -- 2.5%
BHP Billiton, Ltd........................... 65,300 $ 1,108,001
Woolworths, Ltd............................. 82,880 1,051,088
-----------
2,159,089
-----------
Austria -- 0.8%
OMV AG...................................... 10,950 650,248
-----------
Belgium -- 2.9%
KBC GROEP NV................................ 31,160 2,524,105
-----------
China -- 0.5%
China Life Insurance Co., Ltd.+............. 563,000 435,458
-----------
Finland -- 2.3%
Nokia Oyj Sponsored ADR..................... 117,500 1,986,925
-----------
France -- 2.0%
Sanofi-Aventis.............................. 20,710 1,711,208
-----------
Germany -- 11.9%
Allianz AG.................................. 28,720 3,877,653
Bayerische Hypo-und Vereinsbank AG+......... 83,600 2,355,125
DaimlerChrysler AG.......................... 35,200 1,867,347
RWE AG...................................... 34,050 2,252,809
-----------
10,352,934
-----------
Greece -- 6.1%
National Bank of Greece SA.................. 82,900 3,293,877
OPAP SA..................................... 64,010 1,984,804
-----------
5,278,681
-----------
Hong Kong -- 0.9%
Hysan Development Co., Ltd.................. 320,000 802,336
Peregrine Investments Holdings, Ltd.+(1)(2). 91,000 0
-----------
802,336
-----------
Ireland -- 1.5%
CRH PLC..................................... 49,250 1,334,759
-----------
Israel -- 0.5%
Taro Pharmaceutical Industries, Ltd.+....... 15,910 409,364
-----------
Italy -- 4.9%
Saipem SpA.................................. 254,020 4,283,272
-----------
Japan -- 25.4%
FANUC, Ltd.................................. 20,500 1,657,769
Ibiden Co., Ltd............................. 29,500 1,229,167
Japan Tobacco, Inc.......................... 62 977,625
Kaneka Corp................................. 107,000 1,395,939
Komatsu, Ltd................................ 128,000 1,743,199
Mizuho Financial Group, Inc................. 268 1,704,510
NGK Spark Plug Co., Ltd..................... 62,000 898,432
ORIX Corp................................... 7,500 1,354,387
The San-in Godo Bank, Ltd................... 104,000 1,074,630
SECOM Co., Ltd.............................. 27,000 1,298,626
Value
Security Description Shares (Note 3)
---------------------------------------------------------
Japan (continued)
Seven & I Holdings Co., Ltd.+....... 45,300 $ 1,500,423
Sumitomo Metal Industries, Ltd...... 412,000 1,444,468
Takeda Pharmaceutical Co., Ltd...... 24,500 1,458,950
Toyota Motor Corp................... 51,800 2,372,798
Tsumura & Co........................ 42,000 984,144
Yamada Denki Co., Ltd............... 13,500 1,026,295
-----------
22,121,362
-----------
Luxembourg -- 0.7%
Gemplus International SA+........... 231,300 639,372
-----------
Mexico -- 0.5%
Grupo Financiero Banorte SA de CV... 47,610 425,423
-----------
Norway -- 6.4%
Statoil ASA......................... 128,680 3,191,688
Telenor ASA......................... 265,800 2,373,377
-----------
5,565,065
-----------
Portugal -- 0.9%
Banco Comercial Portugues SA........ 268,690 745,956
-----------
Singapore -- 0.9%
Keppel Corp., Ltd................... 50,168 376,545
StarHub, Ltd........................ 358,000 427,387
-----------
803,932
-----------
South Korea -- 0.4%
Samsung Electronics Co., Ltd. GDR... 1,300 369,850
-----------
Sweden -- 7.2%
Ericsson LM Telephone Sponsored ADR. 53,890 1,985,307
Hennes & Mauritz AB, Class B........ 51,020 1,819,288
Nordea Bank AB...................... 245,480 2,453,486
-----------
6,258,081
-----------
Switzerland -- 8.1%
Credit Suisse Group................. 77,490 3,429,900
Roche Holding AG.................... 17,950 2,493,075
Synthes, Inc........................ 9,780 1,143,789
-----------
7,066,764
-----------
United Kingdom -- 11.4%
Enterprise Inns PLC................. 140,060 2,081,293
Next PLC............................ 54,700 1,342,999
Royal Bank of Scotland Group PLC.... 49,900 1,416,138
Tesco PLC........................... 462,600 2,525,314
Vodafone Group PLC.................. 997,650 2,595,490
-----------
9,961,234
-----------
United States -- 0.0%
Softbrands, Inc.+................... 40 72
-----------
Total Long-Term Investment Securities
(cost $73,423,569)................. 85,885,490
-----------
48
SunAmerica International Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Principal Value
Security Description Amount (Note 3)
-------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.5%
Agreement with State Street Bank & Trust Co.,
bearing interest at 1.75%, dated 09/30/05, to
be repurchased 10/03/05 in the amount of
$1,355,198 and collateralized by $1,420,000
of United States Treasury Notes, bearing
interest at 3.63%, due 05/15/13 and having
an approximate value of $1,384,500
(cost $1,355,000)............................. $1,355,000 $ 1,355,000
-----------
TOTAL INVESTMENTS --
(cost $74,778,569)(3)......................... 100.2% 87,240,490
Liabilities in excess of other assets............ (0.2) (210,674)
---------- -----------
NET ASSETS -- 100.0% $87,029,816
========== ===========
- --------
+ Non-income producing securities
(1) Fair valued security. See Note 3
(2) Illiquid security
(3) See Note 6 for cost of investments on a tax basis
ADR -- AmericanDepository Receipt
GDR -- GlobalDepository Receipt
See Notes to Financial Statements
49
SunAmerica Value Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Financial Services............. 16.1%
Energy Sources................. 14.9
Banks.......................... 13.1
Utilities...................... 6.5
Broadcasting & Media........... 6.0
Telecommunications............. 5.0
Food, Beverage & Tobacco....... 4.5
Insurance...................... 4.1
Pharmaceuticals................ 3.7
Aerospace & Military Technology 3.5
Apparel & Textiles............. 3.1
Conglomerate................... 3.0
Chemicals...................... 2.6
Repurchase Agreements.......... 2.3
Health Services................ 2.1
Computer Software.............. 2.0
Manufacturing.................. 1.6
Computers & Business Equipment. 1.5
Electronics.................... 1.5
Leisure & Tourism.............. 1.5
Medical Products............... 1.5
Restaurants.................... 1.0
-----
101.1%
=====
- --------
* Calculated as a percentage of net assets.
50
SunAmerica Value Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
-----------------------------------------------------------
COMMON STOCK -- 98.8%
Aerospace & Military Technology -- 3.5%
Alliant Techsystems, Inc.+............ 50,000 $ 3,732,500
United Technologies Corp.............. 96,000 4,976,640
-----------
8,709,140
-----------
Apparel & Textiles -- 3.1%
NIKE, Inc., Class B................... 93,700 7,653,416
-----------
Banks -- 13.1%
Bank of America Corp.................. 232,700 9,796,670
North Fork Bancorp., Inc.............. 136,600 3,483,300
U.S. Bancorp.......................... 170,000 4,773,600
Wachovia Corp......................... 154,100 7,333,619
Wells Fargo & Co...................... 125,200 7,332,964
-----------
32,720,153
-----------
Broadcasting & Media -- 6.0%
News Corp., Class A................... 481,000 7,498,790
Time Warner, Inc...................... 416,800 7,548,248
-----------
15,047,038
-----------
Chemicals -- 2.6%
du Pont (E.I.) de Nemours & Co........ 163,200 6,392,544
-----------
Computers & Business Equipment -- 1.5%
International Business Machines Corp.. 48,100 3,858,582
-----------
Conglomerate -- 3.0%
3M Co................................. 53,000 3,888,080
General Electric Co................... 110,900 3,734,003
-----------
7,622,083
-----------
Computer Software -- 2.0%
Microsoft Corp........................ 194,500 5,004,485
-----------
Electronics -- 1.5%
Applied Materials, Inc................ 221,400 3,754,944
-----------
Energy Sources -- 14.9%
Chevron Corp.......................... 160,000 10,356,800
ConocoPhillips........................ 120,000 8,389,200
Exxon Mobil Corp...................... 191,900 12,193,326
Marathon Oil Corp..................... 90,000 6,203,700
-----------
37,143,026
-----------
Financial Services -- 16.1%
American Express Co................... 109,700 6,301,168
Capital One Financial Corp............ 60,000 4,771,200
Citigroup, Inc........................ 219,200 9,977,984
Goldman Sachs Group, Inc.............. 47,400 5,762,892
J.P. Morgan Chase & Co................ 214,600 7,281,378
Merrill Lynch & Co., Inc.............. 100,000 6,135,000
-----------
40,229,622
-----------
Food, Beverage & Tobacco -- 4.5%
Altria Group, Inc..................... 69,000 5,085,990
Diageo PLC Sponsored ADR.............. 62,100 3,602,421
The Coca-Cola Co...................... 56,600 2,444,554
-----------
11,132,965
-----------
Health Services -- 2.1%
Aetna, Inc............................ 31,000 2,670,340
WellPoint, Inc.+...................... 34,400 2,608,208
-----------
5,278,548
-----------
Shares/
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------
Insurance -- 4.1%
Chubb Corp......................... 71,700 $ 6,420,735
The Allstate Corp.................. 68,800 3,803,952
------------
10,224,687
------------
Leisure & Tourism -- 1.5%
Royal Caribbean Cruises, Ltd....... 87,700 3,788,640
------------
Manufacturing -- 1.6%
Dover Corp......................... 98,900 4,034,131
------------
Medical Products -- 1.5%
Johnson & Johnson.................. 58,500 3,701,880
------------
Pharmaceuticals -- 3.7%
Abbott Laboratories................ 56,500 2,395,600
Pfizer, Inc........................ 280,300 6,999,091
------------
9,394,691
------------
Restaurants -- 1.0%
McDonald's Corp.................... 74,100 2,481,609
------------
Telecommunications -- 5.0%
BellSouth Corp..................... 186,600 4,907,580
Sprint Nextel Corp................. 156,700 3,726,326
Verizon Communications, Inc........ 116,300 3,801,847
------------
12,435,753
------------
Utilities -- 6.5%
FPL Group, Inc..................... 117,100 5,573,960
The Southern Co.................... 146,000 5,220,960
TXU Corp........................... 48,800 5,508,544
------------
16,303,464
------------
Total Long-Term Investment Securities
(cost $228,467,264)............... 246,911,401
------------
REPURCHASE AGREEMENTS -- 2.3%
State Street Bank & Trust Co.
Joint Repurchase Agreeement(1).... $ 783,000 783,000
UBS Securities LLC
Joint Repurchase Agreeement(1).... 5,000,000 5,000,000
------------
Total Repurchase Agreements
(cost $5,783,000)................. 5,783,000
------------
TOTAL INVESTMENTS --
(cost $234,250,264)(2)............ 101.1% 252,694,401
Liabilities in excess of other assets (1.1) (2,728,974)
---------- ------------
NET ASSETS -- 100.0% $249,965,427
========== ============
- --------
+ 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 -- AmericanDepository Receipt
See Notes to Financial Statements
51
SunAmerica Biotech/Health Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Pharmaceuticals...... 25.4%
Managed Care......... 18.6
Biotechnology........ 16.2
Medical Devices...... 13.3
Health Services...... 8.7
Healthcare Equipment. 6.4
Repurchase Agreements 5.6
Specialty Healthcare. 4.7
Distribution......... 1.6
-----
100.5%
=====
- --------
* Calculated as a percentage of net assets.
52
SunAmerica Biotech/Health Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
-------------------------------------------------------------------
COMMON STOCK -- 94.9%
Biotechnology -- 16.2%
Amgen, Inc.+.................................... 21,500 $1,712,905
Cephalon, Inc.+................................. 10,500 487,410
Genentech, Inc.+................................ 11,300 951,573
Genzyme Corp.+.................................. 21,400 1,533,096
Gilead Sciences, Inc.+.......................... 12,700 619,252
----------
5,304,236
----------
Distribution -- 1.6%
Cardinal Health, Inc............................ 8,400 532,896
----------
Health Services -- 8.7%
HCA, Inc........................................ 12,000 575,040
LifePoint Hospitals, Inc.+...................... 11,000 481,030
National Medical Health Card Systems, Inc.+..... 24,000 663,360
Triad Hospitals, Inc.+.......................... 13,000 588,510
Medco Health Solutions, Inc.+................... 10,000 548,300
----------
2,856,240
----------
Healthcare Equipment -- 6.4%
Charles River Laboratories International, Inc.+. 6,500 283,530
Fisher Scientific International, Inc.+.......... 19,600 1,216,180
I-Flow Corp.+................................... 45,000 616,950
----------
2,116,660
----------
Managed Care -- 18.6%
Aetna, Inc...................................... 12,800 1,102,592
CIGNA Corp...................................... 6,500 766,090
Coventry Health Care, Inc.+..................... 8,800 756,976
Humana, Inc.+................................... 7,500 359,100
PacifiCare Health Systems, Inc.+................ 10,800 861,624
UnitedHealth Group, Inc......................... 12,800 719,360
Wellpoint, Inc.+................................ 20,400 1,546,728
----------
6,112,470
----------
Medical Devices -- 13.3%
Biomet, Inc..................................... 16,700 579,657
Boston Scientific Corp.+........................ 16,000 373,920
Kinetic Concepts, Inc.+......................... 21,800 1,238,240
Medtronic, Inc.................................. 24,600 1,319,052
Shares/
Principal Value
Security Description Amount (Note 3)
---------------------------------------------------------------
Medical Devices (continued)
St. Jude Medical, Inc.+.............. 8,600 $ 402,480
Zimmer Holdings, Inc.+............... 6,400 440,896
-----------
4,354,245
-----------
Pharmaceuticals -- 25.4%
Abbott Laboratories.................. 24,000 1,017,600
Eli Lilly and Co..................... 7,500 401,400
IVAX Corp.+.......................... 27,000 711,720
Johnson & Johnson.................... 19,500 1,233,960
Novartis AG Sponsored ADR............ 16,000 816,000
Pfizer, Inc.......................... 47,000 1,173,590
Schering-Plough Corp................. 53,000 1,115,650
Teva Pharmaceutical Industries, Ltd.
Sponsored ADR....................... 24,700 825,474
Wyeth................................ 22,600 1,045,702
-----------
8,341,096
-----------
Specialty Healthcare -- 4.7%
The Cooper Cos., Inc................. 20,000 1,532,200
-----------
Total Long-Term Investment Securities
(cost $28,711,674).................. 31,150,043
-----------
REPURCHASE AGREEMENTS -- 5.6%
State Street Bank & Trust Co.
Joint Repurchase Agreement(1)
(cost $1,858,000)................... $1,858,000 1,858,000
-----------
TOTAL INVESTMENTS --
(cost $30,569,674)(2)............... 100.5% 33,008,043
Liabilities in excess of other assets.. (0.5) (174,312)
---------- -----------
NET ASSETS -- 100.0% $32,833,731
========== ===========
- --------
+ 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--AmericanDepository Receipt
See Notes to Financial Statements
53
SunAmerica Tax Managed Equity Fund
PORTFOLIO PROFILE -- September 30, 2005 -- (unaudited)
Industry Allocation*
Financial Services............. 9.8%
Energy Sources................. 9.6
Pharmaceuticals................ 7.9
Telecommunications............. 7.6
Retail......................... 6.7
Conglomerate................... 5.3
Food, Beverage, & Tobacco...... 5.0
Banks.......................... 4.8
Insurance...................... 3.8
Computer Software.............. 3.7
Broadcasting & Media........... 3.5
Aerospace & Military Technology 3.4
Computers & Business Equipment. 3.2
Medical Products............... 3.0
Utilities...................... 3.0
Electronics.................... 2.6
Household & Personal Products.. 2.4
Time Deposit................... 2.4
Health Services................ 2.1
Automotive..................... 1.2
Transportation................. 1.1
Apparel & Textiles............. 1.0
Machinery...................... 1.0
Chemicals...................... 0.9
Energy Services................ 0.9
Manufacturing.................. 0.9
Forest Products................ 0.7
Business Services.............. 0.5
Metals & Mining................ 0.5
Restaurants.................... 0.5
Real Estate Investment Trusts.. 0.4
----
99.4%
====
- --------
* Calculated as a percentage of net assets.
54
SunAmerica Tax Managed Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005
Value
Security Description Shares (Note 3)
---------------------------------------------------------
COMMON STOCK -- 97.0%
Aerospace & Military Technology -- 3.4%
Raytheon Co........................... 10,000 $ 380,200
The Boeing Co......................... 4,000 271,800
United Technologies Corp.............. 13,800 715,392
----------
1,367,392
----------
Apparel & Textiles -- 1.0%
NIKE, Inc., Class B................... 4,800 392,064
----------
Automotive -- 1.2%
Johnson Controls, Inc................. 7,600 471,580
----------
Banks -- 4.8%
Bank of America Corp.................. 19,806 833,833
U.S. Bancorp.......................... 17,931 503,502
Wachovia Corp......................... 1,600 76,144
Wells Fargo & Co...................... 9,300 544,701
----------
1,958,180
----------
Broadcasting & Media -- 3.5%
Comcast Corp., Class A+............... 13,000 374,140
E.W. Scripps Co., Class A............. 4,600 229,862
Gannett Co., Inc...................... 3,700 254,671
News Corp., Class B................... 17,100 282,150
Viacom, Inc., Class B................. 8,500 280,585
----------
1,421,408
----------
Business Services -- 0.5%
Accenture, Ltd., Class A+............. 8,400 213,864
----------
Chemicals -- 0.9%
Air Products & Chemicals, Inc......... 7,000 385,980
----------
Computer Software -- 3.7%
Microsoft Corp........................ 35,900 923,707
Oracle Corp.+......................... 45,000 557,550
----------
1,481,257
----------
Computers & Business Equipment -- 3.2%
Dell, Inc.+........................... 11,900 406,980
Hewlett-Packard Co.................... 11,700 341,640
International Business Machines Corp.. 4,000 320,880
Lexmark International, Inc., Class A+. 3,500 213,675
----------
1,283,175
----------
Conglomerate -- 5.3%
General Electric Co................... 43,500 1,464,645
Tyco International, Ltd............... 24,700 687,895
----------
2,152,540
----------
Electronics -- 2.6%
Altera Corp.+......................... 15,700 300,027
Analog Devices, Inc................... 9,400 349,116
Intel Corp............................ 15,800 389,470
----------
1,038,613
----------
Energy Services -- 0.9%
Baker Hughes, Inc..................... 5,800 346,144
----------
Energy Sources -- 9.6%
Burlington Resources, Inc............. 7,000 569,240
Chevron Corp.......................... 15,000 970,950
Value
Security Description Shares (Note 3)
---------------------------------------------------------------
Energy Sources (continued)
ConocoPhillips.............................. 10,900 $ 762,019
Exxon Mobil Corp............................ 24,820 1,577,063
----------
3,879,272
----------
Financial Services -- 9.8%
CIT Group, Inc.............................. 9,000 406,620
Citigroup, Inc.............................. 27,466 1,250,252
Freddie Mac................................. 10,900 615,414
Goldman Sachs Group, Inc.................... 3,002 364,983
MBNA Corp................................... 9,600 236,544
Morgan Stanley.............................. 3,900 210,366
State Street Corp........................... 11,800 577,256
Washington Mutual, Inc...................... 7,200 282,384
----------
3,943,819
----------
Food, Beverage & Tobacco -- 5.0%
Altria Group, Inc........................... 13,400 987,714
PepsiCo, Inc................................ 6,000 340,260
The Coca-Cola Co............................ 15,700 678,083
----------
2,006,057
----------
Forest Products -- 0.7%
Temple-Inland, Inc.......................... 6,500 265,525
----------
Household & Personal Products -- 2.4%
Procter & Gamble Co......................... 16,300 969,198
----------
Health Services -- 2.1%
Aetna, Inc.................................. 4,700 404,858
WellPoint, Inc.+............................ 6,000 454,920
----------
859,778
----------
Insurance -- 3.8%
Allstate Corp............................... 6,900 381,501
Ambac Financial Group, Inc.................. 6,600 475,596
Genworth Financial, Inc., Class A........... 12,400 399,776
The Hartford Financial Services Group, Inc.. 3,500 270,095
----------
1,526,968
----------
Machinery -- 1.0%
Deere & Co.................................. 6,900 422,280
----------
Manufacturing -- 0.9%
Danaher Corp................................ 6,700 360,661
----------
Medical Products -- 3.0%
Boston Scientific Corp.+.................... 6,000 140,220
Johnson & Johnson........................... 16,860 1,066,901
----------
1,207,121
----------
Metals & Mining -- 0.5%
United States Steel Corp.................... 4,500 190,575
----------
Pharmaceuticals -- 7.9%
Amgen, Inc.+................................ 8,500 677,195
Eli Lilly and Co............................ 5,300 283,656
Medco Health Solutions, Inc.+............... 7,500 411,225
Pfizer, Inc................................. 26,205 654,339
Sepracor, Inc.+............................. 4,200 247,758
Wyeth....................................... 19,500 902,265
----------
3,176,438
----------
Real Estate Investment Trusts -- 0.4%
ProLogis.................................... 3,700 163,947
----------
55
SunAmerica Tax Managed Equity Fund
PORTFOLIO OF INVESTMENTS -- September 30, 2005 -- (continued)
Value
Security Description Shares (Note 3)
------------------------------------------------------
COMMON STOCK (continued)
Restaurants -- 0.5%
Yum! Brands, Inc................... 4,200 $ 203,322
----------
Retail -- 6.7%
Home Depot, Inc.................... 14,250 543,495
Kohl's Corp.+...................... 8,700 436,566
Staples, Inc....................... 16,700 356,044
Target Corp........................ 9,000 467,370
TJX Cos., Inc...................... 16,600 339,968
Wal-Mart Stores, Inc............... 13,100 574,042
----------
2,717,485
----------
Telecommunications -- 7.6%
Cisco Systems, Inc.+............... 28,600 512,798
Corning, Inc.+..................... 22,000 425,260
Motorola, Inc...................... 24,000 530,160
QUALCOMM, Inc...................... 11,300 505,675
Sprint Nextel Corp................. 20,914 497,335
Verizon Communications, Inc........ 17,964 587,243
----------
3,058,471
----------
Transportation -- 1.1%
Burlington Northern Santa Fe Corp.. 4,200 251,160
FedEx Corp......................... 2,300 200,399
----------
451,559
----------
Shares/
Principal Value
Security Description Amount (Note 3)
-----------------------------------------------------------------------
Utilities -- 3.0%
Duke Energy Corp................................ 14,000 $ 408,380
FPL Group, Inc.................................. 11,300 537,880
PG&E Corp....................................... 7,000 274,750
-----------
1,221,010
-----------
Total Long-Term Investment Securities
(cost $37,112,952)............................. 39,135,683
-----------
SHORT-TERM INVESTMENT SECURITIES -- 2.4%
Time Deposit with State Street Bank & Trust Co.
1.35% due 10/03/05
(cost $979,000)................................ $979,000 979,000
-----------
TOTAL INVESTMENTS --
(cost $38,091,952)(1).......................... 99.4% 40,114,683
Other assets less liabilities..................... 0.6 236,705
-------- -----------
NET ASSETS -- 100.0% $40,351,388
======== ===========
- --------
+ Non-income producing securities
(1)See Note 6 for cost of investments on a tax basis
See Notes to Financial Statements
56
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005
Note 1. Organization
SunAmerica Equity Funds is registered under the Investment Company Act of
1940, as amended, (the "1940 Act") as an open-end 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. ("AIG"). 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 such securities.
Each Fund, except for the International Equity Fund, Value Fund, and
Biotech/Health Fund, is organized as a "diversified" Fund of the Trust.
57
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
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. With respect to Class A shares of the International Equity Fund, a
redemption fee of 2% will be assessed on the proceeds of any redemption of
shares that were purchased within ninety (90) days prior to the date of such
redemption. An exchange fee of 2% will be assessed on the amount of any
exchange of Class A shares of the International Equity Fund that were
purchased within ninety (90) days prior to the date of such exchange.
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 approximately eight years after purchase 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 as 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. Effective February 23, 2004,
Class I shares of the New Century Fund are no longer being offered for sale.
As of March 9, 2005, Class X shares of the Growth Opportunities 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: Shares of the Fund are valued at least daily as of the
close of regular trading on the New York Stock Exchange (generally, 4:00p.m.
Eastern time). The Fund calculates the net asset value of its shares by
dividing the total value of
58
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
its net assets by the number of shares outstanding. The days and times of
such computation may, in the future, be changed by the Directors in the
event that the portfolio securities are traded in significant amounts in
markets other than the New York Stock Exchange, or on days or at times other
than those during which the New York Stock Exchange is open for trading.
Stocks are generally valued based upon closing sales prices reported on
recognized securities exchanges. Stocks listed on the NASDAQ are valued
using the NASDAQ Official Closing Price ("NOCP"). Generally, the NOCP will
be the last sale price unless the reported trade for the stock is outside
the range of the bid/ask price. In such cases, the NOCP will be normalized
to the nearer of the bid or ask price. For listed securities having no sales
reported and for unlisted securities, such securities will be valued based
upon the last reported bid price.
Non-convertible bonds and debentures, other long-term debt securities, and
short-term debt securities with maturities in excess of 60 days, are valued
at bid prices obtained for the day of valuation from a bond pricing service,
when such prices are available. If a vendor quote is unavailable the
securities may be priced at the mean of two independent quotes obtained from
brokers. Securities for which market quotations are not readily available
are valued as determined pursuant to procedures adopted in good faith by the
Board of Trustees.
As of the close of regular trading on the New York Stock Exchange,
securities traded primarily on security exchanges outside the United States
are valued at the last sale price on such exchanges on the day of valuation,
or if there is no sale on the day of valuation, at the last-reported bid
price. If a security's price is available from more than one exchange, a
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 to reflect what it believes to be the fair
value of the securities as of the close of regular trading on the New York
Stock Exchange. The Fund may also fair value securities in other situations,
for example, when a particular foreign market is closed but the Fund is
open. For foreign equity securities, the Fund uses an outside pricing
service to provide it with closing market prices and information used for
adjusting those prices.
Futures contracts and options traded on national securities exchanges are
valued as of the close of the exchange upon which they trade.
Short-term securities with 60 days or less to maturity are amortized to
maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund on the 60th day, are amortized to
maturity based on the value determined on the 61st day. Securities for which
market quotations are not readily available or if a development/significant
event occurs that may significantly impact the value of the security, then
these securities are valued, as determined pursuant to procedures adopted in
good faith by the Board of Trustees.
Repurchase Agreements: The Funds, along with other affiliated registered
investment companies, pursuant to exemptive relief granted by the Securities
and Exchange Commission, may transfer uninvested cash balances into a single
joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Treasury or federal agency
obligations. For repurchase agreements and joint repurchase agreements, the
Funds' custodian takes possession of the collateral pledged for investments
in repurchase agreements ("repo" or collectively "repos"). 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, 2005, 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.... 1.63% $1,384,000
Growth Opportunities 0.82 701,000
New Century......... 7.17 6,102,000
Growth and Income... 0.60 512,000
Balanced Assets..... 1.66 1,412,000
Value............... 0.92 783,000
Biotech/Health...... 2.18 1,858,000
59
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
State Street Bank & Trust Co., dated September 30, 2005, bearing interest at
a rate of 3.05% per annum, with a principle amount of $85,086,000, a
repurchase price of $85,107,626 and a maturity date of October 3, 2005. The
repurchase agreement is collateralized by the following:
Interest Maturity Principal Market
Type of Collateral Rate Date Amount Value
- ------------------ -------- -------- ----------- -----------
U.S. Treasury Notes........... 3.25% 08/15/07 $14,060,000 $13,901,825
U.S. Treasury Notes........... 4.00 09/30/07 62,140,000 61,984,650
U.S. Treasury Notes........... 3.13 10/15/08 3,460,000 3,412,425
U.S. Treasury Notes........... 3.38 12/15/08 5,760,000 5,673,600
U.S. Treasury Bonds........... 10.38 11/15/12 1,565,000 1,819,313
In addition, at September 30, 2005, the following Funds held an undivided
interest in a joint repurchase agreement with UBS Securities LLC:
Percentage Principal
Fund Interest Amount
- ---- ---------- ----------
Growth Opportunities.......... 1.50% $3,000,000
Growth and Income............. 1.00 2,000,000
Balanced Assets............... 1.00 2,000,000
Value......................... 2.50 5,000,000
As of such date, the repurchase agreement in that joint account and the
collateral therefore were as follows:
UBS Securities LLC, dated September 30, 2005, bearing interest at a rate of
3.30% per annum, with a principal amount of $200,000,000, a repurchase price
of $200,055,000 and a maturity date of October 3, 2005. The repurchase
agreement is is collateralized by the following:
Interest Maturity Principal Market
Type of Collateral Rate Date Amount Value
- ------------------ -------- -------- ------------ ------------
U.S. Treasury Inflation Index Bonds..... 3.63% 04/15/28 $ 23,933,000 $ 38,502,214
U.S. Treasury Inflation Index Bonds..... 3.88 04/15/29 100,000,000 165,500,000
Securities Transactions, Investment Income, Expenses, Dividends and
Distributions to Shareholders: Security transactions are recorded on a trade
date basis. Realized gains and losses on sales of investments are calculated
on the identified cost basis. Interest income is accrued daily except when
collection is not expected. Dividend income is recorded on the ex-dividend
date except for certain dividends from foreign securities, which are
recorded as soon as the Fund is informed after the ex-dividend date. 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. These amounts are included in the net foreign withholding taxes on
capital gains line on the Statement of Operations. 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 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
60
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
income tax regulations, which may differ from U.S. generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital
accounts at fiscal year end based on their federal tax-basis treatment;
temporary differences do not require reclassification. Net investment income
(loss), net realized gain (loss) and net assets are not affected by these
reclassifications.
Each Fund intends to comply with the requirements of the Internal Revenue
Code, as amended, applicable to regulated investment companies and
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, 2005, none
of the Funds 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.
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 funds may enter into forward
foreign currency contracts ("forward contracts") to attempt to protect
securities and related receivables and payables against changes in future
foreign exchange rates or to enhance return. A forward contract is an
agreement between two parties to buy or sell currency at a set price on a
future date. The market value of the contract will fluctuate with changes in
currency exchange rates. The contract is marked to market daily using the
forward rate and the change in market value is recorded by the Fund as
unrealized gain or loss. On settlement date, the Fund 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 minimizes
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, 2005, there were no open futures
contracts.
61
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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.
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.
There were no transactions in call and put options written during the period
ended September 30, 2005.
Short Sales: All funds may engage in "short sales against the box". A short
sale is against the box to the extent that the Fund contemporaneously owns,
or has the right to obtain without payment, securities identical to those
sold short. In addition, the 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. At September 30, 2005, there were no short sales.
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 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, 2005, 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. 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.
62
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
SAAMCo has contractually agreed to waive fees or reimburse expenses, if
necessary, to maintain the funds' expense ratios 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
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, to maintain the funds' expense ratios at or below the following
percentages of each Fund's average net assets.
Fund Percentage
- ---- ----------
New Century Class C 2.14%
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, 2005, SAAMCo has agreed to reimburse
expenses as follows:
Fund
- ----
Blue Chip Growth Class I.... $ 9,807
Growth Opportunities Class I 12,461
Growth Opportunities Class X 231
New Century Fund Class C.... 14,024
Growth & Income Class I..... 8,140
Balanced Assets Class I..... 10,800
International Equity Class A 39,256
International Equity Class B 38,352
International Equity Class C 25,435
International Equity Class I 8,624
Value Fund Class A.......... 109,783
Value Fund Class B.......... 95,474
Value Fund Class C.......... 35,499
Value Fund Class I.......... 13,921
Value Fund Class Z.......... 15,624
Biotech/Health Class A...... 37,925
Biotech/Health Class B...... 36,108
Biotech/Health Class C...... 26,366
Tax Managed Equity Class A.. 47,946
Tax Managed Equity Class B.. 61,709
Tax Managed Equity Class C.. 55,859
63
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
For the period ended September 30, 2005, the amounts recouped by the Adviser
are as follows:
Fund
- ----
International Equity Class A............ $ 5,801
International Equity Class B............ 3,037
International Equity Class C............ 2,434
International Equity Class I............ 590
Value Fund Class A...................... 13,625
Value Fund Class B...................... 7,112
Value Fund Class C...................... 5,932
Value Fund Class I...................... 418
Value Fund Class Z...................... 2,056
At September 30, 2005, expenses previously waived or reimbursed by SAAMCO
that are subject to recoupment are as follows:
Class
Other Specific
Expenses Expenses
Reimbursed Reimbursed
---------- ----------
International Equity Class A............ $ -- $ 39,253
International Equity Class B............ -- 38,351
International Equity Class C............ -- 25,434
International Equity Class I............ -- 8,624
Value Fund Class A...................... 67,828 69,030
Value Fund Class B...................... 45,828 56,080
Value Fund Class C...................... 22,383 26,207
Value Fund Class I...................... 3,459 17,721
Value Fund Class Z...................... 5,984 30,409
Biotech/Health Class A.................. 3,471 84,929
Biotech/Health Class B.................. 3,084 77,792
Biotech/Health Class C.................. 2,216 55,701
Tax Managed Equity Class A.............. 5,954 77,671
Tax Managed Equity Class B.............. 8,230 108,682
Tax Managed Equity Class C.............. 7,657 100,141
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.
The sales charge and distribution fees of a particular class will not be
used to subsidize the sale of shares of any other class. Under the Class A
Plan, Class B Plan and Class C Plan, the Distributor receives payments from
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, 2005, 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, 2005, SACS
earned fees (see Statement of Operations) based upon the aforementioned
rates.
64
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
SACS receives sales charges on each Fund's Class A shares, portions of which
are reallocated to affiliated broker-dealers and non-affiliated
broker-dealers. SACS also receives the proceeds of contingent deferred sales
charges paid by investors in connection with certain redemptions of each
Fund's Class A, Class B and Class C shares. SACS has advised the Funds that
for the period ended September 30, 2005, the proceeds received from sales
(and paid out to affiliated and non-affiliated broker-dealers) and
redemptions are as follows:
Class A Class B Class C
- - ---------------------------------------------------- ------------- -------------
Contingent Contingent Contingent
Sales Affiliated Non-affiliated Deferred Deferred Deferred
Fund Charges Broker-dealers Broker-dealers Sales Charges Sales Charges Sales Charges
- ---- -------- -------------- -------------- ------------- ------------- -------------
Blue Chip Growth.... $ 42,721 $ 20,157 $ 17,050 $ -- $ 60,843 $1,422
Growth Opportunities 56,715 29,184 19,646 -- 104,379 1,134
New Century......... 58,009 31,362 18,716 -- 17,865 115
Growth & Income..... 88,605 40,627 32,055 -- 135,078 2,425
Balanced Assets..... 257,649 158,152 64,317 152 77,958 3,544
International Equity 42,293 18,272 17,771 522 46,708 1,725
Value............... 352,702 106,742 194,116 560 95,469 6,249
Biotech/Health...... 51,554 10,622 36,370 -- 52,116 1,494
Tax Managed Equity.. 15,064 7,460 5,150 3,396 58,264 872
The Trust has entered into a Service Agreement with AIG SunAmerica Fund
Services, Inc. ("SAFS"), an affiliate of the Adviser. Under the Service
Agreement, SAFS performs certain shareholder account functions by assisting
the Funds' transfer agent in connection with the services that it offers to
the shareholders of the Funds. Except for Class Z shares, the Service
Agreement, 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, 2005, 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.
During the year ended September 30, 2005, SAAMCo reimbursed the New Century
Fund $188,306 for certain class action settlements in which the Fund was
eligible to participate.
Expense Payable At September 30, 2005
----------------------------------------- ---------------------------------------
Fund Class A Class B Class C Class I Class X Class A Class B Class C Class I Class X
- ---- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
Blue Chip Growth.............. $128,805 $ 53,199 $12,497 $ 4,361 $-- $ 7,138 $1,211 $ 349 $ 264 $--
Growth Opportunities.......... 99,636 61,909 27,979 5,667 75 3,473 1,714 799 313 --
New Century................... 182,886 23,687 4,466 -- -- 9,430 1,255 126 -- --
Growth and Income............. 145,256 107,418 90,856 1,858 -- 6,285 5,887 5,771 136 --
Balanced Assets............... 315,420 74,124 45,816 1,618 -- 3,974 2,942 3,030 131 --
International Equity.......... 80,515 44,079 35,695 12,877 -- 5,198 2,047 1,896 1,201 --
Value ........................ 254,405 141,824 82,884 11,898 -- 20,915 9,626 7,224 548 --
Biotech/Health ............... 30,926 26,546 18,505 -- -- 1,805 1,441 1,066 -- --
Tax Managed Equity ........... 27,500 39,162 36,753 -- -- 1,897 2,703 2,472 -- --
At September 30, 2005, AIG SunAmerica Inc., an affiliate company of the
SunAmerica Equity Funds owned 6.14% of the total outstanding shares of the
International Equity Fund.
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, 2005, were as follows:
Blue Chip Growth New Growth and
Growth Opportunities Century Income Balanced
Fund Fund Fund Fund Assets Fund
------------ ------------- ----------- ------------ ------------
Purchases (excluding U.S. government securities)........... $110,362,904 $ 74,862,558 $73,788,027 $124,900,493 $287,647,903
Sales and maturities (excluding U.S. government securities) 131,836,142 101,236,500 96,471,782 160,507,033 320,370,523
Purchases of U.S. government securities.................... -- -- -- -- 44,004,707
Sales and maturities of U.S. government securities......... -- -- -- -- 42,420,807
International Tax
Equity Value Biotech/ Managed
Fund Fund Health Fund Equity Fund
------------- ------------ ----------- -----------
Purchases (excluding U.S. government securities)........... $100,693,657 $209,570,758 $56,382,115 $14,596,204
Sales and maturities (excluding U.S. government securities) 106,777,192 190,445,678 65,450,927 28,587,736
Purchases of U.S. government securities.................... -- -- -- --
Sales and maturities of U.S. government securities......... -- -- -- --
65
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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 Balanced
Growth Opportunities Century Income Assets
Fund Fund Fund Fund Fund
------------- ------------- ----------- ------------ ------------
Cost (tax basis)............................. $81,519,992 $ 72,402,300 $88,236,686 $136,127,968 $189,250,978
=========== ============ =========== ============ ============
Appreciation................................. 7,118,212 14,972,955 15,011,489 13,642,609 9,428,492
Depreciation................................. (2,010,321) (2,726,501) (4,446,120) (3,864,036) (4,532,918)
----------- ------------ ----------- ------------ ------------
Net unrealized appreciation (depreciation)... $ 5,107,891 $ 12,246,454 $10,565,369 $ 9,778,573 $ 4,895,574
=========== ============ =========== ============ ============
International Tax
Equity Value Biotech/ Managed
Fund Fund Health Fund Equity Fund
------------- ------------- ----------- ------------
Cost (tax basis)............................. $74,788,504 $234,517,038 $30,573,537 $ 38,093,611
=========== ============ =========== ============
Appreciation................................. 13,276,928 23,176,285 3,274,471 5,869,877
Depreciation................................. (824,942) (4,998,922) (839,965) (3,848,805)
----------- ------------ ----------- ------------
Net unrealized appreciation (depreciation)... $12,451,986 $ 18,177,363 $ 2,434,506 $ 2,021,072
=========== ============ =========== ============
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,
tax treatment of certain debt obligations and derivative transactions.
Distributable Earnings Tax Character Distributions
------------------------------------------- ---------------------------
For the year ended September 30, 2005
-----------------------------------------------------------------------
Long-term Unrealized
Ordinary Gains/Capital Appreciation Ordinary Long-Term
Income and Other Losses (Depreciation) Income Capital Gains
----------- ---------------- -------------- ----------- -------------
Blue Chip Growth Fund.... $ -- $ (77,509,082) $ 5,107,891 $ -- $ --
Growth Opportunities Fund -- (218,788,500) 12,246,454 -- --
New Century Fund......... -- (105,325,726) 10,565,369 -- --
Growth and Income Fund... 101,329 (62,433,092) 9,778,573 588,836 --
Balanced Assets Fund..... 127,498 (83,784,217) 4,895,574 3,278,600 --
International Equity Fund -- (41,481,560) 12,448,789 -- --
Value Fund............... 14,560,020 2,172,531 18,177,363 16,513,550 7,934,524
Biotech/Health Fund...... -- (33,085,562) 2,434,506 -- --
Tax Managed Equity Fund.. 53,975 (31,865,773) 2,021,072 69,828 --
Tax Character Distributions
For the year ended September 30, 2004
-----------------------------------------
Ordinary Long-Term
Income Capital Gains
---------- -------------
Blue Chip Growth Fund.... $ -- $--
Growth Opportunities Fund -- --
New Century Fund......... -- --
Growth and Income Fund... -- --
Balanced Assets Fund..... 2,486,303 --
International Equity Fund 28,461 --
Value Fund............... 8,542,676 --
Biotech/Health Fund...... -- --
Tax Managed Equity Fund.. -- --
66
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
For the period ended September 30, 2005, the reclassifications arising from
book/tax differences resulted in increases (decreases) that were primarily
due to net investment losses, treatment of foreign currency, tax treatments
of certain debt obligations and principle paydown adjustments to the
components of net assets as follows:
Accumulated Accumulated
Undistributed Undistributed
Net Investment Net Realized Capital
Income (Loss) Gain (Loss) Paid-in
-------------- ------------- -----------
Blue Chip Growth Fund......... $ 316,425 $ -- $ (316,425)
Growth Opportunities Fund..... 1,355,114 -- (1,355,114)
New Century Fund.............. 982,002 -- (982,002)
Growth and Income Fund........ -- -- --
Balanced Assets Fund.......... 428,443 (428,443) --
International Equity Fund..... 90,366 125,594 (215,960)
Value Fund.................... (143) 143 --
Biotech/Health Fund........... 549,167 -- (549,167)
Tax Managed Equity Fund....... -- -- --
For Federal income tax purposes, the Funds indicated below have capital loss
carryforwards, which expire in the year indicated, as of September 30, 2005,
which are available to offset future capital gains, if any:
Capital Loss Carryforward
-----------------------------------------------------------------------------
2007 2008 2009 2010 2011 2012 2013
-------- ----------- ----------- ------------ ----------- ---------- --------
Blue Chip Growth Fund*........ $ -- $21,643,793 $ -- $ 13,804,345 $42,060,944 $ -- $ --
Growth Opportunities Fund*.... -- 9,978,889 151,316 143,345,493 65,312,802 -- --
New Century Fund.............. -- -- -- 68,959,096 36,351,156 -- --
Growth and Income Fund*....... -- -- 4,662,804 21,417,395 30,630,503 5,722,390 --
Balanced Assets Fund*......... -- 1,164,120 536,524 22,523,458 55,685,563 3,874,552 --
International Equity Fund*.... -- 16,526,295 8,688,922 11,189,965 5,008,920 -- --
Value Fund.................... -- -- -- -- -- -- --
Biotech/Health Fund........... -- -- 14,956,128 17,583,650 545,784 -- --
Tax Managed Equity Fund....... 910,428 3,887,711 6,189,990 15,675,665 4,260,050 594,906 177,899
The Funds indicated below utilized capital loss carryforwards, which offset
net taxable gains realized in the year ended September 30, 2005:
Capital Loss
Carryforward Utilized
---------------------
Blue Chip Growth Fund......... $ 7,421,783
Growth Opportunities Fund..... 1,907,518
New Century Fund.............. 19,432,936
Growth and Income Fund........ 11,177,024
Balanced Assets Fund.......... 10,996,251
International Equity Fund..... 10,207,065
Value Fund.................... --
Biotech/Health Fund........... 1,386,187
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 fiscal
year ended September 30, 2005, the Funds elected to defer capital losses as
follows:
Deferred Deferred
Post-October Post-October
Capital Loss Currency Loss
------------ -------------
International Equity Fund..... $ -- $67,458
Tax Managed Equity Fund....... 169,124 --
- --------
* The capital loss carryforwards include realized capital losses from the
acquisition of other funds. These losses may be subject to annual limitation
imposed by the Internal Revenue Code. Therefore, it is possible that not all
of these capital losses will be available for use.
67
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ----------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Shares sold............ 318,097* $ 4,691,601* 698,970@ $ 9,864,564@ 127,065 $ 1,685,024 307,120 $ 4,008,403
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed........ (1,010,053) (14,942,148) (1,204,891) (17,272,160) (670,464)* (8,912,621)* (648,520)@ (8,397,097)@
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Net increase (decrease) (691,956) $(10,250,547) (505,921) $ (7,407,596) (543,399) $ (7,227,597) (341,400) $ (4,388,694)
========== ============ ========== ============ ======== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ----------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Shares sold............ 32,571 $ 430,311 75,814 $ 976,052 29,610 $ 439,602 139,129 $ 2,085,799
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed........ (153,116) (2,033,335) (178,943) (2,317,761) (87,497) (1,306,402) (1,489,029) (22,138,786)
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Net increase (decrease) (120,545) $ (1,603,024) (103,129) $ (1,341,709) (57,887) $ (866,800) (1,349,900) $(20,052,987)
========== ============ ========== ============ ======== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ----------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Shares sold............ 246,991+ $ 3,723,609+ 569,253# $ 8,371,293# 91,850 $ 1,231,312 233,369 $ 3,089,899
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed........ (1,159,786) (17,443,762) (1,471,961) (21,425,290) (748,216)+ (10,067,500)+ (796,959)# (10,510,340)#
---------- ------------ ---------- ------------ -------- ------------ ---------- ------------
Net increase (decrease) (912,795) $(13,720,153) (902,708) $(13,053,997) (656,366) $ (8,836,188) (563,590) $ (7,420,441)
========== ============ ========== ============ ======== ============ ========== ============
- --------
* Includes automatic conversion of 133,336 shares of Class B shares in the
amount of $1,765,197 to 119,732 shares of Class A shares in the amount of
$1,765,197.
@ 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 61,785 shares of Class B shares in the
amount of $835,637 to 55,314 shares of Class A shares in the amount of
$835,637.
# 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.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
68
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
---------------------- ------------------------ ---------------------- ----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold............ 52,972 $ 704,930 93,978 $ 1,244,073 20,915 $ 314,055 46,491 $ 685,347
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed........ (410,425) (5,495,557) (496,600) (6,453,697) (167,934) (2,588,381) (111,633) (1,566,530)
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease) (357,453) $ (4,790,627) (402,622) $ (5,209,624) (147,019) $(2,274,326) (65,142) $ (881,183)
======== ============ ========== ============ ======== =========== ======== ===========
Growth Opportunities Fund
------------------------------------------------
Class X
------------------------------------------------
For the For the
year ended year ended
September 30, 2005 September 30, 2004
---------------------- ------------------------
Shares Amount Shares Amount
-------- ------------ ---------- ------------
Shares sold............ -- $ -- 311,431 $ 4,704,596
Reinvested dividends... -- -- -- --
Shares redeemed........ (5,500) (86,962) (1,046,968) (15,570,116)
-------- ------------ ---------- ------------
Net increase (decrease) (5,500) $ (86,962) (735,537) $(10,865,520)
======== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
---------------------- ------------------------ ---------------------- ----------------------
Shares Amount Shares Amount Shares Amount Shares Amount
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Shares sold............ 358,049* $ 6,008,446* 545,178+ $ 7,877,009+ 63,441 $ 952,686 114,707 $ 1,471,759
Reinvested dividends... -- -- -- -- -- -- -- --
Shares redeemed........ (984,135) (16,434,485) (1,445,548) (20,947,928) (281,736)* (4,143,297)* (581,815)+ (7,492,365)+
-------- ------------ ---------- ------------ -------- ----------- -------- -----------
Net increase (decrease) (626,086) $(10,426,039) (900,370) $(13,070,919) (218,295) $(3,190,611) (467,108) $(6,020,606)
======== ============ ========== ============ ======== =========== ======== ===========
New Century Fund
------------------------------------------------------------------------
Class C(1) Class I#
------------------------------------------------ ----------------------
For the For the For the
year ended year ended year ended
September 30, 2005 September 30, 2004 September 30, 2004
---------------------- ------------------------ ----------------------
Shares Amount Shares Amount Shares Amount
-------- ------------ ---------- ------------ -------- -----------
Shares sold............ 16,515 $ 248,611 27,155 $ 338,876 23,471 $ 366,941
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (59,097) (874,430) (42,881) (555,109) (362,040) (5,505,570)
-------- ------------ ---------- ------------ -------- -----------
Net increase (decrease) (42,582) $ (625,819) (15,726) $ (216,233) (338,569) $(5,138,629)
======== ============ ========== ============ ======== ===========
- --------
* Includes automatic conversion of 128,611 shares of Class B shares in the
amount of $1,883,691 to 113,937 shares of Class A shares in the amount of
$1,883,691.
+ 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.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
# See Note 1
69
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares
sold...... 879,119+ $ 10,753,528+ 1,045,004@ $ 11,688,438@ 242,630 $ 2,807,143 436,582 $ 4,667,708
Reinvested
dividends. 43,416 537,570 -- -- -- -- -- --
Shares
redeemed.. (1,697,725) (20,789,044) (1,927,723) (21,643,098) (1,782,268)+ (20,575,616)+ (2,246,309)@ (23,862,612)@
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease) (775,190) $ (9,497,946) (882,719) $ (9,954,660) (1,539,638) $(17,768,473) (1,809,727) $(19,194,904)
========== ============ ========== ============ ========== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares
sold...... 136,365 $ 1,581,328 183,472 $ 1,937,831 21,133 $ 258,364 123,017 $ 1,442,050
Reinvested
dividends. -- -- -- -- 729 9,047 -- --
Shares
redeemed.. (1,041,425) (12,022,770) (1,213,371) (12,873,624) (28,258) (347,815) (1,319,421) (15,401,935)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease) (905,060) $(10,441,442) (1,029,899) $(10,935,793) (6,396) $ (80,404) (1,196,404) $(13,959,885)
========== ============ ========== ============ ========== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares
sold...... 744,224# $ 10,112,127# 1,207,170* $ 15,877,253* 202,218 $ 2,733,921 361,540 $ 4,742,697
Reinvested
dividends. 184,510 2,518,942 149,834 1,981,459 25,821 351,754 16,011 211,106
Shares
redeemed.. (2,685,598) (36,608,551) (3,283,862) (43,275,829) (976,565)# (13,227,507)# (1,262,126)* (16,530,680)*
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease) (1,756,864) $(23,977,482) (1,926,858) $(25,417,117) (748,526) $(10,141,832) (884,575) $(11,576,877)
========== ============ ========== ============ ========== ============ ========== ============
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------ ------------------------ ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares
sold...... 94,054 $ 1,276,760 196,419 $ 2,583,488 20,395 $ 277,145 133,077 $ 1,726,494
Reinvested
dividends. 15,020 204,890 9,054 119,529 1,122 15,336 2,491 33,022
Shares
redeemed.. (430,337) (5,844,582) (549,958) (7,216,970) (18,641) (255,119) (451,196) (5,895,473)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net
increase
(decrease) (321,263) $ (4,362,932) (344,485) $ (4,513,953) 2,876 $ 37,362 (315,628) $ (4,135,957)
========== ============ ========== ============ ========== ============ ========== ============
- --------
+ Includes automatic conversion of 454,066 shares of Class B shares in the
amount of $5,217,517 to 428,550 shares of Class A shares in the amount of
$5,217,517.
@ 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 250,876 shares of Class B shares in the
amount of $3,385,902 to 249,851 shares of Class A shares in the amount of
$3,385,902.
* Includes automatic conversion of 172,518 shares of Class B shares in the
amount of $1,847,985 to 163,528 shares of Class A shares in the amount of
$1,847,985.
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
70
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
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, 2005 September 30, 2004 September 30, 2005 September 30, 2004
----------------------- ------------------------ ---------------------- -------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
--------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Shares sold.............. 1,043,869* $ 12,291,775* 1,003,369@ $ 9,993,370@ 261,068 $ 2,907,036 463,405 $ 4,317,209
Reinvested dividends..... -- -- 1,103 10,629 -- -- -- --
Shares redeemed.......... (865,086) (10,105,312) (1,135,026) (11,344,294) (806,858)* (8,933,931)* (1,302,084)@ (12,437,630)@
--------- ------------ ---------- ------------ -------- ----------- ---------- ------------
Net increase (decrease).. 178,783 $ 2,186,463 (130,554) $ (1,340,295) (545,790) $(6,026,895) (838,679) $ (8,120,421)
========= ============ ========== ============ ======== =========== ========== ============
International Equity Fund
------------------------------------------------------------------------------------------------------------
Class C(2) Class I
----------------------------------------------------- ----------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------------- ------------------------- ------------------------- ------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 162,124 $ 1,805,329 244,213 $ 2,307,252 335,007 $ 3,994,607 526,358 $ 5,224,935
Reinvested
dividends..... -- -- -- -- -- -- 1,799 17,397
Shares redeemed (420,394) (4,662,221) (386,123) (3,682,438) (209,537) (2,503,467) (2,451,685) (25,844,650)
---------- ------------ ---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (258,270) $ (2,856,892) (141,910) $ (1,375,186) 125,470 $ 1,491,140 (1,923,528) $(20,602,318)
========== ============ ========== ============ ========== ============ ========== ============
Value Fund(1)
---------------------------------------------------------------------------------
Class A
---------------------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
------------------------- ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 3,076,062+ $ 54,117,019+ 2,512,260# $ 42,830,376# 1,250,958** $ 18,840,328**
Reinvested
dividends..... 587,633 10,101,410 165,970 2,706,977 148,209 2,134,200
Shares redeemed (1,591,136) (28,099,693) (1,208,150) (20,534,683) (1,166,737) (17,494,094)
---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... 2,072,559 $ 36,118,736 1,470,080 $ 25,002,670 232,430 $ 3,480,434
========== ============ ========== ============ ========== ============
Value Fund(1)
---------------------------------------------------------------------------------
Class B
---------------------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
------------------------- ------------------------- -------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------ ---------- ------------ ---------- ------------
Shares sold.... 741,367 $ 12,542,807 602,789 $ 9,867,154 790,880** $ 11,373,716**
Reinvested
dividends..... 402,122 6,626,965 211,580 3,326,044 190,506 2,649,945
Shares redeemed (1,822,991)+ (30,700,307)+ (2,126,505)# (34,796,505)# (1,219,512) (17,398,128)
---------- ------------ ---------- ------------ ---------- ------------
Net increase
(decrease).... (679,502) $(11,530,535) (1,312,136) $(21,603,307) (238,126) $ (3,374,467)
========== ============ ========== ============ ========== ============
- --------
* Includes automatic conversion of 300,045 shares of Class B shares in the
amount of $3,494,617 to 316,984 shares of Class A shares in the amount of
$3,494,617.
@ 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 1,084,621 shares of Class B shares in the
amount of $18,195,883 to 1,038,213 shares of Class A shares in the amount of
$18,195,883.
# Includes automatic conversion of 56,417 shares of Class B shares in the
amount of $794,436 to 546,465 shares of Class A shares in the amount of
$794,436.
** 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.
(1)See Note 2
(2)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
71
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
Value Fund(1)
-------------------------------------------------------------------
Class C(2)
-------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
--------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 829,763 $14,010,774 673,127 $11,022,116 543,767 $ 7,827,633
Reinvested dividends... 198,515 3,271,530 58,785 924,693 46,488 646,641
Shares redeemed........ (463,163) (7,853,358) (384,036) (6,289,709) (427,255) (6,130,918)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) 565,115 $ 9,428,946 347,876 $ 5,657,100 163,000 $ 2,343,356
======== =========== ======== =========== ======== ===========
Value Fund(1)
-------------------------------------------------------------------
Class I
-------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
--------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 94,037 $ 1,658,733 89,529 $ 1,520,604 94,391 $ 1,425,043
Reinvested dividends... 34,149 586,340 21,805 355,230 15,108 217,403
Shares redeemed........ (224,168) (4,025,285) (248,738) (4,344,445) (26,620) (405,802)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (95,982) $(1,780,212) (137,404) $(2,468,611) 82,879 $ 1,236,644
======== =========== ======== =========== ======== ===========
Value Fund(1)
-------------------------------------------------------------------
Class Z
-------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
--------------------- --------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 569,182 $10,322,268 175,918 $ 3,072,631 268,453 $ 3,953,345
Reinvested dividends... 60,060 1,060,065 15,301 255,534 1,192 17,449
Shares redeemed........ (102,946) (1,879,658) (56,424) (979,176) (23,150) (355,897)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) 526,296 $ 9,502,675 134,795 $ 2,348,989 246,495 $ 3,614,897
======== =========== ======== =========== ======== ===========
- --------
(1)See Note 2
(2)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
72
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
Biotech/Health Fund#
-----------------------------------------------------------------------
Class A
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 452,295* $ 4,107,482* 453,977@ $ 4,634,336@ 456,700 $ 3,940,808
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (728,911) (6,446,238) (627,513) (6,279,531) (639,968) (5,253,782)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (276,616) $(2,338,756) (173,536) $(1,645,195) (183,268) $(1,312,974)
======== =========== ======== =========== ======== ===========
Biotech/Health Fund#
-----------------------------------------------------------------------
Class B
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 86,406 $ 726,533 198,059 $ 1,981,347 504,910 $ 4,524,190
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (468,621)* (4,030,745)* (414,457)@ (4,021,201)@ (746,314) (6,389,961)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (382,215) $(3,304,213) (216,398) $(2,039,854) (241,404) $(1,865,771)
======== =========== ======== =========== ======== ===========
Biotech/Health Fund#
-----------------------------------------------------------------------
Class C(1)
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 94,298 $ 818,695 143,510 $ 1,438,774 211,434 $ 1,825,147
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (453,210) (3,900,683) (279,256) (2,695,203) (551,787) (4,263,083)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (358,912) $(3,081,988) (135,746) $(1,256,429) (340,353) $(2,437,936)
======== =========== ======== =========== ======== ===========
- --------
* Includes automatic conversion of 15,747 shares of Class B shares in the
amount of $136,254 to 15,241 shares of Class A shares in the amount of
$136,254.
@ 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.
# See Note 2
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
73
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
Tax Managed Equity Fund#
-----------------------------------------------------------------------
Class A
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 48,008+ $ 561,687+ 84,726@ $ 934,523@ 70,444 $ 672,205
Reinvested dividends... 5,392 64,327 -- -- -- --
Shares redeemed........ (305,640) (3,583,246) (299,486) (3,349,507) (494,385) (4,600,304)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (252,240) $(2,957,232) (214,760) $(2,414,984) (423,941) $(3,928,099)
======== =========== ======== =========== ======== ===========
Tax Managed Equity Fund#
-----------------------------------------------------------------------
Class B
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 18,771 $ 212,088 75,226 $ 808,880 74,626 $ 688,358
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (501,702)+ (5,676,515)+ (495,633)@ (5,346,758)@ (768,187) (6,967,422)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (482,931) $(5,464,427) (420,407) $(4,537,878) (693,561) $(6,279,064)
======== =========== ======== =========== ======== ===========
Tax Managed Equity Fund#
-----------------------------------------------------------------------
Class C(1)
-----------------------------------------------------------------------
For the For the For the
year ended eleven months ended year ended
September 30, 2005 September 30, 2004 October 31, 2003
---------------------- ---------------------- ---------------------
Shares Amount Shares Amount Shares Amount
-------- ----------- -------- ----------- -------- -----------
Shares sold............ 67,543 $ 758,473 68,670 $ 736,427 168,595 $ 1,555,227
Reinvested dividends... -- -- -- -- -- --
Shares redeemed........ (522,887) (5,947,995) (648,369) (6,961,518) (910,268) (8,270,207)
-------- ----------- -------- ----------- -------- -----------
Net increase (decrease) (455,344) $(5,189,522) (579,699) $(6,225,091) (741,673) $(6,714,980)
======== =========== ======== =========== ======== ===========
- --------
+ Includes automatic conversion of 8,010 shares of Class B shares in the
amount of $88,782 to 7,732 shares of Class A shares in the amount of $88,782.
@ 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.
# See Note 2
(1)Effective February 23, 2004, Class II shares were redesignated to Class C
shares.
74
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (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, 2005, the following
Funds had borrowings:
Weighted
Days Interest Average Debt Average
Fund Outstanding Charges Utilized Interest
- ---- ----------- -------- ------------ --------
Blue Chip Growth.............. 73 $3,385 $ 516,998 3.28%
Growth Opportunities.......... 1 81 1,136,911 2.56
New Century................... 11 547 773,780 2.30
Growth and Income............. 1 102 982,664 3.75
Balanced Assets............... 100 5,852 715,532 3.03
International Equity.......... 59 1,413 261,024 3.27
Value......................... 2 344 1,643,268 3.78
Biotech/Health................ 9 771 1,106,751 2.83
At September 30, 2005, there were no borrowings outstanding.
Note 9. Interfund Lending Agreement
Pursuant to exemptive relief granted by the Securities and Exchange
Commission, the Funds are permitted to participate in an interfund lending
program among investment companies advised by 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, 2005, 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, 2005, the following Funds
recorded realized gains (losses) and income on security transactions of AIG
and subsidiaries of AIG as follows:
Market Market
Value at Change in Value at
September 30, Cost of Cost of Realized Unrealized September 30,
Fund Security Income 2004 Purchases Sales Gain (Loss) Gain (Loss) 2005
- ---- -------- ------ ------------- --------- -------- ----------- ----------- -------------
Tax Managed Equity.. AIG $1,028 $543,920 $-- $455,586 $(101,022) $12,688 $--
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
75
SunAmerica Equity Funds
NOTES TO FINANCIAL STATEMENTS -- September 30, 2005 -- (continued)
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 and expenses line on the Statement of Operations.
Retirement Plan Retirement Plan Retirement Plan
Fund Liability Expense Payments
- ---- --------------- --------------- ---------------
As of September 30, 2005
- - -----------------------------------------------
Blue Chip Growth.... $30,547 $1,248 $2,412
Growth Opportunities 25,449 1,306 1,749
New Century......... 49,071 1,189 4,247
Growth and Income... 39,117 2,087 2,456
Balanced Assets..... 85,134 2,659 7,104
International Equity 17,785 972 1,253
Value............... 29,519 2,432 1,886
Biotech/Health...... 5,244 492 257
Tax Managed Equity.. 10,587 624 588
Note 12. Investment Concentration
Some of the Funds 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, 2005, the International Equity Fund had approximately 25% of its net
assets invested in equity securities of companies domiciled in Japan.
Note 13. Subsequent Event
At a meeting of the Board, held on September 26, 2005, the Board, including
the Disinterested Trustees, approved the termination of J.P. Morgan Fleming
Asset Management, Inc. as Subadviser to the Tax Managed Equity Fund.
Effective November 1, 2005 day-to-day management of the Fund has been
assumed by SAAMCo pursuant to the Advisory Agreement last approved by the
Board on August 31, 2005.
Note 14. Other Information
On May 26, 2005, the New York Attorney General and the New York
Superintendent of Insurance filed a civil complaint against American
International Group, Inc. ("AIG") as well as its former Chairman and Chief
Executive Officer and former Vice Chairman and Chief Financial Officer, in
the Supreme Court of the State of New York. The complaint asserts claims
under New York's Martin Act and Insurance Law, among others, and makes
allegations concerning certain transactions entered into by AIG and certain
of its subsidiaries, but in no case involving any subsidiary engaged in
providing management or administrative services to the Funds. The complaint
seeks disgorgement, injunctive relief, punitive damages and costs, among
other things.
AIG is the indirect parent company and an affiliated person of the AIG
SunAmerica Asset Management Corp. ("Adviser"), AIG SunAmerica Capital
Services, Inc. (the "Distributor") and AIG Global Investment Corp. (the
"Subadviser"). Neither the Adviser, the Distributor, the Subadviser or their
respective officers and directors nor the Funds have been named in the
complaint, and the complaint does not seek any penalties against them.
In the Adviser's view, the matters alleged in the lawsuit are not material
in relation to the financial position of the Adviser, the Distributor or the
Subadviser, or to their ability to provide their respective services to the
Funds. Due to a provision in the law governing the operation of mutual
funds, however, if the lawsuit results in an injunction being entered
against AIG, then the Adviser, the Distributor and the Subadviser will need
to obtain permission from the Securities and Exchange Commission to continue
to service the Funds. While the Securities and Exchange Commission has
granted this type of relief to others in the past in similar circumstances,
there is no assurance that this permission would be granted.
76
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,
2005, 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, 2005, 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 four 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, 2005, and the related statements of
operations, the statements of changes in net assets for each of the two years
in the period then ended, and financial highlights for each of the two years in
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 statement of changes in net assets
and financial highlights for the each of 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 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. We were not engaged to perform an audit of the Funds' internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of September 30, 2005, by correspondence
with the custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. 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, 2005, 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, 2005, the results of its operations, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the four 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, 2005, the results of their operations, 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 two years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Houston, Texas
November 18, 2005
77
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited)
Approval of the Advisory Agreement and Subadvisory Agreements:
The Board of Trustees (the "Board"), including the Trustees that are not
interested persons of SunAmerica Equity Funds (the "Funds") (the "Disinterested
Trustees"), last approved the Investment Advisory and Management Agreement
between the Funds and AIG SunAmerica Asset Management Corp. ("SAAMCo") (the
"Advisory Agreement") for a period of one year, at a meeting held on August 31,
2005. At this same meeting, the Board also approved the renewal of subadvisory
agreements between SAAMCo and AIG Global Investment Company ("AIGGIC") and J.P.
Morgan Investment Management Inc. ("J.P. Morgan") (each a "Subadviser" and
collectively the "Subadvisers") with respect to the SunAmerica International
Equity Fund and Tax Managed Equity Fund, respectively (each a "Subadvisory
Agreement" and collectively, the "Subadvisory Agreements").
The Board noted that the discussion and approval of the Advisory Agreement and
Subadvisory Agreements at the August 31, 2005 meeting was the culmination of
numerous discussions and meetings that had taken place in recent months. The
Board further noted that certain members of the Board had met with senior
management on numerous occasions and had in-depth discussions regarding the
Funds' performance, advisory expenses and other fees and negotiations with
respect to advisory expenses.
In accordance with Section 15(c) of the Investment Company Act of 1940, as
amended (the "1940 Act"), the Board was provided with materials relating to its
consideration of the Advisory Agreement. These materials assisted the Board in
analyzing: (1) the nature, extent and quality of services to be provided by
SAAMCo and the Subadvisers, including administrative and shareholder services
to be provided by SAAMCo and certain other affiliated companies; (2) the costs
of services to be provided and benefits realized by SAAMCo and the Subadvisers,
including a comparison of fees and expense ratios of other similar funds, as
well as SAAMCo's profitability and financial condition; (3) the terms of the
Advisory Agreement and Subadvisory Agreements; (4) economies of scale and
whether the fee levels reflect these economies of scale; (5) SAAMCo's overall
organization, compliance policies and history, as well as the Subadvisers'
compliance policies and history; and (6) the investment performance of the
Funds in their peer groups ("Peer Groups") as determined by Lipper, Inc.
("Lipper") and as compared to their relevant benchmarks and indices.
Experienced counsel that is independent of SAAMCo provided advice to the
Disinterested Trustees ("Independent Counsel"). The Disinterested Trustees
considered additional information, such as expense and other comparative data
from Lipper. In considering these factors, as described in more detail below,
the Board did not identify any single factor or group of factors as being more
important than the others, but considered all factors together.
Nature, Extent and Quality of Services
The Board, including the Disinterested Trustees, considered the nature, quality
and extent of services to be provided by SAAMCo. In making its evaluation, the
Board considered that SAAMCo acts as investment manager and adviser to the
Funds, manages the daily business affairs of the Funds, and obtains and
evaluates economic, statistical and financial information to formulate and
implement investment policies. Additionally, SAAMCo provides office space,
accounting, legal, compliance, clerical and administrative services (exclusive
of, and in addition to, overseeing of any such service provided by any others
retained by the Funds), and has authorized its officers and employees, if
elected, to serve as officers or trustees of the Funds without compensation.
Finally, SAAMCo is responsible for monitoring and reviewing the activities of
third-party service providers.
In making their determination regarding the nature and quality of SAAMCo's
services, the Trustees considered SAAMCo's responsibility to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective administration of the Funds. With respect to the Funds for
which SAAMCo retains daily investment management responsibility, the Board also
reviewed the experience of the portfolio managers and research staff, SAAMCo's
investment style and process, and the level and process of monitoring the
managers. The Board also reviewed the performance of the Funds, the details of
which are described below.
The Board also reviewed the compliance and administrative services of SAAMCo.
The Board noted that SAAMCo provides and compensates a Chief Compliance Officer
for the Funds, and that SAAMCo maintains a compliance staff of nine people. The
Board analyzed the structure and duties of SAAMCo's accounting, legal and
compliance departments and concluded that they were adequate to meet the needs
of the Funds.
With respect to the Funds for which SAAMCo has delegated daily investment
management responsibilities to a Subadviser, the Board also considered the
nature, quality and extent of services to be provided by each Subadviser. The
Board considered that the Subadvisers are responsible for providing investment
management services, including investment research, advice and supervision, and
determining which securities will be purchased or sold by the Fund. The Board
reviewed each Subadviser's history, structure and size, visibility and
resources, which are needed to attract and retain highly qualified investment
professionals. With respect to administrative services to be provided by the
Subadvisers, the board considered that each Subadviser provides assistance in
general marketing assistance and has developed internal procedures for
monitoring compliance with investment objectives, policies and restrictions of
the Fund as set forth in the prospectus.
78
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited)
(continued)
The Board concluded that it was satisfied with the nature, quality and extent
of the services provided by or to be provided by SAAMCo and the Subadvisers and
that there was a reasonable basis on which to conclude that SAAMCo and the
Subadvisers would continue to provide a high quality of investment management
services.
Fees and Expenses
The Board, including the Disinterested Trustees, reviewed information regarding
the fees paid by the Funds to SAAMCo for investment advisory and management
services. The Board examined this information in order to determine the
reasonableness of the fees in light of the nature and quality of SAAMCo's
services and any additional benefits received by SAAMCo or its affiliates in
connection with providing such services to the Funds.
To assist in analyzing the reasonableness of the fees, the Board received
reports prepared independently by Lipper detailing comparative advisory fee and
other information of the Funds' peer groups as determined objectively by
Lipper, and rankings within the relevant Lipper categories. The Board also
received reports prepared by SAAMCo (including reports on investment management
fees charged by SAAMCo to other funds it manages) and by the Board's
independent counsel. In considering the reasonableness of the advisory fee, the
Board reviewed a number of expense comparisons, including: (i) contractual
management fees; (ii) actual total expenses; and (iii) actual and allowable
Rule 12b-1 and non-12b-1 fees. The Board also took into account that certain
fee arrangements included breakpoints that will adjust the fee downward as the
size of Funds increase, thereby allowing the shareholders to participate in
economies of scale. The Board noted that for the fee arrangements for the
SunAmerica International Equity Fund, SunAmerica Value Fund, SunAmerica
Biotech/Health Fund and the Tax Managed Equity Fund, which do not contain
breakpoints, contractual expense caps have been implemented. The expense caps
have been agreed to by SAAMCo and approved by the Board. The Board noted that
expense caps benefited shareholders to a similar extent as if breakpoints in
the Advisory Agreement were implemented (by keeping fees down even in the
absence of economies of scale). The Board also reviewed the reports from the
past year on soft dollar commissions. These reports included information on
brokers and total commissions paid for each Fund. The reports also detailed the
types of research and other services SAAMCo obtained in connection with soft
dollar commissions.
Additionally, the Board reviewed the Funds' expense ratios and analyzed the
expense reimbursements and net expense ratio caps contractually agreed upon by
SAAMCo. The Board compared the Funds' net expense ratios to those of other
funds within their respective Lipper peer groups. Based upon the reports
prepared by Lipper and other information provided by SAAMCo and by counsel to
the Disinterested Trustees, the Board was satisfied that the fee and expense
ratios of the Funds were acceptable given the quality of services expected to
be provided and were comparable to the fee and expense ratios of similar funds
within the same Lipper peer groups.
In considering the subadvisory fees, the Board, including the Disinterested
Trustees, considered that applicable Funds pay a fee to SAAMCo pursuant to the
Advisory Agreement, and that, in turn, SAAMCo, rather than the Funds, pays a
fee to each Subadviser. Therefore, the Board considered the amount retained by
SAAMCo and the fee paid to the Subadvisers with respect to the different
services provided by the Subadvisers.
The Board considered that each of the Subadvisory Agreements contained
breakpoints in the fee schedule if the SunAmerica International Equity Fund and
Tax Managed Equity Funds reached certain asset levels. The Board noted that
such breakpoints would not directly benefit the shareholders, but would result
in SAAMCo retaining a larger portion of the advisory fee. The Board, however,
was satisfied that SAAMCo had implemented expense caps which benefited
shareholders, as described above.
On the basis of the information considered, the Board was satisfied that the
advisory and subadvisory fee rates were fair in light of the usual and
customary charges made for services of the same nature and quality. The Board,
however, did negotiate a waiver of a portion of fees with respect to certain
Funds as described more fully below under "Investment Performance."
Costs of Services and Benefits Derived, as well as the Adviser's Profitability
and Financial Condition.
The Board, including the Disinterested Trustees, considered the direct and
indirect costs and benefits of SAMMCo's providing services to the Funds. The
Board reviewed financial statements relating to SAAMCo's profitability and
financial condition with respect to the services it provided the Funds, and
considered how profit margins could affect SAAMCo's ability to attract and
retain qualified investment personnel. The Board concluded that SAAMCo had a
satisfactory financial condition, and that their profitability was not
excessive as compared to standards set forth in applicable Court cases and
other available industry information.
79
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited)
(continued)
With respect to indirect costs and benefits, the Board was informed, based on
management's judgment, that (1) any indirect costs incurred by SAAMCo in
connection with rendering investment advisory services to the Funds are
inconsequential to the analysis of the adequacy of the advisory fees, and
(2) any collateral benefits derived as a result of providing advisory services
to the Funds are de minimis and do not impact upon the reasonableness of the
advisory fee. The Board also considered the reputational value to SAAMCo from
serving as investment adviser.
The Board also considered fees and, where applicable, profits earned by
affiliates for providing other services to the Funds, and, as described above,
research and other services SAAMCo obtained in connection with soft dollar
commissions. The Board concluded that any benefits that SAAMCo and its
affiliates could be expected to receive with regard to providing investment
advisory and other services to the Funds were not excessive.
Terms of the Advisory Agreement and Subadvisory Agreements
The Board, including the Disinterested Trustees, received a draft of the
proposed Advisory Agreement and Subadvisory Agreements. The Board considered
that they may be renewed from year to year, so long as their continuance is
specifically approved at least annually in accordance with the requirements of
the 1940 Act and that the Agreements provide that they will terminate in the
event of an assignment (as defined in the 1940 Act) or upon termination of the
agreement.
In reviewing the terms of the Advisory Agreement, the Board considered that
SAAMCo pays all of its own expenses in connection with the performance of its
duties, as well as the salaries, fees and expenses of the Trustees and Officers
who are employees of SAAMCo. The Board noted, however, that the Funds bear
certain proxy-related expenses. The Board also considered the termination and
liability provisions of the Advisory Agreement.
With respect to the Subadvisory Agreements, the Board further considered, that
under the terms of each Subadvisory Agreement, the Subadviser is not liable to
the Fund, or its shareholders, for any act or omission by the Subadviser or for
any losses sustained by the Fund, or its shareholders, except in the case of
willful misfeasance, bad faith, gross negligence and reckless disregard of
obligations or duties. The Board also considered that each Subadvisory
Agreement provides that the Subadviser will pay all of its own expenses in
connection with the performance of its duties as well as the cost of
maintaining the staff and personnel as necessary for it to perform its
obligations.
Economies of Scale
The Board, including the Disinterested Trustees, considered whether the Funds
have benefited from economies of scale and whether there is potential for
future realization of economies with respect to the Funds. The Board concluded
that any potential economies of scale are being shared between shareholders and
SAAMCo in an appropriate manner. The Board considered that the Funds in the AIG
SunAmerica complex share common resources and as a result, an increase in the
overall size of the complex could permit each fund to incur lower expenses than
they otherwise would achieve as stand-alone entities. The Board also considered
the anticipated efficiencies in the processes of SAAMCo as it adds labor and
capital to expand the scale of operations.
The Board concluded that the advisory fee structure was reasonable and that no
changes were currently necessary to further reflect economies of scale. The
Board noted that it will continue to review fees, including breakpoints and
expense caps in connection with contract renewals.
The Overall Organization of SAAMCo
The Trustees considered the benefit to shareholders of investing in a Fund that
is part of a family of funds offering a variety of types of mutual funds and
shareholder services. The Trustees also considered SAAMCo's experience in
providing management and investment advisory services to advisory clients,
including approximately 130 mutual funds (not including the Funds), and the
fact that SAAMCo currently managed, advised and/or administered approximately
$42 billion of assets. The Trustees also considered SAAMCo's record of
compliance with each Funds' objectives, strategies and restrictions and its
positive regulatory and compliance history. The Trustees also considered
SAAMCo's relationships with its affiliates and the resources available to them.
Compliance
The Board considered SAAMCo's and the Subadvisers' compliance and regulatory
history, and inquired whether SAAMCo or either Subadviser had been the target
of any regulatory actions or investigations. In addition, the Board reviewed
information concerning SAAMCo's compliance staff that would be responsible for
providing compliance functions on behalf of the Funds. Finally, the Board
reviewed the Code of Ethics of SAAMCo and the Subadvisers, and determined that
they contain provisions reasonably necessary to prevent fraudulent, deceptive
or manipulative acts by personnel in connection with their personal
transactions in securities held or to be acquired by the Funds.
80
SunAmerica Equity Funds
APPROVAL OF ADVISORY AGREEMENTS -- September 30, 2005 -- (unaudited)
(continued)
Investment Performance
The Board regularly reviews the performance of the Funds over various periods
of time. At the Board meeting held on August 31, 2005, in connection with the
approval of the continuation of the Advisory Agreement and the Subadvisory
Agreements, the Board reviewed the Funds' annualized total return for the one-,
two-, three-, four-, five- and ten-year periods (for those Funds that do not
have ten years of performance history, the Board reviewed performance history
since the Fund's inception). The Board, including the Disinterested Trustees,
received and reviewed information regarding the investment performance of the
Funds as compared to their respective benchmarks, the performance of the Funds'
Peer Groups, and to an appropriate index or combination of indices.
In preparation for the August 31, 2005 meeting, the Board was provided with
performance reports independently prepared by Lipper. Based on the Lipper
reports, the Board reviewed the Funds' annualized total return for the prior
one-, two-, three-, four-, five-, and ten-year periods ending on June 30, 2005.
The Board also received a report prepared by SAAMCo's management which detailed
the Funds' performance with respect to 2005. The Trustees noted that the Funds
generally were providing competitive performance for long-term investors, but
noted the performance in particular with respect to the SunAmerica Blue Chip
Growth Fund, SunAmerica Balanced Assets Fund and the SunAmerica Growth
Opportunities Fund, which lagged performance within their peer groups for
certain periods. Members of the Board and management of SAAMCo discussed
SAAMCo's plans to improve performance of these Funds. In this connection, the
Board noted steps taken by management of SAAMCo including past and present
plans with respect to investment and trading personnel. The Board received a
report prepared by SAAMCo's management which showed that SAAMCo had steadily
increased its staff in the investments and trading department over the past
couple of years. Such increases in staff included the hiring of new analysts
and portfolio managers. The Board noted that SAAMCo previously agreed to hire a
Chief Investment Officer and expand the department and that the report
demonstrated that SAAMCo was committed to enhancing the Funds' performance by
increasing the number of qualified personnel. The Board recognized that SAAMCo
regularly apprised the Board regarding personnel plans and fulfillment thereof
and requested that SAAMCo continue to keep the Board so apprised.
In reviewing the performance of AIGGIC the Board noted that it was satisfied
with its performance in managing the SunAmerica International Equity Fund. In
making this determination the Board considered that AIGGIC's performance has
improved during the past year and its Lipper peer rankings with respect to
certain periods compared favorably. In reviewing the performance of
J.P. Morgan's management of the Tax Managed Equity Fund, the Board noted that
performance continues to lag its Lipper peer group and appropriate indices with
respect to certain periods. SAAMCo's management reported to the Board that
during the past year J.P. Morgan had made adjustments to their investment
process and portfolio management team but that they would continue to carefully
monitor performance and report to the Board.
Conclusion
After a full and complete discussion, and following negotiations with SAAMCo's
management, the Board renewed the Advisory and Subadvisory Agreements with
respect to each of the Funds for a period of one year, subject to a waiver by
SAAMCo of advisory fees in the amount of .05% of average daily net assets with
respect to the following Funds to commence on or about October 1, 2005:
SunAmerica Blue Chip Growth Fund; SunAmerica Balanced Assets Fund; and
SunAmerica Growth Opportunities Fund. The Board noted that the waiver was
temporary and may be discontinued by SAAMCo without notice to shareholders,
subject to approval by the Board. The Board indicated that it would carefully
monitor the performance of the Funds and the actions taken by SAAMCO to enhance
the investments department, and that the Board would take appropriate action,
as necessary, in an effort to enhance performance. The Board further noted that
the approval of the Subadvisory Agreement with J.P. Morgan with respect to the
Tax Managed Equity Fund was subject to a subsequent report on the Fund's
performance and recommendations by SAAMCo./1/
Based on their evaluation of all material factors and assisted by the advice of
independent counsel, the Board, including the Disinterested Trustees, were
satisfied that the terms of the Advisory Agreement and Subadvisory Agreements
were fair, and in the best interest of the Funds and its shareholders, and that
the advisory fee rates provided in the Advisory Agreement are acceptable in
light of the usual and customary charges made for services of similar nature
and quality. In arriving at a decision to approve the continuation of the
Advisory Agreement and Subadvisory Agreements, the Board did not single out any
one factor or group of factors as being more important than other factors, but
considered all factors together.
- --------
/1/ At a meeting of the Board, held on September 26, 2005, the Board,
including the Disinterested Trustees, approved the termination of J.P.
Morgan as Subadviser to the Tax Managed Equity Fund. Effective November 1,
2005 day-to-day management of the Fund has been assumed by Paul Ma of
SAAMCo pursuant to the Advisory Agreement last approved by the Board on
August 31, 2005.
81
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2005 -- (unaudited)
The following table contains basic information regarding the Trustees and
Officers that oversee operations of the Funds and other investment companies
within the Fund complex.
Number of
Position Term of Portfolios in
Name, Held With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships
Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2)
- ---------------------- ---------- -------------- ----------------------------- ------------- -----------------------------
Trustees
Jeffrey S. Burum Trustee 2004-Present Founder and CEO of 40 None
DOB: February 27, 1963 National Housing
Development Corporation
(January 2000 to present);
Founder, Owner and Partner
of Colonies Crossroads, Inc.
(January 2000 to present);
Owner and Managing
Member of Diversified
Pacific Development Group
LLC (June 1990 to present).
Dr. Judith L. Craven Trustee 2001-Present Retired. 80 Director, A.G. Belo
DOB: October 6, 1945 Corporation (1992 to
present); Director, Sysco
Corporation (1996 to
present); Director, Luby's,
Inc. (1998 to present):
Director, University of Texas
Board of Regents
(2001-Present).
William F. Devin Trustee 2001-Present Retired. 80 Member of the Board of
DOB: December 30, 1938 Governors, Boston Stock
Exchange (1985-Present).
Samuel M. Eisenstat Chairman 1986-Present Attorney, solo practitioner. 50 Director, North European Oil
DOB: March 7, 1940 of the Royalty Trust.
Board
Stephen J. Gutman Trustee 1986-Present Associate, Corcoran Group 50 None
DOB: May 10, 1943 (Real Estate) (2003 to
present); Partner and Member
of Managing Directors, Beau
Brummell-Soho LLC
(Licensing of menswear
specialty retailing and other
activities) (June 1988 to
present).
Peter A. Harbeck(3) Trustee 1995-Present President, CEO and Director, 89 None
DOB: January 23, 1954 SAAMCo. (August 1995 to
present); Director, AIG
SunAmerica Capital
Services, Inc. ("SACS")
(August 1993 to present)
President and CEO, AIG
Advisor Group, Inc. (June
2004 to present).
82
SunAmerica Equity Funds
TRUSTEE AND OFFICER INFORMATION -- September 30, 2005 -- (unaudited)
(continued)
Number of
Position Term of Portfolios in
Name, Held With Office and Fund Complex
Address and SunAmerica Length of Principal Occupations Overseen by Other Directorships
Date of Birth* Complex Time Served(4) During Past 5 Years Trustee(1) Held by Trustee(2)
- --------------------- ---------- -------------- ----------------------------- ------------- ---------------------------
William J. Shea(5) Trustee 2004-Present President and CEO, Conseco, 50 Chairman of the Board,
DOB: February 9, 1948 Inc. (Financial Services) Royal and SunAlliance,
(2001-2004); Chairman of U.S.A., Inc. (March 2005 to
the Board of Centennial present); Director, Boston
Technologies, Inc. (1998 to Private Holdings (October
2001); Vice Chairman, Bank 2004 to present).
Boston Corp. (1993-1998)
Officers
Vincent M. Marra President 2003-Present Senior Vice President and N/A N/A
DOB: May 28, 1950 Chief Operating Officer,
SAAMCo (February 2003 to
Present); Chief
Administrative Officer, Chief
Operating Officer and Chief
Financial Officer, Carret &
Co., LLC (June 2002 to
February 2003); President
and Chief Operating Officer,
Bowne Digital Solutions
(1999 to May 2002)
Donna M. Handel Treasurer 2002-Present Senior Vice President, N/A N/A
DOB: June 25, 1966 SAAMCo (December 2004
to Present); Vice President,
SAAMCo (1997 to
December 2004), Assistant
Treasurer (1993 to 2002)
- --------
* The business address for each Trustee is the Harborside Financial Center,
3200 Plaza 5, Jersey City, NJ 07311-4992.
(1) The "Fund Complex" consists of all registered investment company portfolios
for which SAAMCo serves as investment adviser or business manager. The
"Fund Complex" includes the SunAmerica Money Market Funds (2 funds),
SunAmerica Equity Funds (9 funds), SunAmerica Income Funds (6 funds),
SunAmerica Focused Series, Inc. (17 portfolios), SunAmerica Focused Alpha
Growth Fund (1 fund), SunAmerica Focused Alpha Large-Cap Fund (1 fund),
Anchor Series Trust (9 portfolios), SunAmerica Senior Floating Rate Fund,
Inc. (1 fund), SunAmerica Series Trust (32 portfolios), VALIC Company I (24
portfolios), VALIC Company II (15 funds), Seasons Series Trust (24
portfolios) 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 and Officers is contained in the
Statement of Additional Information and is available without charge by calling
(800) 858-8850.
83
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, 2005. The information and distributions
reported herein may differ from the information and distributions taxable to
the shareholders for the calendar year ending December 31, 2005. 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 2006.
During the year ended September 30, 2005 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.. -- -- -- -- --
New Century Class A........... -- -- -- -- --
New Century Class B........... -- -- -- -- --
New Century Class C........... -- -- -- -- --
Growth & Income Class A....... 0.11 0.11 -- -- 100.00
Growth & Income Class B....... -- -- -- -- --
Growth & Income Class C....... -- -- -- -- --
Growth & Income Class I....... 0.14 0.14 -- -- 100.00
Balanced Assets Class A....... 0.24 0.24 -- -- 78.60
Balanced Assets Class B....... 0.15 0.15 -- -- 78.60
Balanced Assets Class C....... 0.15 0.15 -- -- 78.60
Balanced Assets Class I....... 0.28 0.28 -- -- 78.60
International Equity Class A.. -- -- -- -- --
International Equity Class B.. -- -- -- -- --
International Equity Class C.. -- -- -- -- --
International Equity Class I.. -- -- -- -- --
Value Class A................. 2.07 0.29 1.12 0.66 47.68
Value Class B................. 1.96 0.18 1.12 0.66 47.68
Value Class C................. 1.96 0.18 1.12 0.66 47.68
Value Class I................. 2.08 0.30 1.12 0.66 47.68
Value Class Z................. 2.17 0.39 1.12 0.66 47.68
Biotech/Health Class A........ -- -- -- -- --
Biotech/Health Class B........ -- -- -- -- --
Biotech/Health Class C........ -- -- -- -- --
Tax Managed Equity Class A.... 0.06 0.06 -- -- 100.00
Tax Managed Equity Class B.... -- -- -- -- --
Tax Managed Equity Class C.... -- -- -- -- --
The International Equity Fund intends to make 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, 2005 was $233,996. The
gross foreign source income for the information reporting is $1,812,604.
For the year ended September 30, 2005, certain dividends paid by the following
funds 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 Income
---- -----------
Growth & Income............... $ 588,836
Balanced Assets............... 3,278,600
Value......................... 16,513,550
Tax Managed Equity............ 69,828
84
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.
85
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Blue Chip Growth Fund
For the annual period ending September 30, 2005, the SunAmerica Blue Chip
Growth Fund Class B returned 7.17% at NAV, trailing its benchmarks, the Russell
1000 Growth Index and the S&P 500 Index, which returned 11.60% and 12.25% for
the same period, respectively.
Over the past twelve months, equity market conditions have been challenging, as
the economy dealt with rising interest rates and commodity price trends. While
large-cap growth stocks did appreciate during the annual period, their results
significantly lagged the returns generated by the small- and mid-cap categories.
During the opening months of the annual period, equity prices staged a powerful
recovery following the outcome of the 2004 presidential election. The equity
market lost ground in the first quarter of 2005 as fears of higher oil prices,
increasing interest rates, mounting inflationary pressures, and slowing
corporate earnings weighed heavily on the markets. Stocks resumed their upward
climb in early April, with most indices setting peaks in the summer. As the
fourth quarter of the annual period began, investors marked the one-year
anniversary of the Federal Reserve tightening cycle, oil had recently broken
$60 per barrel, and bonds remained quite strong, yielding 3.91% on the 10-year
Treasury note. Despite this backdrop, the U.S. equity market continued to
benefit from positive profit growth. Economic growth remained solid, with
second quarter Gross Domestic Product increasing 3.3%. As the summer
progressed, however, fears of faster economic growth and higher inflation
caused the domestic equity markets to correct, and investors seemingly focused
on a longer tightening cycle by the Federal Reserve.
With respect to sector selection, strong stock selection in the Financial
sector was the leading contributor to overall Fund performance despite the
rising interest rate environment. With respect to stock sector weighting
vis-a-vis the Fund's benchmark, under-weight positions in the Healthcare and
Consumer Staples groups assisted the portfolio's performance, as did
over-weight exposure to the Industrial and Energy sectors. On the other hand,
no exposure to the Utility group, the best performing industry category during
the annual period, negatively impacted results, as did disappointing stock
selection in the Consumer Discretionary, Energy, and Information Technology
sectors.
Leading contributors to performance for the annual period included Amgen, Inc.,
PacifiCare Health Systems, Inc., Transocean, Inc., Intel Corp., and Texas
Instruments, Inc. Stocks which detracted from performance included Wal-Mart
Stores, Biogen Idec, Inc., International Business Machines Corp., Nokia Oxj
Sponsored ADR, and Zimmer Holdings, Inc.
86
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 $16,842. 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 $24,753 and $19,473, respectively.
[CHART]
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
Average Average Average Average
Blue Chip Growth Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 1.74% 7.95% 3.17% 7.17% 5.96% 6.96% 8.26% 8.26%
- --------------------------------------------------------------------------------------------
5 Year Return -10.41% -38.76% -10.31% -40.96% -10.07% -41.18% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 5.36% 78.82% 5.35% 68.42% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 6.06% 114.62% 8.23% 408.09% -3.14% -19.13% -1.56% -5.89%
- --------------------------------------------------------------------------------------------
+ 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, 2005, the SunAmerica Blue Chip
Growth Class B returned 3.17% compared to 11.60% for the Russell 1000 Growth
Index and 12.25% 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
87
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Growth Opportunities Fund
For the annual period ending September 30, 2005, the SunAmerica Growth
Opportunities Fund Class A returned 19.19% at NAV. The Fund's performance
benchmark, Russell Mid-Cap Growth, returned 23.47% over the same period.
While the major U.S. market indices delivered positive returns during the
annual period, small-cap stocks outperformed their large-cap brethren. The
fiscal year began on a positive note for the small-cap growth category, as the
outcome of the presidential election raised the probability of permanent tax
cuts and continued pro-growth policies. In the following quarter, small-cap
stocks exhibited volatility as mixed macroeconomic data, a possible
acceleration in the pace of interest rate increases by the Federal Reserve, and
renewed inflation concerns resurfaced. Overall, the Russell Mid-Cap Growth
Index appreciated 23.74% for the period, as all major sectors delivered
positive returns. Utilities, while only comprising a 1% weight in the
benchmark, delivered a 80.78% return, the highest of any sector. The Energy (5%
weight) and Telecom Services (1% weight) groups also delivered sizeable gains
of 59.21% and 66.96%, respectively. The two largest components of the Russell
Mid-Cap Growth Index, Consumer Discretionary (24% weight) and Information
Technology (20% weight) delivered returns of 14.49% and 21.73%, respectively.
Sector selection positively impacted results. Specifically, an overweight
position in Energy and Information Technology sectors provided relative
out-performance, as did under-weight exposure to the Consumer Discretionary
group. Additionally, security selection in the Energy, Healthcare, and
Industrial segments also proved beneficial. Detracting from performance was a
combination of an over-weight position and stock selection in the Financial
sector. Disappointing security selection in the Consumer Discretionary,
Information Technology, and Consumer Staples groups also negatively impacted
results.
Top-performing equity selections included Global Industries, LCA-Vision, TODCO,
Hornbeck Offshore Services, Inc. and Ametek, Inc. Portfolio laggards included
SupportSoft, Piper Jaffray, Niku, Applebee's International, and Cypress
Bioscience.
Finally, the Fund's portfolio manager during the majority of the period, Brian
Clifford, left the firm in September 2005. A team of SunAmerica investment
professionals are now responsible for the day-to-day management of the Funds.
This team is overseen by Tim Pettee, Chief Investment Officer and Senior
Vice-President of AIG SunAmerica and Lead Portfolio Manager to the Funds. Mr.
Pettee is responsible for managing the team which consists of other
co-portfolio managers and research analysts; he also has primary investment
discretion for the Funds. The other members of Mr. Pettee's team are Andrew
Sheridan, Brendan Voege, Allison Larkin, Dawn Schuchman, Soraya Benitez and Ben
Barrett. These six members of Mr. Pettee's team are primarily responsible for
research and making recommendations in regards to the selection of securities.
Mr. Pettee is the only person who has actual discretion over the purchase and
sale of securities on behalf of the Funds.
88
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 $16,816. The same amount invested in securities
mirroring the performance of the Russell Mid-Cap Growth Index would be valued
at $23,894.
[CHART]
Growth Opportunities Class A Russell Mid-Cap Growth Index
---------------------------- ----------------------------
9/30/1995 $ 9,423 $10,000
9/30/1996 10,641 11,633
10/31/1997 12,295 14,326
9/30/1998 12,390 13,669
9/30/1999 18,885 18,752
9/30/2000 38,155 30,073
9/30/2001 15,938 14,505
9/30/2002 10,315 12,257
9/30/2003 14,201 17,024
9/30/2004 14,118 19,352
9/30/2005 16,816 23,894
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
Growth Average Average Average Average
Opportunities Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+ Return Return
- ---------------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 12.36% 19.19% 14.34% 18.34% 17.37% 18.37% 19.56% 19.56%
- --------------------------------------------------------------------------------------------
5 Year Return -16.11% -55.93% -16.01% -57.45% -15.72% -57.47% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 5.33% 78.46% 5.35% 68.48% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 8.72% 405.16% 5.79% 96.35% -0.94% -6.08% -2.44% -9.12%
- --------------------------------------------------------------------------------------------
+ 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 10/04/93; Class C 02/02/99; 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, 2005, the SunAmerica Growth
Opportunities Class A returned 12.36% compared to 23.47% for the Russell
Mid-Cap 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
89
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
New Century Fund
For the annual period ending September 30, 2005, the SunAmerica New Century
Fund Class A returned 21.87% at NAV, outperforming the Russell 3000 Growth
Index, which returned 12.13% during the same period.
The economy and the markets were directly impacted by the direction of energy
prices during the twelve months ending September 30, 2005. As the price of
crude oil increased 33% during the fiscal year, inflation and consumer spending
concerns resurfaced. The annual period began with a broad-based equity rally,
with small- and mid-cap stocks outperforming as investors sought companies with
higher growth prospects and reasonable valuations. Market conditions varied
significantly in the second and third fiscal quarters of the annual period, as
the economy and the markets were directly impacted by the direction of energy
prices. During the first three months of 2005, interest rates rose, stocks
lagged, and oil prices soared. In the third fiscal quarter, interest rates
declined, stocks rallied across the board, and oil prices were mixed. After an
initial sell-off in April and May, the Energy group regained favor and the
Russell 3000 Growth Index ended the annual period on a positive note.
Several portfolio strategies contributed to the Fund's out-performance versus
its benchmark. The Fund benefited considerably from outstanding stock selection
in the Information Technology and Materials sectors. Additionally, over-weight
exposure to the Energy and Telecom Services sectors enhanced returns, as did
strong stock selection in the Energy, Industrial, Healthcare, and Financial
categories. On the negative side, an 8% average-cash position, stock selection
in the Consumer Staples sector, and no exposure to Utilities was a drag on
performance.
Individual securities which were significant positive influences during the
annual period included EOG Resources, Inc., NII Holdings, Inc.,
Cleveland-Cliffs, Inc., Marvell Technology Group, Ltd. and Centene Corp.
Individual portfolio holdings that detracted from performance included
biotechnology companies such as Cypress Bioscience, Inc. and Millennium
Pharmaceuticals, Inc., as well as restaurant companies like Applebee's
International, Inc. and Ruby Tuesday, Inc. Smurfitt-Stone Container Corp. was
another laggard.
Finally, the Fund's portfolio manager during the majority of the period, Brian
Clifford, left the firm in September 2005. A team of SunAmerica investment
professionals are now responsible for the day-to-day management of the Funds.
This team is overseen by Tim Pettee, Chief Investment Officer and Senior
Vice-President of AIG SunAmerica and Lead Portfolio Manager to the Funds. Mr.
Pettee is responsible for managing the team which consists of other
co-portfolio managers and research analysts; he also has primary investment
discretion for the Funds. The other members of Mr. Pettee's team are Andrew
Sheridan, Brendan Voege, Allison Larkin, Dawn Schuchman, Soraya Benitez and Ben
Barrett. These six members of Mr. Pettee's team are primarily responsible for
research and making recommendations in regards to the selection of securities.
Mr. Pettee is the only person who has actual discretion over the purchase and
sale of securities on behalf of the Funds.
90
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 $16,562. The same amount invested in securities mirroring the
performance of the Russell 3000 Growth Index would be valued at $18,991.
[CHART]
Class A Class B Class C++
------------------ ------------------ ------------------
New Average Average Average
Century Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- --------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return 14.87% 21.87% 16.94% 20.94% 20.31% 21.31%
- ------------------------------------------------------------------------
5 Year Return -10.34% -38.52% -10.15% -40.60% -9.78% -40.24%
- ------------------------------------------------------------------------
10 Year Return 5.17% 75.69% 5.25% 66.88% N/A N/A
- ------------------------------------------------------------------------
Since Inception 9.69% 496.81% 7.28% 132.54% 4.03% 35.36%
- ------------------------------------------------------------------------
+ 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, 2005, the SunAmerica New Century
Class A returned 14.87% compared to 12.13% for the Russell 3000 Growth Index.
(The performance data and graph do not reflect the deducation 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)
Growth and Income Fund
For the annual period ending September 30, 2005, the SunAmerica Growth & Income
Fund Class A returned 9.89% at NAV. The Fund's primary benchmark, the S&P 500
Index, returned 12.25% for the same period.
The economy continued to expand at a solid pace during the annual period but as
the year progressed investors became increasingly concerned about the effect of
higher energy prices and inflation would have on the economy. In addition,
several natural disasters caused additional disruptions to the economy and the
supply of energy. The primary stock market trend that impacted the Fund was the
out-performance of small- and mid-cap stocks relative to large-cap stocks. This
trend made it particularly challenging for a fund that has a higher
concentration of larger-cap equities.
The S&P 500 advanced significantly in the first quarter of the annual period,
as the U.S. economy continued to show signs of strength as corporate earnings
improved at a healthy pace and inflation remained subdued. Although U.S.
economic trends improved, with strong corporate earnings and low inflation, the
S&P 500 declined moderately during the first calendar quarter of 2005. Higher
oil prices continued to be a headwind for the consumer for most of the annual
period. The U.S. economy expanded during the second half of the fiscal year and
the equity markets responded with the S&P 500 producing positive returns.
Investors remained focused on energy prices and their potential impact on
consumer spending and the economy. Hurricanes in the southern United States
added to economic uncertainty, but investors appear to have discounted these as
one-time events.
With respect to sector weightings, a leading contributor to overall Fund
performance during the period was solid stock selection in the Consumer
Discretionary, Healthcare, Consumer Staples, and Industrials categories.
Conversely, a combination of 1) disappointing security selection in the
Information Technology, Energy, and Telecom Services sectors, and 2)
under-weight exposure to the Utility group detracted from performance.
Stock selection was successful overall, most notably in the energy sector, led
by Exxon Mobil Corp., Marathon Oil Corp. and Chevron Corp. Other positions that
significantly enhanced portfolio performance included WellPoint, Inc., Altria
Group, Inc., and Wendy's International, Inc. On the other hand, portfolio
laggards included Wal-Mart Stores, Inc., Verizon Communications, Inc., Pfizer,
Inc., News Corp. and J. P. Morgan Chase & Co.
92
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 $20,182. 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 $24,753.
[CHART]
Class A Class B Class C++ Class I
Growth ------------------ ------------------ ------------------ ------------------
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 3.61% 9.89% 5.21% 9.21% 8.23% 9.23% 10.09% 10.18%
- --------------------------------------------------------------------------------------------
5 Year Return -8.47% -31.85% -8.31% -34.00% -7.98% -34.03% N/A N/A
- --------------------------------------------------------------------------------------------
10 Year Return 7.27% 114.09% 7.36% 103.45% N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 8.36% 161.88% 8.48% 149.61% 0.95% 7.48% 0.59% 2.29%
- --------------------------------------------------------------------------------------------
+ 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, 2005, the SunAmerica Growth and
Income Class A returned 3.61% compared to 12.25% for the S&P 500 Index. (The
performance data and graph do not reflect the deducation 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)
Balanced Assets Fund
For the annual period ended September 30, 2005, the SunAmerica Balanced Assets
Fund Class B returned 5.16% 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 12.25%, whereas its fixed-income
benchmark, the Lehman Bros. Aggregate Bond Index, returned 2.80% for the same
period.
Over the past twelve months, equity market conditions have been challenging, as
the economy dealt with rising interest rates and commodity price trends. While
large-cap growth stocks did appreciate during the annual period, their results
significantly lagged the returns generated by the small- and mid-cap
categories. Rising oil, interest rates, and inflation were the most noteworthy
trends prevalent in the market this past year. After most equity indices peaked
during the summer, fears of faster economic growth and higher inflation caused
the domestic equity markets to correct, and investors seemingly focused on a
longer tightening cycle by the Federal Reserve.
With respect to stock sector weightings, strong stock selection in the
Industrial and Consumer Staples sectors benefited portfolio performance, while
under-weight exposure to the Utilities sector and disappointing security
selection in the Information Technology and Consumer Discretionary groups
detracted from returns. Contributors to performance included Altria Group,
PacifiCare Health Systems, Exxon Mobil, Transocean, and Intel. Stocks which
detracted from performance included Wal-Mart Stores, Biogen Idec, International
Business Machines, Pfizer, and Pulte Homes.
Market activity has been affected by numerous factors this past year, most
notably, the continued incremental increase in the Fed Funds target rate by the
Federal Reserve. This incremental approach produced a flattening of the yield
curve as well as increased volatility in the credit markets. Additionally,
increased LBO activity and the downgrade of both Ford and General Motors to the
high-yield asset class were other negative catalysts facing the credit markets
during the annual period. At period-end, headwinds from higher interest rates
and the possibility of a higher inflationary backdrop also weighed on market
sentiment.
The Fund was able to take advantage of strong performance in the
investment-grade, high-yield and emerging markets asset classes. Moreover, the
Fund's curve positioning, which anticipated a flatter yield curve by favoring
investments in shorter and longer maturities versus their intermediate
counterparts, also boosted portfolio returns. Despite the increased volatility,
both the investment-grade and high-yield markets proved resilient. Moreover,
emerging markets, bolstered by strong fundamental backdrops, have performed
extremely well as credit upgrades abound.
Sector selection positively impacted the Fund's performance during the annual
period. Specifically, the inflation-linked sector, supranationals, and
utilities aided returns, while agency and mortgage-backed securities (MBS)
performance proved to be a marginal drag on returns. Security selection was a
driver of returns as well. Investments in America Cellular, Republic of
Venezuela, and Southern Energy bonds bolstered returns. Conversely, Calpine,
General Motors, and American Stores were performance detractors.
94
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Over the past ten years $10,000 invested in the Balanced Assets Fund Class B
shares, would be valued at $15,829. 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 $18,848 and $24,753, respectively.
[CHART]
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
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 -0.22% 5.84% 1.16% 5.16% 4.15% 5.15% 6.10% 6.10%
- -------------------------------------------------------------------------------------------
5 Year Return -5.88% -21.62% -5.71% -24.16% -5.38% -24.14% N/A N/A
- -------------------------------------------------------------------------------------------
10 Year Return 4.65% 67.08% 4.70% 58.29% N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------
Since Inception 5.57% 103.58% 8.65% 455.48% -1.90% -11.96% 0.57% 2.20%
- -------------------------------------------------------------------------------------------
+ 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, 2005, the SunAmerica Balanced
Assets Class B returned 1.16% compared to 12.25% for the S&P 500 Index and
2.80% for the Lehman Bros. Aggregate Bond Index. (The performance data and
graph do not reflect the deducation 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)
International Equity Fund
For the annual period ending September 30, 2005, the SunAmerica International
Equity Fund Class B returned 27.04% at NAV, outperforming its MSCI EAFE Index,
which returned 25.79% during the period.
Over the last several months, global equity markets have been challenged by a
combination of record oil prices, conflicting economic data, and the prospect
of rising interest rates. In addition, markets have been tested by a number of
natural disasters. Moreover, the subway bombings in London together with the
increasingly volatile situation in the Middle East led to a heightening of
geopolitical risk. Even against this tumultuous global backdrop, equity markets
around the world posted strong performance. The microenvironment gives cause
for optimism as the corporate sector has been displaying extreme caution when
it comes to both hiring and expansion plans. Overall, the most positive
economic and corporate trends are to be found in Asia. In Japan, it is now
becoming increasingly evident that domestic demand is replacing exports as a
source of growth. Japanese consumers are enjoying significant increases in real
disposable incomes and this is starting to be reflected in improving consumer
confidence and retail spending. In fact, Prime Minister Koizumi's landslide
victory ignited investor enthusiasm in anticipation of planned structural
reforms. Elsewhere, Asian markets did well as Beijing's revaluation of the yuan
eased concerns of a major disruption in US-Sino trade. In China, it now appears
that economic growth is continuing at a high pace, defying earlier predictions
of a possible economic slowdown. This contributes to export growth throughout
the region.
From a sector selection perspective, all major sectors experienced positive
returns during the annual period, with Energy and Materials being the top
performers. The Fund significantly benefited from an over-weight position in
the Energy sector on the back of soaring oil prices. On the other hand, an
under-weight stance in the Materials sector proved beneficial because of
positive stock selection.
In terms of country selection, the Fund was aided by its exposure to Southeast
Asia and Latin America. Asian markets did particularly well over this time
period despite rising oil prices. Similarly, Latin American equity markets
raced ahead, especially in recent months, as investors focused on the economic
rather than political outlook. Performance was also helped by our over-weight
of oil-rich Norway, but on the other hand, an under-weight position in
Australia detracted from performance.
Several individual stocks assisted the Fund's performance, particularly Statoil
ASA, Saipem SpA, National Bank of Greece SA, Sumitomo Heavy Industries, Ltd.,
and Axa. Holdings which detracted from performance included Accord Customer
Care Solutions, Ltd., PT Indocement Tunggal, Tesco PLC, Next PLC, and Sharp
Corp.
96
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 $11,026. The same
amount, invested in securities mirroring the performance of the MSCI EAFE Index
would be valued at $15,771.
[CHART]
Class A Class B Class C++ Class I
------------------ ------------------ ------------------ ------------------
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 20.52% 27.84% 23.04% 27.04% 25.96% 26.96% 28.00% 28.00%
- --------------------------------------------------------------------------------------------
5 Year Return -2.61% -7.04% -2.39% -9.75% -2.06% -9.90% N/A N/A
- --------------------------------------------------------------------------------------------
Since Inception* 1.01% 15.99% 1.11% 10.26% 0.98% 8.70% 9.98% 44.44%
- --------------------------------------------------------------------------------------------
+ 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, 2005, the SunAmerica International
Equity Class B returned 23.04% compared to 25.79% for the MSCI EAFE Index. (The
performance data and graph do not reflect the deducation 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)
Value Fund
For the annual period ending September 30, 2005, the SunAmerica Value Fund
Class B returned 13.34% at NAV, trailing the Russell 3000 Value benchmark,
which returned 16.78% during the period.
The large cap-value market, represented by the Russell 3000 Value Index,
produced double-digit positive returns for the year. Energy, Utilities, and
Consumer Staples were the three sectors that contributed the most to benchmark
returns during the period. It is important to note that the return of the
Financial sector, the largest constituent of the Index (33% weight) returned
9.03%; significantly below than the next largest sector, Energy (12% weight)
which returned 47.84%.
A leading contributor to overall Fund performance during the period was solid
stock selection in the Consumer Discretionary and Utilities categories.
Additionally, over-weight exposure to the Information Technology sector as well
as Healthcare and Telecommunications under-weights also assisted the
portfolio's performance. Conversely, a combination of 1) disappointing security
selection in the Information Technology, Energy, and Financial sectors, 2) a
Utilities under-weight, and 3) over-weight exposure to the Industrials group
detracted from performance.
Stock selection was successful overall, most notably in the energy sector, led
by Exxon Mobil Corp., ConocoPhillips and Marathon Oil Corp. Other positions
that significantly enhanced portfolio performance included Federated Department
Stores, Inc. and Altria Group, Inc. On the other hand, portfolio laggards
included J.P. Morgan Chase & Co., Verizon Communications, Inc., News Corp. and
Alcoa, Inc.
98
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 $21,554. The same amount, invested in
securities mirroring the Russell 3000 Value Index, would be valued at $23,482.
[CHART]
Class A Class B Class C++ Class I Class Z
------------------ ------------------ ------------------ ------------------ ------------------
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 7.50% 14.06% 9.34% 13.34% 12.34% 13.34% 14.12% 14.12% 14.77% 14.77%
- ---------------------------------------------------------------------------------------------------------------
5 Year Return 7.01% 48.90% 7.30% 44.22% 7.58% 44.13% N/A N/A 8.91% 53.25%
- ---------------------------------------------------------------------------------------------------------------
Since Inception* 8.96% 126.86% 9.05% 115.54% 8.27% 97.58% 10.29% 46.00% 6.63% 61.83%
- ---------------------------------------------------------------------------------------------------------------
+ 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; Class Z 04/03/98.
++ Effective February 23, 2004, Class II shares were redesignated as Class C
shares.
For the 12 month period ended September 30, 2005, the SunAmerica Value Class B
returned 9.34% compared to 16.78% for the Russell 3000 Value Index (The
performance data and graph do not reflect the deducation 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
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Biotech/Health Fund
For the annual period ending September 30, 2005, the SunAmerica Biotech/Health
Fund Class A returned 4.21% at NAV, lagging both its AMEX Biotechnology and S&P
Composite 1500 Healthcare benchmark, which returned 23.69% and 12.13%,
respectively, during the period.
While the U.S. equity markets posted impressive returns during the first three
months of the annual period, healthcare shares increased more modestly.
Overall, the fourth quarter of 2004 was a challenging one for the healthcare
sector. Weighing heavily on investor psyche were product withdrawals such as
Vioxx, the safety of Celebrex being called into question, rumored regulatory
issues surrounding the HMO group, and product recalls of select device
products. The second fiscal quarter was another challenging one for the
biotechnology sector. Heightened inflation concerns, rising commodity prices,
and moderating economic data led the market downward, and put pressure on the
higher-multiple, longer-duration sectors like biotechnology issues. Despite the
difficult market conditions, positive product portfolio news from industry
leader Genentech provided investors with a rare respite.
Momentum shifted in the third fiscal quarter for the healthcare industry, with
all sub-sectors posting positive returns. Shares of battered small- and mid-cap
biotechnology companies rebounded significantly, as the group capitalized from
encouraging product developments regarding Genentech's cancer drugs. Another
catalyst was the emerging acquisition of fast-growing biotechnology companies
by large-cap pharmaceutical companies, as evidenced by Pfizer's purchase of
Vicuron. The managed-care segment posted strong results as solid fundamentals
and strong prospects relating to the implementation of the Medicare drug
benefit plan in 2006 kept investor interest alive. Elsewhere, the
pharmaceutical group traded sideways, as potential patent and product
litigation challenges kept a lid on valuations in the near-term.
With respect to the Fund's performance in terms of sub-sector selection versus
the AMEX Biotechnology Index, a high concentration of biotechnology companies,
a group that under-performed significantly in the first half of the annual
period, negatively impacted results. At mid-year, the portfolio was
repositioned to include a broad-range of healthcare companies, including more
healthcare equipment/services and large-cap pharmaceuticals companies. To
reflect this change, the Fund added the S&P Composite 1500 Healthcare Index as
a benchmark.
In terms of sub-sector selection versus the S&P Composite 1500 Health Care
Index, factors that benefited fund performance included 1) a Managed Care
overweight, 2) a Major Pharmaceutical under-weight, and 3) stock selection in
the Biotechnology and Major Pharmaceutical sectors. On the other hand, security
selection in the Managed Care and Specialty Medical sectors negatively impacted
results, as did a Biotechnology over-weight.
Individual stock selection affected the Fund's performance both positively and
negatively. Invitrogen, Genentech, Celgene, Amgen, and Transkaryotic Therapies
were among the top contributors during the period. Stocks which detracted from
performance included Millennium Pharmaceuticals, Onyx Pharmaceuticals, Cypress
Bioscience, Eyetech Pharmaceuticals, and Biogen.
Allison Larkin assumed management of the Fund on April 1, 2005. Ms. Larkin
reduced the portfolio's concentration of biotechnology stocks and more broadly
diversified the Fund among various healthcare sub-sectors with the goal of
achieving more consistent returns.
100
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Since the Fund's inception, if $10,000 were invested in the Biotech/Health Fund
Class A, it would be valued at $7,401. The same amount, invested in securities
mirroring the S&P 1500 Supercomposite Health Care Index and the AMEX Biotech
Index, would be valued at $10,345 and $11,097, respectively.
[CHART]
S&P 1500 Supercomposite AMEX
Biotech/Health Class A Health Care Index Biotech Index
---------------------- ------------------------- -------------
6/30/2000 $10,166 $10,000 $10,000
9/30/2000 12,451 10,146 13,172
9/30/2001 8,235 9,729 7,708
9/30/2002 5,742 7,701 5,476
9/30/2003 7,708 8,705 7,760
9/30/2004 7,102 9,226 8,972
9/30/2005 7,401 10,345 11,097
Class A Class B Class C++
------------------ ------------------ ------------------
Average Average Average
Biotech/Health Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- ---------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -1.77% 4.21% -0.47% 3.53% 2.53% 3.53%
- -------------------------------------------------------------------------
5 Year Return -10.94% -40.56% -10.82% -42.49% -10.46% -42.44%
- -------------------------------------------------------------------------
Since Inception* -5.52% -21.49% -5.28% -24.23% -5.07% -24.07%
- -------------------------------------------------------------------------
+ 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, 2005, the SunAmerica Biotech/Health
Class A returned (1.77%) compared to 12.13% for the S&P 1500 Supercomposite
Health Care Index and 23.69 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
101
SunAmerica Equity Funds
COMPARISONS: FUNDS vs. INDEXES -- (continued)
Tax Managed Equity Fund
For the annual period ended September 30, 2005, the Tax Managed Equity Fund
Class A returned 5.51% at NAV. The Fund's performance benchmark, the S&P 500
Index returned 12.25% over the same period.
At the outset of the annual period, the equity markets rallied as a result of
positive economy data and the swift outcome in the presidential election, which
helped to eradicate fears of a long, contentious process, and reassured
investors that taxes on capital gains and dividends would not be raised.
Although interest rates rose across most of the yield curve during the first
three months of 2005, favorable reports on corporate earnings and cash-flow
generation provided support for the equity markets. Despite encouraging
inflation data, the Federal Reserve continued to increase short-term rates
during the third fiscal quarter, and most domestic stock indices posted solid
returns for the period. Positive momentum continued into the final quarter of
the annual period on evidence that the economy's expansion was continuing.
Equity gains, however, were offset late in the annual period as hurricane
damage to oil rigs and refineries put upward pressure on energy prices and
heightened inflation fears. Shortly thereafter, the price of West Texas
Intermediate crude oil approached $70 per barrel, setting another all-time
high. This concern was exacerbated as the Consumer Price Index rose at the
fastest rate in more than four years.
Relative to its benchmark, the Fund's performance was affected by market
conditions. This was primarily due to the out-performance of higher-beta and
small-cap stocks during the fiscal period. The Fund's bias toward
higher-quality, higher-capitalization stocks had a negative impact on
performance during the annual period.
Specific securities selection also benefited the Fund, including Altria Group,
Inc., Exxon Mobil, Inc., ConocoPhillips, Chevron Corp., and Amgen, Inc. The
primary detractors from the Fund's relative performance included healthcare
companies such as Pfizer, Boston Scientific, and OSI Pharmaceuticals, Inc., as
well as Wal-Mart Stores, Inc., and Lexmark International, Inc.
At a meeting of the Board, held on September 26, 2005, the Board, including the
Disinterested Trustees, approved the termination of J.P. Morgan as Subadviser
to the Tax Managed Equity Fund. Effective November 1, 2005, day-to-day
management of the Fund has been assumed by Paul Ma of AIG SunAmerica Asset
Management Corp. pursuant to the Advisory Agreement last approved by the Board
on August 31, 2005.
102
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 $8,968. The same amount invested in
securities mirroring the performance of the S&P 500 Index would be valued at
$10,969.
[CHART]
Class A Class B Class C++
Tax ------------------ ------------------ ------------------
Managed Average Average Average
Equity Annual Cumulative Annual Cumulative Annual Cumulative
Fund Return Return+ Return Return+ Return Return+
- --------------- ------- ---------- ------- ---------- ------- ----------
1 Year Return -0.58% 5.51% 0.88% 4.88% 3.78% 4.78%
- ------------------------------------------------------------------------
5 Year Return -5.08% -18.22% -4.95% -20.85% -4.56% -20.83%
- ------------------------------------------------------------------------
Since Inception -1.64% -4.87% -1.40% -8.88% -1.39% -8.80%
- ------------------------------------------------------------------------
+ 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, 2005, the SunAmerica Tax Managed
Equity Class A returned (0.58%) compared to 12.25% for the S&P 500 Index. (The
performance data and graph do not reflect the deducation 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
103
[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 com-plete
William F. Devin Center schedule of portfolio
Stephen J. Gutman 3200 Plaza 5 holdings with the U.S.
Jeffrey S. Burum Jersey City, NJ Securities and Exchange
William J. Shea 07311-4992 Commission for its first
and third fiscal quarters
Officers Distributor on Form N-Q. Once filed,
Vincent M. Marra, AIG SunAmerica Capital the Trust's Form N-Q will
President Services, Inc. be available without
Donna M. Handel, Harborside Financial charge on the U.S.
Treasurer Center Securities and Exchange
Francis Gannon, Vice 3200 Plaza 5 Commission's website at
President Jersey City, NJ www.sec.gov. You can also
J. Steven Neamtz, Vice 07311-4992 obtain cop-ies of Form
President N-Q by (i) visiting the
Timothy Pettee, Vice Shareholder Servicing U.S. Securities and
President Agent Exchange Commis-sion's
Cynthia Gibbons, Vice AIG SunAmerica Fund Public Reference Room in
President and Chief Services, Inc. Washington, DC
Compliance Officer Harborside Financial (information on the
Gregory N. Bressler, Center operation of the Public
Chief Legal Officer 3200 Plaza 5 Reference Room may be
and 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
Corey A. Issing, Agent U.S. Securities and
Assistant Secretary State Street Bank and Exchange Commis-sion's
Shawn Parry, Assistant Trust Company Public Reference Room,
Treasurer 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 TRUST
PORTFOLIO SECURITIES This report is submitted
A description of the solely for the general
policies and proce-dures 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
secu-rities held in the than shareholders of the
Fund's portfolio which is Fund is authorized only
available in the Trust's in connection with a
State-ment of Additional currently effective
Information, may be prospectus, setting forth
obtained without charge details of the Fund,
upon re-quest, by calling which must precede or
(800) 858-8850. This accompany this report.
information is also
available from the EDGAR
database on the U.S.
Secu-rities and Exchange
Commission's website at
http://www.sec.gov.
PROXY VOTING RECORD ON
SUNAMERICA EQUITY FUNDS
Information regarding how
SunAmerica Equity Funds
voted prox-ies relating
to securities held in the
SunAmerica Equity Funds
during the twelve month
period ended June 30,
2005 is available without
charge, upon request, by
calling (800)858-8850 or
on the U.S. Securities
and Exchange Commission's
website at
http://www.sec.gov.
104
[LOGO]
AIG Sun America
Mutual Funds
Distributed by:
AIG SunAmerica Capital Services, Inc.
Investors should carefully consider the investment objectives, risks, charges
and expenses of any mutual fund before investing. This and other important
information is contained in the prospectus, which can be obtained from your
financial adviser or from the AIG SunAmerica Sales Desk at 800-858-8850, ext.
6003. Read the prospectus carefully before investing.
www.sunamericafunds.com
EQANN-9/05
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. The
Code of Ethics was amended, effective December 1, 2004, to reflect the
resignation of Robert M. Zakem as a "Covered Officer" as that term is
defined in the Code of Ethics.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees has determined that William J. Shea,
the Chairman of the Registrant's Audit Committee, qualifies as an audit
committee financial expert, as defined in the instructions to Item
3(a) of Form N-CSR. Mr. Shea is considered to be "independent" for
purposes of Item 3(a)(2) of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a)--(d) Aggregate fees billed to the registrant for the last two
fiscal years for professional services rendered by the registrant's
principal accountant were as follows:
2004 2005
Audit Fees ....................$ 172,800 $ 207,000
Audit-Related Fees ............$ 69,680 $ 60,480
Tax Fees ......................$ 58,100 $ 70,200
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 2005 and 2004 were $649,679 and $566,627, 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 applicable.
Item 6. Schedule of Investments.
Included in Item 1 to the Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures.
(a) An evaluation was performed within 90 days of the filing of this
report, under the supervision and with the participation of the
registrant's management, including the President and Treasurer, of the
effectiveness of the design and operation of the registrant's
disclosure controls and procedures. Based on that evaluation, the
registrant's management, including the President and Treasurer,
concluded that the registrant's disclosure controls and procedures are
effective.
(b) There was no change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d))) that occurred during the second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal contro1 over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics applicable to its Principal Executive and
Principle Accounting Officers pursuant to Section 406 of the
Sarbanes-Oxley Act of 2002 attached hereto as Exhibit 99.406.
Code of Ethics.
(2) Certification pursuant to Rule 30a-2(a) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit
99.CERT.
(3) Not applicable.
(b) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 attached hereto as Exhibit 99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SunAmerica Equity Funds
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: December 8, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Vincent M. Marra
-------------------
Vincent M. Marra
President
Date: December 8, 2005
By: /s/ Donna M. Handel
-------------------
Donna M. Handel
Treasurer
Date: December 8, 2005